Is it better to be infamous or famous?

Do you know what ‘infamous’ means? It’s about being famous from doing bad things. For example, Ned Kelly is ‘infamous’ not ‘famous’.

Why is it that we remember the people who do bad things and fail to recognise those who do good things? Tell me, who remembers the name of:
• The shooter at port Arthur in 1996;
• The name of the man who carried out the Strathfield massacre;
• The name of the little girl that was kidnapped at Mount Druitt and killed;
• The name of the family whose child was killed by a dingo;
• The name of the head of Al Qaida at the time of the world trade centre terrorist attacks.

You remember most of these names. You will even probably remember names around the matter intimately. Can any of you however remember the name of:?
• The ambulance man who climbed through the hole to look after Stewart Darvis during the avalanche in the snowy mountains;
• The name of the fireman who sat amongst the rubble talking to the woman when the Newcastle workers club collapsed during the 1989 earthquake;
• The name of the helicopter pilot who was involved with the rescue of people from the ocean during the Sydney to Hobart race;
• The name of the last Victoria cross winner in Afghanistan; and
• The name of the leader of the Australians who went over the Kokoda Trial.

Yes, some of you remember one of these names. Many of these names will not even come up under Google. These guys have done wonderful things in their lives. They should be famous, but why are they not.

So the conundrum is, why does one bad act make you recognised but one good act can completely go unnoticed?

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

To get in touch with Bailey, please email info@leveragegroup.com.au

Immoral Developments

Real Estate agents often look bad due to the Vendors they represent. This story is one of greed and one where the agent lost out.

In Curtis Road Kellyville, a Vendor/Developer subdivided land into 15 lots. He sold this land in mid 2013 to a number of mum and dad purchasers. The mums and dads sold their properties so that they could build on the land as soon as they settled on the purchased subdivided property.

The contact of sale had the standard sunset clause. Each party was permitted to rescind the contract if the developer was unable to register the subdivision by 30th of June 2014. The developer was required to use his best endeavours to have the properties registered prior to the sunset clause.

The Vendor/Developer did not obtain registration by the sunset date. Although the DA was approved in 2011, the section 96 amendment was lodged in January 2013 and all works had been completed by 2013, the 30th of June was not met. Ironically, after the enhanced valued in the Hills District in October, November and December 2013, the Vendor/Developer conveniently took 6 months to have the property ready for registration.

On 2nd July 2014, the Vendor/Developer rescinded all contracts except for 2. Based on early estimates, the property value has increased by $80 000 – $100 000. The windfall for the Vendor/Developer is in the vicinity of $1.5 million. The property has returned to the market through Castlehaven Real Estate within 2 weeks of the rescission.

Many of the mum and dad investors may be completely shut out of the market. Those people sold before the increased values in late 2013, and will not have the resources to purchase anywhere else in the market place. One of the consultants put it in a nutshell when he said that “the developer has acted completely immorally”

There are 3 issues here;
1. What can the purchasers do?
2. What’s going to happen to the first agent’s commission?
3. What will the second agents, Castlehaven, have to do when selling the properties?

There is no doubt that, this will create a legal mess. Once the property is registered, all purchasers will lodge a caveat on the property. The vendor has an opportunity to lapse that caveat by giving the purchasers 3 weeks’ notice that the caveat will lapse. The purchasers will then have an opportunity to appear before the Supreme Court to seek specific performance of the contract.

A case called Hall vs. Foster (2012) considered a similar situation. In that case, the vendor was unable to obtain his windfall by rescinding the contract. The court ordered the developer to pay all the increased value to the purchasers.

Purchasers are now joining together to conduct a class action against the developer to either:
• Obtain specific performance of the contract: or
• Cause damaged to be paid by the developer

The first agent is entitled to the commission if their agency agreement has been correctly drafted. The agency agreement should state that “The agent is entitled to commission upon settlement or upon the termination of the contracts of sale.” If this type of clause had been inserted into the agency agreement, the agent is still entitled to the commission.

Finally, what does Castlehaven have to do? The fact that any consequential sale may be held up based on a court action, must be considered a material fact. Material fact is set out in Hinton vs. Commissioner of Fair Trading (2005) defining material fact means something that is “significant or relevant.” The upshot of the Hinton case was that section 52 of the Property, Stock and Business Agents Act 2002 requires an agent to disclose anything with a significant relevance to the perspective purchaser. Castlehaven will therefore be required to disclose to all perspective purchasers to possible delays and the possibility of the sale not being achieved.

