Unit News Online - UOAQ FEBRUARY

The official newsletter of Unit Owners Association QLD MARCH 2011FEB 2012

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EST.1978

See Inside February

Caretaker Assignments

Work Health and Safety Regulations Confuses Many

Strata and Community Title in Australia for the 21st Century

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uoaq.org.auUnitNews January 20122

BrisbaneP 3220 0959 or www.uoaq.org.au and request to communicate to a particular person Sue Ekert, Bob Boundy, Elle Young, Paul Cassels.Published by Unit Owners Association QLD

Editor Paul Cassels

Gold CoastWayne Stevens, Greg Carroll, Roger Dearing

Art DirectionDan Hancock - P 3162 8823 E [email protected]

Web DevelopmentJohn Connole - P 0439 879 740 E [email protected]

Help for MembersMembers of the UOAQ are welcome to contact committee members of the association for any help on any body corporate matter.

SponsorsWe appreciate the support of our sponsors to help us do the work we do. To become a sponsor of UOAQ, please contact Paul Cassels on 3220 0959

Unit Owners Assocation QLD6th Floor. 333 Adelaide St, Brisbane Q 4000E [email protected] P 3220 0959uoaq.org.au

DisclaimerArticles contributed to this newsletter are published as a service to members and do not necessarily reflect the opinion or policy of this Association. To contact the committee of the UOAQ for assistance with a body corporate matter please e-mail [email protected]

www.uoaq.org.au

Unit Owners Association QLD

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Coralie Mott (BA Dip Ed, Cert IV in BCM)Director and Body Corporate Manager

Suite 35, Level 6. “Northpoint”231 North Quay Brisbane QLD 4000Telephone 07 3211 4445Fax 07 3211 4410Mobile 0419 741 066Email [email protected]

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“Parity Factor rating in Brisbane and View Tax rating on the Gold Coast - what is next to make our homes and

From the Editor Paul Cassels

investments in apartments more unaffordable and unsustainable.

Next it could be a rate on the house structure on the land as well as a rate

based on the Unimproved Capital Value (UCV) of the land.

The local council on the Gold Coast is doing its best to deter would be owners of apartments by raising rates for local owners by the height of your unit in a building. In Brisbane the BCC has introduced a Parity rates just as “unfair”. The local elections are coming up, ask your local representative what are they going to do?

Keep the View or Parity Tax or remove it. YES or NO very simple. Please vote accordingly to their answer.

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uoaq.org.au january 2012 UnitNews 3

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1. Future contract extensions cannot be mandated or agreed in advance at the time of considering a current assignment to a new Caretaker.

2. Therefore the existing financial position of a new Caretaker needs to be substantially robust to demonstrate its ability to meet its financial obligations under the new contract it is purchasing, through to the contract’s expiry, without recourse to reliance on a future contract extension to relieve any borrowing needed to purchase the contract rights in the first place.

3. Any lender to the new Caretaker, in undertaking responsible lending, needs to require its borrower to demonstrate that it has sufficient financial resources to pay down any borrowing without reliance of a future contract extension which cannot be relied upon to underpin future value.

4. Under these circumstances, what can and should a BCC do when addressing this issue of giving consent to the assignment of a Caretaker’s contract to

a purchaser? 5. Apart from the usual assessment criteria,

a BCC would be well advised to seek the following additional written confirmations, as pre-requisites to giving consent to any assignment:

a) In the interview process and before confirming consent, query the new

Caretaker as to: –(i) their expectation in respect of any

future contract extensions; (ii) the financial necessity of future contract extension to provide any support to any financing arrangement

they are entering into to fund their proposed purchase;

(iii) how will the Caretaker’s financial position be affected in the event that

no future extension is granted, and the contract is allowed to expire without extension or renewal (which the owners have the right to withhold);

(iv) b) Require the new Caretaker to

confirm in writing the answers to the above 3 questions and confirm in writing that their financial position

is adequately robust to fund their contractual obligations through to expiry of the existing contract without

any extension.

b) Require a certificate from any lender to the new Caretaker that confirms

the strength of their borrower’s financial position to meeting the conditions set out above.

