Last week I wrote about a young resident of a Brisbane complex who allegedly yelled racist abuse at a family and threatened to blow up the building. That was a police matter from the first word.
Read: When Hate Moves Into the Building
But what happens when the behaviour falls short of a crime? When it is just rude, obnoxious and relentless? Justice Gregory Sirtes of the NSW Supreme Court had to answer that question last month.
The case involved Easthaven, a mid-century waterfront building in Darling Point. For about five years, the adult daughter of one owner made life in the building miserable. The court heard evidence of music blasting through the night, paint spilled in common areas, water poured onto balconies below, a door camera recording the hallway, and complaints about volunteer directors sent to their employers and a long list of government agencies. Two sets of tenants next door ended their leases and left.
Easthaven is company title. The shareholders voted to cancel the owner's membership, which meant giving up the apartment. She challenged the vote and lost. Justice Sirtes held that her daughter's conduct counted as her own, because she permitted it or failed to take reasonable steps to stop it. The daughter has 28 days to leave.
That power does not exist in strata. Should it?
Why could Easthaven do what a strata scheme cannot?
Easthaven could do what astrata scheme cannot because company title runs on the company's own constitution. Owners hold shares, and the articles can let members cancel a membership for serious breaches. Strata largely replaced company title in NSW after 1961 by giving owners secure title to their own lot. Secure title is the whole point of strata. It also means a strata scheme has no equivalent lever.
In strata, the tools are by-law notices, fines, tribunal or adjudicator orders and, in serious cases, an injunction. Every one assumes the person will eventually comply. Most do. A small number never will. For them, a fine becomes a cost of doing business. An owner can lose a lot over unpaid levies through debt recovery. Nobody loses a lot for making everyone else's life miserable.
Read: The Trouble With ‘Tone’
What did it cost Easthaven to get there?
Getting there cost Easthaven agreat deal. Press reports say residents paid special levies of up to $3,500 a month to fund the legal fight. Volunteer directors had complaints lodged with their employers and professional regulators. One director's law firm investigated her and cleared her. The complaints went nowhere, but the damage to the people involved was real.
Even with a clear power in its constitution, Easthaven needed about five years and a Supreme Court hearing to remove one occupant. A strata scheme in the same position would still be issuing notices.
Read: The Behaviours Wearing Down Australia's Strata Managers
Should strata have the power to force a sale?
Strata should have the power to force a sale, but only as the final step in a long and transparent process. My proposal has four safeguards.
First, only a court can make the order. Never a committee and never a general meeting. Second, the owner must have breached a specific earlier order, so they have had a clear warning and a fair chance to stop. Third, the sale happens at market value through an independent agent, and the owner keeps the proceeds after costs. Fourth, the court must consider lesser options first, such as removing the occupant rather than the owner, and take account of any mental health or disability issues.
Easthaven carries a warning for investors. The court held the owner responsible for the person she let live there. Any forced-sale power in strata should work the same way. Owners who install a problem should own the problem.
The risk is real. A forced-sale power in the wrong hands becomes a weapon. Some committees already use by-laws to settle personal scores. An owner who asks hard questions about the accounts must be protected. An owner who terrorises the building must be removable.
Read: Six Court Cases, One Leaking Shower, and Zero Winners
What should committees do in the meantime?
Committees should, in the meantime, build their evidence as if the power already existed. Log every incident with the date, time, witnesses and any photos or recordings. Issue every notice properly and on time. Seek orders when the evidence supports them. Report anything threatening to police immediately.
A professional strata manager runs that process calmly, keeps it lawful and stops it from becoming personal. That protects the residents being targeted and the volunteers trying to help them.
Most buildings will never need a forced sale. The few that do have no answer under the current law.
Michael Teys has more than 30 years’ experience as a strata lawyer and academic and has owned 11 strata management agencies throughout Australia. He has a Master of Philosophy (Built Environment) and Bachelor of Laws. He lectures and writes widely about strata management issues in Australia and internationally.
