Australia: New statutory obligations on strata in WA – Will it lead to fewer disagreements?

Last Updated: 11 April 2019
Article by John Park

Strata development, ownership and use can be beset with misinformation, misunderstanding, disagreement and conflict as was alluded to in  What is Strata Titled Land and How is it Managed?

The Strata Titles Act 1985 (WA) (Act) is intended to be the basis upon which those things can be avoided or resolved.

Help may be at hand because, as the "second witch" in "Macbeth" (William Shakespeare, 1606) said: "something wicked this way comes".

That thing "wicked" are the recent amendments made to the Act (but not yet in force).

Whether the meaning of "wicked" in my above, perhaps poor analogy, is the modern or more informal meaning of the word, to mean: "excellent, or fantastic or cool" or the traditional meaning: "bad" (or somewhere in between), will likely depend on your interests, expectations, experience and willingness to impose the "new regime".

The amendments to the Act impose, amongst other things, a comprehensive statutory regime on strata managers in their dealings with Strata Companies to whom they are contracted (remembering, strata managers are not the Strata Company they manage and are not administrators of Strata Companies).  They are chosen contracted service providers that are often indispensable to some Strata Companies.

The amended Act codifies some of strata managers' obligations to the Strata Companies they manage including obligations to:

  • act honestly and in good faith;
  • exercise a reasonable degree of skill, care and diligence;
  • hold minimum education requirements as set out in the Regulations (not yet written);
  • hold professional indemnity insurance;
  • inform Strata Companies with whom they contract that they have or are likely to receive a commission from their role as a Strata Manager; and
  • have a written contract that includes statutory minimum terms; and
  • account for Strata Company money they hold in accordance with obligations set out in the amendments.

Will such things lead to fewer disagreements?

I anticipate they will lead to less disputation between Proprietors of Strata Schemes. However, I anticipate that it will increase the disputation between Strata Companies and their Strata Managers particularly as each group become informed about the affect and meaning of the "new statutory obligations".

I base that anticipation on an acceptance of the phrase: "knowledge is power" (Sir Francis Bacon or perhaps Thomas Hobbes or Thomas Jefferson); and that Proprietors and Strata Companies will become more knowledgeable about their rights and they will seek to enforce them against Strata Managers they perceive to be lacking.

The Parliament, by passing the amendments to the Act, appear to have a similar anticipation because the amendments include a swathe of changes to the dispute resolution processes available under the Act.

These changes include:

  • broadening the powers of the State Administrative Tribunal (SAT);
  • allowing the imposition of penalties by the SAT for serious breaches of By-laws;
  • resolving disputes between buyers and sellers of strata titled Lots;
  • some disputed debts; and
  • the summary dismissal of disputes.

The SAT's powers will likely be further broadened by the Regulations (still to come).

The SAT can also be called on, under different legislation, to resolve building and construction disputes over buildings on Strata Plans.

Considering both the increased use of strata buildings and the age of the original strata buildings, who is responsible for the remediation of required building defects or repairs?

When can such claims be brought (or a better question "when should they be brought")? Who is responsible for the remediation or repair? Who is responsible for the costs of the dispute?

Do the answers to the above questions change if the required building work relates to:

  • water leaks;
  • flammable cladding installed on strata buildings (or is that a secret);
  • concrete cancer (or similar problems often affected by definition);
  • the "need" to remove asbestos; or
  • the "need" to replace entire air conditioning, elevators or other prime supporting infrastructure.

(to name a few)

Building and construction issues relating to strata

Accepting the $170 billion valuation, the building and construction issues relating to Strata remain and are perhaps becoming a more important consideration for Proprietors and Strata Companies.

What is the value of an investment in a Strata Plan with water leaks, "concrete cancer", flammable cladding, asbestos and aged essential services.

Will it be a different value if the Strata Plan is well managed, the Strata Company well advised and knowledgeable and it has a good building maintenance plan with an adequate "reserve or capital works fund".

My most often experience is that Strata Companies avoid the need for legal advice until matters are highly charged, position based or almost lost in disputes with third parties including builders and/or developers.

Early advice often leads to a better and less reactive process and outcome. We can help.

In answer to my question about whether the amendments are "wicked", they are likely to be "wicked" in the modern informal meaning for the early learners and adapters; to the proactive people and organisation that are not trammelled by a fixed mindset.

This is a great opportunity for strata participants.

But, please note there are some interesting legal issues entangled amongst the reforms including "good faith"; what is that anyway? Is it "wicked"? I suppose we will all have to wait and see.

I have advised many Proprietors and Strata Companies and some, but fewer, strata managers. I also have given much advice about building and construction.

You do not need to and should not wait for a dispute to arise before seeking our advice about all things Strata and building and construction.

We can and are available to help any participant in the Strata regime (including developers and builders who I have acted for in various matters in relation to developments with a combined worth over $300 million).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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