6. Given that a future contract extension can only be dealt with at a future general meeting which can’t be mandated in advance, (and the views of a BCC can

change from year to year) this highlights the initial strong financial position a new Caretaker needs to demonstrate to the BCC as part of the due diligence assessment process to ensure the suitability of the new Caretaker and to ensure minimization of any future risk of contractual default

7. Undertaking this type of due diligence should assist in precluding any subsequent claim by a then incumbent Caretaker if any future extension requests are rejected by the owners (as is their right)

8. Such an approach by the BCC should also assist in bringing back to reality the expectations of any prospective rights purchaser who may have – through the sales negotiation process – been given, or developed, an unrealistic expectation as to the likelihood of future contract extensions simply being a matter of course, and who may be about to commit to an acquisition price – or level of borrowings – based on that expectation).

Increasingly Body Corporates are saying “NO” to extensions and ‘starry-eyed’ or overly optimistic Caretakers will get caught in the cross-fire unless they undertake their own due diligence and base their purchase price on a value that is a realistic reflection of the current contract rights and term.

Caretaker Assignments – When Can Consent Be Denied?A an earlier article in the September 2011 UOAQ Online newsletter (‘And Caretakers are appointed by ...?’) highlighted the fact that a Body Corporate Committee (BCC) cannot withhold consent to a Caretaker’s Assignment without having a good reason for

doing so. The discussion below sets out an example of a situation in which consent to an assignment may be withheld, provided it is accompanied by the due diligence process prior to the new Caretaker committing to the purchase.

Continued from Last IssueBRISBANE - GOLD COAST - REDCLIFFEWorking with

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uoaq.org.auUnitNews January 20124

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2011 Work Health and Safety Regulations Confuses Many– Chapter 8 of the New Model Work Health and Safety Regulations is Difficult to ComprehendJanuary 1 2012 saw the introduction of a brand new Work Health and Safety Bill (Act) across Australia. Division 4 Section 244 of the new Act specifically mentions Bodies Corporates and their

increased requirements for Work Health and Safety. Enter Work Health and Safety Regulations 2011. New Regulations in Chapter 8 state the following:

Although it does give an exemption as follows:

With these new auditing regulations strictly enforced, understanding the nature of 2011’s Work Health and Safety Regulations can ultimately save you tremendous headache, fines and even lawsuits. Unfortunately, wording of these Regulations can be very confusing to the average individual, leaving hundreds of unintentional Bodies Corporate at risk. With hefty fines in the range of $6,000 to $60,000 due to non-compliance of Federal Regulations, the Government is cracking down.

Alarming statistics of Asbestos in Australia over recent years have provoked the Federal Government to take a more “hands-on” approach to ensure this issue is properly resolved. Hence the reason for the new Health and Safety Act, created to combat unnecessary Asbestos related deaths within the workplace. In the past 10 years alone, the Government has spent over $180 million removing asbestos from Queensland Government Buildings ($140 million in Queensland schools), a testament to the importance of this matter.

The most common question Bodies Corporate and Property Owners face is: “Are we required to have an Asbestos Audit conducted on our building??”

Although the 2011 Work Health and Safety Regulations provide confusing statements regarding the issue, here are the facts:

On one hand the government states:

“An owner or occupier of a unit, apartment or townhouse used for residential purposes does NOT have duties under the Work Health and Safety Act 2011” (Qld Government information Fact Sheet ‘Apartment owners occupiers and bodies corporate’)

On the other hand, it also says:

“The only time they Would have duties under the Act is if the premises becomes a workplace on a temporary or ongoing basis, for example, when a contractor is engaged to carry out work at the premises.” (Qld Government information Fact Sheet ‘Apartment owners occupiers and bodies corporate’)

To clarify this statement, please go to the Queensland Government’s Fact Sheet, “Residential Premises”.

Note: Queensland Government is the only State to offer any clarification to date.

