Podcast: Flooring flaws exposed in reno bodge

There’s a little bit of everything in this week’s podcast.  We start with a story about how people who either ignore or don’t know by-laws and regulations (not to mention common sense and personal responsibility), can get their come-uppance.

And then we slide into the second part of the Lawyer in the Hot Seat webinar with David Bannerman.

But first we bring you the story of a person who really should have known better, who laid down a timber floor which, in its design, could not have been noisier if it had drums and cymbals attached.

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Complaints from the downstairs about night time crashings and bashing were dismissed or, at the very least, downplayed by the committee.

But then something happened that will bring a smile to the face of anyone who has ever had to deal with a noisy and inconsiderate neighbour and a committee reluctant to get involved.

Then we hear part two of Lawyer in the Hot Seat where David Bannerman answers our questions about everything from defect claims to the appointment of compulsory strata managers.

If you enjoyed listening to this podcast (or reading the transcript), please share it with your friends using the social media buttons on this page.

TRANSCRIPT IN FULL

NB: The timings on these transcriptions do not match the exact timings on the podcast audio as the Lawyer in the Hotseat section comes from a different recording.

Jimmy  00:00

We’ve got a bit of a lighter load today, Sue.

Sue

Oh, yeah?

Jimmy

We’re going to be listening to the second part of the David Bannerman Lawyer In The Hot Seat webinar, the thing we recorded a couple of weeks ago. And before that, we’ve got a really interesting story about somebody who has been caught having put down an illegal floor.

Sue  00:22

Yeah, that’s a cracker. That one.

Jimmy  00:25

Yeah, well, you know, the people think they can just do what they want and get away with it. But sooner or later, they get caught out. So that’ll be fun.

I’m Jimmy Thomson, I write the Flat Chat column for the Australian Financial Review.

Sue  00:37

And I’m Sue Williams and I write about property for Domain.

Jimmy  00:41

And this is the Flat Chat Wrap.

[MUSIC]

Jimmy

Okay, well, we’re not going to name names here, because this happens to be one of the more litigious buildings in Sydney, let’s just say. So the story is, first of all, background, a resident and owner in this building has been complaining for years about noise from her upstairs, thumping and banging all night, okay. Yep. And not being taken seriously by her building committee after a while.

Sue  01:27

Oh, that’s really hard, isn’t it? Because you do get people complain a lot. And sometimes, other people start kind of getting complaint blindness and start thinking, well, maybe they’re imagining it, or maybe they’re oversensitive, or that kind of thing. Really.

Jimmy  01:38

Yeah. I mean, that’s a problem. You know, you do get people who complain a lot about not very much. But you also get people who complain a lot because they’ve got a lot to complain. So this person had been complaining about the person upstairs crashing and banging around and what seemed, she said was totally unreasonable. And then the person upstairs did a renovation. This is more recently.

So this person had bought into the apartment block, years ago, done a big renovation, the person we know had moved in underneath and discovered all his crashing and banging. And you know, the committee was saying “Oh, we’ve never had any complaints before” kind of stuff and basically fobbing her off. To the point. I think it was so bad that she rented another apartment in the building just to have somewhere to sleep at night.

Sue  02:27

Yeah, I guess she’d made lots of complaints to this guy upstairs before. Yeah. And the guy had not been particularly kind of helpful or receptive any in any way. Really. So yeah. But finally, it seems that the guy upstairs has been caught out.

Jimmy  02:42

Yeah, because he’s done another renovation. And during that renovation, something went wrong. And the committee had to send somebody in the building manager went in and discovered that this person when they did their original renovation, had put down floorboards in a really stupid way.

Sue  03:02

With no kind of any of that stuff that deadens sounds

Jimmy  03:07

Insulation But even worse than that, what they done was they drilled wooden battens into the floor, apparently, and then put the floorboards on top of that. So what they’d effectively done was create a drum, right? So the floorboards, then air, then concrete, and the wooden battens, of course, helping to transmit all the sound. Now, anybody who has spent any time in an apartment building who has ever looked into the question of putting down hard flooring will find that there will be. Or there should be very specific instructions on the kind of insulation you need to put under your floorboards or your tiles.

