In February 2019 the NSW Government released their response to the Shergold Weir Building Confidence Report. This was followed by the NSW Government’s Building Stronger Foundations Discussion Paper in June 2019. The public was invited to provide the NSW Government with their submissions in relation to this discussion paper. Kerin Benson Lawyers has now provided the NSW Government consultation with detailed submissions on what we believe to be the most critical areas of NSW Building & Construction law that are in urgent need of reform. In our submissions we address issues relating to risk management, building quality and the need for the introduction of Rectification Agreements as well as the benefits of adopting Decennial Liability and Decennial Liability Insurance in NSW.
Please click below to download a complete copy of our submissions.
Submission-to-Building-Stronger-Foundations-Consultation-Kerin-Benson-Lawyers-dated-24-July-2019

In Raynor v Murray [2019] NSWDC 189 the New South Wales District Court has held that remarks sent in an email to the chairperson of an owners corporation that copied in all owners and occupiers within the scheme were defamatory.
The case came about after the owners corporation’s mail boxes were broken into. The defendant, an occupier in the scheme, refused to lock her mail box or did not lock it all the time. The plaintiff, the chairperson of the owners corporation sent four emails to the defendant personally over approximately six months. The first was a “welcome” email, the second was in regards to a noisy late party and the third was a reminder to lock her mail box. After the mail box break-ins, the plaintiff emailed all lot owners and occupiers a reminder to lock their mail boxes. The defendant wrote back to the plaintiff and said they would not lock their mail box. In response to the defendant’s email the plaintiff explained that he had been advised by a locksmith that it was best to keep all mail boxes locked to avoid further thefts.
However, it was the email that the defendant sent to the plaintiff copying in all owners and occupiers in the scheme that was the subject in the case. The email contained, amongst other things, the words “criminal”, “stalk/staking” “fixation”, “thief/thieves” and “…to avoid further harassment, I’ve not replied to your provoking mailbox emails. However your consistent attempt to shame me publicly is cowardly. It is also offensive, harassing and menacing through the use of technology to threaten me. Please stop!”.
The defendant pleaded honest opinion, justification, and triviality as defences to the defamation claim. However, ultimately, the Court found in favour of the plaintiff holding that defendant had used “… the strongest adjectives she could find, in order to embarrass the plaintiff and make him look as if his conduct was criminal, without having any basis for the making of such allegations”, and that every sentence in the defendants email “stuck a blow at the plaintiff, and was intended to ridicule and humiliate him in every way”. In contrast, the Court found the plaintiff was polite in his correspondence with the defendant.
As far as duties of strata committee members and owners corporations were concerned, these were not expressly pleaded so they were only touched on in the judgement, however, the Court found that given that there had been break-ins to the mail box, the plaintiff’s correspondence was “reasonable and proportionate”. Further, it was held that the strata committee’s decision to go to mediation with Fair Trading in regards to the issue of the unlocked mail box was proper conduct and not harassing, threatening or menacing conduct.
What lessons can owners, occupiers, committee members and strata managers can learn from this case?

Be careful when responding to chain emails.
Think carefully about who you’re emailing information to.
Do not make false allegations you know to be false.

Be courteous in your email correspondence.