In other words, for every property built before 2004 an asbestos audit MUST be conducted BY:

419 Work involving asbestos or ACM—prohibitions and exceptions (1) A person conducting a business or undertaking must not carry out, or direct or allow a worker to carry out, work involving asbestos. Maximum penalty: In the case of an individual—$6 000. In the case of a body corporate—$30 000.

(2) In this regulation, work involves asbestos if the work involves manufacturing, supplying, transporting, storing, removing, using, installing, handling, treating, disposing of or disturbing asbestos or ACM.

(c) maintenance of, or service work on, non friable asbestos or ACM, fixed or installed before 31 December 2003, in accordance with these Regulations;

422 Asbestos to be identified or assumed at workplace (1) A person with management or control of a workplace must ensure, so far as is reasonably practicable, that all asbestos or ACM at the workplace is identified by a competent person. Maximum penalty: In the case of an individual—$6 000. In the case of a body corporate—$30 000.

uoaq.org.au january 2012 UnitNews 5

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1. The Body Corporate a. You ARE required to have an Asbestos Audit conducted if you employ ANYONE, at ANYTIME within your building. *The moment anyone is employed, for any reason, you become bound by LAW to perform a necessary audit on your building. b. If you have short term Rentals or any Commercial premises on site, you ARE required to have an Asbestos Audit conducted. c. You engage an on-site manager as an employee. 2. The On-Site Manager a. If the Body Corporate engages the on-site manager under a contract 3. Individual Trade Contractors a. When the Body Corporate manages a residential property and does not employ an on-site manager, does not have short term rentals, does not have any commercial component, each and every trade contractor has a responsibility under the Act and must have an audit conducted prior to conducting any works.

Who is responsible for Asbestos found in the workplace?

A person with management or control of a workplace must ensure asbestos or ACM at the workplace is identified by a competent person. (Section 422 - Model Work Health and Safety Regulations 2011)

Why should the Body Corporate undertake the asbestos audit? 1. In many cases you have a responsibility under the Regulations to undertake the audit. 2. Heavy Penalties apply for failure to adhere to the new Regulations. 3. If you allow the on-site manager to engage the consultant, you will be paying for the audit plus an on-cost. 4. You will not be able to engage any trade contractors if they need to undertake an audit prior to commencing any jobs. 5. You have a Duty of Care to the persons living within the property to ensure a safe and healthy environment.

Should the internal of units be audited?YES

From advice received, it can be argued that any asbestos materials within the unit had been installed as a structural component of the building, and as such is a responsibility of the Body Corporate.

A case in question is the vermiculite spray to the ceiling of a unit. This spray most likely would have been installed for fire and/or acoustic rating. Thus, a structural component of the building, and a responsibility of the Body Corporate.

This spray could contain up to 80% asbestos and is extremely dangerous and poses a very high risk to the occupants of the unit.What would materialize if a person living or working within the unit or building comes into contact with asbestos materials and develops an asbestos related disease? How much liability would the Body Corporate face? The numbers are endless…

Although these regulations may seem somewhat “harsh” in nature, it is important to understand why this new law is currently in effect.

• Next to the United Kingdom, Australia has the HIGHEST rate of asbestos- related cancer deaths in the world.• WHO estimates that 107,000 people Die each year from asbestos-related lung disease• According to cancer experts, an additional 25,000 Australians are expected to die over the next four decades from mesothelioma• Deaths from Asbestosis increased 253% from 1998 to 2008• Experts suggest the number of deaths from mesothelioma will peak somewhere between 2014 and 2021

As the death toll continues to rise throughout Australia, Asbestos prevention is a major concern for everyone. The money you spend now to ensure your workplace is safe and in accordance with new regulations will ultimately save thousands, if not millions of dollars and lives in the future. When Asbestos is found within the workplace, the body corporate or Property Manager becomes fully responsible. Take advantage of this warning and protect

your workplace by a “licensed Professional” who is capable of performing an audit.

Remember, it has become mandatory for every workplace constructed before 2004 to undergo an Asbestos Audit.