A lot of people dismiss it. I remember once we were looking at putting down floorboards and the guy in the floorboard shop, I said, What about the insulation, and the bylaws. And the guy in the floorboard shop said, Oh, you don’t want to worry about them. Nobody pays any attention to them.

Sue  04:02

I remember that. Shocking, isn’t it? Really?

Jimmy  04:05

Yeah. And I thought, yeah, you’re not getting our business.

Sue  04:10

And the problem is, you know, most people would go to those people in the flooring shop. And I think they’ll get good advice. So they go along with what the people in the flooring shop, say, because they’re the expert. Exactly. And they’ll think that they’re doing the right thing. And in fact, when the floor goes down, they haven’t done the right thing. And they have to strip it back up again and start again, which is a terrible thing.

Jimmy  04:29

And remember, this guy in this shop showed me I remember it was green, and it was about three millimetres thick, green plastic. And he said, this is the latest stuff. It’s all you need. I think you have to remembere that people in floorboard shops are there to sell floorboards.

Sue  04:49

Yeah, then it’s hard because, you know, the installation is expensive and this green plastic stuff was really cheap.

Jimmy  04:57

I’m giving you a bargain here. Considering the months and possibly years of misery that would have gone into us putting down floorboards and then the committee coming to us and saying you should have proper insulation, and you got to rip it up.

And that’s what’s happening in this situation that we’re talking about. The owner of the apartment has been told to lift the floorboards, put down proper insulation, and put the floorboards back down again, not cheap.

Sue  05:26

No, certainly not.

Jimmy  05:27

But you know, people come, we’ve got a case on the forum of somebody who’s being driven mad by the people upstairs from them, who have put down hard floors. They’ve gone to the strata manager and said, Can you do anything about this? And the strata manager has blithe’y said, Well, you can’t tell people to put rugs down.

Sue  05:50

You certainly can! Or face ruin the peaceful enjoyment of your own property? Well, you can tell them they can do they have to do something, yes, to make sure that the sound isn’t disturbing you. And whether that’s rugs or whether that’s wearing slippers or wearing socks and no shoes, taking the floorboards out and putting proper insulation underneath.

Jimmy  06:06

That’s right.

Sue  06:10

Then you’re quite entitled to tell him what to do.

Jimmy  06:13

So the strata manager was kind of right, in that nobody can tell them specifically what to do. But they can be told generally, you’ve got to insulate the floor, and do so effectively. And let me tell you folks, rugs will not do it.

Sue  06:29

No. And that decision should be admitted in the minutes so that if somebody goes in and buys that apartment later, yeah, they will know there is a problem with it.

Jimmy  06:38

Yeah, exactly. Because that’s a favourite sport and strata is the past the problem on to the next person. Okay, so we’d be interested to find out the result of the floorboard fiasco in the building that we’re referring to, because I’ve got a feeling that is going to set a precedent in that building, if not, in other buildings, where people are going, I’m not going to I can’t say too much, but the person who put down the floorboards really should have known better. They should have known this building has absolutely rock solid watertight bylaws, on flooring, and this person who should have known better, had just gone in and gone “Stuff this, I can do what I want.”

Sue

Yeah.

Jimmy

And now they’ve discovered that they can’t.

Now, a couple of weeks ago, David Bannerman and I did a webinar on his website for flat chat readers and his clients. And this is the second part and we discuss the design and builders practitioner act and how that’s interfering with people trying to do renovations, dysfunctional committees, strata managers, and how bad it has to be before a compulsory strata manager is appointed. And how much control compulsory strata managers have.

Sue

It should be really interesting.

Jimmy

It is, actually. I’ve listened to it already … well, I took part in it. So I kind of know. So that’s coming up after this

[MUSIC]

Jimmy

And we’re back and as promised, here is the second part of lawyer in the hot seat with Strata lawyer, David Bannerman and me.

[SFX WHOOSH]

Jimmy  22:03

I seem to recall that at some point in the past year, the liability of builders… Because there was some grey area for a while, that builders said their liability was to the developers and the developers’ liability to the apartment owners had expired after six years, then so did the builders warranty for their work. But now they’re being held to 10 years for their work. Is that true and is it making a difference?

