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When bad by-laws are a bullies' blunt weapon
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05/11/2018 - 9:28 am
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There are a million ways to get things wrong in strata, especially when it comes to devising the by-laws with which we try to moderate or even control the behaviour of our neighbours.

These sins of commission and omission fall into three main categories: the ignorant, the arrogant and the vindictive.

While the first can be forgiven – it’s a complicated business, running a strata scheme – the second can be tolerated. After all, “my way or the highway” offers a very attractive second option if the insistent know-all turns out to be wrong and you can turn their threat back on them.

But’s it’s the nasty, sneaky plotting that invariably lies behind efforts to get revenge on other owners that stick in the craw.

There’s a large building in Sydney where this has become the norm, rather than the exception.  The issue, in a number of cases, was owners asserting their rights to the detriment of members of the committee.

In one case a committee member’s unapproved renovations exposed his neighbours to asbestos dust.  In response to the stop-work orders and expensive clean-up, the committee member and his cronies voted to prevent the completion of the complainer’s bathroom renovation for three years.

Three years without a working bathroom – that’s a hell of a punishment for pointing out that someone was doing the wrong thing.

In another case, the same committee has used strata funds to fight pretty straightforward common property repairs, tooth and nail, tribunal and appeal, causing years of damage to the apartment concerned when water poured in every time it rained … and a $200,000 legal bill for the owners who refused to give up.

The NCAT Appeals tribunal – in its infinite lack of wisdom –  refused to differentiate between an argument in which both sides had valid claims and a dispute in which one side was nit-picking the law and using it as a weapon against the other.

Having lost the appeal – but not the costs argument – the committee is now lining up its weapons for another assault on the poor owners.

They are proposing a by-law that says anyone who his accused of a breach has to pay the costs of that breach.  Not only that, if you refuse to pay the costs up front, they will take them out of your levies.

Now, this proposed by-law is wrong on so many fronts, not least Section 136(2) that you can’t pass a by-law that supersedes strata or any other law.

The Civil Administrative Tribunal Act which governs NCAT (who deal with strata breaches and fines) says quite clearly that both parties in disputes should pay their own costs. Now, there are exceptions but there are for extreme cases and none of them include being able to pass a by-law.

Also, the NSW strata Act is quite clear about how levies are to be charged and used. Taking a chunk out of someone’s levies to pay highly dubious “costs” would then render the alleged miscreant insolvent, subject to a 10 per cent penalty interest rate and unable to vote at general meetings.

Sad to say, one of our better-know strata management firms is fully complicit in this travesty, having issued it in the agenda of the upcoming AGM. Also, one of our top strata law firms is on retainer to this building, and they are apparently silent on this .

Having seen the proposed by-law, our strata law sponsors Sachs Gerace Broome are less forgiving.

“In my opinion, Part 4, Division 7 of the Act deals exclusively with the way by-laws are to be enforced and breaches are to be dealt with,” says Principal David Sachs. “You are correct to note that s 60 of the CAT Act deals with costs.  By seeking to impose a separate and supplementary regime for enforcement and reimbursement of costs, that is sufficient to be inconsistent, thereby falling foul of s 136(2).”

“A person who breaches a by-law could well be heard to say: ‘If you want to do anything about the breach, take it to NCAT and if NCAT decides I have to pay costs, so be it’.”

In other words, the by-law would make absolutely no difference to the way costs work, except to force owners to NCAT and perhaps even the Supreme Court to defend their rights.

“A similar sort of reasoning was adopted by the Court of Appeal in Thoo’s case when it examined the operation of Chapter 5 of the 1996 SSMA and whether it enabled a claim for damages for breach of statutory duty – it found that it did not because the chapter provided an exclusive code for dealing with failure to repair or maintain common property,” David adds.

“The power to levy contributions is similarly dealt with by the Act.  They are fixed at the AGM, as is the date for payment.  There is nothing in the Act that enables some other ‘debt’ to be set off against payment of a contribution.

“The whole thing reminds me of owners of private property who seek to impose ‘fines’ for illegal parking on their property, he concludes.

We’ve passed this information on to the owners concerned and expect that they will challenge the by-law before it even gets to a vote at the AGM.

But bullies are bullies, and the owners can only wonder what form retribution will take when the committee is balked yet again.

We are talking about a block that on the one hand is pushing through a special levy to cover a shortage of funds and on the other is proposing to pay committee members tens of thousands of dollars for their efforts over the last year.

Something seriously wrong here … but with their strata managers on-side and strata lawyers turning a blind eye (except when they are paid to pursue bogus claims), who is going to step in and say “enough!”?



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15/11/2018 - 6:51 am
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So in effect Jimmy this Bylaw switches the onus from the Owners Corporation to the individual owner on the starting  up of any NCAT proceedings. This way the the individual owner who has had their levy garnished of the indiscriminate costs  over an alleged breach will then have to take the reins to get their money back. Keeping in mind they use their own money to  fight in NCAT  while the OC has legal defence insurance. Defence being the important word here. So  this will cost the OC nothing but the owner could get burned.

What a wonderful way for lawyers and Strata managers and Owners corporations to make money from this By law.  After some time in the Tribunal myself I see a distinct bias against the individual owner.  I also see a triad of lawyers committees and Strata managers working together, a very hard nut to crack if you are an individual owner. Most  folks wouldn’t know this by law is outrageous they would just accept their lot pardon the pun.

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16/11/2018 - 4:17 pm
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The advice from David Sachs of Sachs Gerace Broome is that if the strata committee demands the costs, you just say “no – take me to NCAT if you want costs”.  And if they garnishee the levies, they and the strata manager have crossed the line legally and there would be grounds for their dismissal.

But you’re right. A naive owner might go along with it.  That’s why everyone should read Flat Chat.  

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