This article discussing unauthorised works and who is responsible for the cost of repairs has been provided by Adrian Mueller, JS Mueller & Co Lawyers.
Who is responsible for repairing unauthorised works done by an owner to common property that is defective? The answer (and the reason for that answer) might surprise you.
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Introduction
An Example
Take the classic case of an owner who decides to renovate his bathroom without the consent of the owners corporation. During the renovation, the owner re-waterproofs his shower tray. Several years later, after the owner has sold his unit, the shower tray allows water to leak into the unit below because it was not re-waterproofed correctly. Who is responsible for fixing the unauthorised works, in this case, a defective shower tray?
A Typical Approach
In the case of the defective shower tray, many owners corporations will assume that because the shower tray is common property, they are responsible for repairing it even though they did not install it. On the other hand, some owners corporations will take the view that because the shower tray was installed without their consent, the owner responsible for installing the shower tray, or the current owner, must fix it. Which is the correct approach?
The Duty to Maintain Common Property
The NSW Courts have over many years considered the nature and scope of the duty of an owners corporation to maintain and repair common property. The Courts have concluded that this duty:
- is compulsory: see Seiwa Pty Ltd –v- Owners Strata Plan 35042 [2006] NSWSC 1157;
- is absolute and is not a duty to reasonable care to maintain and repair common property or to take reasonable steps to do so but a strict duty to maintain and keep in repair: Seiwa;
- extends to require the maintenance and repair of common property which could not be for the benefit of the owners as a whole or even a majority of them (such as the repair of a common property air conditioning system that only services one lot): see Proprietors Strata Plan 159 -v- Blake (1986) CCH Strata Titles Cases ¶ 30-068;
- must still be fulfilled even if the owners corporation did not cause the damage to the common property which needs to be repaired: see Lubrano -v- Proprietors Strata Plan No. 4038 (1993) 6 BPR 13,308;
- extends to require remediation of defects in the original construction of the common property even if the original builder or developer are responsible for those defects: see The Proprietors of Strata Plan No. 6522 -v- Furney & Anor (1976) 1 NSWLR 412.
A Duty to Maintain Unauthorised Works to Common Property?
However, the position is different in relation to the maintenance and repair of alterations or additions to common property which have been undertaken by an owner without the consent of an owners corporation. This is because the Courts have held that the duty of the owners corporation to maintain and repair common property:
- involves consideration of the attributes of the original common property at the time the strata plan is registered in order to determine whether or not a specific part of the common property is in need of maintenance, repair or replacement: see The Owners Strata Plan 50276 –v- Thoo [2013] NSWCA 270;
- must only take into consideration any alteration or addition that is made to the common property in accordance with the strata legislation when determining whether or not any common property that has been altered or added to requires maintenance, repair or replacement: Thoo;
- centres on the preservation of the original fabric of the building as constructed: see The Owners – Strata Plan 21702 -v- Krimbogiannis [2014] NSWCA 411;
- focuses on preserving the original fabric on the common property by not removing, replacing or destroying the original common property (without proper authority): Krimbogiannis;
- requires the owners corporation to restore to its original condition any common property which has been altered, replaced or destroyed (without proper authority): Krimbogiannis;
- therefore, does not require the owners corporation to repair common property that has been added to the building without its consent: Krimbogiannis.
In other words, in order to determine if some part of the common property must be repaired or replaced, one must look backwards and compare what currently exists with what existed at the time the strata plan was registered (which allows one to ignore unauthorised changes to the common property), and if the common property is operating as it was originally intended to, then there is generally no need to repair or replace that common property: Thoo.
Krimbogiannis
The Krimbogiannis case explains why an owners corporation is not responsible for repairing an item of common property which was installed without the consent of an owners corporation and has become defective.
This case involved the Connaught building in Sydney. Long after the strata plan for the Connaught was registered, the owner or tenant of lot 6 removed a glass panel from an external common property wall of the building and replaced it with a glass sliding door (door). This work was done without the consent of the owners corporation. The glass sliding door allowed the operator of the cafe which traded from lot 6 to accept deliveries through the door.
The door was kept in good repair. However, the owners corporation wanted the external wall to be returned to its original condition. The tenant of lot 6 refused to do so. The owners corporation applied to an Adjudicator and then the Consumer, Trader and Tenancy Tribunal for an order for access to lot 6 to enable it to remove the door and reinstate the external wall to its original condition. The owners corporation’s application for the access order was rejected and an appeal to the District Court was unsuccessful. The owners corporation sought judicial review of the District Court’s decision in the NSW Court of Appeal.
The Court of Appeal concluded that in order to be entitled to an access order, the owners corporation had to show that it needed to gain access to lot 6 to properly maintain or keep in good repair the common property. The Court concluded that the duty of the owners corporation to maintain the common property centred on preserving the original fabric of the common property. This meant the owners corporation had a duty to reinstate the external wall to its original condition by removing the door that had been installed without its consent. For that reason, the Court concluded that the owners corporation was entitled to an order to give access to lot 6 to restore the external wall to its original condition.