The Vendor/Developer’s action will and has caused problems for the purchasers, the first agent and the second agent. Presently, it appears that all those parties have acted appropriately and will continue to act appropriately. Agents need to be papered in relation to their agency agreements and their disclosure so they do not face business, legal or personal risk.

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

To get in touch with Bailey, please email info@leveragegroup.com.au or call 1300 438 538

Q&A Is the front door common property or the responsibility of the lot owner?

Who is responsible for repairs to the front door of the unit? Is permission needed to install deadlocks? Leanne Habib, Premium Strata provides the following response.

Question: Is the front door common property or the responsibility of the owner? Do lot owners need to seek permission to install deadlocks?

I am the Secretary of an owners corporation and we are wondering, is the front door common property or the responsibility of the lot owner.
I have seen an opinion from an NSW solicitor on your site but some of the contributors to that discussion raised more questions than there were answers.

Some questions I have around front door onwership and resposibility in strata:

1. Does the owners corporation need to provide permission to an owner who wishes to install deadlocks?
2. Can strata impose a special locking system on all owners?
3. Is the Committee entitled to retain a key to all front doors (something which does not appear sensible)?
4. Who looks after the painting of the inside of the door?

There is nothing in our bylaws about ownership of front doors.

Currently, we have a situation where a front door was damaged as a result of an attempted break-in but we have several older cases where the locks or the doors have become damaged or faulty and we have always stated the owner is responsible.

Your advice and clarification would be greatly appreciated.

Answer: Subject to any notations on the strata plan and applicable by-laws, a front entrance door is common property.

Subject to any notations on the strata plan and applicable by-laws, a front entrance door is common property.

As front doors are “fire-doors” for fire safety, the installation of additional deadlocks, peep-holes etc can adversely affect the fire safety of the door and result in the Owners Corporation not being able to obtain annual fire certification. Any work which detrimentally affects the fire safety of a building requires the passing of a by-law under the new strata legislation.

In relation to an owners corporation imposing a type of locking system, generally, this would require the passing of a by-law.

Painting of the inside of the front door is an individual owner’s responsibility because it’s part of the cubic lot space of the unit (generally speaking).

If you refer to the common property memorandum on the NSW Fair Trading website (which must be adopted to apply to any particular scheme), original and replacement locks and any automatic closers etc form part of the common property.

This article has been republished with permission from the author and first appeared on the LookUpStrata website.

Q&A Charging lot owners who use the visitor parking spaces

The following questions about visitor parking spaces have been received into the site. Leanne Habib, Premium Strata provides the following response.

Question: Some residents in our building use the visitor parking spaces as an additional parking spot. Is it possible to increase levies for these few residents and not all lot owners?

My inquiry is in relation to a small-sized strata plan in NSW with most lots being owner-occupied.

There are 5 visitor parking spaces on common property which is mostly occupied by the residents – both owners (who are also strata committee members) & tenants.

One owner (a strata committee members) feels this isn’t right as their visitors and other residents do not get to use the visitor parking spaces as, by the time they are home from work, all visitor spots are taken by other residents.

Please note that all lots have their own individual parking, but due to having multiple vehicles they utilise visitor parking spaces if empty.

The concerned owner has complained to our Strata manager and put a proposal to the strata committee. Regarding the proposal, most members responded that they would rather use the visitor parking spaces to park their vehicles inside their building at night after work, rather than park on the street and leave the visitor parking spaces empty as, during weekdays, visitors to the building are minimal.

However, this one owner feels that in doing so they are being unfair to other residents and their visitors. They recommend an increase in levies for those residents who want to use the visitor parking spaces.

As levies are paid according to unit entitlements, is it possible to increase levies for a few and not all? This owner keeps insisting that it is not fair that they all are paying the same levies and other residents get to use common property more. They recommend that they pay less levies compared to others or they pay some sort of parking fee for using visitor parking spaces.
Most committee members are against this idea of a parking fee and would also prefer not to pass a by-law for ‘exclusive use’ of visitor parking spaces as the spots are being used as and when available by all residents.

Please advise if such an arrangement can be made where those residents who frequently use visitor parking spaces pay some additional amount to their strata levy.

Answer: First you need to ascertain from the development consent for the building exactly how many visitor parking spaces are required by law.

Before answering the question on whether such an arrangement would be legal, you would need to ascertain from the development consent for the building (available from Council) exactly how many visitor parking spaces are required by law.

Visitor car parks are to be used for bona fide purposes, therefore, charging residents for a contrary use would not be recommended.

