[JulieMcLean]

Most strata management companies have a couple of resolutions that relate to Section 29 to support the owners corporation statutory responsibility. The strata manager is not the owners corporation but is an agent for the owners corporation and actions the decisions of the owners corporation either from a general meeting or a committee meeting. The manager has some delegated functions within the management contract to perform without further instruction, but the vast majority of the strata managers work is on instruction.

As you have said the Owners Corporation Act sets out under section 29, four subsections that provides discretionary powers and some statutory (musts) requirements for the owners corporation.

The first discretionary power relates to the authorisation for the owners corporation to charge penalty interest on outstanding fees. This is an ordinary resolution and must be done at a general meeting. The owners corporation must be able to point to this resolution if it wishes to recover the penalty interest at VCAT or Magistrates court. The Committee is unable to authorise the charging of penalty interest. This is why you see the same resolution every year.

Typically this resolution at the annual general meeting is passed under the “Financial or Debt Recovery” item in the meeting and looks like this:

That the Owners Corporation resolves to charge penalty interest in accordance with the conditions set out by the Owners Corporation Act 2006, Act No. 69/2006 Part 3.

The second discretionary power relates to the Committee (or the owners corporation in the event there is not a committee), not the manager (unless they have been delegated a specific power to do so) to waive any penalty interest.

The first statutory (must) power requires the committee to report to the owners at the annual general meeting if the waiver of penalty has been considered and the committee (or the manager) must report any decision to waive or not waive. This report is voted on usually as part of the “Committee Report” and/or the “Managers Report” or as separate resolution, if there is no written committee or managers report.

An example of the owners corporation delegating the waiver of penalty interest resolution at the annual general meeting may be found under the item “financials” or under “delegation” and looks like this:

That if on the 1st working day of the month in which a general meeting occurs there is less than $7.00 owing on a lot owners account, and this represents penalty interest, that the sum owing will be waived.

The reason this is done, is to increase the number of owners to be financial so they can vote at the AGM and to reduce the time consuming receipting of cash for debts under $7.00 at meetings.

Lastly, as a part of good governance the committee approves a debt recovery process with the manager. This will include when reminder letters are sent and cost, final fee notices and cost and the threshold at which the fill is handed to legal service for debt recovery at court. A debt recovery process may also be reflected in the Rules of the owners corporation, in which case the manager must follow that process. Usually the manager includes the process in the annual general meeting to be resolved each year so owners  are advised before they fall into debt what the process is.

That the Owners Corporation may recover, as a debt due from the person or persons in default or breach, the costs, charges and expenses incurred by the Owners Corporation, (but excluding the personal time cost of any person acting in an honorary capacity including the chairperson, secretary, or committee member of the owners corporation) arising out of any default or breach, by any lot owner, or occupier of a lot, of any obligations under the Owners Corporations Act 2006 or the Owners Corporations Regulations 2018 or the Rules of the Owners Corporation… the resolution would go on to describe the steps and the charges relating to each step.

The resolution that you have mentioned looks like it relates to the section 29 (4), the requirement to report if penalty interest has or has not been waived. The resolution seeks to confirm the income and expenditure statement that has been included, as penalty interest is received as mutual income and usually coded as penalty interest. Some strata management companies report the waiver in the Managers Report and the Committee should also reflect that they authorised the waiver and the reason for that decision.

For example the Managers Report might say:

Penalty interest waived: $27.00 representing the total penalty interest waived on the 1st working day of the month in which a general meeting occurs there is less than $7.00 owing on a lot owners account, to enable those owners to be able to vote at the annual general meeting. 

So, in summary:

1. The resolution –  ‘There were no instances where penalty interest on Lot Owners’ Fee arrears were waived or reduced during the previous financial year.’ is valid, particularly for OC’s without a committee and the statement is a statutory requirement under section 29 (4) – just check the income and expenditure statement to confirm if Penalty Interest was received. If PI was shown, then the resolution was faulty.
2. The charging of fees for the debt recovery process is different to the charging of penalty interest. This is a contractual or delegated process agreed to by the committee. If you want to know more about that process, speak with your manager or committee member. A committee may choose to waive the debt recovery costs at the same time they waive the penalty interest – it depends on the circumstance.
3. Many committees refuse to waive PI of debt costs as they have a zero tolerance for people who do not fulfil their statutory obligations by paying on time. Others review the payment history before making a decision.

