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How do Sections 106 and 108 of the Strata Schemes Management Act Interact?

It is common knowledge that an owners corporation is responsible for the common property in its strata scheme. However, when an owners corporation resolved to replace, rather than repair, the common property roof of one of its buildings the question of the roof ended up in the NCAT appeal panel.
As a quick recap, section 106(1) of the Strata Schemes Management Act 2015 provides for the maintenance and repair of common property and section 106(2) provides for the renewal or replacement of common property.
Section 108 of the Act provides for the procedure for authorising any changes to common property in the form of adding a new structure, altering, renewing or replacing common property.  In these cases, the owners corporation must authorise such changes by passing a special resolution at a general meeting.   These two sections are set out below.
In Loneragan v The Owners – Strata Plan No 16519 [2020] NSWCATAP 177, when the owners corporation passed a special resolution to impose a special levy on all owners to replace the roof in one of the two buildings in the scheme Mr Loneragan argued that it was unnecessary to replace it and that the roof could be repaired.
The Tribunal in making its decision had identified the critical issue as ‘whether the roof should be replaced or repaired’ but Mr Loneragan argued that the Tribunal should have asked ‘whether the roof could have been repaired’. He cited Glenquarry Park Investments Pty Ltd v Hegyesi [2019] NSWSC 425 as authority that the obligation of the Owners Corporation under section 106(2) to renew or replace common property was limited to whether it ‘reasonably necessary’ to do so and only in circumstances where the item can no longer be kept in good and serviceable repair.
Mr Loneragan’s position was that the roof was able to be repaired and under section 106(1) of the Act meant that the owners corporation was obliged to do the repair rather than replace the roof.  He also said that any replacement of the roof was an ‘enhancement’ within the meaning of s108 which required a special resolution.
The Appeal Panel did not agree that Glenquarry was authority for Mr Lonergan’s interpretation of the obligation under section 106 and stated that the decision of whether to repair or replace will depend upon the facts of each case and dismissed the appeal.
106 Duty of owners corporation to maintain and repair property
(1) An owners corporation for a strata scheme must properly maintain and keep in a state of good and serviceable repair the common  property and any personal property vested in the owners corporation.
(2) An owners corporation must renew or replace any fixtures or fittings comprised in the common property and any personal property vested in the owners corporation.
108 Changes to common property
(1) Procedure for authorising changes to common property.  An owners corporation or an owner of a lot in a strata scheme may add to the common property, alter the common property or erect a new structure on common property for the purpose of improving or enhancing the common property.
(2) Any such action may be taken by the owners corporation or owner only if a special resolution has first been passed by the owners corporation that specifically authorises the taking of the particular action proposed.
Article authors: Rhonda Webster and Allison Benson

What happened when a Building was Damaged from the Excavations next Door?

Picture this: Building works in a development project led to movements of the foundation below an adjoining strata scheme causing extensive damage to an apartment building on that land.  The building works involved extensive excavations, a retaining and a shoring wall to support the property.  The cost of rectification to the building was estimated at $5 million and $500,000 to repair the internal structural walls.  The work was estimated to take 66 weeks with residents being required to be relocated to temporary accommodation for the occupants.   If it sounds like a nightmare it was for one strata scheme.
The Owners Corporation made a claim in the New South Wales Supreme Court and the court decided that neither the builder (Southern Cross Constructions) or the structural engineering firm were liable for any of the damage to the building.  The Court did not accept that the builder’s actions could have been said to have caused the relevant damage and evidence did not disclose that the structural engineer’s designs caused any damage.
The Owners Corporation appealed and the decision is known as Owners of Strata Plan No 30791 v Southern Cross Constructions (ACT) Pty Ltd (in liquidation) [2020] NSWCA 199.
Allegations of Negligence
The Owners Corporation alleged that the builder and structural engineer breached their duties of care owed at common law and under the Conveyancing Act 1919 (NSW) and that it suffered damage as a result.  They alleged that the builder was negligent with respect to the excavations and construction of the shoring wall and that the structural engineer was negligent with respect to the structural designs failing to properly accommodate the design of the shoring wall.
Expert Evidence shows the cause of the damage to the Building
A joint expert engineering report indicated that inadequate support of the retaining wall caused movement of the shoring and retaining walls that supported affected property causing  movement of the foundation strata below the affected property.  The contributing factors included inadequate design, removal and replacement of props, additional excavation below general excavation depth and cutting down of the piles in a particular area and inadequate temporary propping of the retaining wall.  The loss of soil material caused by the additional excavation had adverse impacts on the stability of the walls without temporary support.  Inadequate monitoring of the vibration of the walls and the building meant that there was no ability to mitigate or minimise the damage.  The report also noted that the lack of clarity as to the roles of the parties in the construction process was also a contributing factor.
Responsibility
The expert engineers said that they had identified the parties associated with various technical issues but could not allocate any percentage of responsibilities because it was outside their area of expertise.  This was a matter for the court to decide.
Negligence at common law and statute – a causal connection must be established 
To make a claim of negligence at common law a party must prove three elements: first, a duty of care existed between you and the person that is claimed to be negligent; second, that person breached their duty of care and, third that the damage suffered by you was caused by that breach of duty.
The Owners Corporation alleged that the builder and the structural engineer beached their duties owed at common law under section 177 of the Conveyancing Act 1919 (NSW).  This section provides that a person has a duty of care not to do anything in relation to land that removes any support from that land.  This includes the natural surface of the land and subsoil.
Section 5D(1)(a) Civil Liability Act 2002 (NSW) is also relevant and provides ‘that the negligence was a necessary condition of the occurrence of the harm (factual causation).’  This means that there must be evidence to show that be the breach of duty caused the damage (a causal connection).
Section 5E provides that the plaintiff (in this case the Owners Corporation) bears the onus of proving, on the balance of probabilities any fact that is relevant to causation.
The Appeal Decision – The Builder negligent in part and Hughes not liable
The Appeal Court considered the issues and found at that ‘the primary judge should have found that the builder was negligent’ in directing a subcontractor to conduct excavations near a certain area which was contrary to a written report he had received from an engineering consultant.
The Court concluded that ‘the primary judge ought to have found that the excavation carried out had a relevant causal connection with the damage to the Building.
However, the Court found that the builder was not negligent on any of the other grounds put forward by the Owners Corporation and upheld the primary judge’s decision that Hughes was not liable for the damage to the building.
Article authors: Rhonda Webster and Allison Benson

What is a Scott Schedule & Why are they Used?