The scheme could, however, apply to modify the council conditions and, subject to consent, convert some of the spaces to common property parking spaces and then licence, lease or otherwise charge fees for use (or give exclusive use which they are resisting) (rather than increasing levies).

Subject to council consent, you could also apply to convert them to individual lot property and sell off any extra spaces for valuable consideration (to be paid to the owners corporation). This will require a subdivision of the strata plan.

This post appears in Strata News #205.

This article has been republished with permission from the author and first appeared on the LookUpStrata website.

Turnbull or Morrison

Last week the office of Prime Minister received another stake in the heart. Eighty-five people were able to sit down in a room and re-elect the Prime Minister. These eighty-five people are considered to represent the 24 million people in Australia. They themselves felt that they were more positioned to know who the Prime Minister should be than Australia.

I should have wept tears of blood considering my feelings about respecting the office of Prime Minister. Whoever is there should be respected as our leader. They deserve some respect and support for doing what they’ve done.

Regrettably, I felt no tears for Malcolm Turnbull. What happened to him was exactly what he did to his predecessor Tony Abbott. Therefore, one should live by the sword that one draws.

The Australian people are fed up with it because it has now happened to us four times in the last ten years. Julia stabbed Kevin. Kevin stabbed Julia. Malcolm stabbed Tony. And Dutton stabbed Turnbull. The only saving grace for Australia is that the Brutus this time around will not be the new Prime Minister.

Scott Morrison was not the architect of the Prime Ministerial coup. All he did was stand for the head of the Liberal party when the position became vacant. Mr Morrison has had a foot in both camps of this Liberal government and hopefully he can draw both camps together. He has handed out an olive branch to the previous Prime Minister, Mr Abbott, to become the indigenous envoy. It is a starting point for them to bridge the gap between the factions within the group.

Unfortunately, this is not the first time this has happened. We still think that the last ten years is the only time that Prime Ministers have come to power based from attacks within their government. This is not true; Paul Keating came to power against Bob Hawke by undertaking a coup from the back bench when Bob sacked him as treasurer. Malcolm Fraser resigned as defence minister in 1970 as a means of bringing down Bob Gordon and bringing Billy McMahon to power. There are many other examples of this in our history.

As a side note, we should look to Peter Costello for his dignity. Like Keating, he had been promised that he would have his opportunity to be Prime Minister by his leader, John Howard. When Bob Hawke reneged on his agreement, Paul Keating mounted a coup under a Westminster system. When John Howard reneged, Peter Costello went to the election as the treasurer backing both the Liberal government and his Prime Minister.

Our Australian Constitution Westminster system allows for the few to change Prime Ministers at their whim. Without a referendum, we cannot change this habit. Unfortunately, we rely on the dignity of a few, like Peter Costello, to ensure that the highest office in the land is respected.

Let’s hope that the week that was isn’t the future that is! Let’s hope Scott Morrison can provide us with a direction and a group of people who are willing to govern for Australia and not politic itself.

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

To get in touch with Bailey, please email info@leveragegroup.com.au

The Lending Conundrum

I’ve discovered a recent conundrum with the lending market for self-employed persons. We all know that the lending market has dried up, which is strangling the property industry. McDonald Jones Homes has indicated that they have had no sales in the past month, purely based on lending.

At one time in history, people started businesses to create wealth. There is a saying that, “no one gets rich by working for another.” This does not ring true when you look at executives in the banks and many of the blue chip companies around Australia. Even Australia Post’s CEO was on a salary $5.6 million. Yes, you can get rich by working for another!

The lenders have now determined to demonise self-employed persons. Meaning many create such a high bar for self-employed persons that it is better to just rent. Moreover, if you are self-employed and need to apply for a low doc loan, you will pay a premium for being lent some money. It is confounding that a lender is willing to accept three payslips from an employee to approve a loan but may not lend to the employer at all.

I recently saw some people pooling their money to purchase a unit. One of the buyers was the boss of one of the others. The vendor had no problems with the payslips issued by the employer to assess the person’s ability to repay the loan. Interestingly enough, the company who issued that payslips was not considered on the same basis. In fact, they were required to pay a higher rate and their income was not accepted.

The brokers and institutions involved indicated that a business can go broke at any time. I laughed, if the business went broke, the payslips be useless. Talk about ticking boxes! Provided you fit into a box you get a loan. It’s not about the banks protection, it’s about the customer’s complying with some guideline put out by APRA or ASIC.