Not only will you be saving yourself from possible bankruptcy and life-threating lawsuits, ultimately destroying both your reputation and your community, but also ensuring every resident and worker you employ is safe and without risk of becoming another asbestos-related statistic.

The time has come where everyone must do their part to ensure a safer Australia. The ground rules have been established, the statistics have been presented, and the notification has been delivered. What will you choose to do?

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uoaq.org.auUnitNews January 20126

Griffith University’s Griffith Business School hosted its fourth biennial Strata and Community Title in Australia for the 21st Century conference at the Surfers Paradise Marriott Resort & Spa on 7-9 September 2011.

The two and a half day event attracted 225 delegates and is now the largest independently convened forum of its type bringing together the broad range of stakeholders associated with the strata and community title sector. These stakeholders include: unit owners, strata title managers, resident managers, property developers, managers of ‘strata title hotels’, real estate agents, local government planning officers, hotel / resort managers, bankers, tradespeople, quantity and land surveyors, academic researchers as well as federal, state and local government policy makers involved in the sector.

Following the opening of the conference by Griffith University’s Pro Vice Chancellor (Research) Professor Ned Pankhurst, the Honourable Max Trenorden MLC (Western Australia) summarised the main content of the inaugural Strata Title Policy Makers Forum that had convened in the morning immediately prior to the conference. Other speakers at the forum included David Ford (Deputy Director-General, Department of Justice and Attorney-General, Queensland Government), Leanne Hughes (Director of Legislation & Policy, Land & Property Information, NSW Government) and Gary Bugden OAM (Chairman, Mystrata).

The conference’s over-riding objective is to stimulate debate and research that will support well-informed development of the sector and strengthen partnerships across the spectrum of stakeholders. Particular aims of the 2011 conference included:

• Examining evolving strata title policy issues• The nature of challenges associated with designing and managing strata title schemes• The relative effectiveness of ‘front end’ controls and local government’s influence in the delivery of sustainable harmonious strata title living• Strategies employed by hotel chains in the face of increased strata titling• The adequacy of unit purchaser protection• Government’s role in strata title mediation and committee member training• Evolving environmentally sustainable initiatives in strata titled complexes • The circumstances in which long term service contracting works well • The inter-play of law and power in strata titled complexes

Quick NewsFeature Story

Strata and Community Title in Australia for the 21st Century 2011: Chairperson’s Conference Commentary

Management Rights | Levy Collection | Dispute ResolutionCommunity Management Statements | Review of By-laws

Establishment of Schemes | Construction DefectsLot Entitlement Disputes | Exclusive Use

Conveyancing

BODY CORPORATE MATTERS?ENGAGE THE BODY CORPORATE LAWYERS

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Search strata informationShare your thoughts and experiences Ask questions Find strata specialsts

Our online community forum lets you search for answers to common questions and share your views about the daily challenges within strata.

To join the conversation or to search for strata information go to

uoaq.org.au january 2012 UnitNews 7

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Professor Chris Guilding, Conference Chair

Griffith Business School, Gold Coast CampusGRIFFITH UNIVERSITY QLD [email protected]

■ Financial Management ■ Agendas & Meetings ■ Administration of your Scheme ■ Maintenance ■ Dispute

Resolution ■ Compliance

Hartley’s Body Corporate Management

‘Looking after all your Body Corporate Needs’

internationally• The evolving role of banks over a strata titled complex’s lifetime• Insuring strata title complexes against large disasters• A visionary perspective on strata title’s future evolution.

Aside from seeking relevance for all stakeholders, the conference agenda is formulated with a view to generating discussion that can inform government policy making for the sector. It was notable tha the conference attracted 19 government officials from a broad range of Australian states and territories.