Scott Schedules are often used in building defect matters. They are an important tool that help both the parties and the decision maker focus on the defects being claimed and the quantum of each defect.
What is a Scott Schedule?
A Scott Schedule is a document that sets out the parties’ evidence with cost estimates for labour and material of each item claimed in regard to building defects, incomplete works or variations to the building contract and often involves technical or other complex matters.  It is usually, but not always, prepared by a building or costs specialist and references the expert evidence.
In building defect claims in NCAT or the District Court or Supreme Court preparation of a Scott Schedule is generally required as part of the evidence preparation.
What are the benefits of Scott schedule?
There are four potential benefits:

it can increase the possibility of the parties reaching a settlement on at least some portion of the issues in dispute;
in preparing the schedule each party can identify and clarify areas on which they agree, or have no basis to disagree with the other party;
it allows the parties to identify any items on which the difference in their positions is less than the cost to litigate them; and
it assists in avoiding confusion at the hearing as the items being claimed and the alleged costs of repairing those items is set out by each party.
it means the parties and the decision maker to have one convenient document that sets out the competing claims.

NCAT sets out a pro forma Scott Schedule, the link to which is here.
Authors: Rhonda Webster and Allison Benson.

When is a Strata Scheme Not Functioning Satisfactorily for the Purposes of Appointing a Compulsory Strata Manager?

This question was answered in The Owners – Strata Plan No 76317 v Ho [2020] NSWCATAP 205 which concerned an appeal from a decision made in the Tribunal where orders were made appointing a compulsory strata manager pursuant to s 237(1) of the Strata Schemes Management Act 2015.
The appeal was ultimately dismissed however the judgment set out the reasons the Tribunal at first instance found that the requirements of s 237 of the Act were satisfied and these reasons can be used as indicia of whether a scheme is functioning satisfactorily. These were:

Due notice of the annual general meeting (“AGM”) was not provided to all lot owners.
There was no quorum at the AGM.
The strata manager failed to prepare a 10 year capital works plan meaning there was no capital works plan in place.
The strata manager failed to provide a copy of the proposed new strata management agency agreement in advance of the AGM so that lot owners could consider it before the meeting.
The strata manager incorrectly minuted the resolution of the AGM that there would be no increase in strata levies and stated in the minutes that the AGM had agreed that levies would be raised.
Lot owners who were not financial were appointed to the strata committee when they were ineligible to be appointed.
After the AGM the strata manager sent levy notices for increased levies when no increase of levies had been agreed.
The strata manager was slow to act on noise complaints made by Ms Ho in May 2019, only sending a notice to the premises involved on 27 June 2019.
Publicity was given within the strata plan to a proposed strata committee meeting that was misguided in that an EGM was to be held to deal with the issues raised. The Tribunal found that posting the notice on the noticeboard was intimidatory and inappropriate and that the strata manager did not take sufficient steps to have the notice removed.
The failure by the Owners Corporation to mediate did not reflect well on the strata manager, particularly as the Tribunal has not found that the preponderance of the submissions of the lot owner applicants at first instance were not ‘groundless, misconstrued, malicious and self-interested’ as claimed by the Owners Corporation and strata manager.

Interestingly, the reasons for the finding note several times that the strata manager either did something or failed to do something (i.e. failed to prepare a sinking fund plan, did not include the new management agreement with the meeting notice and was slow to act on the noise complaint). This means that strata managers should try to ensure that their owners corporations comply with the Strata Schemes Management Act 2015 and provide advice where they are not. For instance, if a noise complaint is received the strata manager should provide the information to the strata committee, offer recommendations and request instructions. In many cases the strata manager may not have the power to issue a warning notice without approval of the strata committee. Clearly requesting instructions from the strata committee should put the ball back in their court. Similarly, strata managers should consider the wording of motions placed on agendas. In this case the decision reads as if the strata manager failed to prepare the capital works plan. Delving deeper, did the strata manager have the skills and experience to be able to do so? And was it resolved that the strata manager rather than a third party consultant was to prepare the plan? While we do not know the answer to this question, careful wording of motions and consideration of whether the strata manager had the requisite skills, experience and time to prepare the report may have avoided the lack of a plan.
The Tribunal at first instance had considered the individual failings of the Owners Corporation and the strata manager and concluded that, when taken together, the breaches were serious and affected the proper functioning of management of the strata scheme. The Appeal Panel noted that some of the findings taken on their own would not have justified the appointment of the compulsory manager but the Tribunal at first instance had correctly considered the failures together.
The Appeal Panel also referred to the Appellants’ submissions that the appointment of a compulsory strata manager is a serious step not to be taken lightly however it also noted that section 237 of the Act is clear in its language in that it requires the Tribunal to be satisfied that the management of a strata scheme ‘is not functioning or is not functioning satisfactorily’. In addition, the severity of the appointment of a compulsory manager was mitigated by the length of the appointment – in this case it was for 12 months – whereupon the lot owners would have an opportunity to appoint another strata manager.
Authors: Jasmin H.Singh and Allison Benson

Code of Conduct for Short- Term Rental Accommodation

The mandatory Code of Conduct for short-term rental accommodation has been finalised and will apply from 18 December 2020. You can view the Code here.
Host obligations
If you are a host, the obligations imposed on you by the Code include:

You must hold insurance for third party injuries and death.
You must be contactable between 8am to 5pm daily to manage guests, premises and deal with complaints, and be contactable outside these times to deal with emergencies.
You must provide a copy of the Code and any by-laws to guests.
You must take reasonable steps to ensure guests meet their behaviour obligations in the Code.
You must ensure that you and your premises are registered on the premises register from 1 June 2021 onwards.
You must ensure you do not rent out your premises to a guest who is recorded on the exclusion register.

Guest obligations
If you are a guest, the obligations imposed on you by the Code include:

You must not make noise or use the premises in a way that will unreasonably interfere with the peace and comfort of other occupants of the premises.
You must not damage the premises including any common property or association property.
You must not act in a violent or threatening manner towards other occupants of the premises.
You must take reasonable care of the host’s premises and property.
You are responsible for the actions of your visitors and must ensure they comply with the behaviour standards set out in the Code.