Some people might say that is only small businesses that can fail. Well, your job can be very quickly extinguished. A pay slip does not indicate that you are a high performer and does not look behind it to see if your performance reviews are indicating that you stand to lose the job. Additionally, working for big organisations doesn’t help. Ask people who are working for the banks how they now feel about their job security. I once worked for the government and since 1983, Australia has made smaller and smaller governments, so employment is not secure there either.

Things like payment history, payment of rent and longevity in business, are just a few common sense principles which banks could apply when giving out a loan. Those who are striving for success in their own businesses can’t receive the fruits of their labour. Those employees who benefit from that success can achieve their outcome.

It’s a weird world and it is just too hard to fathom.

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

To get in touch with Bailey, please email info@leveragegroup.com.au

Strata and the 21st Century

I had the opportunity the other day to review an electronic voting system for strata. I won’t mention the company who owns the software, but it was incredibly simple.

The software firstly allowed a portal to be ascertained by any member of the lot for that owner’s strata scheme. From that portal, notices were able to be distributed to all lots for any particular meeting. The system had the template agenda items with a facility to add other agenda items.

A lot owner would receive the agenda and would be given the opportunity to vote on all motions. The system provided for three features which are fascinating:

  • It allows persons to go on their portal and vote at any time up until the date of the meeting;
  • It allows the votes to be calculated in the system; and
  • If a poll is requested, it provided a poll result.

Many say electronic voting is subject to fraud. By the way, anything is open to fraud. When acting as a proxy, I have turned up to a meeting and no one has asked me for my photo ID. Additionally, I have never seen a lot owner requested to prove their identification. Anyone could attend that meeting on behalf of a person.

I hear you saying, “the neighbours would know who they are.” Now, in Sydney and Melbourne, I’m not quite certain that is true. I lived in a strata complex for over twelve months and not one person knew my name. Least of all, they would not have known which unit I belonged to. With no one knowing you and the strata manager never meeting you, anyone could front up and say they represent an apartment. It appears that, fraud is as rife in public meetings as it is electronically.

The beauty of an electronic meeting is that it stops the conflict. People can vote secretly, without being bullied or confronted by their detractors. It allows sufficient means of voting.

Too often people think that strata meetings are about debate. Yes, debate can be really useful as a means of resolving common property issues. But we don’t live in that society anymore; we live in a society where people polarise their views and don’t want to hear the views of another. Hence, if this is the state of play, what is the benefit of a debate?

Electronic voting is coming! People will be able to vote from their computer, IPads and IPhones. Anyone who tells you the oldies won’t be able to handle it are barking up the wrong tree. The aged may not manipulate the internet like the kids of today but they are completely okay with electronic banking, the information superhighway and the ability to use things like Netflix and Stan. This won’t phase them and nor will it stop effective outcomes. In fact, we may have more attend and vote at meetings than ever before.

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

To get in touch with Bailey, please email info@leveragegroup.com.au

Working in a War Zone

In my job of acting as an owner’s representative, I was requested by a number of owners to come along and represent them at an owner’s corporation meeting. I must admit, I thought that my owners were overreacting and that it was purely a neighbourhood dispute. I couldn’t have been further from the truth.

This owner’s corporation was about as dysfunctional as I’ve ever seen one. In fact, I believe it is absolutely dangerous because there is a powder keg which has been lit and may explode. I actually had to spend time with my clients, indicating that they needed to cool down because the police will be involved at some stage.

It was clear to me that the strata committee controlled the owner’s corporation. They were well versed in managing the proxies of others and scaring those who oppose them away from attending meetings. I initially thought it was a control game but after attending the meeting, there may be some greater issues at play which I am yet to identify.

The strata manager himself probably aided and abetted the strata committee. As another strata manager pointed out to me today, “we must go where the numbers are, so we can keep our job”. This means that, the strata manager will decide where the numbers are and avoid his or her duty of care to the owner’s corporation.

Let’s look at one example. There were two motions placed on the agenda which were obviously not written correctly under the Act. The chairman allowed them to be placed on the agenda and then used his powers as chairman to strike those motions down as being unlawful. To accept the motion knowing you are going to strike it down later is obviously going to cause some dissention within the ranks.

A strata manager also struck some motions down as being illegal. When questioned about the law, he didn’t know what laws had been violated, but still struck them out.

The strata managers are there to represent all owners and not one group of owners in an owner’s corporation. By turning a blind eye to behaviour which is wrong, the strata managers themselves can actually be held liable for any damages which are suffered by others. Instead of the naughty strata committee being the ones who are held liable, a professional who has the insurance, is the one who will become liable.

