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With housing affordability at historic lows, high-density residential and mixed-use developments are an increasingly common investment vehicle for home buyers, and individual and corporate investors alike.

With the complexity of laws governing the ‘community titles schemes’, it is important that buyers understand their rights and obligations.

In particular, working out who should pay for maintenance or repairs is a common source of dispute, and may fall on the body corporate or an individual owner.

As the body corporate is comprised of all current lot owners, this is essentially a question of whether costs are borne by one owner or all the owners.

Body Corporate Duty: Maintenance and Repairs

Among other obligations, the body corporate is responsible for the administration of common property. This includes a duty to keep common property in ‘good condition’.

What is ‘Common Property’?

Land and facilities, which are part of the scheme but not part of any individual lot is referred to as ‘common property’. Common property is owned by all the lot owners together.

Facilities like gardens, lawns, walkways, parking areas, and pools are normally common property. In the case of subdivided buildings, such as apartment complexes, the body corporate is also responsible for external walls, railings, windows, and roofing membranes (waterproofing).

As the body corporate is only responsible for maintaining common property, determining whether something is part of the common property or an individual lot determines who is responsible for maintenance or repairs.

This is not always obvious. It can be an involved process and usually requires examination of the scheme plan held on record by the Titles Registry.

Nature of the Obligation

Bodies corporate must maintain common property in ‘good condition’ or, for structural elements (foundations, load-bearing walls, and roofs), in ‘structurally sound condition’. This is not optional: a body corporate does not have discretion to ‘opt out’ of its obligations.

Although the term ‘maintain’ is used, courts consider this to include repairs and, in some circumstances, replacement of damaged property.

There are situations where a failure to perform necessary repairs to common property results in damage to individual lots. Common examples include water damage caused by leaking roofs or insufficient drainage. Depending on the circumstances, bodies corporate may be accountable for damage to individual lots, which would likely exceed the cost of initial repairs.

Water, Electricity and Other Services

Water and electricity supplies, telephone services and drainage are considered part of the common property. Responsibility to maintain or replace damaged infrastructure would normally fall to the body corporate.

However, it is important to note some utilities installed for the occupier’s sole benefit do not form part of the common property; the body corporate will not be responsible for infrastructure that:
• supplies a utility service to only one lot;
• is within the boundaries of a lot; and
• is not within a boundary structure for the lot.

Common examples include hot water systems or air conditioning units installed by the owner. If this is the case, the owner of that lot is liable for its maintenance and repair.

Shared Obligations

Under a community titles scheme, lot owners are in an unusual situation where the body corporate may be obliged to organise and remit payment for repairs, but with each lot owner liable to foot a proportion of the repair cost.

Calculation of payment will be determined by reference to the interest schedule lot entitlement, which determines a lot owner’s share of amount levied by the body corporate. By comparison, any long-term replacements or renovations like painting or carpeting are financed by the Sinking Fund.

It should be noted that individual lot owners also have an obligation to contact the body corporate upon becoming aware of the need for repairs.

Failure to Act: Enforcing Obligations

If a body corporate repeatedly fails to look after common property or owners’ interests and assets, owners can enforce the obligation, if necessary, with assistance of the Office of the Commissioner.

If the matter proceeds to litigation, bodies corporate may be liable to lot owners for any expenditure incurred as a result of the body corporate ignoring its statutory duty to maintain the common property. Lot owners may also be able to obtain damages resulting from economic loss, costs of repair and legal costs, under common law.

Conclusion

It is vital that bodies corporate are aware, and understand the gravity, of their statutory obligations to repair and maintain common property. Damage caused as a result of a failure to fulfil these obligations will incur serious liability.

Bodies corporate should employ strict strategies to avoid preventable liability, particularly by regular distribution of information to all lot owners and investors, including details such as the following:
• Identification of the difference between common property and individual lots;
• Body corporate obligations; and
• Lot owners’ responsibilities.
It is also important to obtain a copy of the registered plan from the Department of Natural Resources and Mines to properly understand the boundaries of common property and individual lots within the community title scheme.

For further information about community titles schemes, and the obligations of bodies corporate and lot owners, please contact:

Ben Warren – Director

M: 0402 003364
E: bwarren@ellemwarren.com.au

Richard Ellem – Director

M: 0403 464 875
E: rellem@ellemwarren.com.au

© October 2014

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All employers should have a clear and accessible ‘action plan’ in the event of workplace injuries. The plan ought to address practical issues, like first aid and emergency response, counselling and potential media enquiries, as well as the many and onerous legal duties and risks.

This short article is not intended as a comprehensive list of legal duties and risks but provides some general guidance in regard to handling injured workers.

