[Bannermans Lawyers]

This is a very common issue for owners corporations and residents because it’s particularly hard to diagnose the cause of the mould and there’s a million reasons why it might exist.

Typically, though, there’s a failed membrane and there’s water entering from some part of the building and it’s spreading to somewhere else and the mould’s just coming through wherever the water can find a way out.

But owners’ corporations struggle to find that solution and get it right the first time. And so there’s frequently recurring mould claims.

If the recurring mould claim is causing somebody a financial loss – such as loss of rent because the apartment is not safe to live in – there’s a strict liability that the owners corporation must reimburse that person, that financial loss.

And we certainly have seen an increasing number of personal injury claims. We don’t do personal injury, but we’ve referred quite a number of personal injury claims relating to mould in strata schemes to personal injury law firms. There could be large claims and settlements that might occur from a personal injury caused by mould.

But property damage is typically what the owner’s corporation would be tackling, whether there’s loss of rent or property damage occurring from the mould. And that can be very significant sums of money.

However, you can have so many different causes. For instance, many new buildings have less circulation of air to comply with new energy rating systems.  But with reduced circulation of air you’re getting more condensation and then more mould.

A lot of owners corporations try to blame the build-up of the content condensation on those buildings on the owner’s behaviour, saying there’s no problem with water entering through another part of the common property, so it’s not their problem.

They may claim it’s your failure to allow sufficient air circulation through your apartment that is causing the condensation buildup and the mould to follow. But the circulation of air might be determined by the way in which the apartment block is constructed, and that’s a common property defect.

It’s an incredibly complex issue because there are often multiple reasons for a build-up of mould with different entities responsible for the problem to greater or lesser extents. You can access more information about that on our fact sheet HERE.

Bannermans Lawyers
www.bannermans.com.au

[Bannermans Lawyers]

Okay. So there’s two types of meetings that could occur. First one is a strata committee meeting. In this case there’s a requirement for the owners’ corporation to create a pecuniary interest disclosure book. A lot of strata managers aren’t really that’s attuned to this requirement so I don’t see it occurring very frequently, but some are.

When someone is elected to a committee, they’ve got fiduciary duties to satisfy the interests of the owners above their own. If you’re the developer and the strats committee is looking at making a decision about defects, well, then that’s a clear conflict of interest and the developer committee members are not able to vote on that.

In fact, they’re supposed to disclose that there’s a pecuniary interest  and it gets written in the pecuniary interest disclosure book. Then they need to leave the meeting when the matter is being discussed and being voted on.  Once the motion’s decided, they can come back into the meeting and then vote on other motions. So at a committee level, the answer is they can’t vote.

But at a general meeting level, it’s a little bit more complicated because they can’t vote on defects when the building  is four storeys high or more.  But they can if the building is three storeys or less, like a low-rise apartment block or a townhouse.

I think it’s an error in the drafting or just from Fair Trading, because I’ve noted on their website that they said incorrectly that the developer wasn’t allowed to vote on any motions of any type of building.  But right now, they can still vote on defects at general meetings provided the building is three storeys or less.

Bannermans Lawyers
www.bannermans.com.au

[Bannermans Lawyers]

And there’s a really interesting case  in which the owner had a leaking building and they sued the strata manager, the individual committee members, the building manager, and the owners’ corporation.

And during that case, it was found that one of the committee members basically didn’t appreciate the person’s point of view. And when provided with an expert report by that person to support their point of view about the water entry, didn’t read it.

Right. And that led to the order for that person’s removal. Okay. So there’s an example where, you know, people aren’t performing the duty with due diligence. So that’s where they’re not using their best endeavours or reasonably best endeavours to fulfil that duty. And so you can get removed on that basis.

So that’s an example. And there’s been interesting other claims against committees as well.

So we had a matter where we gave some advice to an owner’s corporation about an expiry of a warranty period and told them that, you know, if you’re dealing with this builder, you should look to lodge a claim in the tribunal just so the warranty doesn’t lapse, which means that the builder can walk away from it. And that was only a few thousand dollars to lodge that.

And the committee just thought, oh, he’s been coming back. We won’t bother following that advice. We won’t support that advice. And then it turned out that as soon as the warranty lapsed, the builder stopped coming back. And that was a rectification cost of about  $440,000.

