Navigating through disputes related to the maintenance and repair of strata property consistently presents challenges in New South Wales. For lot owners, a pivotal hurdle is handling situations where the owners corporation does not adequately maintain and repair common property defects. Conversely, the owners corporation may find the legal processes following a failure to repair such defects to be complex. This article, whether you’re a strata owner dealing with lingering defects or a strata committee member seeking clarity on responsibilities, aims to be your guide. Explore the legal options available when common property defects in a strata scheme go unaddressed.
Table of Contents
- Duty of Owners Corporation Regarding Common Property Repair and Maintenance
- What to do if the owners corporation fails to repair common property defect in a strata scheme?
- Approaching the NCAT for failure to repair common property
- In Conclusion
Duty of Owners Corporation Regarding Common Property Repair and Maintenance
Section 106 of the Strata Schemes Management Act 2015 (SSM Act) distinctly delineates the duty of the owners corporation concerning the repair and upkeep of common property within a strata scheme. According to this section, the owners corporation is obligated to adequately maintain and sustain the common property, as well as any personal property vested in the owners corporation, ensuring they remain in a state of good and serviceable repair.
This section further mandates the owners corporation to strategize and finance major common property repairs, which includes rectifying defects, and to allocate funds into a capital works fund to assure affordability of significant repairs. In instances where the owners corporation neglects its duty to repair and maintain common property, lot owners may be eligible to claim losses as damages due to the breach of statutory duty.
What to do if the owners corporation fails to repair common property defect in a strata scheme?
As soon as something in the common property is not operating effectively or at all, or has fallen into a state of disrepair, the owners corporation is said to have breached its statutory duty under Section 106 of the SSM Act. If the owners corporation of your strata property has also failed to repair the strata defect, here is what you can do:
1. Review the strata by-laws and common property memorandum
Upon encountering a common property defect in your strata, initial steps should involve a thorough review of the strata by-laws and common property memorandum. Section 107 of the SSM Act bestows upon strata management the authority to implement a common property memorandum in its by-laws, designating specific parts of the common property for which lot owners must oversee repair and maintenance. This delineation absolves the owners corporation from the obligation to repair and maintain the identified items. So, in the event of a common property defect, confirm the responsible party for repairs by referencing the strata by-laws and common property memorandum. Should the owners corporation bear responsibility for the repair of the common property item, you may then navigate through the subsequent legal remedies available.
2. Submit a ‘motion’ to the owners corporation
Amidst instances where the owners corporation overlooks necessary common property repairs, lot owners can leverage their right to submit a ‘motion.’ This acts to weave the matter into the discussion fabric of the subsequent owners corporation meeting, thus ensuring it’s firmly placed on the agenda.
Owners corporations traditionally convene one Annual General Meeting (AGM) each year, a forum that navigates through various pivotal points such as financial considerations, insurance policies, strata committee elections, and modifications to by-laws, among others. Introducing a motion ensures that the need for repair becomes a discussion point at the next AGM. However, should the repair be of an urgent nature, owners can also invoke a general meeting. Tailored to address specific, urgent agenda items, general meetings can be initiated as required and need to be requested in written form. Moreover, the owners, or a collective of owners, rallying for the meeting must hold at least a quarter of the total unit entitlements within the scheme.
During the meeting where the motion is discussed, both attending lot owners and strata committee members can cast votes on the repair issue.
3. Negotiate a deed of settlement to repair common property
If the issue is still unresolved, the lot owners or a group of lot owners favouring the repair can explore alternative mechanisms for resolving the dispute. The lot owners can try to negotiate a deed of settlement with the owners corporation. This is an out-of-the-court process and typically requires engaging a lawyer or a conciliator to arrive at a middle ground. When the terms of settlement are negotiated and accepted by both the sides, the lawyers will draw up a written deed of settlement. In the deed, the obligations and liabilities of both the parties should be explicitly and clearly set out. Once executed by both the parties, the deed of settlement becomes a legally enforceable agreement.
But what if the owners corporation does not comply with the deed of settlement?
Let’s say, you have executed a deed of settlement with the owners corporation to fix and repair the common property defects. But the owners corporation does not fulfill its promises under the deed, either fully or partly. Is there something you can do to make the owners corporation fulfill its promise under the deed of settlement? Yes, you can.
This is exactly what happened in the case of Byrne vs Strata Plan  NSWSC 342, where the owners corporation had, under a deed of settlement, committed to investigating building works and remedying defects emerging from mould, fungal spores, and bacteria. However, it neglected to meet its obligations under the deed. Acting on behalf of the strata owner, PBL Law Group launched an application to the Supreme Court of NSW to enforce the deed and to recover loss of rent for the period during which the owners corporation had failed to perform its obligations under the deed.
4. Go for mediation through NSW Fair Trading
In case settlement is not a viable option, or if the negotiations have failed, the lot owners can also approach the NSW Fair Trading for undertaking a mediation. In fact, as per Section 227 of the SMM Act, in most scenarios it is mandatory to undergo a NSW Fair Trading administered mediation prior to filing an application to the NSW Civil and Administrative Tribunal (NCAT).
NSW Free Trading’s mediation is free of cost and can help resolve the dispute amicably. The mediation process is voluntary, confidential, and conducted by an independent mediator. When an agreement is reached, the mediator can help draft a written agreement, or an enforceable order if both parties consent. If no settlement is reached or an agreement breaks down, parties can apply to the NCAT.
Approaching the NCAT for failure to repair common property
If the mediation agreement has fallen through, or if the parties could not reach an agreement, an application can be made to the NCAT for resolving the dispute. The SMM Act entrusts the NCAT with a wide range of powers. It can pass interim orders to stop the actions of a party or to preserve the current state until the substantive application is decided. It can also pass orders related to meetings and decisions of the owners corporation; by-law breaches; and disputes over common property.
NCAT’s hearing process is linked to a prior conciliation process. During the first hearing at NCAT, the parties are encouraged to resolve their dispute through conciliation. If that doesn’t work, the matter proceeds to a hearing where parties can present their cases and cross-examine witnesses. The NCAT, then, makes an order containing a set of actions the specified party is obliged to complete.
Usually, most disputes about repairs to strata defects are resolved at this stage. However, if your strata defect is still not repaired because of an unfavourable NCAT order, you can file an application to set aside the order, or file an internal appeal before the NCAT Appeal Panel. It is also possible to approach a court with a statutory appeal if you are aggrieved by the internal appeal.
Strata laws lay down a detailed mechanism to ensure that the owners corporation complies with its duty to repair and maintain common property defects. At every stage of the process, the lot owners and the owners corporation are given sufficient opportunities to make their side heard.
When engaged in a strata dispute, strategic legal advise has the power to shift legal outcomes. At PBL Law Group, we are committed to advising and representing property owners and strata management in complex disputes related to strata law. From negotiating on your behalf and drawing up a settlement agreement, to pursuing your case throughout the hierarchy of tribunals and courts, we have got you covered.