Booking platform and letting agent obligations
Booking platforms and letting agents are required to tell industry participants about the Code and make a copy of the Code readily available. From 1 June 2021 onwards, short term accommodation can only be advertised by booking platforms and letting agents if the host and premises are registered on the premises register. A host of premises recorded on the exclusion register must not be advertised for short term accommodation.
Penalties for breaching the code
Complaints can be made to the Commissioner for Fair Trading for breaches of the Code. If a breach is found, the Commissioner may issue a warning notice, issue a direction to an industry participant to act or stop acting in a certain manner, record a strike against a host or guest, or record a host or guest on the exclusion register. A host or guest who has had two strikes in a two year period will be entered onto the exclusion register for five years. This means that these hosts and guests will not be able to enter into short term accommodation arrangements for five years.
Changes will also be made to planning laws in mid-2021, including the introduction of new policies.
Owners Corporations should seek legal advice to ensure their short term accommodation by-laws comply with the Code.
Authors: Jasmin H. Singh and Allison Benson

When is Refusal to Consent to a By-law Unreasonable?

When is refusal to consent to an amendment of a by-law unreasonable? This was one of the issues raised in the recent case of Gelder v The Owners – Strata Plan No 38308 [2020] NSWCATAP 227 (05 November 2020).
Ms Gelder refused to consent to the amendment of Special By-law 1 which gave her and three other lot owners exclusive use of separate common property courtyards despite the amendments being passed at a general meeting. The exclusive use areas conferred by Special By-law 1 were unlimited in depth or height. The key proposed amendments:

required the lot owners to provide other lot owners and their contractors reasonable access to the exclusive use area for the purpose of installing, upgrading and maintaining the air conditioning units servicing their lots within seven days’ notice; and
limited the depth and height for the exclusive use area.

In the original proceedings the Owners Corporation sought, among other things, an order under section 149 of the Strata Schemes Management Act 2015 that the changes to Special By-law 1 were unreasonably refused. The Tribunal made orders that the amendments to Special By-law 1 presented at the annual general meeting be made other than the word “slab” which was to be omitted where it appeared in relation Ms Gelder’s lot and directed that the amended by-law be registered.
Ms Gelder appealed. On appeal, the Appeal Panel stated that it is common ground that “unreasonable” should be regarded as meaning “not endowed with reason, not guided by reasonable good sense, not based on or in accordance with reason or sound judgment, immodest, capricious or exorbitant”.
The Appeal Panel considered the appellant lot owner’s reasons for her refusal to consent which the Tribunal had failed to properly consider. These included that if the proposed amendments were made to Special By-law 1:

she would lose the exclusive use of that part of her exclusive use area below the level of the upper surface of the floor slab for her lot;
she would lose the exclusive use of that part of her exclusive use area above the level of the lower surface of the ceiling slab for her lot;
the creation of rights of access to her exclusive use area would have had certain effects, which included that:

she would be required to provide access to her lot’s courtyard to unidentified persons for indeterminate periods and those persons would be under no obligation to keep the exclusive use area clean, with such obligation remaining on her and
she may be liable for losses caused by death or injury or damage to property occurring during the access being exercised by those persons.

The Appeal Panel held that the Tribunal’s decision to order the amendment of Special By-Law 1 was legally unreasonable, for the following key reasons:

Ms Gelder’s unchallenged evidence was that the proposed changes would result in her no longer having exclusive use of the spaces removed by the excisions to her exclusive use area.
This would involve the extinguishment of part of the proprietary rights held by Ms Gelder.
The removal of that part of Ms Gelder’s proprietary rights was not necessary. The aim of allowing access to allow installation, maintenance and repair of air conditioning units was achievable without the excisions.
No interest of the other lot owners required the excisions as a step to be taken in addition to a right of access.
The Owners Corporation’s submission that the removal of Ms Gelder’s proprietary rights was necessary and reasonable to ensure harmony within the scheme was also rejected.

The Appeal Panel’s decision implies that where consent is refused, the refusal to consent would not be unreasonable if the proposed amendments went beyond the imposition of rights of access and removed proprietary rights when there was no need to do.
It should be noted that in this case, the Appeal Panel went on to state that:

the orders made by the Tribunal gave effect to an amendment to Special By-law 1 as passed at the annual general meeting (by removing the word “slab” which was considered to be a substantial amendment) to which the appellant had not refused consent or even been given the opportunity to refuse;
it followed that the appellant could not have refused consent unreasonably and the finding necessary to enliven the Tribunal’s discretion could not have been made; and
as such, the Tribunal made an order which was beyond its power to make, and by doing so it made an error of law.

Authors: Jasmin H. Singh and Allison Benson

Tribunal Powers to Determine Applications under the Home Building Act 1989 (NSW) despite Non-compliance with Section 48J of the HBA

One of the issues that came before the Tribunal in the recent decision of Maygood Australia Pty Ltd v The Owners – Strata Plan No 85338 [2020] NSWCATAP 237 was whether the Tribunal had jurisdiction to determine an application which had been accepted by the Tribunal’s registry despite the absence of an investigation by Fair Trading NSW or a direction by the President as required by section 48J of the Home Building Act 1989 (NSW) (“HBA”).
Section 48J of the HBA provides that the principal registrar of the Tribunal must reject any application to the Tribunal for the determination of a building claim unless the provisions of section 48J of the HBA are complied with.
The Tribunal held that the failure to comply with section 48J of the HBA did not deprive the Tribunal of jurisdiction to determine an application which had been accepted. The Tribunal’s reasoning was:

That it agreed with the reasoning of the Appeal Panel in S & G Homes Pty Ltd t/as Pavilion Homes v Owen [2015] NSWCATAP 190 as follows:

section 48J of the HBA is not a pre-condition to the Tribunal’s jurisdiction to determine home building claims.
the Appeal Panel contrasted the terms of section 48J with the requirements of section 48K of the HBA which specifically provides, in subsections (3), (4), (6), (7) and (8), that “the Tribunal does not have jurisdiction” in respect of various classes of building claim after the specified time periods.

As section 48J of the HBA does not contain the form of wordings as section 48K of the HBA which clearly states the Tribunal does not have jurisdiction to determine matters not commenced in accordance with the requirements of that section, this suggested that the failure to comply with section 48J of the HBA did not deprive the Tribunal of jurisdiction.
The terms of section 48J of the HBA are addressed to the Principal Registrar. The requirement is that the Principal Registrar reject an application “unless satisfied”. It would not be appropriate that the Tribunal should be required to investigate whether the Principal Registrar had been relevantly satisfied in disputed cases.
The jurisdiction of the Tribunal is enlivened by the filing of an application. The jurisdiction of the Tribunal is conferred and defined by the NSW Civil and Administrative Tribunal Act (“NCAT Act”).
Sections 48I(1) and 48K(1) of the HBA confer jurisdiction upon the Tribunal with respect to building claims.
The jurisdiction of the Consumer and Commercial Division of the Tribunal over matters arising under the HBA is within the general jurisdiction of the Tribunal. An application made to the Tribunal for a decision in respect of such a matter is a general application under section 29(4) of the NCAT Act.
If the Principal Registrar had rejected the application filed by the Owners Corporation, the Tribunal would have had no jurisdiction because there would have been no application before it. However, since the Principal Registrar had not rejected the Owners Corporation’s application, there was an application before the Tribunal and the Tribunal had jurisdiction to determine it.