The Wash
Up The decision in Krimbogiannis means that an owners corporation cannot be responsible for the repair of a defective item of common property that was added to its building without its consent ie unauthorised works. This is because imposing on the owners corporation a responsibility to repair that defective item would be incompatible with the duty the owners corporation owes to remove the item and restore the common property to its original condition.
What does this all mean?
The position is generally as follows:
- an owners corporation is not responsible for repairing defects in alterations or additions to the common property that have been made by an owner without its approval;
- instead, the owners corporation is responsible for removing any alterations or additions to the common property that have been made by an owner without its approval and restoring the common property to its previous condition;
- if an owner or his or her predecessor wants to retain unauthorised works to the common property, a by-law needs to be made to permit the owner to keep those works and that by-law should impose on the owner the obligation to maintain and repair the unauthorised works.
The Result
This analysis leads to some surprising results. To take our earlier example of the bathroom renovation done by an owner without owners corporation approval, the owners corporation is not responsible for repairing the defective waterproofing in the shower recess. If the owners corporation wants to force the owner to repair the defective waterproofing this should be done by either:
- a by-law being made which permits the bathroom renovations to remain on certain conditions including the condition that the owner is responsible for the ongoing maintenance and repair of the renovations including the waterproofing; or
- an order being obtained from NCAT to require the owner to repair the defective waterproofing.
Conclusion
An owners corporation is generally not responsible for repairing defects in works that have been done to the common property without its consent. If the owners corporation is prepared to allow the unauthorised works to remain, a by-law should be made, with the consent of the relevant owner, to permit the works to be kept on certain conditions. Those conditions should include a condition requiring the owner to maintain and repair the works.
If the owners corporation is not content to allow the unauthorised works to remain, then an application should be made to obtain an order by NCAT to require the occupier of the lot to give the owners corporation access to allow it to reinstate the common property to its previous condition or to require the owner responsible for the works to remove the unauthorised works and reinstate the common property to its previous condition.
NSW: Supreme Court Quashes NCAT Decision to Allow Unauthorised Works
Summary
The Supreme Court has set aside a decision made by NCAT to allow an owner to keep alterations carried out to common property without the consent of an owners corporation. In doing so, the Court confirmed that an owners corporation must act unreasonably before NCAT should overturn a decision of an owners corporation not to allow an owner to keep unauthorised works to common property.
The Owners – Strata Plan No 69140 v Drewe
Window Proposal
Ms Stephanie Drewe owns an apartment in a large strata title apartment building in North Manly, Sydney. In early 2013, Ms Drewe sought the consent of the owners corporation to install a timber window in her bedroom. The strata committee rejected Ms Drewe’s application largely because all of the windows and doors in the building were powder coated aluminium. Ms Drewe’s proposal in relation to the window went no further.
Bi-fold Doors
In December 2013, Ms Drewe installed bi-fold timber doors at the entry to the verandah of her apartment to replace the powder-coated aluminium doors which formed part of the common property of the building. This was done without any prior notice to the owners corporation and without its approval.
In October 2014, the owners corporation’s building manager informed Ms Drewe that the bi-fold timber doors she had installed were in breach of the by-laws and requested that she reinstate the original powder coated aluminium doors. Ms Drewe failed to do so.
The AGM
In January 2015, Ms Drewe wrote to the strata manager of the owners corporation attaching a building works application and requesting that a motion be placed on the agenda of the AGM for the owners corporation to retrospectively approve the timber bi-fold doors.
Subsequently, the agenda for the AGM was circulated to owners and it included a motion for the owners corporation to approve by special resolution the work undertaken by Ms Drewe without its prior approval. The AGM was held in February 2015 and the motion proposed by Ms Drewe was comprehensively defeated. Indeed, only Ms Drewe voted in favour of the motion.
In March 2015, the owners corporation again asked Ms Drewe to reinstate the original powder-coated aluminium doors that she had replaced with her timber bi-fold doors. Ms Drewe refused to do so. The owners corporation then served Ms Drewe with notices to comply with the by-laws but she still did not reinstate the original powder coated aluminium doors.
The Adjudicator’s Decision
In May 2015, Ms Drewe applied for orders by a Strata Schemes Adjudicator to approve the bi-fold doors she installed without the consent of the owners corporation. Ms Drewe’s application also sought the creation of a by-law to allow her to keep the bi-fold doors on the condition that she was responsible for maintaining them. In September 2015, Ms Drewe’s application was dismissed. The Adjudicator concluded that Ms Drewe did not establish that the owners corporation’s decision to reject her application to keep the timber bi-fold doors was unreasonable.