Where strata schemes exist where the bias has been taken one way or the other, you need to find a strata manager who is versed in the arts of mediation and negotiation. It is not necessarily about being impartial, because none of us really are, it is about finding mechanisms and means of assisting the parties to reach decisions even though they hate each other. Too many strata managers take the viewpoint that we just need to be done and get out of there and let the parties fight their own battles. That is both negligent and quite frankly, dangerous.

A Justice of the Criminal Court of Appeals once told a story which reminds me about dealing with neighbourhood disputes. The story goes like this:

“In a Sydney suburb, two neighbours were in disputation over three wooden pylons. One day, the seven year old daughter of one of the neighbours, playing with a ball in the backyard, found it went through the fence and followed it. In following the ball through the fence,  she trampled upon all the plants of the next door neighbour. The next door neighbour came out of the house and yelled at the little girl who ran home crying. The two owners of the houses came to the fence and had a screaming match. Sometime after they returned to their kitchen’s seething until their husbands returned home. Their husbands both were sent to war on the front porches. They were having an argument when one of them went inside to grab a gun and returned to the porch saying that he meant to shoot it over his head. Unfortunately, he shot the man in the chest and killed him outright. One daddy dead and the other one in jail for life. All for 3 pylons.’

We can forget the fighting, we are not fighting for sheep stations or for issues of real principle. Little things can grow to quite a disastrous level. Both lot owners, belligerent parties and strata managers need to think quite clearly when disputes are becoming heightened.

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

To get in touch with Bailey, please email info@leveragegroup.com.au

Will They Ever Listen?

On the 8th of August 2018, Justice Parker of the Supreme Court, made a statement that an agency agreement may not be enforceable where the agreement uses the words, “as per contract.” Justice Parker asked the question, why the parties should enforce an agency agreement where the contract is not existence and it is not attached to the agency agreement.

For fifteen years, Leverage has been teaching the court participants to not use the words, “as per contract”. Agents have constantly said it is not, “practical” to do anything else.

Justice Parker’s words clearly show that it is “impractical” to do anything else.

Justice Parker had two problems with the words, “as per contract”:

  1. He was concerned that the contract was not yet in existence. His actual words were, “how can I enforce a contract (meaning the Agency Agreement) where the reference doesn’t exist?”; and
  2. He was concerned that the contract referred to in the agency agreement was not attached to the agency agreement.

Considering the contract isn’t in existence at the time that an agency agreement is executed, both things are impossible. In fact, it is “impractical” to even consider Justice Parker’s decision.

Well, what do you do?

  1. Where something is to be negotiated by the parties, you need to use the words, “to be negotiated by the parties.” For example, where it says, “any special conditions”, you could use this term. Do not use nil because special conditions will always operate as part of the contract.
  2. Where it asks you questions regarding, “easements, covenants etc” you use the words, “unknown to agent.” This is valid because you do not have a contract in existence.

If an agent wants to protect their commission, avoid the words, “as per contract.” If you ignore these words, you will hear the following words from a court, “the commission is not payable as per contract.”

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

To get in touch with Bailey, please email info@leveragegroup.com.au

Sorry Officer

Some say we live in a nanny state! “Whatever that may mean”. I know some men who have some fairly good fun and are worthwhile at the party. I’m a little bit uncertain about what “nanny” means.

If it means, the fun police are at work, I completely get the saying. Government and bureaucrats are operating in this country as a means of ensuring that fun is expunged.

Overnight, a man has been charged with driving an unregistered vehicle and being unlicensed. The man was caught in his suburb, riding around on an electronic esky.

What has the world come to? The electronic esky was dangerous to no one, except the idiot driving it. It was just a belligerent policeman wanting to bash someone in Sydney’s West. The man was just wanting to have a little fun. Interestingly enough, he wasn’t charged with drink driving, so he wasn’t drunk. He was just riding on his esky.

We understand that government must protect us against ourselves on certain occasions. But we are so safe now that there are no thrills in life. Kids can’t climb trees, people can’t party after 1 o clock, you can’t abseil off the Harbour Bridge etc.

For the policeman who charged this man, “humbug”. You may not like him, but just let the man live. The rest of us want to live, too. It won’t be long until the police find a way to create a fun tax to prevent us from having any fun without them taking a fee for it.

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

To get in touch with Bailey, please email info@leveragegroup.com.au