David  22:37

There’s divergent views about this and it’s still running through the court, to work out which views are right. But one of the important changes to the building industry (and we have just finished an article on it, which will be published in the next couple of days); this new duty of care, under the Design and Building Practitioners Act… When they implemented it in June 2010, the wording provided that it would have retrospective effect, going back 10 years, that if there’s an occupation certificate that’s issued for a new building more than 10 years ago, you’re too late, to bring that cause of action.

So there’s there’s a view there, that that means that for those buildings that are less than 10 years old, from that occupational view, that there’s a duty of care, and that they can sue other people, whether no statutory rights currently exist, because they’ve all expired. You’d only rely on this duty of care, if there was no statutonary rights. It’s a harder case to win, it requires different evidence. There’s more defences available under it and so, it’s not your preferred type of action.

If you had the statute on, that’s a lot easier and cheaper. But the other view is that, well, you’ve only got six years from awareness of the loss, to bring the action and it’s capped out by 10 years. If the building is more than 10 years old, you’re too late. So there’s judgments where they are exploring the reasoning, before the final decision, is in some interlocutory applications and so a decision from the Supreme Court, is probably due in the next, probably, six months a year, I would have thought, depending on the way things roll through there.

And it’s a very important piece for a lot of owners corporations, who seek to rely on that. But that said, there’s been three really interesting recent decisions in the Supreme Court. So this new duty of care gives commercial buildings, without any statute warranties to right to sue for their losses, under this new duty of care. And one of the things that’s been played out is that numerous people behind the company… Like, there was a situation where there was the same building-developer; same company, same directors, and they’re suing the directors directly, not the company, because they think that they’ll just fold the company, perhaps that’s the reason why, but they’re keeping the company directors involved in the proceedings, because it’s allowing you to sue the people in control of the works directly.

That’s a brave new world, for people who are in the building game, or the engineering game, because that new duty of care, cures the problem, that you couldn’t sue an engineer for defective design, if you were the second owner of the property. That came out in some cases a few years ago. The only person who’s not in the frame for negligence, in relation to these works, are the private certifier, unless somehow, they could be argued to be in control of the building works, but that’d be a long stretch, a long haul. So the way building defect matters again, is that it’s looking like the corporate shield (the company shield was available to varying companies), is been pierced by this new duty of care. But when those decisions come out… I mean, there’s already some decisions out, where they’ve sued people directly, and they’ve been found personally liable for those items. And  there’s more to come, it would appear. There’s some interesting discussions about whether or not in one case, that if you’re a registered building practitioner, that you can be a person who might be the person who can be sued for the duty of care. And so there’s a lot more to play out in that space. But a good thing that’s happened, following the other part of the Design and Building Practitioners Act, is the improvement in the scope of works, that people are required to design for class 2 buildings, and the certifications that go to how good their design is, and how compliant it is, then in the building contractor providing certification that he has followed the design, and that’s some heavy penalties there as well, including incarceration for up to two years.

Jimmy  27:01

Wow!

David  27:05

And then following this wrap-up of better design, better procurement certification of works is a new decennial insurance policy, that’s on the market at the moment; probably be mandated in July next year, for new class 2 buildings. So what ‘decennial’ means; it’s a 10-year insurance product for the building. Initially, when they included that in the legislation, I thought, who would insure a New South Wales strata building for 10 years and what sort of premium would you have to collect? But I was speaking to such a broker for a product just recently, and they said that the premium is less than the 2% bond.

Jimmy  27:51

Wow!

David  27:51

And so for builders and particularly developers, who are the ones who’ve got to procure the actual decennial insurance, they’ll be quite interested in that product. And I was told (but I haven’t seen anything writing), is that people will be able to opt for either the decennial product, or the 2% bond scheme. So it could well be, that the landscape for the current environment, in relation to defects, in 10 years’ time dramatically changes, to that of one involving people suing people, not companies, to insurance claims being made. It could really shake up the indemnity market, in relation to the insurance that would be offered to directors and office bearers. Shake up the role that people decide to take on in organisations, to avoid being in control; to avoid personal claims on their assets. You’ll still have a statue warranty scheme running its course. There’s no discussion about removing that. I imagine that the home warranty insurance scheme would evaporate eventually, to the decennial product, because presently, the decennial product will be offered to those buildings who don’t get home warranty insurance, because they’re above four storeys. So yes, it’s a fast-evolving landscape. The law was put in place for the duty of care back in June 2020 and the new design requirements came in in July last year and the new insurance requirements are probably due next year, so it’s a shifting landscape, for sure.

