Strata Committees

(Private Member's Statement, 04 June 2019, Legislative Assembly, NSW Parliament)

More than one million people live in strata communities in this State, and the sector is growing rapidly. Apartments already represent 80 per cent of homes in my electorate. Increasingly, I hear from owners and occupiers about problems for which the available dispute resolution processes are difficult, expensive and slow—if not non-existent. We urgently need reform to promote consumer protection, social cohesion and better living. I am particularly concerned about corruption, serious maladministration or problems that put residents' health and safety at risk and where mediation and tribunal action do not help. I raise two examples recently presented to my office. In one building five owners separately reported serious allegations that the strata committee and strata manager collude to extort funds from owners. They say that works are conducted without owners corporation approval, essential work that affects non-committee members is never approved, jobs are contracted to committee associates at inflated prices, common property works are charged to individual lot owners and the strata manager ignores owners other than members of the strata committee.

One owner could not get the committee to approve an electrician to fix her bathroom light after a pipe burst and flooded the fixture, even after EnergyAustralia confirmed that using the light posed an electrocution risk. I understand from owners that the chairperson and treasurer of the committee are married and hold multiple proxies, which they demand from letting agents in the building. It is unclear whether their proxies exceed permissible limits. Owners tell me that the strata manager gives the chairperson and treasurer unfettered access to the owners corporation's funds without needed approvals. They tell me that funds were used to pay legal fees to fight other owners taking action about these concerns without approval at a general meeting. Now owners are scared to pursue their rights in court.

In a different building, constituents reported that the ceiling in five rooms of their top-floor apartment has leaked since they moved in in 2015. They cannot use their kitchen when it rains and they cannot sell or lease the property because of damage and mould. The problem was clearly identified as the roof membrane but the strata committee denied responsibility for repairs. My constituents tell me that the committee also refuses to fix a non-compliant fire door connected to their home. The owners have spent over $200,000 in legal fees taking their case to the NSW Civil and Administrative Tribunal [NCAT]. Despite multiple rulings in their favour, the committee continues to refuse to conduct repairs and NCAT has no power to force compliance. The owners have few options other than to keep pursing the matter through the tribunal and the courts. Meanwhile, their health and safety is at risk and their home does not function.

As in the previous example, these constituents tell me that the committee used building funds for legal fees to fight their case without approval at a general meeting. They also told me that the members blocking essential building works wield power through holding large numbers of proxies. The Government's responses to my representations show how difficult it can be to get fairness in schemes where serious corruption and dysfunction exist. Owners concerned that their strata manager and committee collude to misappropriate funds were told to raise their concerns about the strata manager with the strata committee or to ask the strata manager to add a motion to a general meeting to discuss the matter. Owners who were unable to get urgent repairs to damage that creates serious risks to health and safety were told to try mediation and tribunal action, despite the likelihood of a drawn-out case and lack of remedy even if the tribunal rules in their favour.

The Owners Corporation Network reports that this sort of serious dysfunction occurs regularly. In other cases of corruption, serious maladministration or when someone's health and safety is at risk there are oversight bodies that can investigate, such as the police, the Australian Securities and Investments Commission or SafeWork NSW. Fair Trading is not sufficiently resourced or empowered to enforce the law. We urgently need a dedicated commissioner for strata who has oversight and audit powers to review serious issues. A commissioner would address other strata challenges including defects, fire safety, proxy farming, short-term letting, renewal and sustainability.

Strata communities are more than just consumers of property services; they are constituents of the fastest‑growing form of housing. They warrant a dedicated statutory officer to provide support and to advise government. Strata committees increasingly deal with complex issues and I support the owners corporation strata committee support service proposal for providing independent support, advice, training and representation funded by a small fee on levies. If owners in dysfunctional buildings cannot get help, apartments will be seen as an unattractive investment and living option at a time when population and economic growth depend on high-rise living. I call on the Government to create a new commissioner for strata living.