Hope that helps.

[JulieMcLean]

Installation of bollards is more likely to be about a trip hazard, than visual.

It is also possible if the committee hasn’t turned its mind to bollards, they say “no” until they have had time to consider.

I would suggest that you do the research for them and submit permission for a product that is recessed into the floor, could be telescopic and when upright is the sufficient height that a car can see it when reversing. There may need to be consultation with a structural engineer to determine the depth of recess without compromising the structural integrity (if it is not a slab on the ground). It may also need to be lit, if there is insufficient ambient lighting.

The product needs to address the risk for the owners corporation whilst balancing the needs of owners. If you propose a surface mounted solution, then add that you will provide signage and continuously have “public liability” for your private property and that you will indemnify the owners corporation for any injury caused from your installation and provide a certificate of currency every 12 months.

Do the research, provide alternatives and submit to the committee for consideration. The committee needs to act reasonably. This doesn’t mean they have to say Yes to your proposal, but it does mean they need to weigh the pro’s and con’s and give reasons as to why you can or can’t have the bollard.

If you still feel aggrieved, then you can then contest the committees decision at VCAT.

[JulieMcLean]

Thanks for raising this. I was unware of this change, it is yet another example of the government policy makers being strata blind. I will ask SCA (Vic) to raise with the relevant minister.

But in the meantime, what can be done?

We already know in Victoria that an owners corporation can’t interfere in a persons property rights eg short term letting (Supreme Court of Victoria case of Owners Corporation PS 501391P v Balcombe [2016] VSC 384 (22 July 2016). If it is lawful use under planning laws or other laws, then an owners corporation can’t create Rules to prevent. However what we learnt in Lim v Owners Corporation PS714612M (Owners Corporations) [2018] VCAT 1995 was that the Rules are for the administration of the common property and requiring induction, provided it was requirement of all owners, residents and their guests was considered reasonable.

Using this as an example, perhaps there are some administrative process that require all residents and their guests to register or sign in, to ensure that the owners corporation has knowledge of the number occupants in the building at anytime to  able to comply with occupancy permit and emergency processes, similar to what we did under Covid.

Perhaps cameras, particularly facial recognition at point of entry and linked to swipe, fob or key access to promote a safe and secure building for all.

A regular security access review of all key, swipes and fobs to ensure that all are registered and in use, weekly or daily changing of access codes – often necessary if the building has high takeaway food deliveries, may see the need to remove all “unregistered” or not dormant devices.

Of course all these administrative services will need to incur a fee, similar to our Lim case – everyone to contribute to at least one fee for the service and then a user pays.

Can anyone think of any other ingress and egress services?

Of course, you should absolutely consult your favourite legal adviser to craft Rules that are not oppressive or discriminatory and comply with the law. Once you have the drafted Rules, you will need a special resolution from all owners to allow the Rule to be registered before you charge any fees or enforce the Rule.

I am also reminded of a comment by the Police when advising a committee of the benefit of security patrols and CCTV. Security Patrols and/or CCTV won’t stop the crime, but it encourages the crim’s to go elsewhere without those measures.

Perhaps its the same for small business. The more difficult it is to run a business from your building the more likely they will hopefully move on.

Food for thought.

[JulieMcLean]

Regardless of your own personal beliefs, the reality is the property market, big and small business has all moved on. They have all got behind doing the right thing by the environment.

According to realestate.com.au’s Residential Consumer Omnibus Survey June-July 2022, more than 55% of respondents believe energy efficiency is extremely important in their home – a 17% increase on the prior year.

The apartments and townhouses being delivered today, that on resale will compete with existing high energy consuming buildings, will not be connected to gas to reduce emissions and will instead use green electricity, have their own solar panels, heat pumps and come with electric vehicle charger infrastructure.

And I can buy a 2 bedroom apartment like this for for under $700,000 or I can buy another older apartment and have a special levy anywhere from $10,000 to $60,000 to retrofit and the Vendor accepts a lower price for their property.

