NSW: Q&A Liability Clauses When Lot Owner Improves Common Property

This Q&A from a NSW Lot Owner concerns the need for a liability clause when the neighbour above wants to install a balcony garden.

Table of Contents:

• QUESTION: A lot owner has requested permission to install a diesel generator on his roof to safeguard against future black/brown-outs. What do we need to consider?


• QUESTION: Around 10 years ago we obtained approval and installed shutters on our apartment. Now it appears the shutters may have caused water damage to the unit below. If approval was given by the strata manager, are we responsible? 


• QUESTION: Can the Owners Corporation recover monies for repairs to common property when changes have been made by the lot owner? A lot owner has removed self-closer from a unit entry door. The replacement of the closer is required to complete our annual fire safety measure certification. Can this action be reinforced with a by-law? 


• QUESTION: The neighbour above wants to install a garden on their balcony. A waterproof membrane would be installed. Should this be approved with liability clauses on the garden’s owners?

Question: A lot owner has requested permission to install a diesel generator on his roof to safeguard against future black/brown-outs. What do we need to consider?

I am a Committee Member in a Strata Plan comprising 134 residential apartments. The complex is 8 storeys in height.

A lot owner wishes to install a personal diesel generator on the roof above his apartment to ensure his apartment enjoys continual power in the case of future black/brown-outs.

Apart from common property issues, are there any safety issues that need to be addressed prior to consideration for approval?

Answer: Variables need to be clarified and worked through before the strata committee agrees to this request.

If the Committee approves the installation of the generator, that area of the roof will become the lot owner’s “exclusive use” area. From then on, the responsibility of maintenance, safety and safe access to the generator remains that lot’s responsibility in perpetuity.

Safe storage of fuel and the electrical connections (for switching the generator over after starting) also need to be worked out.

As you can see, variables need to be clarified and worked through before the strata committee agrees to this request. You should also run this concept past your strata scheme’s electrical contractor.

Peter Berney Solutions in Engineering E: peter@solutionsinengineering.com P: 1300 136 036

This post appears in the May 2023 edition of The NSW Strata Magazine.

Question: Around 10 years ago we obtained approval and installed shutters on our apartment. Now it appears the shutters may have caused water damage to the unit below. If approval was given by the strata manager, are we responsible?

Around 10 years ago we installed balcony shutters in our apartment. Before proceeding, the contractor emailed our strata manager requesting approval to proceed. They provided all details for the installation and we were given approval to proceed via email.

It now appears the installation of the balcony shutters might have caused a leak in the bedroom of the unit below.

• Was the strata manager’s approval to proceed sufficient for us to go ahead with these works?


• If not, are we at fault for proceeding with the works even though we obtained approval from the strata manager? At the time, we were not asked to action anything else before proceeding.


• If the contractor damaged the waterproofing during installation, is the contractor liable for the damage?

Answer: You may have recovery rights against the contractor for breach of contract or breach of the statutory warranties.

If the installation of the shutters you installed has damaged the common property (such as the waterproofing membrane). Section 132 of the Strata Schemes Management Act 2015 provides the owners corporation may obtain an order from the Tribunal requiring you to undertake rectification work or pay for the rectification work:

Rectification where work done by owner

1. The Tribunal may, on application by an owners corporation for a strata scheme, make either of the following orders if the Tribunal is satisfied that work carried out by or for an owner or occupier on any part of the parcel of the scheme has caused damage to common property or another lot—
   
   1. an order that the owner or occupier performs the work or takes other steps as specified in the order to repair the damage,
   
   
   2. an order that the owner or occupier pay to the owners corporation or the owner of the lot a specified amount for the cost of repairs of the damage and any associated costs, including insurance and legal costs.
   
   
2. An amount payable by an owner or occupier to an owners corporation under this section is payable, and may be recovered, under this Act as if it were an amount of unpaid contributions.

It is important that you ascertain when the installation of the shutters was completed because you may have rights to claim against the contractor who installed the shutters. You may have recovery rights against the contractor for breach of contract or breach of the statutory warranties in the Home Building Act 1989. The damage to the unit below may be recoverable from the contractor as consequential loss. You should obtain legal advice promptly concerning this as it is a very technical area of law and strict limitation periods apply. You will also likely need to engage a building consultant to prepare a report.

If you are able to pass liability on the contractor, and recover from the contractor, this could assist you in responding to and resolving any claim the owners corporation makes against you in relation to the damage.

