Statutes Amendment (Strata Schemes) Bill

Second Reading

Adjourned debate on second reading.

(Continued from 13 October 2021.)

The Hon. V.A. CHAPMAN (Bragg—Deputy Premier, Attorney-General, Minister for Planning and Local Government) (10:50): I rise to speak on the Statutes Amendment (Strata Schemes) Bill 2021 and indicate to the house, and in particular to the member for Waite, that whilst I thought, when he was presenting this bill, it might have some merit and be able to remedy some ill, he did not ultimately identify any ill that needed to be remedied. I have taken advice on the matter as to how we currently manage the strata schemes and indicate that, on the basis that it is not a matter which at this stage needs to be considered in the affirmative, the government will be opposing the bill.

I thank the member for Waite for bringing to our attention all the matters that need to be reviewed from time to time in relation to how we structure the rules around people who cohabit in the same place—not always in the same dwelling. They need to be able to resolve these matters. We have community titles, we have strata titles and we have legislation to cover these matters incorporated in the Community Titles Act 1996 and the Strata Titles Act 1988.

Essentially, this bill is to remove the requirement for an owner of a strata area or a community strata area, where there are only two in the lot, to comply with the need to ordinarily agree to structural building on common property. The closest thing we otherwise have in the community is the rules that are probably the bane of most MPs' lives, and that is under the Fences Act and disputes between neighbours and how they might determine, through a notice procedure, what kind of fencing should be between their boundaries and when it needs an upgrade and the like.

At the moment, under the Strata Titles Act, unless a particular strata plan indicates otherwise, the boundary of a unit is the internal surface of the walls, floors and ceilings, and in most strata corporations the roof, guttering, external walls and foundations are common property. Internal walls are the owner's responsibility. The unit holders, where there are only two units, own the structure and therefore can legally contract with a builder, etc., to undertake structural building work/improvements and then own the improved property comprising the two units.

Under section 29 of the Stata Titles Act, a unit building may not be altered without special resolution of the unit holders. A special resolution requires that not more than 25 per cent of the owners vote at a properly convened meeting of the corporation. For a two-unit group, both owners must agree to achieve a special resolution. As described in the second reading, the intent of the bill is to remove effectively the veto power of the neighbour or the second owner for the external work/ improvements proposed.

Because of these long-established positions, a person who has bought into a strata group of units, even where there are only two, has the expectation that the exterior appearance and structure of what is essentially a jointly owned building of two units will not be altered without their agreement. Notwithstanding the usual planning controls on such work, it would be a significant change to owners' rights to suddenly take away their joint decision-making power over the jointly owned property. Further, the default position is that the opposing owner, as part of the strata corporation, would become jointly liable financially for the second improved unit, including for maintenance, increased insurance premiums, etc.

Service infrastructure is often shared in strata groups, such as shared water, sewerage and electricity lines and meters. These jointly owned infrastructure and supporting easements for the right of access, etc., will likely need to be interfered with if building work is undertaken on one side of the building comprising the two units.

Questions then arise about the potential liabilities arising from that and the impact on the enjoyment of the other unit. South Australia, like other jurisdictions, does sensibly exempt two-lot schemes from several of the requirements in the legislation relating to operating sinking funds and other financial management requirements. They are not the subject of the bill, but I think it is important to note that our principal legislation does acknowledge that a two-unit facility may have different obligations from multi-lots.

Informal and preliminary search indicates that no other Australian jurisdiction provides for an owner in a two-lot scheme to undertake structural improvements on a lot without the agreement of the owner of the other unit. Discussions with the peak industry body, Strata Community Australia (SA), indicate that they were not consulted prior the introduction of the bill and hold similar reservations about the liability for works to common property as well as potential impacts to property valuations.

As acknowledged by the member for Waite, there is provision in the STA for the owner to apply to the Magistrates Court for relief if an owner claims that a decision of the corporation—effectively the other owner in this scenario—is unreasonable or where a dispute arises between the two owners. Of course, court action can be costly; that is acknowledged. It is preferable, obviously, to be able to deal with the matter, but we also need to take into account the rights of the dissenting owner to enable them to be properly taken into account.

From time to time, this question is raised about whether these sorts of disputes should be dealt with in SACAT's jurisdiction. Property matters have remained with the Magistrates Court. There is a determination which even prohibits SACAT dealing with it, from a residential tenancy point of view, where the landlord might be an interstate party. We do have to really fit in within the rules that we have. I am happy to work with the member for Waite on any further ideas that he might have in this regard, but I am unable to support this bill, but otherwise invite him to continue the discussion further.

Ms MICHAELS (Enfield) (10:57): I rise to make a contribution on the Statutes Amendment (Strata Schemes) Bill and indicate I am the lead speaker for the opposition on this. I commend the member for Waite and I understand there are certain constituents in his community who have had to face the issue of having two-strata or community lots and this concept of the power of veto preventing any building or construction work on one title.