Jimmy  29:43

Absolutely. And this, the decennial insurance, is all part of the David Chandler vision and it is linked to his gold-star ratings for the companies that apply for it.

David  29:59

It was always envisaged that this would be an objective, under the Design and Building Practitioners Act, which gives the Building Commissioner and Fair Trading a lot of control over these type of works. I mean, the interesting thing about it is, is that it’s not going to be limited to just class 2 buildings; it’s going to other classes, where like, hotels and short-term. That seems to be on their radar for consultation at the moment and then it could well spread into other more commercial areas, as well.

Jimmy  30:28

I’m just going to jump out a little bit here, because the Design Act,  that you’ve referred to, which applies to relatively minor work being done and remediation, or repairs, or maintenance in strata buildings… I don’t know about you, but I’m getting a lot of traffic, where people are saying, we cannot get the builders to come and do this, or we’ve got a builder who will sign off on the work, but we need to get a specialist under the Act and there are just not enough of them and they’re all too busy.

David  31:13

Look, we’ve had countless inquiries about this. We just launched on our website, two new articles under our recent articles. The answer is quite detailed, in relation to that. The thing about it is, is that the Act applies to all building works, whether it’s new builds or remedial works, unless the Act carves it out. And so there’s a whole section that’s carved out, and it relates to remedial works. Things like, if it’s under $5,000, that’s exempt. If it’s exempt development of the planning codes, excluding waterproofing, well then, that’s exempt. There’s a whole series of convoluted, detailed and specific exemptions there, which would take a long time to explain. For those people who want to know the answer, if they look on our website, they’ll readily find it out.

There’s also a reasonable excuse provision, that could be relied upon for not complying. So, let’s say you had a registered building practitioner…. And I think the simplest way of approaching this whole new scheme, is that people have really got their head around having a licenced builder doing residential building work; just think of this as another licence, like a class 2 licence, to do class 2 building work. But before that person, who’s got that class 2 licence can do the work, if that legislation applies, they need to get a registered designer to upload a design, and then they would quote off that design and they can go ahead with it. Now if say though, what’s the reasonable excuse for not complying, even though the legislation applies, because the carve-outs didn’t help you. Say it was like over $5,000, and it was external waterproofing; you’re specifically caught there. If you’re doing mitigation loss work, so you’re putting up tarpaulins to stop water entry; temporary measures… That would be a reasonable excuse for not complying. But once you’re looking at doing the long-term remediation project, then you would be looking to comply.

Jimmy  33:23

Is one of the problems, David, maybe that the Fair Trading website doesn’t have an interface, where someone like me can go “well, we’re not doing that and we are doing that and we’re not going to do that,” and then at the bottom it will say ‘that’s okay, you don’t need this certification.’ I mean, is that what’s missing in the equation, just something that people can access where all that complexity can be brought together and they go “yeah, you don’t need this.”

David  33:53

I personally have spent hundreds of hours, creating materials and doing webinars and trying to get people up to speed on it, myself and it’s complicated. No doubt about it. There’s widespread non-compliance in the remedial space. And what’s also interesting is that the Building Commissioner has been looking at a few jobs, it’s been reported to me. And what they’ve also identified is that people are not only not using registered designers; it’s akin to ‘I’m just getting an unlicensed builder to do building work for me, that should have been licenced.’What they’ve also unravelled is that you didn’t get the planning approval from council as well, because you wrongly thought that it was exempt development. So things things like a lift replacement in a building, unless it’s specified in the LEP, it doesn’t appear in the State Exempt Development Code. And how many buildings do you see the lift replacements? Balustrade replacements…Someone’s replacing a balustrade, even if it’s like-for -like, that’s not exempt, because it’s considered to be structural and when you read the code, it says ‘non-structural balustrade replacement.’ And you go “hang on a second, but it’s structural.” here. So the the headline knocks it out, and the words make it confusing. So you’ve got this new Design and Building Practitioners Act compliance, but you’ve also got the strata in Moodle industry having to understand the exempt development requirements as well, which is another convoluted area