About whether you are at fault for proceeding with the works based upon an email from the strata manager, based upon the work you have described in your email, the work should have been undertaken pursuant to a by-law.

There could be a general by-law that authorises the installation of the shutters, and the email from the strata manager could be confirming you have approval under a by-law. However, if there is such a by-law, it is quite likely it will contain provisions that make you responsible for the damage to the waterproofing membrane. You should review the registered by-laws carefully and check to see whether any relevant by-laws have been repealed since the time the shutters were installed.

If there is no by-law authorising the work, it is quite likely you installed the shutters without the proper authorisation and damaged the common property (the waterproofing membrane) in the process of doing so.

Whether you can rely upon the email from the strata manager to avoid, reduce or apportion any liability, would involve interpreting the email correspondence in the context of the circumstances at the time. This would be a complicated legal argument and you will need to obtain legal advice about this.

Shane Williamson Williamson Lawyers Pty Ltd E: shane@williamsonlawyers.com.au P: 0404 045 605

This post appears in the February 2023 edition of The NSW Strata Magazine.

Question: Can the Owners Corporation recover monies for repairs to common property when changes have been made by the lot owner? A lot owner has removed self-closer from a unit entry door. The replacement of the closer is required to complete our annual fire safety measure certification. Can this action be reinforced with a by-law? 

Answer: If the owners corporation is able to prove that the lot owner has caused the damage, the owners corporation will have good prospects of recovery.

If the owners corporation is able to prove that the lot owner has caused the damage, in this case the removal the self-closer from the entry door, the owners corporation will have good prospects of recovery.

If it is clear the owner is responsible, the strata committee may wish to provide the owner with written notice that removal of the self-closer is prohibited because it is a fire safety risk that will result in the scheme not satisfying its annual fire safety requirements and could expose the owner to personal liability if the removal of the self-closer results in or contributes towards loss and damage in the event that there is a fire. The notice may state that if the self-closer is removed again, action will be taken pursuant to the by-laws and the Strata Schemes Management Act 2015.

If the owners corporation wishes to take action, it should start by reviewing the registered by-laws. For example, following are some of the model by-laws which may apply to the owners corporation which could be relied upon to support an action:

5 Damage to common property

1. An owner or occupier of a lot must not mark, paint, drive nails or screws or the like into, or otherwise damage or deface, any structure that forms part of the common property without the approval in writing of the owners corporation.

10 Preservation of fire safety

The owner or occupier of a lot must not do any thing or permit any invitees of the owner or occupier to do any thing on the lot or common property that is likely to affect the operation of fire safety devices in the parcel or to reduce the level of fire safety in the lots or common property.

Depending upon the circumstances, there are provisions in the Strata Schemes Management Act 2015 which the owners corporation may rely upon to take recovery action, for example:

Section 120 Owners corporation may carry out work required to be carried out by others

1. Work required by public authority If an owner of a lot in a strata scheme fails to carry out work that is required to be carried out under a notice given to the owner by a public authority, the owners corporation may carry out the work and recover the cost of carrying out the work from the owner or any person who, after the work is carried out, becomes the owner.


2. Work required to be carried out under term or condition of by-law If a person who is the owner, mortgagee or covenant chargee in possession, tenant or occupier of a lot in the strata scheme fails to carry out work that is required to be carried out by the person under a term or condition of a by-law of the scheme, the owners corporation may carry out the work and recover the cost of carrying out the work from that person, the owner of the lot (if the person is not the owner) or any person who, after the work is carried out, becomes the owner of that lot.


3. Work that is duty of owner or occupier to carry out If a person who is the owner, mortgagee or covenant chargee in possession, tenant or occupier of a lot in the strata scheme fails to carry out work in order to remedy a breach of a duty imposed by Part 8, the owners corporation may carry out the work and recover the cost of the work from that person.


4. Work required to be carried out under order If a person fails to carry out work required to be carried out under an order made under this Act, the owners corporation may carry out the work and recover the cost of carrying out the work from the person against whom the order was made.


5. Recovery of costs as a debt The costs incurred by an owners corporation in carrying out any work referred to in this section may be recovered by the owners corporation as a debt.

