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Is Sufficient Compliance With Section 62 of the Strata Schemes Management Act 1996 Good Enough?

There appears to be a body of supporters who take the view that Strata Schemes Adjudicators will usually decline to make orders under sections 138 and 62 of the Strata Schemes Management Act 1996 (“SSMA”) in favour of lot owners against owners corporations for breach of section 62 of the SSMA in circumstances where the owners corporation is seeking to rectify the defects to common property by taking proceedings against the builder and developer for breaches of statutory warranties under the Home Building Act 1989.

We understand that there are going to be arguments for and against the above view and appreciate that this article may “rattle the cage” of some of our readers. However, we think it’s a good time that we turn the argument upside down on its head.

We make the following observations:

Firstly, decisions of Strata Schemes Adjudicators are not binding on each other or any Court.

Secondly, although his Honour Justice Forster in Beck & Anor v Owners Corporation Strata Plan No. 64622 [2009] NSWSC 962 stated that it may well be “arguable” that it is sufficient compliance with section 62 of the SSMA for an owners corporation to take action against the builder and developer for breach of statutory warranty, his Honour declined to make a ruling on the merits of such an argument. Therefore, the decision, although persuasive, is not legally binding on a Strata Schemes Adjudicator and lower Courts.

Thirdly, we take the view that the NSW Supreme Court decision of Seiwa Pty Ltd v Owners Strata Plan 35042 [2006] NSWSC 1157 which held that an owners corporation’s duty under section 62 of the SSMA to maintain and repair common property extends to oblige the owners corporation to do things which could not be for the benefit of the lot owners as a whole or even a majority of them is still good law and should be followed.

Fourthly, an owners corporation is not obliged to wait until the owners corporation’s proceedings against the builder and/or developer are finalised or settled before an owners corporation discharges its strict duties under section 62 of the SSMA.

If you have any queries in relation to the above, please contact us on (02) 8710 3430.

Please note that the information contained in this article is not legal advice and should not be relied upon as such. You should obtain legal advice before you take any action or otherwise rely upon the contents of this article.