Authors: Jasmin H. Singh and Allison Benson

Clarification on Time Limits under the Environmental Planning and Assessment Act 1979 for Defective Building Work

According to the recent judgement of the Court of Appeal in Bandelle Pty Ltd v Sydney Capitol Hotels Pty Ltd [2020] NSWCA 303, the 10 year long-stop limitation period in the Environmental Planning and Assessment Act 1979 applies to all defective building work regardless of when the defect manifests or who the claimant is.
Background
On 2 January 2017, a fire broke out on the ground floor of the Capitol Square Building. The fire activated the building’s fire sprinklers and caused loss and damage to Sydney Capitol Hotels, who was a tenant in the building. The fire was alleged to have been caused by defective work to the building’s exhaust duct system. That work had been carried out in 1997 by Bandelle. Bandelle argued that the claim was statured barred by the long-stop provisions in section 6.20 of the Act which provides at subsection (1):
‘A civil action for loss or damage arising out of or in connection with defective building work or defective subdivision work cannot be brought more than 10 years after the date of completion of the work.’
Supreme Court decision
The key question for the Court was whether, on the proper construction of section 6.20 of the Act, the loss or damage suffered by Sydney Capitol Hotels was loss or damage ‘arising out of or in connection with defective building work’. The Supreme Court found the claim was not statute barred by section 6.20 of the Act because Sydney Capitol Hotels was merely an occupier of part of the building, and not the party who contracted with Bandelle to carry out the building work. As such, the loss and damage was caused by the defective building work in an ‘accidental, incidental or indirect sense’ and as such, section 6.20 of the Act did not apply.
Court of Appeal decision
The Supreme Court’s decision was overturned on appeal. The Court of Appeal held that section 6.20 of the Act and former section 109ZK apply to all claims for economic loss caused by defective building work. The Court of Appeal stated that the purpose of these sections is to provide a long-stop limitation period, independently of when the damage first manifested and regardless of whether there was a contractual relationship between the builder and the claimant.
The Court of Appeal stated ‘The clear object of s 109ZK when enacted was to afford a limitation protection to those engaged in the building industry, irrespective of the nature of the claim, so long as the claim can be shown to be for loss “arising out of or in connection with” or “arising out of or concerning” defective building work. Clearly, the claim being made in the List Proceedings is one for loss arising out of or in connection with or concerning defective building work, namely, constructing or designing the Shaft defectively. There is no reason to construe the provision restrictively in the manner contended for by Capitol.’
What does this mean for you?
The effect of this decision is that if you suffer loss or damage arising out of defective building work, you must commence proceedings within 10 years of the date of completion of the building work. Note that the 10 year limitation period under the Act is different to the limitation periods under the Home Building Act 1989 which are two years for non-major defects and six years for major defects. We expect the limitations under the Design and Building Practitioners Act 2020 to be clarified in due course.
We strongly recommend that you seek legal advice as to the time limitations in your specific circumstances.
Authors: Jasmin H.Singh and Allison Benson

Notice to Comply with By-laws: How to Ensure the Notice Satisfies the Requirement for Penalty Orders

If you’re a strata committee member or strata manager, no doubt at some point a lot owner or occupier will breach a by-law and the suggestion will be made that a notice to comply with the by-law (sometimes called a “breach notice”) be issued to the person who has breached. Of course, in some cases, a friendly reminder is all that will be needed. But if events escalate or the breach is on-going or severe, then a notice to comply is the first step. Furthermore, if you as a committee, owners corporation or strata manger intend for the notice to comply to be the first step to proceedings in NCAT for penalty orders (that is, orders that the lot owner breaching the by-law pays a penalty amount to the owners corporation), then you must get the steps right.
The Strata Schemes Management Act 2015 sets out the steps in section 146. It requires that a notice to comply must be in a form approved by the Secretary (which is, for this purpose, Fair Trading. You can download a notice to comply form from their website). The notice must refer to one by-law only and it must state that the owners corporation is satisfied that the owner or occupier has breached a by-law. The notice must extract the by-law breached. For this purpose, the entire by-law should be extracted, not just the part that was breached. The notice must not be issued unless unless the strata committee has resolved to issue the notice at a strata committee meeting, or the owners corporation has resolved to issue the notice at a general meeting, or the strata manager has been delegated the power to issue notices to comply by their strata management agreement. Once all of those steps have been taken, the notice should be served on the owner or occupier (to their address for service on the strata roll is the best way or personal service is the second best). If the person breaches the same by-law again within twelve months of the notice, so long as the owners corporation has proof of the breach, then the owners corporation can make an application to NCAT for penalty orders due to the breach. Penalty orders can be up to $1,100.00. If the person further breaches the by-law in the next twelve months after NCAT orders, then the owners corporation can apply for further penalty orders of up to $2,200.00 without notice or warning to the lot owner.
If you have any issues with breaches of by-laws in your scheme, contact Kerin Benson Lawyers.
Authors: Gemma Lumley and Allison Benson

Why it is important to Pay your Strata Levies on Time: Consequences for Late or Non-Payment