I understand that frustration. I also understand there may be concerns in relation to, for example, if someone wanted to paint their house bright pink, what that would do to their neighbouring property. I propose to move an amendment, which I will talk through at a later point in the committee stage. What I think is a reasonable compromise is to support the member for Waite's bill on the basis that an amendment is put through so that if planning or building approval is required under the Planning, Development and Infrastructure Act, there is that oversight and the Planning and Design Code will come in.

In that case, I think the power of veto should be removed. If it is something like painting, which would not otherwise require planning approval, then I think the power of veto should stay to prevent any devaluing of property from someone doing something that does not require planning and development approval. On that basis, as we move through the stages of this bill, that is the position that we will take on this side of the chamber. Again, I commend the member for taking this up on behalf of his constituents and look forward to the progress of the bill.

Mr DULUK (Waite) (10:58): I thank the Attorney for outlining the government's position and the member for Enfield for the opposition's position as well, and for outlining some proposed amendments, which I hope we can discuss in the committee stage. I want to respond to some of the remarks from the Attorney. These proposed amendments will only, of course, relate to the situation where the power of veto will not apply, once a proposal has received appropriate planning approval and council approval.

This does not allow in a two-unit strata corporation for one unit holder in that strata corporation to make any substantial changes to the outside of the strata that they see fit. It will only be any changes that have, of course, appropriate council permissions, and that can simply be an amendment to a carport or a second-storey balcony, which may need strata approval per se, but one strata owner is in disagreement with that. It really looks at a way of removing any vexatious neighbourly dispute.

I appreciate that there will be some changes to strata property that do not need council approval, and I think that those mitigating factors are foreshadowed in some of the amendments proposed by the member for Enfield. I thank both the government and the opposition for their contributions, and I move that this bill be read a second time.

Bill read a second time.

Committee Stage

In committee.

Clause 1.

The ACTING CHAIR (Mr Pederick): While we are sorting out some of these amendments, are there questions on clause 1, the title?

The Hon. V.A. CHAPMAN: I would ask the mover of the bill, the member for Waite, whether he has made any inquiry with any stakeholder in relation to the matter since he has introduced the bill and, if so, what was their position?

Mr DULUK: No, I have not. This is very much a constituent-led issue and to that, obviously, some of the stakeholders who would normally be involved with this have not had the opportunity to do so. As I have often found the case with other private member's bills that I have brought forward in engaging some of the government stakeholders to seek their position, a response being received is very tardy and is quite often received after any private member's bill is debated or even passed in this place.

The Hon. V.A. CHAPMAN: I am not quite sure I understood that answer, but I would have to say that with government bills that come to this house it is the usual practice that people are consulted, including the stakeholders. It is the usual practice and the practice of this government to continue to do that.

Members interjecting:

The ACTING CHAIR (Mr Pederick): Order!

The Hon. V.A. CHAPMAN: My question is: having constituents in your area who may be at the end of a vexatious neighbour who is not prepared to agree to the psychedelic painting of the person who has complained to you, have you had any complaints from others who say, 'I'm offended by people who want to do something that is patently inconsistent with the area,' and therefore there is a dispute?

Have you had any complaints from those where they have been the subject of, for example, a Magistrates Court determination if they have been unhappy with that, because I am assuming that your boundary does not go through the middle of the two units?

Mr DULUK: Thank you, Attorney: I think that was more of a statement than a question. No, I have not had any determination or any constituents put to me a situation of a magistrate's determination. As most members know, some interest that I take in this house is consumer protection law, and I think that is evident in this bill before us and in some of the other legislation I have brought to this place.

Where there are some anomalies I think in our consumer protection laws—and stratas are an example, and insurance and crash repairers are probably another good example—where we can look to fix what I think are some anomalies in legislation, I think we should as a parliament, and ultimately that is up to the parliament to decide.

The Hon. V.A. CHAPMAN: If it is consumer protection, I therefore assume that it is the consumer protection of the person who wants to be able to do something without consent of their neighbour and not the consumer protection of the person who is objecting to it. My next question, though, is: have you had any constituents complain to you that they have had to go to the Magistrates Court to have this issue resolved?

Mr DULUK: Not specifically.

Clause passed.

Clause 2.

The Hon. V.A. CHAPMAN: I ask the mover of the bill, the member for Waite: what is the nature of alterations or additions that your constituents have raised with you where consent has been unreasonably withheld from the other party?

Mr DULUK: Attorney, in relation to your question, I think as you know, constituents come to all their members with a range of issues, some specific, some general. What my proposed amendment to the Community Titles Act and the Strata Titles Act looks to do is create a fairer situation. For example, if you are a resident in a strata corporation with three unit holders, the legislation rightly says that you need two out of three unit holders to agree to any changes required under the act, which means that no one unit holder has an absolute power of veto over any other resident in that same strata unit.