Jimmy  35:38

And councils… We had a flat and the person in the next door flat decided to take out the third bedroom, so it was; the building was designed so it was bedroom, next to bedroom. And he decided to take out the third bedroom, to extend the size of his lounge room, ‘so I can have bigger parties.’ So now he’s got his party room next to the bedroom in the flat and his builder came in and said “this is a complying development.” And then he took that certificate to the owners corporation and they said “well, we can’t challenge this, because it’s a complying development.” He then took it to the council and said “look, I’ve got the builders’ permission and the owners corporation permission” and they went “oh yes, that’s fine then.” Then now when I called them up, and said, This guy’s just made a party room next to a bedroom. And it says in the law, that you you have to get counsel permission before you change the configuration of an apartment. And the guy said, yeah, there’s nothing we can do. You have to sue the builder. That was what the council said.

David  36:56

Yeah. The confusing thing about the code for exempting the blind development and what requires development consent, you’ve got a look at each zone in the locality, because there’s some zones have different rules, you need typically got to get the planning certificate to say this is the zoning that applies to this particular land. And you got to look through those documents to work out exactly what those things were for exempt or complying or not required to do. And that is a time consuming task and not a straightforward one. So

Jimmy  37:34

complex. And it’s much easier just to sling the builder an extra couple of grand to check the box that says complying development. Next slide, please. This functional committees. Is there such a thing really how often there’s the first question then David, how often do you see complaints about dysfunctional committees.

David  38:03

It’s a very common complaint that we get from a grave lot owner who is feeling that they have been disenfranchised, or they’re being bullied, or they’re trying to be forced out of their apartment because someone’s trying to do a collective sale and buy him out. Or they feels like they’re paying too many levies or that things are getting repaired in the building. So it’s very common assertion that disgruntled owner may feel towards the committee because the strata manager has limited powers, strata managers following the instructions of the committee. And if they don’t get there and why they’ll often blame the committee. Right?

Jimmy  38:45

I just as an example, I just got a post on the forum, which it was a couple. They’ve had leaks in their apartment for nine years. They’d gone to the Tribunal. The Tribunal said, yeah, the owners Corporation, we’ve got to fix it. The owners Corporation didn’t fix it. They go back to Tribunal. The owners Corporation said, Yeah, we’re gonna fix it. Can we have an extension on the time? The Tribunal said, yeah, you can have the extension, they still didn’t fix it. And the owners went back to tribunal and said, This is a dysfunctional, surely this is dysfunctional. Can we get a statutory appointment of a strata manager? And the the owners Corporation said, It’s okay, we’re fixing it now. And the owners, the aggrieved owners said, it doesn’t matter. They’re still dysfunctional. They’re just there nine years we’ve had leaks in our apartment. Do you Would you consider that a dysfunctional committee there if they are suddenly doing the right thing?

David  39:52

Often unnoticed cooperation once they get brought that charge, being dysfunctional, They’ll take steps to engage contractors and establish that they are no longer dysfunctional because the Tribunal to exercise that decision making power to create that order. They don’t like to do it lightly because it disenfranchises everybody’s voting rights, it puts the control into the hands of another third person for 12 to 24 months. And then they determine the levees, they determine everything. And so it’s one of the things that they want to determine quite clearly that it is dysfunctional ensure if honest, corporations have been slow. So it might have been that they tried numerous cheap fixes. On the issue before it was actually properly scoped by an expert. It might have been that they did get an expert and the expert wasn’t as expert as what he thought it was. And then they discover works for the expert. It wasn’t until I went to the top of the tree, and got a really good expert that actually worked out what the solution was, it would seem hard to believe that you would just write letters for eight years to the anus corporation to say, Can you fix it and you’d accept it. So there must have been other experts engaged evolved along the way. But if there wasn’t, well, then the fact that the endoscope price is now performing the function, you got to establish that they’re not functioning. So the test isn’t, were they not functioning, it’s Are they not functioning. And so, if they can establish that they are functioning properly, then they will be able to defend the appointment of the compulsory manager. See, I

Jimmy  41:38

take all my, like Albert Camus, I take everything I know about life I learned from football. And I think you get a yellow card. If you get a second yellow card, you’re off, right? That seems simple. Everybody knows what the rules are. Dysfunctional committees seem to just Trundle from one yellow card to the next to the next to the next. Like they’re the Italian guy who in the in the game against the Australia and the World Cup, we’ve got three yellow cards before they they sent them off. I mean, it’s it is, should there be a benchmark for dysfunctional committees to establish, if you do X, Y, and Zed, you’re out?