All owners of a lot in a strata scheme must pay contributions levied on them in accordance with the schedule determined at the annual general meeting of the owners corporation for that year (and any special contributions determined during the year).
Usually, the contributions (i.e. levies) will be quarterly and owners will be reminded of the payment dates when a notice is issued to them. Payment of the levies is not discretionary and payment cannot be withheld even if you are in a dispute with your owners corporation about other things which require payment. Put simply, there is a strict statutory obligation for lot owners to pay and pay on time. If contributions are not paid on time or at all, the consequences can be expensive and severe.
Let’s start with expensive. Unpaid contributions attract interest each day they remain unpaid. The interest is calculated at an annual rate of 10% and starts accruing 30 days after notice that the contribution is due and payable.
At the severe end of the scale, unpaid levies mean that you are unfinancial and unable to vote, ultimately it could lead to involuntary bankruptcy. This is because the Strata Schemes Management Act 2015 is detailed and strict about the obligation to pay levies, which means path to orders from a Court for the payment of those levies and the issue of a notice of bankruptcy (notice required prior to filing a claim for bankruptcy) can be straightforward. If a notice of bankruptcy is not responded to, and an owners corporation files for bankruptcy which is not successfully defended by a lot owner*, the outcome can be very dire.
In the case of Owners Of Strata Plan 71241 v Kerswell [2020] FCCA 2296 (30 September 2020), the debtor stated he owned numerous properties around NSW and had cash in the bank that combined would have fulfilled the amount being claimed. However, the Court found the debtor did not prove his statements and ordered bankruptcy (although, the order was stayed for 21 days, presumably to allow the debtor to pay the amount in the event that he could as he asserted during the proceedings).
There are steps between a late payment and bankruptcy though. Lot owners and owners corporation’s can enter into payment plans, either generally or for the payment of overdue contributions. Such plans may be for up to 12 months. And an owners corporation may also resolve that a contribution either generally or in a particular case is not to bare any interest. Both steps can ease the burden of levies on lot owners who may be struggling to make payments.
For the above reasons, it is crucial that lot owners keep their address for service updated with their owners corporation so that lot owners receive notices of contributions and, if you are having trouble paying your levies that you communicate with your strata manager and strata committee.
*We note that usually, the threshold for a bankruptcy notice is $5,000 debt with 21 days to respond to the notice. As part of the Federal Government’s Covid-19 response, the threshold was increased to $20,000 debt and six months to respond. These temporary measures are in place until 31 December 2020.
Author: Gemma Lumley

Who is Responsible for Fixing The Fence?

A fence servicing a strata scheme could be owned by any number of people.
To determine ownership and therefore responsibility, the first step is to consult the strata plan. If the fence is located within the air space of a lot but is not shown on the strata plan, then it will be the owner of the lot’s property. If the strata plan says that a fence is part of a lot, then its lot property. If the fence is structural or appears as a line on the strata plan, the Owners Corporation owns it and is likely to be responsible for it. If the fence is on a boundary between the common property and the next door neighbor (and is therefore a dividing fence that separates the adjoining land), then the Owners Corporation and the neighbor will be responsible for it 50/50 (we refer to section 7 of the Dividing Fences Act 1991). If the fence is on a boundary between a lot and the common property then it is the Owners Corporation’s responsibly as owner of the strata parcel (we refer to section 266(1) of the Strata Schemes Management Act 2015). And, if a fence is actually a retaining wall then… it is not a fence, it’s a retaining wall. And a retaining wall is a different beast because maintenance and responsibility for retaining walls is governed by common law.
Disputes about fences are common, and they can be complicated depending on the precise location of the fence in relation to boundary lines. If you have an issue in relation to a fence that involves a strata scheme (or community or neighborhood scheme even though we haven’t discussed those in detail in this article), contact us.
Author: Gemma Lumley

Was the Noise from the Café Downstairs a ‘Nuisance’?

This was the question determined by NCAT’s Appeal Panel on 3 June 2020 in Chehelnabi v Gourmet and Leisure Holdings Pty Ltd [2020] NSWCATAP 102 (03 June 2020).
In the first instance, the appellants sought orders from the Tribunal to improve the alleged noises, smells and vibrations from the café below them in their three lot mixed-use strata scheme. The y alleged a breach of section 153 of the Strata Scheme Management Act 2015 which provides that ‘an owner, occupier or other person must not use or permit their lot to cause a nuisance to the occupier of any other lot’.
Each party employed their own acoustic engineers as expert witnesses.  Although they provided contradictory reports, both considered whether the noise complained of was “offensive” within the definition in the Protection of Environment Operations Act 1997 (NSW) (PEO Act), referred to guides and policies of the Environment Protection Agency (EPA), and also cited Noise Guide for Local Government and Noise Policy for Industry (NPFI).  Interestingly, the expert reports did not refer to section 153 of the Strata Scheme Management Act 2015 (NSW).
In considering the case the Appeal Panel referred to The Owners Strata Plan 2245 v Veney [2020] NSWSC 134 [at 46] where it was held that ‘nuisance’ should be interpreted in accordance with the common law meaning of an actionable nuisance’ and also the finding of Lord Wright in Sedleigh-Denfield v O’Callaghan [1940] AC 880 [at 903] that a ‘useful test is perhaps what is reasonable according to the ordinary usages of mankind living in society, or more correctly in a particular society.’
The Panel noted two elements for actionable nuisance which were:

there must be noise heard by the appellants in the use of their lot which emanated from the cafe. This could be established by the appellants’ subjective evidence.
there must be evidence to satisfy the Tribunal that the noise caused by the cafe was excessive or unreasonable and caused inconvenience beyond what other occupiers in the vicinity could be expected to bear, considering the prevailing standard of comfort of the time and place. This is an objective test.

The Panel noted that the definition of offensive noise in the PEO Act was relevant to establishing the second element for an actionable nuisance in respect of noise and stated that the relevant evidence of a reasonably acceptable standard of noise emission in our society, particularly as it affects others requires assessment of whether the noise is: (i) harmful to (or is likely to be harmful to) a person who is outside the premises from which it is emitted; or (ii) interferes unreasonably with (or is likely to interfere unreasonably with) the comfort or repose of a person who is outside the premises from which it is emitted.
The appellants claimed that the Tribunal at first instance had failed to consider the criteria set out in section 153 of the Act and had treated the NPFI as being determinative of the issue.  The Panel declared that these guidelines were a reasonably acceptable standard of noise emission in society, that the guidelines were not determinative but provided evidence such that ‘nuisance’ in the sense of section 153(1) was not established.  The appellants also claimed that the Tribunal failed to take into account the subjective evidence of the appellants’ sleep disturbance and continuous night time noise.
As noted above, both parties provided expert witnesses to adduce evidence of the second element which was referenced through established guidelines from EPA and NPFI.  As such, the Panel held that the appellants’ subjective experience … would be insufficient to discharge the practical onus they bore to lead evidence that the noise constituted an actionable nuisance, given the Tribunal’s conclusion as to the expert evidence. Essentially, the appellant’s subjective evidence was not enough to establish that they had suffered from an actionable nuisance given the findings of the expert evidence , therefore they failed the objective test and the appeal was dismissed.
Article authors: Rhonda Webster and Allison Benson

Disposal of Abandoned Goods on Common Property

Seemingly without warning, as of 1 July 2020 section 125 of Strata Schemes Management Act 2015 and clauses 32 to 34 of the Strata Schemes Management Regulations 2016 which regulated the disposal of abandoned goods on common property were repealed.
The legislation that now governs goods abandoned on common property is the Uncollected Goods Act 1995 (Act). Relevantly, section 5(2)(e) of the Act provides that goods are uncollected goods if an owners corporation reasonably believes the goods have been abandoned or left behind on common property. Where there is no agreement between the owner of the goods and the owners corporation for the disposal of the goods the Act is available for the disposal of uncollected goods.
Section 7 of the Act means that an owners corporation will not incur any liability in respect of the disposal of uncollected goods in accordance with the Act or in accordance with an order of the Tribunal.
The Act divides uncollected goods into five categories:

low value uncollected goods (goods with a value of less than $1,000),
medium value uncollected goods (goods with a value equal to or more than $1,000 but less than $20,000),
high value uncollected goods (goods with a value of at least $20,000),
personal documents, and
perishable goods and rubbish.