NCAT Decision
Ms Drewe appealed against the Adjudicator’s decision to NCAT. In about June 2016, NCAT upheld her appeal and made an order allowing Ms Drewe to retain her timber bi-fold doors. NCAT concluded that the decision made by the owners corporation to reject Ms Drewe’s application to keep the bi-fold doors was unreasonable. This is because, in the view of NCAT, the owners corporation had predetermined Ms Drewe’s application and was never prepared to agree to it, there was no basis for the strata committee to conclude that the timber bi-fold doors would undermine the building’s image as a landmark or require more maintenance than powder coated aluminium doors, and the concern of the owners corporation that if it approved Ms Drewe’s application, it would be responsible for maintaining the bi-fold doors because there would be no by-law approving them was unfounded because, had Ms Drewe been asked to submit a by-law, she would have done so.
Supreme Court Appeal
The owners corporation appealed against NCAT’s decision to the Supreme Court. The Supreme Court upheld the appeal and set aside the decision of NCAT as a result of which NCAT’s decision to allow Ms Drewe to keep the timber bi-fold doors was revoked. The Supreme Court quashed NCAT’s decision because it concluded that NCAT had made numerous errors of law, had denied the owners corporation procedural fairness and had failed to carry out the task required of it in hearing an appeal against the Adjudicator’s decision.
Relevant Considerations
In reaching its conclusion, the Supreme Court confirmed the following matters:
- the task for the Adjudicator (and NCAT in the appeal) was to determine whether the owners corporation unreasonably refused consent to the installation of Ms Drewe’s timber bi-fold doors;
- that question needed to be determined having regard to the circumstances that existed at the time the owners corporation refused to grant consent for the timber bi-fold doors to remain, namely at the AGM in February 2015;
- NCAT was required to confine itself to the decision of the Adjudicator and the evidence which underpinned that decision in order to determine whether the Adjudicator had erred and should not have treated the appeal as a fresh hearing at which completely new evidence could be considered;
- the ultimate question to be asked and answered by both the Adjudicator and NCAT was whether the owners corporation’s refusal to give consent to the timber bi-fold doors at the AGM, based on the material then available, was unreasonable, not whether the reasons for its refusal were objectively reasonable (Ainsworth -v- Albrecht [2016] HCA 40 at [97]);
- the onus lay on Ms Drewe to establish that the reasons given by the owners corporation for rejecting her application to keep the timber bi-fold doors had no rational basis in that they were not guided by sound judgment or good sense.
The Decision
The Supreme Court concluded that Ms Drewe had not established that the owners corporation’s refusal to allow her to keep the timber bi-fold doors was unreasonable or that the reasons given by the owners corporation for making that decision were irrational. The Court noted that the reasons the owners corporation rejected Ms Drewe’s application included:
- the importance of the uniformity of appearance of the building;
- the fact that the wooden bi-fold doors were not in keeping with the overall appearance of the building;
- that the grant of retrospective approval of the timber bi-fold doors required a by-law and none was submitted by Ms Drewe;
- wooden bi-fold doors require more maintenance than the original powder coated aluminium doors and, in the absence of a by-law, responsibility for the maintenance of the timber doors fell to the owners corporation;
- the grant of retrospective consent to the timber doors did not allow the owners corporation to control the engagement of contractors who installed the doors and their access to the building which exposed the owners corporation to a potential work, health and safety liability;
- the work done by Ms Drewe was contrary to the strata legislation and the by-laws of the building.
Ultimately, the Supreme Court concluded that Ms Drewe failed to establish that each of the reasons given by the owners corporation for rejecting her application had no rational basis. For that reason, the Court concluded that NCAT made numerous errors of law in overturning the Adjudicator’s decision and granting Ms Drewe permission to keep the timber bi-fold doors. In the end result, the Supreme Court set aside NCAT’s decision.
Conclusion
The decision in Drewe’s case provides helpful guidance as to the matters that should be taken into consideration by an owners corporation when considering an application by an owner for retrospective approval of alterations carried out to common property without its consent. The case also clarifies the test that should be applied by NCAT when scrutinising a decision made by an owners corporation to reject an application by an owner to approve unauthorised works done to the common property.
The case confirms that the onus is on the owner to demonstrate that the decision of the owners corporation is unreasonable rather than the owners corporation having to justify its decision and that in order for the decision of the owners corporation to be unreasonable, there must be no rational basis for making that decision.
Ultimately, the case demonstrates the difficulties that will be faced by an owner who applies to NCAT to overturn a decision of an owners corporation to reject an application by the owner to keep unauthorised works done to the common property.
Case reference: The Owners – Strata Plan No. 69140 -v- Drewe [2017] NSWSC 845.
Adrian Mueller Partner + Senior Lawyer JS Mueller & Co Lawyers E. adrianmueller@muellers.com.au W. http://muellers.com.au/ P: 02 9562 1266
This post appears in Strata News #166.
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This article has been republished with permission from the author and first appeared on the JS Mueller & Co Lawyers Website.
Disclaimer: The information contained in this article is provided for your personal information only. It is not meant to be legal or professional advice nor should it be used as a substitute for such advice. You should seek legal advice for your specific circumstances before relying on any information herein. Contact JS Mueller & Co Lawyers for any required legal assistance.
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