The market will ultimately drive the outcome and speed at which it will occur.

Just like in the car industry. The manufactures have determined when they will stop producing ICE cars not government. At least six major automakers have committed to phasing out ICE cars by 2040  including Ford, Mercedes-Benz, General Motors and Volvo.

 

 

 

[JulieMcLean]

I am sorry Eureka to hear of your situation. You have been very patient.

Firstly, there are some key points that you have mentioned that I think all readers would benefit from further clarity around, then we can move to a solution focused approach.

1. The strata manager or the OC or the Chairperson can’t prevent lot owners from making a claim on the OC Insurance Policy. You can lodge a claim anytime without reference to either the strata manager or the OC. Provided you know which insurance company holds the policy, which should be disclosed at the AGM every year.
2. The choice of Insurer and Insurance Policy that suits the owners is decided usually at the AGM as well. The Policy may or may not include floating floors. Regardless it would not change the outcome in your case because of the Water Act. Next year they may choose to not have a policy that includes floating floors, the OC is still liable for the damage caused. At least if they hold a policy that includes floating floors they are covering that exposure.
3. Section 16 of the Water Act sets out that if water flows from one property to another and causes damage, the the person who caused the flow (in your case the OC) is liable to pay damages to that other person (you) in respect of that injury, damage or loss.
4. The OC must act to do something about the flow of water and the OC’s liability (financial exposure) is increasing daily. If you were a landlord for instance, you would not be able to rent your property under the minimum rental standards which may lead to a loss of rent claim against the OC as well. Unfortunately as a lot owner you don’t have that same protection unless the lot is uninhabitable. However, if the flow of water is not resolved, mould may become the issue and damages relating to your  property and your health may eventuate. The OC may find themselves in a position that insurance renewal is denied. If this occurs, they will find it very hard to get any insurer to take them on and the financial exposure is now exponential.
5. If there was a quorum (more than 50% of owners) were present at the 2022 AGM, the minutes are not required to be sent until the Notice of Meeting is sent for the next 2023 AGM, so the strata manager has breached their contract duties – at least for that. If however a quorum was not present, then the minutes must be circulated within 14 days of the meeting – this would be breach of contract.
6. Response times are most likely not stated in the Contract of Appointment, so technically there is no breach there either.
7. SCA (Vic) can only hear complaints for a breach of their Code of Conduct which can find on their website http://www.vic.strata.community.

Unfortunately in Victoria, we have no help line provided by Consumer Affairs and their website is out of date.  VCAT is also struggling with the number of disputes and the delay for hearings are over 12 months. Some possible things for you to explore:

1. Contacting the Franchisor is a good idea. They should be interested to manage the brand reputation, which might help with the response times. Google review comments get attention. They may not be able to interfere with your direct case but should be able to seek responses for you.
2. Contacting a good plumber or landscaping company to inspect the common property adjacent to your lot, will be helpful. Meeting with one or more of these types of experts will start to provided solutions which may not be very difficult to fix. The solution might be a spoon drain or installing impervious material to curb the flow.
3. Lodge a formal complaint under the Owners Corporations Act 2006 – see Consumer Affairs website. You will find the prescribed form that must be used.  https://www.consumer.vic.gov.au/housing/owners-corporations/complaint-handling-and-resolving-disputes
4. The formal complaint triggers a requirement for the OC to meet and consider the dispute within a specified time frame. If you have done some research as outlined in step 2 above, then a constructive conversation might actually occur. You can have another person attend with you to the mediation if you like.
5. I would remind the other owners at this meeting, that it would be cheaper for the OC to get the work done before this matter goes legal. The only winners are the lawyers.

You should in the meantime, explore your legal options and seek a quote for the provision of Legal advice from a specialist OC law specialist practicing in Victoria and perhaps explore some of these options:

1. Legal letter of demand seeking the appointment of an appropriate technical expert to determine how water is flowing from common property to your land. A letter from a lawyer may bring about action.
2. Legal advice as to the quickest remedy for you – Magistrates Court and Nuisance or VCAT and Water Act or VCAT and seek a Administrator. Should you stay in your unit or move out. All options should be explored.

I hope this information is helpful and that you can resolve the matter quickly.

The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.

[Author]

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