In respect of low value uncollected goods, medium value uncollected goods and personal documents, sections 19, 20 and 22A respectively of the Act sets out the process and notice requirements before the goods can be disposed of and how the goods may be moved, stored or disposed of.
Under section 22 of the Act high value uncollected goods can only be disposed of in accordance with an order of the Tribunal. The goods may be moved or stored in an appropriate manner.
No notice is required for perishable goods and rubbish and they may be disposed of in such manner as the owner corporation considers appropriate.
Section 31 of the Act sets out an additional requirement where a motor vehicle is being sold pursuant to that Act, that is a person must not sell a motor vehicle under the relevant part of the Act unless the Commissioner of Police has issued the person with a certificate to the effect that the motor vehicle is not for the time being recorded as being stolen and the person has obtained a written search result in relation to the vehicle.
Should an owners corporation have uncollected goods that it wishes to dispose of we recommend that it seeks legal advice as to the category of the goods and the process that needs to be followed.
Article authors: Jasmin H. Singh and Allison Benson

Strata 101 – What is It and How does It Work?

The University of New South Wales’s City Futures report in June 2020 found that over 1.1 million people, approximately 15% of the NSW population, lives in a strata scheme.  This number is expected to grow year on year.
As the number of people residing in a strata scheme increases, inevitably so do the issues and disputes relating to strata schemes. This article is a very high level overview for first time residents and owners in strata schemes.
What is Strata?
A strata scheme is defined in section 4 of the Strata Schemes Development Act 2015 as:
“(a) the way a parcel is subdivided under this Act into lots or lots and common property, and
(b) the way unit entitlements are allocated under this Act among the lots, and
(c) the rights and obligations, between themselves, of owners of lots, other persons having proprietary interests in or occupying the lots and the owners corporation, as conferred or imposed under this Act or the Strata Schemes Management Act 2015 .”
A strata scheme is made up of the common property and the individual lots.
An owners corporation is a distinct legal entity. It is responsible for the management of the strata scheme and comes into existence upon the registration of the strata plan. It has the ability to sue, be sued and has perpetual succession, however it notably is not a corporation for the purposes of the Corporations Act 2001.
Upon the registration of the strata plan, each lot owner becomes a member of the owners corporation, with varying unit entitlements based upon the allocation which is registered with the plan. Unit entitlements establish the voting rights of lot owners and the proportion of the levy that a lot owner is responsible for paying to the owners corporation.
How does living in a strata scheme work?
The way that a strata scheme operates will vary in each state and territory. In NSW, lot owners within a strata scheme will be subject to the following governing documents that are in (in order) the Strata Schemes Management Act 2015 and the Strata Schemes Development Act 2015, Strata Schemes Management Regulation 2016, the strata management statement (if one applies) and the registered by-laws of the scheme.
The by-laws for the scheme are what most lot owners will be most familiar with. They regulate and authorise such things as noise, keeping of pets, parking and storage. Each lot owner will be responsible for a proportion of quarterly levies for the maintenance of common property areas such as elevators, swimming pools and fire safety measures. Lot owners will generally need to seek approval for conducting building work affecting the common property. This may require them to agree to a common property rights by-law authorising such work under specific conditions.
Common grounds upon which disputes arise include breaches of a scheme’s by-laws, unauthorised works and building defects. In matters such as these we can act for the individual lot owner or for the owners corporation.
If you have a strata related issue or are seeking a by-law to undertake work, please contact our office.
Authors: Zachary Sie and Allison Benson

Building Management Committees 101: What are They and Where will You Find Them?

When will you encounter BMCs?
You will find Building Management Committees (“BMCs”) in stratum developments (also called part strata plan developments). Land can be subdivided by a strata plan or by a part strata plans. In subdivision by a strata plan, the land and building are divided into lots and common property. Stratum developments occur when you have a building or buildings that are subdivided into part strata plans. Stratum subdivision is a subdivision of height and the lots created are known as stratum lots. Stratum lots may have different uses. For example, a building may have a retail stratum lot on the ground floor, a commercial stratum lot on the first floor and a residential stratum lot on the second floor. Stratum lots can subsequently be subdivided into strata plans.
Stratum lots will share common facilities that may be located in one or several of the stratum lots, for example – the entrance/foyer, building façade, fire systems, car parking areas, storm water drainage system, air-conditioning systems and rooftop pool. gardens.
Why does the BMC exist?
The BMC exists to regulate or manage the shared facilities and the shared costs of those facilities. Unlike an owners corporation, a BMC is not a separate legal entity. Each owner of a stratum lot is a member of the BMC unless:

It is an owners corporation and it passes a special resolution not to be a member and all other members agree; or
A person (individual or company) states in writing they do not want to be a member and all the other members agree. Note a company would have to pass a resolution to give effect to its wish not to be a member.

Each owners corporation that is a BMC member must by special resolution or under the terms of a by-law elect a representative to sit on the BMC. A lot owner that is a company must also pass a resolution to appoint a representative to sit on the BMC.
The key documents that regulate a BMC in order of priority are:

The Strata Schemes Development Act 2015;
The Strata Schemes Development Regulations 2016;
The original development consent conditions; and
The strata management statement.

