EC members’ personal liability for failure to maintain common property

@PJ said:
I  would appreciate some advice as to when the ‘new Act’ come into effect and what are the transitional arrangements, if any?

Thanks in anticipation

If by “transitional arrangements” you mean the “savings provisions” that are included with every Act, the new Act basically says that anything that happened under the old Act is deemed to have happened under the new Act.

To quote Schedule 3, Section 3(1) of the new Act:

3 General savings
(1) Any act, matter or thing done or omitted to be done under a provision of the former Act and having any force or effect immediately before the commencement of a provision of this Act that replaces that provision is, on that commencement, taken to have been done or omitted to be done under the provision of this Act.

A failure by the executive committee or owners corporation to maintain common property is a breach of the current Act. It does not just become a breach if an NCAT order is issued. It is also a breach of common law as per multiple Supreme Court rulings.

Under the new Act any breach of the law that occurred in the previous 2 years is deemed to have occurred under the new Act. Any breach of the law that occurs under the new Act gives rise to a cause of action for damages. A breach that occurs today will therefore entitle an owner to claim for damages the day the new Act comes into force.

If it wasn’t intended to work that way Section 3 of Schedule 3 of the new Act would not have been included. It would have stated that the provisions of the new Act only apply to breaches that occur after the commencement of the new Act. But they say the exact opposite.

In the case in our building that I referred to above the committee is not protected as they acted in bad faith. There therefore can be (and will be) sued personally for damages the moment the new Act comes into effect.

The owner who had the concrete cancer (Mr X) typically votes against the committee. The only way of describing their actions in depriving him of the use of his lot for 11 months was punishment for daring to oppose them.

Work did not even start until 4 months after the problem was reported, during which time he could not re-rent his unit.

By way of comparison in 2014 Mr X and I were on the committee and the current clowns were not. One of them had concrete cancer in his bedroom. It was almost exactly the same amount of cancer that Mr X had in his bedroom.

It took 32 days from the day the problem was reported to us until the repairs were completed. That included the time to obtain 3 quotes and wait 10 days for the successful tenderer to have staff available to commence work. The owner in question agreed in writing to that initial delay. The actual work took less than a week. That is all documented in letters, emails, quotes and photographs.

The current committee did not bother to check if the company they engaged to fix Mr X’s problem was licensed for concrete spalling repairs. They are not.

The company employed an 18-year-old labourer off the street to do the actual repairs. He admitted he had never done spalling repairs before. He was supervised by a costs estimator who admitted in writing that he had never done spalling repairs before. Between them they butchered Mr X’s unit.

They were given an engineer’s specification for the repairs before they started but did not comply with one single part of it.  Far more material than was necessary was removed. They jackhammered on top of steel bars, forcing the legs of the bar chairs through the ceilings of the lot below. Floor tiles metres away from the repair were smashed and/or scratched. Walls were damaged. When they finished there was a 2mm thick layer of dust on the walls, floors and ceilings of the entire unit and in the foyer outside that they did not clean up. The committee did not check on any of their work during the 3 months the repair were under way. They merrily paid the contractor at the end without disputing the cost of the numerous issues that arose.

What should have been a simple and quick repair ended up costing the building over $94,000. Mr X lost $36,000 in rent thanks to the 11 month delay.  

To add insult to injury I subsequently discovered that two weeks after the problem was first reported the committee had obtained a quote from a licensed company to do the repairs for $6,000! The committee knew the similar repair in the other owner’s unit in 2014 had cost $16,000. With a ridiculously cheap quote like that there was no reason for them to even obtain additional quotes. They should have given the go-ahead immediately.

There could not be a more glaring example of a committee acting in bad faith than this one.

Bring on the new Act!

@Whale said:
In the absence of such proactive steps by Mr X he would, save the vindictiveness that you suspect, in my opinion have difficulty substantiating that the owners corporation (through its E/C) could have reasonably foreseen the loss that he incurred, and so he would likely not be able to successfully pursue the owners corporation under sect. 106 of the proposed new legislation.

I think the courts would take all of 5 seconds to conclude that even the mental giants on our committee should have been able to “reasonably foresee” that if they took 11 months to fix an owner’s rented lot, when an identical repair in another lot took 32 days, then he would suffer a loss.

As for why the owner did not take action earlier, NCAT action takes months. He was losing money by the bucket-load. He just wanted the job finished as fast as possible. He was also worried that if he did take action they would penalise him even further. As it turned out that is exactly what they did.

There was also concrete cancer in his kitchen floor. To fix it his kitchen had to be completely demolished. The owners corporation agreed up front to pay him the value of his old kitchen on completion, (as required under s.65(6)) which he could put towards a new kitchen of his choosing.

The work was completed in early November. He should therefore have been paid immediately so he could re-install the kitchen and re-rent his unit. When the work finished they had not even obtained a single quote on the value of his old kitchen, which they had had 8 months to do. His kitchen was identical to several others in the building as numerous photos prove so it was a simple exercise, even after the old one had been demolished.

They did not pay him until late February, almost 4 months after the repair work was completed. Knowing as they did that his unit had previously been rented for $700pw I think they could “reasonably foresee” that that extra 4 month delay would cost him another $11,000 in lost rent.

Before they paid him they made him sign to say that he would not take legal action against the owners corporation. That does not prevent other owners such as me from suing them for the losses we incurred due to the spiteful, vindictive and unlawful actions of the committee.