Section 124 Orders by Tribunal relating to entry to carry out work or inspections

1. The Tribunal may, on application by an owners corporation for a strata scheme, make an order requiring the occupier of a lot or part of a lot in the scheme to allow access to the lot for any of the following purposes—
   
   1. to enable the owners corporation to carry out work referred to in section 118, 119, 120 or 122 or to determine whether such work needs to be carried out,
   
   
   2. to enable an entry or inspection referred to in section 122 or 123 or Part 11 to be carried out.
   
   
2. This section does not limit the power of an owners corporation to enter a lot under this Division in an emergency without applying for an order.

Section 132 Rectification where work done by owner

1. The Tribunal may, on application by an owners corporation for a strata scheme, make either of the following orders if the Tribunal is satisfied that work carried out by or for an owner or occupier on any part of the parcel of the scheme has caused damage to common property or another lot—
   
   1. an order that the owner or occupier performs the work or takes other steps as specified in the order to repair the damage,
   
   
   2. an order that the owner or occupier pay to the owners corporation or the owner of the lot a specified amount for the cost of repairs of the damage and any associated costs, including insurance and legal costs.
   
   
2. An amount payable by an owner or occupier to an owners corporation under this section is payable, and may be recovered, under this Act as if it were an amount of unpaid contributions.

Moving forward, if the strata committee considers that the removal of self-closers could be an ongoing problem, a new by-law may be made to specifically deal with the issue and prescribe how removal of self-closers in breach of the by-law will be addressed.

Aside from the above, it is important to ensure a new self-closer is installed as soon as possible and the annual fire safety statement completed and signed.

Shane Williamson Williamson Lawyers Pty Ltd E: shane@williamsonlawyers.com.au P: 0404 045 605

This post appears in Strata News #596.

Question: The neighbour above wants to install a garden on their balcony. A waterproof membrane would be installed. Should this be approved with liability clauses on the garden’s owners?

The top floor owners wish to establish a garden on their balcony which is above the rooms of the apartment below. A new waterproof membrane would be installed.

The concern from the owner below is the risk of damage from water penetration in the future. Should this be approved with liability clauses on the garden’s owners?

Answer: We would recommend that the new by-law contain comprehensive conditions regarding the carrying out the work, the future maintenance obligations and appropriate indemnities.

Ordinarily the waterproof membrane on a balcony is common property and the repair and maintenance of the waterproof membrane is the responsibility of the owners corporation.

If an owner proposes to install new waterproof membrane on their balcony for a new garden, this would be an alteration to common property governed by section 108 of the Strata Schemes Management Act 2015 (SSMA).

Pursuant to s108 of the SSMA, a special resolution of the owners corporation would be required to authorise the owner to alter common property by installing a new waterproof membrane. The owners corporation would also need to make a new by-law to ensure that the owner is responsible for the ongoing maintenance of the waterproof membrane (otherwise the owners corporation will remain responsible for the ongoing maintenance).

We would recommend that the new by-law contain comprehensive conditions regarding the carrying out the work, the future maintenance obligations and appropriate indemnities. These conditions would include:

• requiring reports from qualified consultants to advise on:
  
  • the appropriate waterproofing solution for the garden (to ensure that the waterproof membrane for the new garden section preserves the waterproofing currently existing on the balcony which is not affected by the works);
  
  
  • whether the balcony can bear the weight of the proposed garden structure and contents.


• the owner is to be responsible for all future maintenance and replacement of the waterproof membrane and any damage caused to common property or other lots by leakage or other failure of the new waterproof membrane;


• the owner is to indemnify the owners corporation and other lot owners for any loss or damage caused or contributed to by the works or any future leakage or damage caused by the new waterproof membrane;


• obtaining any required development approval, insurance obligations and certification of works.

Emma Smythies Bugden Allen Graham Lawyers E: emma@bagl.com.au P: 0412 046 966

This post appears in Strata News #316.

Have a question about liability clauses or something to add to the article? Leave a comment below.

Embed

This article does not constitute legal or other advice and should not be relied upon this way. Readers should take legal or other advice before applying the information containing in this publication.

Read Next:

• NSW Strata: Q&A What if My Skylight’s Blamed for Causing a Roof Leak
• NSW: Q&A Indemnity in Perpetuity – Installation of an Air Conditioning Unit
• NSW: Q&A Water Dripping Over Balcony From the Neighbour Above

Visit our Strata By-Laws and Legislation OR NSW Strata Legislation

Looking for strata information concerning your state? For state-specific strata information, try here.

After a free PDF of this article? Log into your existing LookUpStrata Account to download the printable file. Not a member? Simple – join for free on our Registration page.