Monthly Archives: November 2012

What Happens

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When You Are Not Too Big to Fail

The Federal Government has announced an inquiry into alleged price gouging by insurance companies for Residential Strata Title Insurance in Far North Queensland.

The allegation is that one of the insurance companies entered the market, cut premiums to win business, forced the others out of the market and has ramped up the premiums by up to 350%. Nasty stuff indeed, if true.

What is true, is that premiums north of Mackay have increased by this sum, making it virtually impossible to get a reasonable return on investment stock or to sell to owner-occupiers or investors.

The insurer blames the weather – the locals, lead by Warren Entsch the federal member for Leichardt, say that’s nonsense: North Queensland has always been a cyclone zone and insurance has always been provided so what’s changed.

Amid the competing allegations is a fundamental policy issue – should government intervene when a market fails consumers? The trouble for our FNQ friends is that government intervention in any market these days is not very fashionable, unless of course you are the US government and Wall Street overdoses on toxic loans. The European Central Bank is grappling with the same problem.

Here’s the bad news for FNQ – Wall Street at least, and the Euro zone perhaps, were thought too big to fail. Will the same be said for the home unit market in regional Queensland?

Unit owners in marginal Queensland seats where the state government goes to the polls in March 2012, need to make a lot of noise on this issue if they want state or federal intervention to drive down premiums.

Welcome to our nightmare

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When You Are Not Too Big to Fail
Queensland Unit Owners response to call for national contract law

The federal Attorney General, Robert McClelland, last week signaled his intention to explore options for a national system of contract law. As poor, suffering Queensland unit owners come to grips with the recent Merrimac Heights management rights case, their response might be, ‘Why should we suffer alone – welcome to our nightmare!’

Since 1997, Queensland has had an extensive array of laws governing long-term contracts between unit owners and resident mangers known as ‘management rights’. Effectively, these laws outrank the common law of contracts inherited from England and developed over centuries.

The unit owners of Merrimac Heights who recently lost a case commenced by their resident managers, will rue the day the government stepped into this area. If the common law was left alone, they would have succeed in their quite straight forward case that a body corporate can’t pay for things done to lot because a body corporate has powers only to spend money on common property.

Due to government intervention, this ancient legal principle of ‘ultra vires’ has been overturned and now it has been declared that a body corporate can contract for all manner of things to do with domestic services to lots, even if the body corporate doesn’t recover the cost of doing so from the members that use this service.
This is a disaster for Queensland unit owners. Developers and managers in Queensland have, over more than 40 years, shown no restraint or regard for the average unit owners by exploiting these statutory laws to long-term income streams sold off to the highest bidder.

Experience has shown, at least in strata living, government intervention in the commercial affairs of bodies corporate and their right to contract has been as successful in Queensland as the introduction of the cane toad.

Communicating Your Focus Effectively

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A focus, if it’s to be effective, must be simple and therefore memorable. Politicians have mastered this art. They have learned that to win an election the point has to be made simply and often. Whitlam pioneered this in Australia with the 1972 election slogan – ‘ It’s Time’. The message was simple, memorable, repeated often and was effective. Obama did it so well in the United States with – ‘ Hope We Can Believe In’.

An owners corporation may get its point across by screaming – ‘ LOOKING AFTER OUR COMMON PROPERTY’. It’s not as glamorous as changing the world but it is the simple point of the group and the point should be well made to its constituents. Buttons for committee members adorned with the words ‘Looking After Our Common Property’ may be over the top, but a simple flyer with this as the heading, slipped under the door or enclosed with every levy notice – being the only thing owners do in fact read, would be effective and might help explain what the committee does and how it is for the common good.

NCAT A New Super Tribunal In NSW

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On 26 October 2012, the NSW Attorney General Greg Smith SC announced a plan to integrate 23 of the state’s tribunals and bodies into a new overarching tribunal, NCAT in order to provide a simple, quick and effective process for resolving disputes. Mr Smith said,

The NSW Civil and Administrative Tribunal (NCAT) will be a one-stop shop for almost all state tribunals, ranging from relatively small bodies such as the Chinese Medicine Tribunal through to the much larger Consumer, Trader & Tenancy Tribunal.

NCAT will be divided into specialist divisions, which are:

1. Consumer, Administrative and Equal Opportunity;
2. Occupational and Regulatory;
3. Guardianship; and
4. Victims.

The President of NCAT will be a judge of the Supreme Court in order to ensure its independence and Deputy Presidents with relevant experience will lead the specialist divisions.

NCAT will have an internal appeals panel to provide for speedy and accessible reviews of most tribunal decisions.

NCAT is expected to begin operation in January 2014.