Gold sponsorship support was received from Body Corporate Services and Strata Choice. Silver sponsorship support was received from the Australian Resident Accommodation Managers Association, CHU, the Gold Coast City Council, StrataCash Management and Strata Unit Underwriters. When considered in the context of the economic climate prevailing at the time of the conference, the level of sponsorship support received represents a strong affirmation of the high regard that the event now commands. It also serves as testimony of a growing appreciation of a need for considered debate, discussion and research in connection with the challenges confronting the strata title sector. In addition to sponsorship support, trade booth exhibitions were provided by Bing Mail, Boss Building Maintenance, Dulux, Ebix Trades Monitor, GlobalX Information, Minc Services, and VingCard Elsafe.

Two new initiatives were trialled at the 2011 conference. Firstly, an on-line discussion forum was established in advance of the event. This initiative recognises that the uptake of web-based discussion forums provides an opportunity to promote conference related discussion beyond the time period that a conference formally convenes. Two of the 2011 conference sessions reflected on insights arising from these on-line discussion forums. Secondly, the conference opened a parallel stream on the afternoon of the event’s second day. This parallel stream represented an explicit attempt to raise the conference’s level of engagement with local government authorities and from all reports suggest this initiative has been successful.

The attendees’ consensus view was that the event was again an overwhelming success, achieving much in terms of high quality debate that will inform future research and policy making. Reports from delegates also indicate that the conference was highly successful in terms of strengthening partnerships across the spectrum of stakeholders involved. Of the many conference outcomes, it is significant that the event has triggered discussions amongst owner associations directed towards developing a national representative group for owners.

One notable aspect of the conference is the CD that is developed and provided to all delegates as part of their registration package. Appearing on this disc are papers prepared by the 2011 conference speakers’ papers, together with copies of 46 speakers’ papers from all of the Strata & Community Title in Australia for the 21st Century conferences dating back to 2005. This signifies that the disc represents one of the world’s largest literary resources on multi-owned housing, and it certainly represents the largest single resource of commentaries and discussions of strata title issues conducted from a range of Australian stakeholder perspectives.

uoaq.org.auUnitNews January 20128

Feature Story

The Lot Entitlements Issue:An Owner’s Perspective of the Drama being enacted in one Building:

Many owners are unaware of the importance of lot entitlements. Your contributions to the Body Corporate i.e. LEVIES are based on lot entitlements. Higher entitlements INCREASE your levies and lower entitlements REDUCE levies. The value of the lot entitlements also influences the resale of units, general rates and water consumption charges.

In April 2011, the State Government introduced legislation to address issues with the system of lot entitlements in strata title buildings. It was relevant for our building.

Consequently we analyse the PAST and the PRESENT and speculate on the FUTURE in our building relating to this issue in the hope that we will assist other owners.

THE PAST• The original lot entitlements in our building were in place for around ten years.

• In 2002, the new lot owner for a commercial lot was dissatisfied with the lot entitlements and proposed an amendment to the existing schedule. The owner was a professional person and a due diligence should have revealed the high lot entitlements prior to his purchase.

• The caretaker and committee commissioned an alternate proposal roughly based on the “Equality Principal”. The parties agreed on this proposal. 4 committee members passed it via a flying minute and the matter was taken to court. One owner who attended reported that the magistrate was told that all lot owners agreed to the changes. That was totally false.

• We had no general meeting, no committee meeting, no time set aside for discussion.

• Several owners submitted written objections.

• You have to question the duty of care of both the Body Corporate Manager and solicitor, paid for by the Body Corporate, in not informing owners of their rights.

Owners did not understand the complexity of the regulations.

Ten years later we find that a change in lot entitlements is a RESTRICTED ISSUE for the committee. IT REQUIRES A VOTE OF THE BODY CORPORATE. Those who benefitted avoided the possibility of a negative result and simply went to court on an illegal committee vote. This situation reflects both the anomalies consistent with this industry, and unfortunately the ignorance of owners which allows their rights to be ignored.

75% of the building received increased levies and only 25% had reduced levies. Some of these were very large reductions.

• Consider also that at this time, every lot that was advantaged had been purchased with owners having full

ability to access their lot entitlements and levies prior to purchase. They all knew that larger units involved higher body corporate levies.

THE PRESENTThe current legislation allows these changes to be reversed.