David  42:24

It’s whether they continuing the dysfunctionality up until the time of the hearing. It’s whether they’ve got the chance to cure it in between is, is the question that you can get. Like if it’s something that urgent, that’s what they classify as urgent considerations, and get one appointed on the spot. Within a week, a judgement creditor who’s had the debt, it’s their actual only course of recourse against the corporation to get paid, if they refuse to pay. And they’ve exchanged letters too many times in the been to court and they’ve got a judgement, then if they still don’t pay the judgement out. That’s another reason for appointing a compulsory manager so they can get paid out

Jimmy  43:11

with a V value and having a middle step where the tribunal could say this committee is dysfunctional. Have another election. You’ve got a you’ve got two months to elect a new committee. So that we’re not taking away all your the voting rights of all the owners. But we are insisting that you change things.

David  43:38

Well, in relation to community change. You can apply to the tribunal to get an order that somebody be removed. If you think that’s the person who’s causing the dilemma. Although that’s a pretty tough order to get. You could apply by way of a requisition for a general meeting just to call for re election. Yeah, time at any time. It doesn’t have to be the AGM, say, if you’ve got enough political might a 25% of unit entitlements, you can call for an AGM. But typically the committee number and members will be controlled by the simple majority. So just over 50% Yeah. And it’s typical that people on the committee, other people who had that 50% plus controlling interest, yeah, that interim measure step can be activated can be tried, but a lot of people wouldn’t advise that option. Say No, on the minority here. That troublemaker Yeah. I’m never gonna win that argument.

Jimmy  44:39

You’re talking about me again. I mean, it’s getting personal. They, I mean, I have heard that people who apply for the removal of individuals on the committee for very valid reasons, that they more often than not, the tribunal if it does take action will be to go the whole hog and just say, Look, we’re putting in a statutory manager.

David  45:04

In some limited circumstances, rarely. I’ve seen like people appointed to manage a particular action or legal action, like a building defects claim, lifted the another manager to look after everything else. So you can see borders for specific appointment, which would be granted, and it could improve your prospects of success of succeeding. Because it’s not an easy bar to get up and over.

Jimmy  45:31

Right. Okay, that’s that’s only one question. Oh, when I waved done question two, how bad does it have to get before the instal a compulsory manager? Do you think we’ve covered that? Yeah. Okay. Is this a popular application and get? Well, popular is probably not the right word. But it’s not popular with the people on the committee? That’s for sure.

David  45:56

It certainly, there’s a high volume of applications that the tribunal determines of these, that’s for sure.

Jimmy  46:04

We’ve kind of covered what the what are the key reasons what happens when a compulsory man, I mean, you touched on it, but just to spell it out. For people who are not aware of when a compulsory manager is appointed. It’s usually nominally for one year, but they usually come back and say, Look, there’s still the same bunch of idiots, who are gonna get on the committee once I’m gone. So give me another year to sort things out. But what happens?

David  46:31

Okay, so, immediately from the making of the order, the strata management agreement that was in place at the time, like all the industry agreements that I’ve seen, they have a terminating provision, where it says that if that order is made, the contracted managers terminated. So they’ve got to hand out of the books and records to the new manager. But quite often, you can have the incumbent manager, the same one be appointed as the compulsion, because they know that they’re doing a good job, but they’re not getting good instructions from the committee. And so they just want to disenfranchise the committee decision making and leave the the current manager who’s got all the corporate knowledge about all the things that are going on, and can get the job done quicker than a new person having to get up to speed. And so but whatever happens, that agreement is terminated, and a person is appointed. And when that person is appointed, they don’t have to have any meetings. So there’s no voting, the only meeting that they’d be looking at having is just prior to the end of the audit, it’d be setting up an AGM to allow an election of a new committee.