What is a strata management statement (“SMS”)?
The SMS is the day to day guide for managing the BMC. It has the effect of an agreement under seal on lot owners (both stratum and strata lot owners), occupiers, mortgagees, chargees and lessees.
The SMS should contain provisions regulating the establishment of the BMC, holding of meetings, the functions of the BMC, how the SMS can be amended i.e. a unanimous, special or ordinary resolution, how disputes are to be managed, the method of allocating the costs of shared expenses (arising from shared facilities), a fair allocation of the costs of shared expenses and a review process to ensure the allocation of shared costs remains fair.
Generally, the shared facilities and shared costs of those facilities are listed in a schedule registered with the SMS. Shared facilities can be physical items or services. Shared costs are the costs related to the shared facilities. They generally are not just the cost of repair and maintenance but also the costs of operating, inspecting and cleaning the shared facility. The BMC does not own the shared facilities. Shared facilities are owned by the relevant stratum lot owner however their ownership may be limited by requirements of the SMS.
To authorise a change in the SMS, each owners corporation must pass a special resolution. In addition, the BMC must also approve the amendment by passing the type of resolution required by the SMS. Generally, to register a change in the SMS each owners corporation and lot owner must sign the request form and provide their certificate of title to the NSW Land Registry Services.
Authors: Jasmin H. Singh and Allison Benson

By-Laws 101: Approval and Registration of Renovation By-laws

The process to authorise major works in a lot within a strata scheme can be complex and it normally involves the adoption of a special by-law making the lot owner responsible for any damages to the portion of common property affected by the works.
Under section 111(b) and (c) of the Strata Schemes Management Act 2015, a lot owner will only be allowed to carry out major renovations if authorised to do so:
(b)  under a by-law made under this Part or a common property rights by-law, or
(c)  by an approval of the owners corporation given by special resolution or in any other manner authorised by the by-laws.
Any changes to a strata scheme’s by-laws (including the approval of a special by-law allowing an owner to carry out major works) must be passed by a special resolution of the Owners Corporation at a general meeting.
For lot owners wishing to carry out major renovations not only does the by-law have to be passed by special resolution, but it must also registered before they commence their works. Why is this so? Under section 141(2) of the Act, a change of by-law will have no effect until the new by-law is actually registered with the Land Registry Services and a new Certificate of Title, inclusive of the dealing registering the new by-law, is prepared by the Land Registry Services.
A by-law needs to be submitted for registration with the Land Registry Services within six months of the motion being passed at a general meeting .  Failure to do so will result in the motion having to be re-passed, which would mean additional costs and delays for the lot owner.
In summary, there are three main steps that a lot owner wishing to conduct major works should tick before they can proceed with the works:

Having a by-law motion prepared (preferably by a strata lawyer);
Having the by-law motion passed by special resolution at a general meeting of the Owners Corporation; and
Ensuring that the new by-law has been registered and noted on the new Certificate of Title prepared by the Land Registry Services.

The team at Kerin Benson Lawyers has extensive experience in successfully assisting lot owners in drafting and registering special by-laws authorising major works – please feel free to get in contact with us for any questions that you may have in connection with the renovations of your strata lot.
Authors: Michela Alesse and Allison Benson

Righting Discrepancies in Strata Plans: What happens when “Shared” Common Property Hot Water Systems are not Used by All Lots?

Can a by-law make some by not all lot owners responsible for common property costs? And can the Tribunal make orders requiring an owners corporation repay contributions? The Appeal Panel in The Owners – Strata Plan No 76830 v Byron Moon Pty Limited [2020] NSWCATAP 186 recently answered these questions.
The scheme had 30 lots, 27 of which were residential. The respondents owned two of the three non-residential lots. The hot water for 22 of the residential lots was supplied out of three hot water systems located on the common property. The common property hot water systems were connected to the common property electricity supply meaning that effectively all 30 of the lots in the scheme were paying for the electricity to heat water for 22 of the lots.
The respondents owned lots that were not serviced by the common property hot water systems. They raised the issue with the owners corporation requesting that the electricity for these tanks be paid for by the lots that used them. After an investigation, the owners corporation on the 25 October 2019 passed a by-law making lots 1 to 22 responsible for payment of all electricity metered charges for the hot water system located on common property which serviced those lots effective from 1 May 2019.
The respondents then made a claim in NCAT for repayment for approximately $18,000 which was the amount of their contributions that had been used to pay for the hot water systems. They were successful with the Tribunal making orders requiring the monies be repaid however the owners corporation appealed.
The Appeal Panel on 7 September 2020 held that the Strata Schemes Management Act 2015 (NSW) required (with two exceptions in sections 82 & 83) the owners corporation to levy contributions on all lot owners in accordance with their respective unit entitlements. As such, the owners corporation had to levy all lot owners, not just the 22 lot owners using the common property hot water system, for the past costs of the electricity. It also found that section 87 of the Act “did not in its terms permit any differential treatment of any individual lot owner by reference to the amount of contributions” and that the Act only allowed orders for an aggregate amount to be varied.
This Appeal Panel followed the decision in The Owners Strata Plan No 74835 v Pullicin; The Owners Strata Plan No 80412 v Vickery [2020] NSWCATAP 5 and held that as there was no section of the Act that gave the Tribunal the power to make such an order, the decision making power of the Tribunal under section 232 was not enlivened. Therefore, the Tribunal had no power to make an order requiring monies to be repaid by the owners corporation and the appeal was upheld with the repayment orders quashed.
Interestingly, in respect of the by-law that was passed on 25 October 2019, the Appeal Panel considered that the terms of the by-law meant that the owners corporation was not responsible for the electricity costs for the hot water systems (the by-law made lots 1 – 22 responsible) and therefore the electricity charges for the hot water system no longer become monies needed to be considered as either actual or anticipated expenditure for recurrent expenses and were no longer required to be included within the amounts levied for the administrative fund. As such, the by-law was not inconsistent with any part of the action and in breach of section 136 (2).
Author: Allison Benson

NSW Government sets residential developers in its sights

Snapshot

The Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 imposes greater obligations on developers and introduces significant investigative and enforcement powers for the NSW Government.
Developers are now obliged to notify the Secretary of the Department of Customer Service of the expected completion date of building work.
NSW Government has greater power to investigate building work and developers, as well as the power to issue prohibition orders, stop work orders and rectification orders.

 

The Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (‘the Act’) is the second of a two-punch combination by the NSW Government to address the much-reported NSW building crisis. The purpose of the Act, which follows the Design and Building Practitioners Act 2020, is to prevent developers from carrying out building work that may result in serious defects, or result in significant harm or loss to the public or current or future occupiers of residential apartment buildings. That is, the Act is largely directed at developers and applies to residential apartment buildings (as well as mixed use developments with a residential component).
The Act comes into force on 1 September 2020 and currently applies to both incomplete developments and developments completed within the previous 10 years.
The Act will likely have a significant impact not only on developers and residential apartment owners, but also on third parties such as certifiers.
The definition of developer in the Act is wide ranging and includes, for example, any person who arranges for, facilitates or otherwise causes (directly or indirectly) residential apartment building work to be carried out. It also includes owners of the land on which the building work occurs and principal contractors as defined in the Environmental Planning and Assessment Act 1979 (NSW).

