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Legislative Council - Fifty-Fourth Parliament, Second Session (54-2)
2021-12-01 Daily Xml
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Statutes Amendment (Strata Schemes) Bill

Second Reading

Adjourned debate on second reading.

(Continued from17 November 2021.)

The Hon. E.S. BOURKE (22:35): I rise to speak to the Statutes Amendment (Strata Schemes) Bill and will be the lead speaker for the opposition on the bill. The bill seeks to amend both the Strata Titles Act and the Community Titles Act. It seeks to address an issue which affects only a small number of strata or community title properties. While it is not unusual to come across strata or community title properties that comprise five, 10 or 30 units or apartments, there is a small subset which comprise just two properties.

These are somewhat unusual situations, where the strata or community corporation has little to interact over other than for insurance purposes. However, difficulties can occur when the owner of one of the two properties wishes to undertake a building work for the purpose of the relevant act's prescribed work. The two acts define prescribed work as:

(a) the erection, alteration demolition or removal of a building or structure; (b) the alteration of the external appearance of a building or structure.

I believe this bill came about initially through a conversation with a constituent in Waite with their local member. This constituent had obtained all the relevant approvals through the council for an addition to be built at the rear of a strata unit. However, as the property was part of a two-property body corporate, the owner also needed to obtain permission from the owner of the other strata property associated with the strata corporation. Unfortunately, this approval was not forthcoming. It is issues like this that the bill is seeking to address.

However, we must also consider the unintended consequences of this legislation. The constituent was seeking to make an addition to the rear of the property which may not have changed the property from the street front perspective. My colleague in the other place the member for Enfield, the shadow minister for planning (Andrea Michaels), regularly speaks with people right across South Australia about the new planning system and how it is negatively impacting our local streetscapes.

These strata and community title properties are usually designed so that they look very similar and are designed to remain that way to maintain their streetscape appeal. The passing of this legislation has the potential for significant changes to be made to those two properties involved in a strata or community title. The bill will permit the complete demolition of a building, not just allowing for a minor addition to be built on the rear of one of the two properties.

As I mentioned earlier, prescribed work includes altering the external appearance of a building. There is potential for a purchaser to enter into a contract to purchase one property of a two-unit corporate body, which may be one of two lovely little courtyard villas. However, on moving day, what was once two lovely little courtyard villas may now be one nice villa and a second brand-new bright pink eyesore, as permission will not be required from the other owner to alter the external appearance of the property.

While I appreciate the constituent's issue, the minor changes to these acts could have wideranging implications which may not be best for the South Australian community. This is why my colleague in the other place passed an amendment which removes the veto power of a unit holder for a prescribed work that requires building and planning approvals, while it leaves in place a veto for prescribed work that does not require planning approval.

I would like to thank my colleague in the other place, the member for Enfield, for her amendment to this bill and her commitment to ensuring a balance between the frustrations experienced by a two-property body corporate strata and the community's expectations in keeping in line with planning and design for our streetscapes.

The Hon. R.I. LUCAS (Treasurer) (22:39): The government opposes the bill. The bill would remove the requirement for the second owner of a two-lot strata or community strata scheme to agree to structural building work on the first owner's unit. Amendments made in the other place do not address the government's concerns about the bill. They improve the bill somewhat in that any work that has not been the subject of planning assessment approval will still require the approval of the owner of the second unit.

Essentially, as amended, it is only work that is an approved development under the Planning, Development and Infrastructure Act 2016 that can proceed in the absence of consent from the second-unit owner. The issue is that under the Strata Titles Act 1988, unless a particular strata plan indicates otherwise, the boundary of a unit is the internal surface of the walls, floors and ceilings. In most strata corporations, the roof guttering, external walls and foundations are common property jointly owned by the strata corporation. Internal walls are the owner's responsibility.

Accordingly, it is the strata corporation of all the unit owners, including where there are only two units, that owns the structure. Under section 29 of the Strata Titles Act, a unit building may not be altered without a special resolution of the unit owners. The special resolution requires that not more than 25 per cent of owners voted against it at a properly convened meeting of the corporation.

For a two-unit group, both owners must agree to achieve a special resolution. That is what the second reading speech is describing as effectively a veto power by the second owner. However, the outcome is not so different with the three-unit or greater group. Ultimately, the owner of one unit can be prevented from making structural changes to their unit if the majority of owners disagree, noting that is the strata corporation of all the owners that owns the actual walls, roof and so on.

Because of this long-established position, a person who has bought into a strata group of units, even where there are only two, has an expectation that the exterior appearance and structure of what is essentially a jointly owned building will not be altered without their agreement. Notwithstanding the usual planning controls on such work, it would be a significant change to their rights to suddenly take away their joint decision-making power over this jointly owned property.

Further, the default position could be that the opposing owner as part of the strata corporation becomes jointly liable financially for the second improved unit, including for maintenance, increased insurance premiums and so on. In strata groups, often service infrastructure is shared, such as shared water, sewerage and electricity lines and meters. This jointly owned infrastructure and supporting easements for right of access, etc., are likely to need to be interfered with if building work is undertaken on one side of the building comprising the two units.

Questions then arise about potential liabilities arising from that and impact on the enjoyment of the other unit. The Strata Titles Act and Community Titles Act do sensibly exempt two-lot schemes from several of the requirements in the legislation relating to operating sinking funds and other financial management requirements because financial management is more straightforward for two-lot schemes. However, this is a different matter and the government is not aware of any precedent for this measure in other jurisdictions.

There is provision in the Strata Titles Act 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. Although court action can be costly, this is a preferable way to deal with this kind of dispute so that the rights of the dissenting owner can be properly accounted for.

The bill would make the same change in relation to a strata lot under the Community Titles Act. Strata lots relate to multilevel buildings. As distinct from community lots where the unit lot owners own the walls and ceiling, etc., of their unit lot, strata lots under the Community Titles Act are similar to strata titled units in that the owner owns the interior space of the building.

Therefore, the same issues arise with this amendment as arise with respect to the amendments to the Strata Titles Act in the bill, with the likely compounding factor that this could be structural change to one unit in a multilevel building—that is, the bottom floor of a two-storey building comprising two units or vice versa. Additional impacts may therefore arise in relation to interference with easements of support provided by one unit in favour of the other.

These are the issues that the government considers would need to be carefully considered and worked through with consultation if this measure is to proceed. Without the benefit of consultation, however, it is not clear that the measure is workable in practice in light of the joint ownership of strata properties. It is for those reasons that the government continues to oppose the bill.

The Hon. J.A. DARLEY (22:44): First of all, I would like to thank the Hon. Emily Bourke and the Hon. Rob Lucas for their contribution and I commend the bill to the council.

Bill read a second time.

Committee Stage

Bill taken through committee without amendment.

Third Reading

The Hon. J.A. DARLEY (22:46): I move:

That this bill be now read a third time.

The Hon. R.I. LUCAS (Treasurer) (22:46): I indicate that the government is opposing the bill, but my understanding from discussions with crossbenchers is that the Greens and the Hon. Mr Darley are supporting the bill, so therefore there are sufficient numbers to see the passage of the bill and, given the lateness of the hour, I do not propose to divide at the third reading.

Bill read a third time and passed.

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