Of course, where you only have two unit holders in a strata corporation, effectively one unit holder has a 100 per cent power of veto over that other unit holder. All this basic amendment seeks to do is take away that power of veto only in the circumstance once any proposed changes have council approval. This is not looking at two neighbours just blatantly saying, 'I don't support the changes that you want to make to your balcony looking out east,' for example. That might be an example. Council approval needs to be sought and it needs to be granted, and of course with any council process as well there naturally is a complete ability for anyone to object in that council approval process for building works.

This is not looking to blatantly take away one person's right to stop a project or to approve a project. Council approval will still need to be sought and, as most members are aware, most councils are pretty difficult to deal with when it comes to building processes. We are not looking for an abrogation of responsibility for decision-making. We are just saying that where council approves for a project to occur on a strata unit where there are only two parties that power of veto does not apply.

The Hon. V.A. CHAPMAN: If you cannot identify for the benefit of this any alteration or addition that has been complained of, let's consider the hypothetical that has been put by the member for Enfield, that is, somebody wants to have the front area painted bright pink and proceeds to do so. In the absence of this bill, they would need to get the permission of the other party to do so. They do not need council permission to actually paint the area. Do you think that that is a matter that they should be able to proceed to do without obtaining the consent of the other party?

Mr DULUK: I suppose this bill does not propose to understand that hypothetical question. My amendments only relate to the position where you need to have council approval. In a position where you do not need to have council approval, the current status quo of the legislation applies.

The Hon. V.A. CHAPMAN: Do you have any idea at this stage what the prescribed work will incorporate?

Mr DULUK: Of course, it is any prescribed work that would need council approval to add to someone's property.

Clause passed.

Clause 3.

Ms MICHAELS: I move:

Amendment No 1 [Michaels–1]—

Page 2, line 16 [clause 3(1), inserted subsection (1a)(b)]—After '2 lots' insert:

if the work is approved development under the Planning, Development and Infrastructure Act 2016

Amendment No 2 [Michaels–1]—

Page 2, lines 17 to 18 [clause 3(1), inserted subsection (1b)]—Delete 'on a lot in a strata scheme consisting only of 2 lots' and substitute 'referred to in subsection (1a)(b)'

The second amendment is consequential on the first one, and I think this clarifies the situation that has just been the subject of the conversation between the Attorney and the member for Waite. It is to clarify that the power of veto will be abolished in respect of work that is subject to an approved development under the Planning, Development and Infrastructure Act. Where there is council approval, which is what the member for Waite was discussing, the power of veto would no longer apply. If it is not subject to council approval, as the Attorney was stating—the pink house—the power of veto would remain in place to stop any devaluation of neighbouring property. That is my first amendment, and the second amendment is consequential on that.

The Hon. V.A. CHAPMAN: I do not have any questions of the mover of the motion, but I will indicate that I agree that this substantially improves the bill in the sense of its application. At the very least, this is to be able to cover what has already had an assessment, essentially, whether it is by the local council or another authorised authority; it may be SCAP, for example. In any event, there is some assessment being undertaken. I think that is a significant improvement.

Again, given this matter has just been raised today, we will have to have a look at that and consider in another place whether we agree to the bill generally with this improvement and with the relevant stakeholders. Naturally, we will need to do that. But I do not disagree with the member for Enfield's amendment, providing an improvement. Whether it is adequate to deal with the weaknesses otherwise of the bill we have yet to see.

Amendments carried; clause as amended passed.

Clause 4.

Ms MICHAELS: I move:

Amendment No 3 [Michaels–1]—

Page 3, line 8 [clause 4(1), inserted subsection (1a)(b)]—After '2 units' insert:

if the work is approved development under the Planning, Development and Infrastructure Act 2016

Amendment No 4 [Michaels–1]—

Page 3, lines 9 to 10 [clause 4(1), inserted subsection (1b)]—Delete 'on a unit in a strata scheme consisting only of 2 units' and substitute 'referred to in subsection (1a)(b)'

These are consequential on the first amendment and introduce the concept that work that will not be subject to a veto must be subject to approved development and approval under the Planning, Development and Infrastructure Act.

The Hon. V.A. CHAPMAN: For the same reasons, in relation to amendments Nos 3 and 4 being presented by the member for Enfield, I accept that this obviously narrows the application of the bill in relation to two-unit landholdings and, for the same reasons, I indicate that we will consider that between the houses.

Amendments carried; clause as amended passed.

Title passed.

Bill reported with amendment.

Third Reading

Mr DULUK (Waite) (11:16): I move:

That this bill be now read a third time.

The house divided on the third reading:

Ayes 22

Noes 22

Majority 0

The SPEAKER: There being 22 ayes and 22 noes, the votes being equal, I give my casting vote for the ayes. The motion therefore passes in the affirmative.

Third reading thus carried; bill passed.