Completion of residential apartment building work
The Act establishes a notification scheme (‘the Scheme’) which requires developers to notify the Secretary of the NSW Department of Customer Service (formally the NSW Department of Finance, Services and Innovation) (‘the Secretary’) as to when building work will be completed. The Scheme is the first of its kind in Australia.
Section 7 of the Act requires developers to notify the Secretary at least six months, but no more than 12 months, before an application for an occupation certificate is made (‘Expected Completion Notice’).
For projects that are expected to be completed within six months, the developer must provide the Secretary with an Expected Completion Notice within 30 days of the commencement of the building work.
Some flexibility has been provided under s 8 which allows for the amendment of the expected date provided to the Secretary should the circumstances of the building work change. That is, a developer is permitted to amend the expected date as long as an ‘Expected Completion Amendment Notice’ is provided to the Secretary within seven days of the developer becoming aware of the change in circumstances that affect the original expected date. A developer may provide the Secretary with more than one Expected Completion Amendment Notice.
Section 8 does not apply if the new expected date is within 60 days of the original expected date specified in the Expected Completion Notice.
Pursuant to s 9 of the Act, the Secretary may prohibit the issue of an occupation certificate in relation to a residential apartment building (‘Prohibition Order’) and, if relevant, the registration of a strata plan in relation to a residential apartment building if:

the Expected Completion Notice, or the Expected Completion Amendment Notice, was not given or was given less than six months before the application for the occupation certificate was made;
the Secretary is satisfied that a serious defect in the building exists; or
any applicable building bond required under s 207 of the Strata Schemes Management Act 2015 has not been provided to the Secretary.

Prohibition Orders will not only affect developers but will also prevent certifiers from issuing occupation certificates in relation to building work the subject of a Prohibition Order. Any occupation certificate issued in contravention of a Prohibition Order is invalid.

In short, developers will be forced to ensure building work is free of serious defects before an occupation certificate is issued.
Under the Act a serious defect is defined as:
‘(a) a defect in a building element that is attributable to a failure to comply with the performance requirements of the Building Code of Australia, the relevant Australian Standards or the relevant approved plans, or
(b) a defect in a building product or building element that is attributable to defective design, defective or faulty workmanship or defective materials, and causes or is likely to cause –

the inability to inhabit or use the building (or part of the building) for its intended purpose, or
the destruction of the building or any part of the building, or
a threat of collapse of the building or any part of the building, or

(c)  the use of a building product (within the meaning of the Building Products (Safety) Act 2017) in contravention of that Act.’

Investigations
Under Part 3 of the Act, authorised officers (including the NSW Building Commissioner) have been granted far reaching powers to investigate potential non-compliances for authorised purposes. Authorised purposes are defined as:
(a)  investigating, monitoring and enforcing compliance with the following in carrying out building work –
(i)    the Act and the regulations,
(ii)   the performance requirements of the Building Code of Australia,
(iii) the relevant Australian Standards,
(iv) the relevant approved plans,
(b) investigating whether buildings have serious defects,
(c)  obtaining information or records for purposes connected with the administration of the Act, and enforcing, administering or executing the Act.
These powers include the power to:

obtain information or records (or both) from a person;
require a person to answer questions;
enter any premises (although if the premises are used only for residential purposes, permission of the occupier or the authority of a search warrant will be required). Further, while at those premises, the authorised officer has a very broad range of powers as to what he or she can do;
apply for the issue of a search warrant; and
take possession of records to be used as evidence.

Pursuant to ss 26 and 27 of the Act, those who obstruct, hinder or interfere with an authorised officer or fail to comply with the direction of an authorised officer may be liable to significant penalties.

Remedial Actions
Another key reform introduced under the Act is the ability of the Secretary to issue stop work orders. Pursuant to s 29 of the Act, the Secretary may order the developer to ensure that the building work stops if the Secretary is of the view that the building work is, or is likely to be, carried out in a manner that could result in significant harm or loss to the public or occupiers or potential occupiers of the building to which the work relates or significant damage to property.
A stop work order can be unconditional or subject to conditions and takes effect on the day of issue or on a later date if such date is specified by the order. The order remains in force until it is revoked by the Secretary, the term of the order ends, or 12 months from the day the order took effect.
Under s 30 of the Act, a developer may appeal a stop work order to the Land and Environment Court within thirty 30 days of a notice of the order being given unless the Court grants leave for it to be made after that time.

Rectification of serious defects
Under s 33 of the Act, if the Secretary has a reasonable belief that building work was or is being carried out in a manner that could result in a serious defect, the Secretary may give an order to a developer in relation to such building work (‘Building Work Rectification Order’) which aims to eliminate, minimise or remediate a serious defect or potential serious defect by compelling the developer to carry out building work or to refrain from such work.
Building Work Rectification Orders can be conditional or unconditional. The Secretary has the power under s 38 to modify such an order, once issued.
The developer does not require consent or approval under the Environmental Planning and Assessment Act 1979 to carry out work in compliance with a requirement of a building work rectification order.
Pursuant to s 42 of the Act, if the Secretary gives a building work rectification order, the Secretary may do anything necessary or convenient to give effect to the terms of the order (including the carrying out of any work required by the order) if the developer to whom the order was given fails to comply with the terms of the order. Further, any expenses incurred by the Secretary may be recovered in any court of competent jurisdiction as a debt due to the Secretary by the person required to comply with the order.

Offences
Section 58 provides that if a body corporate contravenes, whether by act or omission, a provision of the Act or the regulations, each person who is a director of the body corporate, or who is concerned in the management of the body corporate, is taken to have contravened the same provision if the person knowingly authorised or permitted the contravention. Further, such a person may be proceeded against and convicted whether or not the body corporate has been proceeded against or convicted under that provision.
It should also be noted that there are very significant penalties for failing to comply with various provisions of the Act.

Conclusion
The NSW Government has established six specialised work streams, or ‘Pillars’ to reform the building industry in NSW.
The Act and the Design and Building Practitioners Act 2020 are to form part of a better regulatory framework which is the first pillar (or specialised work stream) in the Six Reform Pillars. The other five pillars are the building ratings system, building skills and capabilities, building better procurement methods, building a digital future and building the reputation for quality research.
Each of the pillars will be underpinned by its own working group, made up of professionals with lived knowledge and experience in the subject before them. These Six Reform Pillars will be led by the NSW Building Commissioner to regain public confidence in ‘a new, customer-facing industry by 2025’.
In the context of such obviously ambitious goals, the Act is a good start. The question is, will it be enough? Only time will tell.

 
To find out more, please see https://lsj.com.au/articles/nsw-government-sets-residential-developers-in-its-sights/