And so the owners corporation then changed the committee because they weren’t happy with that performance and then brought a claim against the committee members. And then the office bearers’ insurer answered that claim and paid the $440,000 worth of damages.

There was an interesting case also regarding a building on on the waterfront where they had a particular colour and the committee decided that they would change the colour of the building. But that required a special resolution of the Owners’ Corporation, not something the committee could do.

Anyway, the colour of the building was change and the other owners weren’t happy so they changed the committee. Then they brought a claim against that committee and they got a payout from the office-bearers insurer to repaint the building back to the original colour because they didn’t like the new colour.

So there’s some examples of non-performing committees and some of the consequences that can flow from that.

Bannermans Lawyers
www.bannermans.com.au

[Bannermans Lawyers]

I’ll just do a bit of a background on lithium battery fires. I think it was 2025, two people died in that from a lithium battery. There’s countless strata fires caused bylithium batteries and countless other fires as well. It seems to be the riskiest are the ones with the bikes and where they remove the battery and take it inside and charge it.

What’s quite good is the owners corporation can register a bylaw and when they register a bylaw, they can set out the rules that are suitable for that building. If they’ve got a separate charging area, they can direct people to use that. They could have CCTV footage to ensure compliance and have people checked it if they’ve got bikes. being parked or other items that they’re concerned about, such as scooters, bikes and scooters are the two main issues, that then people can go and have some comfort about these potential fires being mitigated.

If somebody does not comply with the bylaw and they’re negligent in the way that they manage their battery, then they could be liable for the losses that are associated to that. which can be very, very severe. That action would probably be an action in useless because they allowed the fire to spread throughout the building.

To the extent that there’s strata insurance though, as far as I’m aware, strata insurers will still continue to cover for those fire events. I’m not aware of a practice where there’s certain sort of exclusions for that, but that’s a policy by policy basis.

So it may well be that your building had a fire and then as a result of that fire, there’s now an exclusion for fires related to lithium batteries. But you need to just check the policy.

So you do have the comfort of insurance, but you just don’t want to have the fire because the comfort of insurance just puts people back in a monetary position and it doesn’t give peace of mind to people. So the bylaw is good. It sets up the rules.

What’s also good is the New South Wales Fire Brigade Service. They’ve got some really useful printouts that you can print and put around in notice boards and things like that to explain to people how they should um charge batteries like you know not near exits not where people sleep all these sort of safety suggestions that they have if you’re going to be having people charging lithium batteries in their apartments .

Bannermans Lawyers
www.bannermans.com.au

[Bannermans Lawyers]

Bannermans Lawyers has an article breaking down the difference between Class 1 and 2 (see below).

What is a Class 1 and what is a Class 2 Building? – Bannermans Lawyers

PLUS we recently launched a DBPA Compliance Quiz, where you can find out whether your planned works need to comply with the Design and Building Practitioners Act 2020 (see below).

D&BPA Compliance Quiz – Bannermans Lawyers

Hope this helps.

Alison (Bannermans Lawyers)

Bannermans Lawyers
www.bannermans.com.au

[Bannermans Lawyers]

Hi Ray,

This is a symptom of the confusing nature of the D&BPA.

It is possible to have a regulated design that does not entail “professional engineering work” as defined in s31 so long as it otherwise satisfies the requirements for a regulated design.

There is, however, still a requirement for the specified design professional to provide the design declaration if a regulated design is required.

This is due to the requirement for a regulated design to be provided by a registered design practitioner before a building practitioner can carry out building work:

 

19   Designs and design compliance declarations to be obtained

A building practitioner must not, except with reasonable excuse, carry out any part of building work for which a regulated design is to be used unless—

 (a)  the practitioner has obtained a design from a registered design practitioner for the work and a design compliance declaration for the design from a registered design practitioner whose registration authorises the practitioner to provide a declaration as to the matters to which the declaration relates, and

(b)  the declaration states that the design complies with the requirements of the Building Code of Australia and other applicable requirements prescribed for the purposes of section 8(1).

 

9   Compliance declarations by registered design practitioners

(1)  A registered design practitioner must provide a design compliance declaration to a person if—

 (a)  the practitioner provides the person with a regulated design prepared by the practitioner, and

 (b)  the design is in a form suitable for use by that person or another person in connection with building work.