Employers’ Responsibilities

It is important to be aware that criminal prosecution may be pursued if employees are permitted to perform hazardous work. Post-injury safety assessment and investigations are vital and we recommend initiating this only after seeking legal advice so that, potentially, the results are subject to legal professional privilege.

Employers must proceed with caution. In Queensland, WorkCover must be notified immediately of any injury for which compensation may be payable. It is advisable to encourage the employee to obtain a medical assessment from an independent medical practitioner, and not to assume the cause of injury, to avoid subsequent claims of bias.

Once the immediate injury and safety issues are contained, in preparation for defending against possible discrimination or unlawful dismissal complaints, an employer should also collect and retain all records of attempts to find alternative or modified duties for an injured worker.

Legislation

• The Fair Work Act 2009 prohibits employers from taking adverse action, including terminating the employment, because of a temporary absence from work due to illness or injury. Contravention gives rise to a potential ‘general protections’ claim for compensation and penalties, including against individual directors or managers ‘knowingly involved’.

• The Workers’ Compensation and Rehabilitation Act (WorkCover) extends the prohibition against termination to one year of a compensable injury if the termination arises “solely or mainly” because the employee is not fit for work. Contravention attracts a max. fine of 40 p.u. (i.e. currently $4,400).

• Also, anti-discrimination legislation in most States prohibits discrimination on the basis of impairment. Naturally, a court is likely to take a particularly harsh view of discrimination by an employer where the impairment arose from a workplace accident.

Courses of Action

Employers should also consider guarding against stress, anxiety or depression related illnesses in the workplace.  These are particularly difficult to defend against, they are becoming increasingly common, and damages can be as much or more than any physical injury.  Take all reasonable steps to assist an injured employee in returning to work, including considering the potential for other duties. Termination can only be considered as a last resort, and must follow a complete inquiry, including a functional capacity assessment and safety risk analysis.

Having a clear plan before an injury occurs is infinitely better than trying to address these issues ‘on the fly’.

For further information on these topics, please contact:

Ben Warren – Director

M: 0402 003 364

E:  bwarren@ellemwarren.com.au

Richard Ellem – Director

M: 0403 464 875

E: rellem@ellemwarren.com.au
 

Our people have acted for (and against) most of Queensland’s leading insolvency practitioners in a wide range of matters, including on a speculative basis, with particular expertise in security disputes (including PPSR), preference and director-related transaction claims, and public examinations.

Expertise

• Asset protection and structuring advisory.
• ASIC investigations and prosecutions.
• Bankruptcy administration issues, including:
  • Alternatives: Part X administrations;
  • Annulments;
  • Permission to travel overseas;
• Creditor petitions and bankruptcy proceedings.
• Directors’ duties and personal guarantees.
• Employment and GEERS insolvency issues.
• Landlord advisory for tenant in administration.
• Liquidation administration issues, including:
  • Challenging liquidator decisions;
  • Changing liquidators;
  • Liquidator remuneration applications.
• Preference Claims.
• Public Examinations.
• Receiverships (both creditor and court appointed).
• Retention of title and ownership disputes.
• Secured creditor assessment and advisory.
• Statutory demands and winding up proceedings.
• Trusts and insolvency.
• Voidable transactions.

Experience

• Numerous proceedings forcing bad debtors into insolvency administration, both corporate: statutory demands and winding-up applications; and personal: bankruptcy notices and creditor’s petitions.
• Obtaining orders for substituted service when debtors are evading conventional service, including service by text message, post to former solicitors, and by newspaper advertisement and social media.
• Applications to set aside or stay bankruptcy notices on the basis of pending appeals or supported by applications to set aside judgment.
• Applications to set aside statutory demands on the basis of non-delivery and genuine dispute.
• Numerous preference claims, both for and against liquidators and bankruptcy trustees, including in contested cases against the ATO.
• Numerous disputes in regard to security enforcement and validity, including relating to real property (land), personal property (ASIC registered and PPSA) and relating to intangible and intellectual property.
• Conducting investigations and public examinations for liquidators of the responsible entity for forestry managed investment schemes with over $90 million of investors’ funds under management; advising in regard to securities and insurance issues, and advising about claims available against directors for negligence, misleading and deceptive conduct, and breach of fiduciary and other duties under the Corporations Act 2001, competition and consumer, and legislation governing managed investment schemes.
• Involvement in high-profile insolvencies, including:
  • Storm Financial Limited;
  • The Wattle Group;
  • Queensland Paulownia Forests Limited.
• Public examinations, including examinations of accountants, lawyers and family of the bankrupt or company officers, including a case that established the bankrupt had been using an alias for decades.