On 16 April 2019, the Supreme Court of New South Wales handed down its decision in the matter of Glenquarry Park Investments Pty Ltd v Hegyesi [2019] NSWSC 425.
The case largely concerned whether proposed works to common property amounted to repairs, replacement or renewal of common property under s62 of the Strata Schemes Management Act 1996 (which was the predecessor to s106 of the Strata Schemes Management Act 2015), or whether it amounted to improvements or enhancements under s65A of the 1996 Act (the predecessor to s108 of the 2015 Act).
Background
The building in question was constructed in the 1930s, had four floors, a basement area and contained six lots. Each floor was served by a lift and a staircase.
The owners of three lots held 52% of the unit entitlement between them and could pass an ordinary resolution, but could not pass a special resolution. The majority owners wanted to carry out works to the common property that would cost millions of dollars. The minority owners considered these works too extensive and wanted less extensive (and therefore cheaper) works to be carried out.
Proceedings were commenced after ordinary resolutions were passed in August authorising the owners corporation to undertake extensive works to the common property. A resolution was also passed for all lot owners to pay a special levy to fund the works, amounting approximately $1.9 million.
Issues for determination
The issue in dispute was the extent of works required to be carried out and whether the works in question fell under s62 or s65A of the 1996 Act. That is were they repairs or improvements/enhancements to the common property? Repairs, replacements and renewal of common property do not require a special resolution. Alterations, improvements or enhancements of common property under s65A of the 1996 Act do require a special resolution.
Replacement of lift, lift shaft and stairs and finishing work
One of the ordinary resolutions passed in August 2016 authorised the upgrading and replacement of the internal stairs and lift shaft, installation of a new lift and finishing work for the internal stair, foyer and lobby area.
The owners corporation had a report indicating that although the lift had been in operation for about 80 years, it was being maintained in a reasonable manner. However, the lift did not meet current code requirements and overshot each floor level by approximately 100mm. The report stated the lift could continue to be maintained for many more years, provided spare parts could be sourced. However, eventually wear and tear would require that the lift be replaced meaning the lift would be inoperative for a lengthy period of time.
The Court, following Ridis v Strata Plan 10308 (2005) NSWCA 246, indicated that s62(2) concerned repairing fixtures or fittings which have deteriorated, are damaged or are operating inadequately and that it was clear that s 62(1) & (2) do not operate to impose an obligation on an owners corporation to replace common property where it was functioning as intended.
The Court also stated that practicality requires allowing a degree of judgment and latitude to an owners corporation in deciding the extent to which repair and replacement work should be done. In certain instances, maintenance may be carried out to replace something before it breaks down.
However the Court went on to state that the purpose of s 65A, which requires a special resolution to authorise enhancements or improvements to common property, was to protect minority owners from having the costs of these works being imposed on them by the majority. The minority may prefer to continue to maintain an item of common property even if this would end up being more costly. This may be because they do not have large amounts of money to spend at one time.
The Court held the report clearly indicated that it would be possible to continue maintaining the lift, even though this may not be the most economical or practical course. The replacement of the lift was originally conceived as part of an overall plan for the refurbishment of the building which was evidently an enhancement of common property.
The Court in its judgement stated that it was implicit in The Owners Strata Plan 50276 v Thoo [2013] NSWCA 270 that the obligation in s 62(2) of the 1996 Act to renew or replace items of common property is limited by a concept of reasonable necessity where the item can no longer be kept in a state of good and serviceable repair and the provision is only directed to circumstances where the item “is no longer operating effectively or at all, or has fallen in to disrepair”.
Ultimately the Court decided that the works were more extensive than required under the obligation to repair and maintain common property. They were not reasonably necessary in the Thoo sense implicit as the report indicated that it would be possible to continue to maintain the lift and which could be expected to operate for many years. There was no evidence to establish that a new lift car, or a new lift shaft was required. It was held that the lift was operating in accordance with its design requirements and could be kept operating into the future and had not reached the point where it “can no longer be kept in a state of good and serviceable repair” (per Tobias AJA in Thoo). The Court also stated that the existing functionality of the lift could be maintained without renewing or replacing it. As such, the works had to be authorised by a special resolution.
Cement rendering and painting
The building was constructed with a double layer of masonry walls. The brick ties used in the walls to connect the external brick wall to the internal brick wall had corroded and lost their strength. An option provided in a 2014 report commissioned by the owners corporation was for the entire façade to be cement rendered and painted. In August 2016, a resolution was passed to replace the brick ties, cement render and paint the building. The replacement of the brick ties was not challenged. The Court held that existing functionality of the external walls could be restored by repairs to the damaged bricks and mortar. Rendering the walls, putting a new surface on the building and incorporating the external pipe work, would be an enhancement going beyond the restoration of the walls to their previous functional state. As such, a special resolution was required.
Landscaping and external paving
The Court upheld the Tribunal’s finding on this point which was that the Tribunal was not satisfied that the alterations to footpaths and steps and construction of modified terrace areas and circular stairs to specified units fell within the owners corporation’s duty to maintain and repair common property. The works were not simply enhancement or improvements consequential upon necessary repair or maintenance and as such would need to be authorised by a special resolution.
Conclusion
It is difficult for owners corporations to justify the replacement or renewal of common property if the existing common property is functioning as intended and this functionality can be maintained by carrying out repair and maintenance works. This finding is directly relevant to both section 106 (the new s62) and section 108 (the new section 65A) of the 2015 Act and disputes over whether works are a repair or an alteration or improvement.

What do you do if you want to do work (or have done work) but you can’t get approval of your owners corporation?
Section 126 of the Strata Schemes Management Act 2015 enables a lot owner (or lessee in a leasehold scheme) to apply to the NSW Civil & Administrative Tribunal (also known as NCAT) for an order requiring the owners corporation to consent to works.
Section 126(1) deals with works proposed to be carried out by the lot owner that have been unreasonably refused where the work relates to either minor renovations or other alterations directly affecting the owner’s lot or the carrying out of repairs to the common property or any other property of the owners corporation directly affecting the owner’s lot.
This article focusses on section 126(2) which provides for retrospective approval for works. If the works have already been carried out section 126(2) provides that the Tribunal may make orders authorising the work where the owners corporation had unreasonably refused to provide its consent to the work.
The power of the Tribunal to make orders under s126 came into question in the recent case of Endre v The Owners – Strata Plan No. 17771 [2019] NSWCATAP 93. In this case a lot owner in a three-lot scheme had applied to the Tribunal for authorisation for their works (which included six skylights) that had been installed without approval. The Tribunal refused the application and ordered the works be removed. The lot owner appealed and again sought a work approval order under section 126 to the effect that the owners corporation’s refusal to consent to the skylight installation was unreasonable and that they be permitted to keep the skylights.
The Appeal Panel, in making its decision made some important findings which were:

The lot owner had a right of appeal on a question of law due to the inadequacy of reasons provided by the Tribunal in the first instance.
There is a jurisdictional limit on section 126 which means that the Tribunal only has the power to make orders under this section when:

An owners corporation has unreasonably refused consent to the relevant works; and
These works are to common property or any other property of the owners corporation directly affecting the lot owner’s lot. Notably, the requirement of “directly affecting” the lot owners lot does not require the works to have an immediate physical connection to the lot owners lot.

A works approval order under section 126 is not limited to only minor renovations but may authorise major works;
The question of unreasonableness is to be determined having regard to the facts that existed at the time the decision was made and the Tribunal must look at all the circumstances. While a lot owner’s view may be considered it is only one factor to be taken into account;
Section 126(4) allows the Tribunal to take account of the conduct of the parties to the proceedings in determining whether or not to make a work approval order. This includes whether the lot owner sought consent prior to conducting the work. The conduct of the owners corporation is relevant both to whether the refusal to consent to the work was unreasonable and whether a work approval order should be made and if so, on what terms;
A work approval order may grant approval for works on terms including requiring the benefited lot owner to repair and maintain the common property affected by the order.

In the case the Appeal Panel in deciding that the owners corporation’s refusal to consent to the works was unreasonable found it relevant there was no expert evidence as to the adequacy (or otherwise) of the ventilation in the attic space or the aesthetic effect of the skylights, that the lot owner had mistakenly but genuinely believed that an existing exclusive use by-law had authorised her to conduct the work, that another lot owner had carried out work to their exclusive use attic area including constructing an attic balcony demonstrating that it was not the intent of the owners corporation to retain the building in its original state, the skylights had been installed for a number of years before the lot owner had sought the owners corporation’s authorisation, the owners corporation had repaired the roof around the skylights without dissent and that the lot owner had agreed to repair and maintain the skylights.
Why is this case important for lot owners and owners corporations? The Appeal Panel has set clear guidelines around when works approval orders can be made. It also indicates that if an owners corporation’s conduct implicitly approves unauthorised works (for example by not taking timely action for their removal or by conducting works around the unauthorised works and not making the common property area good) then it may be difficult for the owners corporation to reasonably refuse retrospective approval for the works.

A detailed report that highlights the issues of lot owners, strata lawyers, academics, building consultants, engineers and certifiers featuring our own Christopher Kerin.
Watch it on iview here: https://www.abc.net.au/4corners/cracking-up/11428900

CORBY v THE OWNERS CORPORATION – UNITS PLAN NO 1035 (Unit Titles) [2019] ACAT 45
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
Member: Senior Member R Orr QC
Date of Decision/ Orders: 8 May 2019
FACTS
On 11 April 2018 the executive committee for the owners corporation of Units Plan No 1035 (the Respondent) convened a meeting to discuss the lack of visitor car parking. The executive committee unanimously resolved to convert a space of common property adjacent to unit 13 into visitor car parking.
Ms Corby (the Applicant), who purchased unit 13 in 2001, had consistently used this area of common property as her own parking spot. It was the Applicant’s understanding that the space was her car park.
On 26 July 2018, a contractor attended the site of the designated visitor car parking spot to complete the works. The contractor commented to the Applicant that this was a strange place to put the visitor parking spot as it was likely to impede the Applicant’s access to her driveway. The contractor then left to obtain clarification from the executive committee. This was the first time the Applicant learned about the plans to convert the space into visitor parking.
On 7 August 2018, the contractor returned to complete the works. The Applicant approached the contractor and stood in the space. The Applicant enquired as to what would happen if she did not move out of the space. The contractor said he would not be able to continue and decided to cease working.
Shortly following these events the executive committee served on the Applicant a rule infringement notice under rule 5 of the units plan rules (the Rules), which stated:

Use of common property
“A unit owner must not use the common property or permit it to be used, to interfere unreasonably with the use and enjoyment of the property by an owner, occupier or user of another unit.”