In our building 5 of the 7 lots currently owned by committee members were advantaged in 2002. The current chairman had benefitted to a very high degree. Many buildings must be in this position.

Consequently, having little faith in the committee, in late September, 2011 we submitted a private motion to revert to the pre-adjustment lot entitlements for the Annual General Meeting (AGM). We were advised we could do this by the Body Corporate and Community Management (BCCM) Information Service. The Body Corporate Manager (BCM) and committee, as the administrative arm of the Body Corporate, were then required to supply official information as outlined in the legislation and carry out their obligations.

So Simple! Really?

This alternative to submit a Body Corporate Motion, rather than a committee motion has subsequently, been affirmed as being appropriate by several official sources. However, in hindsight it has provided an excuse for delays.

The delays and errors began:

• The BCM felt the motion should have gone directly to the committee. • He advised the chairman to rule the motion out of order.• The AGM material contained a massive error. Two documents setting out the current and pre adjustment lot entitlements had identical figures. • The error has never corrected despite copious emails and phone calls requesting this.

Regardless, at the AGM, owners present persevered and, under strong pressure the chairman did not declare the motion invalid and the motion was passed.

2 months after the AGM, the Body Corporate has received no further information from the committee or BCM. A solicitor has been employed to clarify the position.

THE FUTUREBased on the current position, we expect delays. We anticipate challenge. Based on the latest advice from the Body Corporate Solicitor we expect to have a new CMS registered in the future. We intend to continue the fight for our rights.Unfortunately in this industry there are no certainties.

OWNER: Gold Coast, QUEENSLANDCONSUMER PROTECTION FOR UNIT OWNERS

uoaq.org.au january 2012 UnitNews 9

There have been several adjudications about pets & despite some buildings banning pets, recent adjudications establish precedent as to an entitlement to keep a pet on the grounds that it is a normal domestic activity & so a Body Corporate has no power to abolish such activities.

The adjudication (attached) makes invalid some conditions of pet approval that many buildings have - for example a pet must not be more than 10KG. The argument is the condition is arbitrary & without any underlying justification & possibly not able to be practically enforced. There is also the continuing catch cry that every case must be considered on its merits.

Judge in Pet Justice

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The foundation stone therefore is that By Laws must be reasonable (given each unique set of circumstances) & associated conditions within a by law or imposed by a Committee if any, must have a rationality or underpinning justification in a way that requiring pets to be under 10KG does not. So it might be for example, a very large dog of a certain placid breed, may be acceptable if its owner was on the ground floor & it never was taken within the common areas of the interior of the building. Regrettably, owners with self interest in mind, will sometimes (usually?) have the greatest of difficulties in understanding the pedantic legalese subtleties that the adjudicators use to determine “reasonableness on its merits”!

There are some fine points in this argument/adjudication, but the absence or invalidity of “arbitrary” criteria means there is likely to be a lack of clarity in By Laws & in fact add to disputation because what is reasonable often covers quite a range of grey & especially when such decisions are made by a layperson Committees of variable insights, skills & knowledge. The adjudicator seems to recognise this problem when he comments. “I have some sympathy for the body corporate because the more it tries to regulate by defining parameters, the more likely it is to fall into the error of creating by-laws which will be held to be unreasonable.” It follows therefore that a legitimate set of By-Laws will now be a set of vague motherhood statements & increasingly one can only find out what is reasonable on its merits by asking an Adjudicator! Post Script; Is it then reasonable that residents vote unconditionally to extend management rights without testing the market or considering alternative possibilities?

Can these decisions be ruled as invalid because the action is unreasonable and quite obviously arbitrary? ;-)

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Community Power $8,884

Building Services $9,590

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CONSUMER PROTECTION FOR UNIT OWNERS

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Who’s Eating your Pie..

Fire Control$4,842

Insurance $5,282

R & M - Lifts $5,282

BCMCharges $5,282

14%

13%

9%

8%8%7%

6%

35%

MinorExpenses

$4,190

Community Power $8,884

Building Services $9,590

Caretaker

$24,220

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