Below is a list of all the tribunals and bodies that will be incorporated into NCAT:

Aboriginal and Torres Strait Islander Health Practice Tribunal

Aboriginal Land Councils Pecuniary Interest and Disciplinary Tribunal

Administrative Decisions Tribunal

Charity Referees

Chinese Medicine Tribunal

Chiropractors Tribunal

Consumer, Trader and Tenancy Tribunal

Dental Tribunal

Guardianship Tribunal

Local Government Pecuniary Interest and Disciplinary Tribunal

Local Land Boards

Medical Radiation Practice Tribunal

Medical Tribunal

Nursing and Midwifery Tribunal

Occupational Therapy Tribunal

Optometry Tribunal

Osteopathy Tribunal

Pharmacy Tribunal

Physiotherapy Tribunal

Podiatry Tribunal

Psychology Tribunal

Vocational Tribunal Appeal Panel

Victims Compensation Tribunal

Posted by Chris Kerin and Chanele Mao

The Art of Catching People Doing Good

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In life and compliance, you get further with praise than you do with punishment. Ironically, finding reasons to punish is easier than recognising occasions to lavish praise. It seems failure irritates more than compliance pleases. That’s a shame, and the success of your strata organisation’s compliance push will depend on changing this human condition.

Anyone can thank someone for a job well done, although most don’t, but it takes a first class leader to realise the power of thanking someone for making mistakes. Of course, you are not thanking them for the mistake, you are thanking them for telling you about it so that something might be done to correct the situation and, moreover to ensure it doesn’t happen again. This is compliance at its best.

Introduction to Home Owners Warranty Insurance in Australia

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All Australian jurisdictions have mandatory home owners warranty insurance and each jurisdiction is regulated at state/territory level. However, each state and territory can differ on key aspects of the insurance.*

New South Wales

1. Coverage of $340,000 for each dwelling and 6 years for structural defects and 2 years for non-structural defects;
2. Excess not exceeding $250;
3. Pre-conditions for claim – three storeys or less (not including carpark) and insolvency, death or disappearance of the builder;
4. Period for notification – within 6 months of awareness.

Queensland

1. Coverage of $200,000 x no. of residential units and 6 years and 6 months from payment of premium for category one defects and 6 months from practical completion for category two defects;
2. No excess;
3. Pre-conditions for claim – three storeys or less (not including carpark);
4. Period for notification – within 3 months of category one defects becoming evident and within 7 months of practical completion for category two defects.

Victoria

1. Coverage of $200,000 for each dwelling and 6 years from completion for structural defects and 2 years from completion for non-structural defects;
2. Excess of $1000 for claims made after 5 years of completion / $750 for claims made between 3 and 5 years of completion / $500 for claims made between 1 and 3 years of completion and $Nil for claim made within 3 months of completion;
3. Pre-conditions for claim – three storeys or less (not including carpark) and insolvency, death or disappearance of the builder;
4. Period for notification – within 180 days of awareness.

ACT

1. Coverage of no more than $85,000 for each dwelling and begins at issue of building commencement notice and ends 5 years after the certificate of occupancy is issued (where the builder was not the owner of the land on which work was completed);
2. Excess not exceeding $500;
3. Pre-conditions for claim – three storeys or less (not including carpark) and insolvency, death or disappearance of the builder;
4. Period for notification – within 90 days of awareness of grounds for a claim.

* The above information is current as at 8 November 2012 and is not, and is not intended to be, legal advice. It is a summary only and should not be treated as a comprehensive review of applicable legislation.

Posted by Chris Kerin & Chanele Mao

NSW Ahead of the Rest on Access to Adjoining Land

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Obtaining access to adjoining land is sometimes a critical part of the building process. Given apartment buildings are commonly located in areas where development activity is more common, owners corporations should be aware of their rights to refuse requests for access to common property by builders. Set out below are the relevant provisions for some key jurisdictions.

New South Wales

In NSW, a party seeking to obtain access to neighbouring land can either:

1. obtain an order for access under the Access to Neighboring Land Act 2000 ( ANL Act ); or
2. apply to the Supreme Court of NSW under the Conveyancing Act 1919 for an order imposing an easement over land if it is reasonably necessary for the effective use or development of the applicant’s land.

Of the two processes, the ANL Act provides a simpler and cheaper alternative by enabling an access order to be made by a Local Court. The order provides a landowner with the right to enter land, remain on land and/or store materials on land. However, this interest is a temporary and unregisterable right of access.

An easement under the Conveyancing Act is defined as a right held by one property owner to make use of the land of another for a limited purpose (eg a right of passage). The order creates a permanent or temporary registerable easement and its scope is defined in the easement.

Queensland

Similarly, in Queensland a landowner can apply to the Supreme Court under the Property Law Act for an easement in similar terms to that provided under the Conveyancing Act in NSW. However, Queensland does not have any equivalent of the ANL Act.

Victoria

In late 2010, the Victorian Law Reform Commission recommended the adoption of legislation similar to that detailed above for NSW. Those recommendations have not yet translated into legislation.

Australian Capital Territory

The ACT currently does not have any equivalent provisions to those detailed above for NSW.

Posted by Chris Kerin

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