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Owners’ Corporation Law - May 2016

26 Apr 2016

Rules, rules and more rules

An owner installs an air conditioner unit on the common property roof. A tenant stores their bicycle and some boxes of rags and domestic cleaning equipment in their car parking space. A tenant installs a barbecue and some garden furniture on the common property courtyard to create an enclosed space. An owner decides to place some potted plants near the entrance to the complex.

For each of these situations detailed above, an owners’ corporation (OC) has to consider the issue from the point of view of managing and regulating the use of and access to the common property. The legislation requires the owners’ corporation to control the common property and to ensure that common property is not misused.

Some OCs might turn a blind eye to these situations, citing a desire to either avoid drama or conflict, or maybe even due to apathy or tacit and silent approval.

But consider for a moment the implications of that air conditioner unit failing due to lack of maintenance over a period of years, catching fire one warm evening and engulfing the common property roof in flames. Assuming everyone in the complex escaped unharmed, would an insurer void coverage under its policy of insurance on the grounds the air conditioner unit was an unapproved installation?

The owner who installed the air conditioner unit might be required under the common law to compensate the OC. But if the damage to the roof is extensive, and if the owner concerned is not particularly wealthy, then the liability to cop the cost of the repairs falls back to the members of the OC.

Ditto the situation in the car parking space. If a car catches fire in the basement, would the presence of the rags and toxic cleaning equipment exacerbate and accelerate the spread of fire? How would liability be apportioned in this case?

What about the tenant who took over common property to create their own private outdoor space? Does the OC have the power to remove the furniture if the tenant ignores requests to remove it? If they did, where would they store it? What if the furniture got damaged during the time it was in storage?

All of these situations have occurred in Australia, and each time, the particular  OC has found they didn’t have the powers under their existing rules to properly cater for the situation. The majority of OCs consider that the rules put in place for their scheme (either the model rules under the legislation, or the original rules put in place by the developer) are the start and end point for compliance.

However, the model rules and the “developer” rules are usually very basic, generic and are not tailored to the individual characteristics of the different types and layouts of buildings that we live in.

I recommend that every three years, the committee should review the rules, and consider whether new situations have arisen that necessitate the passing of new additional rules.

The current legislation empowers OCs to make the types of rules it wants, subject to the legal doctrines of ultra vires, unreasonableness, inconsistency and of course, discrimination.

As always, a special resolution would be required to change or introduce new rules. However the cost of not taking these steps would far outweigh the costs of convening a ballot or special general meeting.

In my view, OCs should take a proactive view towards regulation of their communities. After all, and to quote one of the other columnists – we live here.

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