 

5   Regulated designs

(1)  For the purposes of this Act, regulated design means—

(a)  a design that is prepared for a building element for building work, or

(b)  a design that is prepared for a performance solution for building work (including a building element), or

(c)  any other design of a class prescribed by the regulations that is prepared for building work.

 

So, it’s not that a design professional is not required, as much as that to the extent that the engineering professional can certify the design and that certification also constitutes works excluded from the definition of “professional engineering work” it won’t be “professional engineering work” under the D&BPA but the engineer will still need to be engaged to provide the declaration.

For ease of reference, the exclusions for professional engineer work in the D&BPA are:

Section 31:

…

(2)  However, engineering work is not professional engineering work if—

(a)  the work is only provided in accordance with a document that states the procedure or criteria for carrying out the work and the work does not require the application of advanced scientifically based calculations, or

(b)  the engineering work is prescribed by the regulations as not being professional engineering work.

 

And in the regulation:

Reg 14:

14   Certain work is excluded from being professional engineering work

(1)  For the Act, section 31(2)(b), engineering work is not professional engineering work unless the work is carried out directly in relation to the design or construction of a building, or part of a building, that is—

(a)  a class 2 building, or

(b)  a class 3 building, or

(c)  a class 9c building.

 

Example—

The Act and this Regulation apply to a mixed-use building comprising class 2, class 5 and class 6 buildings, including the building’s class 5 and class 6 building parts.

 (2)  In this clause—

construction includes—

(a)  the making of alterations or additions to a building, and

(b)  the repair, renovation or protective treatment of a building.

or a relevant authorisation,

Bannermans Lawyers
www.bannermans.com.au

[Bannermans Lawyers]

David Bannerman from Bannermans Lawyers here. I thought I would give some guidance in hope to assist you with your issue.

The owners corporation is responsible for addressing the common property defects and to this end please consider our Building Defects Handbook found on our website: https://bannermans.com.au/strata/building-defects-handbook

Assuming it is a new building, to preserve the 6 year warranty against the builder or developer, the scheme will need to commence it’s litigation in NCAT or a court within the period of the 6 year period which commences from the first occupation certificate for the building.

Feel free to forward the first occupation certificate for the whole building (interim, if available) so that we can check to see if a warranty is about to expire.

If you are unaware of the date or existence of the interim occupation certificate, I suggest you make enquiries in this order to see if an interim occupation certificate was issued:

1. Certifier who issued the final occupation certificate.
2. Local Council, as they are supposed to be provided with the interim occupation certificate from the private certifier, but sometimes the private certifier forgets to do this.
3. Committee members who purchased off the plan.
4. Developer.

We can then provide a proposal to the scheme for some urgent assistance if you like.

Hope this helps and talk to you soon.

Bannermans Lawyers
www.bannermans.com.au

[Bannermans Lawyers]

The ‘owner’ referred to in clause 7(4) of Schedule 2 of the Community Land Management Act 2021 is not the individual owners in the strata scheme, but the strata scheme itself, i.e. the owners corporation is the owner of the strata scheme.

Therefore, it appears as if the strata scheme can provide notice of opposing the decision of the committee and the owner corporation cannot consider the motion.

However, the community association can either:

1. Resolve at a general meeting to appoint another person as secretary – see section 49(c) of the Community Land Management Act 2021; or
2. Convene a general meeting and elect a new committee.

Matthew Jenkins

General Manager / Partner

Bannermans Lawyers

 

Bannermans Lawyers
www.bannermans.com.au

[Bannermans Lawyers]

Unfortunately doing nothing, i.e. not seeking to recover the unpaid levies does not seem to be working. It also raises time limitation issues, as a debt is usually only recoverable for maximum of 6 years. Meaning, that the owners corporation may only be able recover the last 6 years of unpaid levies.

Therefore, I suggest that the owners corporation obtains legal advice on the recovery of the unpaid levies, which may include a garnishee order on the rental income received. This is where the court orders any rent which is due to be paid by the tenant to be paid to the owners corporation to satisfy the debt.

Matthew Jenkins

General Manager / Partner, Bannermans Lawyers
Suite 702, 2 Elizabeth Plaza, North Sydney NSW 2060
PO Box 514 North Sydney NSW 2059
P 9929 0226   F 8920 2427
W http://www.bannermans.com.au

Bannermans Lawyers
www.bannermans.com.au

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