So the committee at the making of the audit, there’s no office bearers left, so they’re all suspended. And so the strata manager assumes all the roles of the committee and the owners at a general meeting, so they can ride out committee meeting minutes sitting in their office without issuing a notice. They can write out general meeting minutes, they can do special resolutions, the only thing that can’t make a decision about something that requires the consent of the owner. So typically, there’s a renovation bylaw, and the owner wants to redo the bathroom, and they’re going to take liability for the repairs to the items that they’ve replaced, and then any damage. And so they can’t make that bylaw, but they can make a no smoking bylaw. bylaws, where there isn’t any particular reason known as consent that’s required. So this person has the ability to raise levies importantly, and fund the words need to get done.

Typically, the most difficult cause of the appointment is the failure to repair maintain the common property properly. And that’s often caused by the fact that there’s insufficient funds in the capital works fund. And that’s because people didn’t contribute properly over a long period of time and ignored the 10 year capital works fund plan or just didn’t get one. So they’ve got the ability to, to commence legal action to sue owners for the shortfall and the payments to bankrupt them to force them out. So they’ve got a lot of powers, that ability to continue giving instructions on litigation that might have been on on foot at the time. So it’s very analogous to, you’ve got a building company that’s going back, they’ve appointed administrator, and that administrator takes full control of all the affairs. And then if the builder can come back on board, then they will hand it all back. So at the end of the appointment, they’ll often have a general meeting, people seek to elect a new committee or whatever, appointed contracted managing agent so they don’t have any lack of support. And then when their audit ends, the contractual relationships begin. And if there wasn’t an election of the new committee, have a new committee that occurred, then the old committee just gets refreshed back into their position and they continue on as there were.

Jimmy  49:57

A couple of things occur. I mean, it’s It’s been said to me that strike a statutorily appointed strata managers are pretty much bound to do everything by the book. Like they, they look at the law and say, Well, this is what the law requires us to do, then there will be no, you know, sort of nod and wink stuff, as happens in every strata scheme, where they have where an effective committee has a good relationship with a good strata manager. Between them. They’ll say, Look, we can’t afford to do this right now. But we’ll be doing it soon. And that will be fine. But the statutorily appointed strata manager goes, Look, the law says you got to do this, it will be done. Is that fair?

David  50:40

Yeah, well, often, compliance will be the key thing that they’re looking to address, because that’s been a thing that’s been missing. And that can include getting work health and safety reports when they should have done doing audits that they should have done. And doing a 10 year capital works. Fun plan that they should have done, which they haven’t done, engaging, sometimes, a forensic audit of the accounts when there’s been allegations that the where it was self managed that funds are misappropriated. And they need to work out a proper accounting of what’s been paid, and who has what, and who’s stolen, what. And so the so they’re all the things that they’re focusing on is compliance. In particular, getting scope of works to get contractors underway, and whatever approvals are required, from whatever government authority. And the reason for that is, is that when you have full control, you have full liability. And so and what’s quite curious about that is in the marketplace, some managers have gaps in their professional indemnity insurance cover, often cover them for doing things, what they’re instructed to do. But if they’re creating the instructions, and they’re not taking instructions for anybody, and they do their own thing, all right, and they may find themselves without professional indemnity cover for their travels.

Jimmy  52:12

So they’re ultra careful …

David

As you would want to be.

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Jimmy

That was really informative, and quite entertaining. Yeah. I mean, all these questions. These things, they get a lot of people listening. But we also get people coming back and listening to them here on the podcast. So it’s a good way of getting information out there.

Sue  08:55

Absolutely. And it’s quite wide ranging this kind of subjects that come up.

Jimmy  08:59

Yeah, I want to do one of these sometime in the future with the strata manager, because they come at it from a slightly different angle. So maybe we’ll get one of those organised maybe for the new year. It’s getting close to Christmas as it is.

Sue

Yep.

Jimmy

All right, so Well, thanks again for you coming in and contributing to today’s podcast.

Sue

You’re welcome, Jimmy.

Jimmy

And we’ll talk to you all again soon. Bye.