The executive committee also issued the Applicant with an invoice for $649 for the costs associated with the rule infringement notice which was made up of the costs associated with the contractor attending as well as the legal and administrative costs of the executive committee.
The matter proceeded to a hearing before the ACT Civil & Administrative Tribunal in relation to the issuing of the rule infringement notice only. The matter of the visitor car parking space was not in dispute in these proceedings. The following decision was made.
DECISION
The Tribunal found that there was no basis for a reasonable belief that rule 5 had been breached and therefore no basis for issuing the rule infringement notice.
The invoice was issued by the Respondent on the basis that there was a statutory debt arising from a breach of the Rules for the costs incurred in issuing the rule infringement notice.
The Tribunal found that there was no such breach nor any basis to support the statutory debt.
The Senior Member criticised the conduct of the executive committee for failing to inform the Applicant of the plans to convert her parking space into visitor parking or the plans to serve a rule infringement notice on her.
The Senior Member commented that the Applicant uses a walker and a portable oxygen cylinder and that due to her ongoing medical issues ambulance and portable trolley access to unit 13 are required at all times. On this basis at the very least the Applicant’s disability was relevant to the decision by the executive committee to issue the rule infringement notice and therefore should have been taken into account.
The Tribunal repealed the rule infringement notice and the resolution of the executive committee to recover the purported debt.

CORBY v THE OWNERS CORPORATION – UNITS PLAN NO 1035 (Unit Titles) [2019] ACAT 45 ACT CIVIL & ADMINISTRATIVE TRIBUNAL Member: Senior Member R Orr QC Date of Decision/ Orders: 8 May 2019 FACTS On 11 April 2018 the executive committee for the owners corporation of Units Plan No 1035 (the Respondent) convened a meeting […]

In February 2019 the NSW Government released their response to the Shergold Weir Building Confidence Report. This was followed by the NSW Government’s Building Stronger Foundations Discussion Paper in June 2019. The public was invited to provide the NSW Government with their submissions in relation to this discussion paper. Kerin Benson Lawyers has now provided […]

On 22 May 2019, Christopher Kerin appeared before the ACT Parliamentary Inquiry Into Building Quality in the ACT and provided his submissions as to the legislative challenges facing the owners in the ACT and what needs to change in order provide more consumer protection. Watch Christopher’s submissions here.

On 16 April 2019, the Supreme Court of New South Wales handed down its decision in the matter of Glenquarry Park Investments Pty Ltd v Hegyesi [2019] NSWSC 425. The case largely concerned whether proposed works to common property amounted to repairs, replacement or renewal of common property under s62 of the Strata Schemes Management […]

What do you do if you want to do work (or have done work) but you can’t get approval of your owners corporation? Section 126 of the Strata Schemes Management Act 2015 enables a lot owner (or lessee in a leasehold scheme) to apply to the NSW Civil & Administrative Tribunal (also known as NCAT) […]

In Raynor v Murray [2019] NSWDC 189 the New South Wales District Court has held that remarks sent in an email to the chairperson of an owners corporation that copied in all owners and occupiers within the scheme were defamatory. The case came about after the owners corporation’s mail boxes were broken into. The defendant, […]

In the matter of Cestaro v The Owners – Strata Plan No. 457 NSW Civil and Administrative Tribunal of 12 February 2019 (unreported), it was held that security bars affixed to the external windows of a lot were common property. The lot owner applicant alleged that security bars that they had installed in 2004 and […]

On 28 February 2019 His Honour Judge Woodward delivered his judgement which is the first major decision in Australia regarding the liability of building industry entities involved in the design and construction of a building with combustible cladding. The subject of the judgement was a fire which took place in November 2014 at the Lacrosse […]

NSW Government – building standards update The newly re-elected Berejiklian Government has announced its plan in response to the Building Confidence Report commissioned by the Building Ministers’ Forum in August 2017. The independent expert review by Professor Peter Shergold AC and Bronwyn Weir examined building regulatory systems around Australia and found there are national problems […]

Leonard & Anor v Michie & Ors (Unit Titles) [2019] ACAT 14 is a recent decision by ACAT which was determined on 31 January 2019. It is of interest to strata managers given it is the only decision of any jurisdiction in the ACT which considers allegations of breaches of the executive committee Code of […]

Deakin and Griffith Universities are undertaking a research project on building defects. One part of the project involves interviewing stakeholders (including committee members) about their experiences and opinions dealing with building defects. All participant information will be re-identified to provide anonymity. If you are interested and available, the researchers can interview you via teleconference at […]

The Owners Corporation Network (OCN) is calling on all residential owners facing potential financial imposts due to flammable cladding to contact the OCN on [email protected] ASAP, to be part of a Flammable Cladding Action Group. The OCN has seen the benefits of strata owners pooling resources to resolve shared challenges. In addition, OCN is holding […]

Strata managers need to be aware of this key change if serving notices by post. Section 160 of the Evidence Act 1995 (NSW) has recently been amended. Instead of being deemed served four working days after the item has been posted, the item is now deemed served after seven working days after it has been […]

On 3 December 2018, the Canberra Times published an article on owners’ legal action over defects with particular focus on Elara apartments as the owners prepare for Federal Court action against the builders’ insurance fund, which could end years of legal wrangling and building disputes over the controversial Bruce development To read the full article, […]