A lobbyist in disguise!

“You look like an 11 year old, walk like an 11 year old, talk like an 11 year old. But you’re a lobbyist in disguise”

The title of this article; a takeoff from Elvis Presley’s song “Devil in Disguise.” Following the Parkes Elvis Festival which I went to recently, it seems the songs are still in my head.

But it also seems that to get anything done these days you have to be small, about 11 years old and a just a little bit feisty. That appears to be the case with Parramatta Council anyway.

On returning home from my very…err… ‘entertaining’ trip to Parkes, I noticed in the foyer of my apartment building that a member of the Executive Committee, or perhaps the Strata Manager, had posted a cut-out of a newspaper article, no doubt as a warning to owners and tenants. The headline of the article read:

“Laith’s call gets council attention.”

The body of the article detailed how within days of Laith, an 11 year old boy, complaining about rubbish and discarded furniture being dumped in his street, Parramatta Council moved to crack down on illegal dumpers. Well done Laith!

A media release on Council’s website dated 7 December 2009 read “Residents and body corporations who are suspected of illegally dumping rubbish in public spaces will now be issued a Clean-Up Notice and have to pay $433. If they fail to comply with the Clean-Up Notice, an on the spot fine of $750 for individuals and $1500 for corporations will be imposed.”

Another media release on Council’s website dated 14 December 2009 detailed Parramatta City Council’s Lord Mayor, Cr Paul Garrard, urging residents to “dob in a dumper” via the hotline 1800-DUMPED. Although the phone number sounds more like a practical joke you would use on a bad date, it does give Council rangers a ‘tip-off’ line to pursue its promised “covert operations throughout Parramatta to catch offenders in the act.”

In my opinion, there are very few other words that are as exciting as “covert operations,” so I was immediately sucked in by intrigue. However, on reading the newspaper article and the media releases further I became concerned with the use of the word “suspected.” That word suggested that it wouldn’t need to be ‘proven’ that an Owners Corporation had dumped, or been responsible for dumping, rubbish in a street – a Notice and fine could simply be issued on suspicion. If that was the case, procedural fairness was in jeopardy and I too decided to call for council attention.

The wind was knocked out of my sails, however, when Council confirmed that the media releases were a bit unclear and that Clean-Up Notices and fines would only be issued where a resident or Owners Corporation was found guilty of dumping rubbish on a street.

The question remains, however, how do you prove such guilt?  Council advised that in order to ascertain who was responsible for rubbish dumping, Council Rangers would investigate the matter in a number of ways and then decide whether there is sufficient evidence of guilt. Such ways include going through the rubbish dumping to see if there are any indications of identity, i.e. paperwork, matches in the type of rubbish dumped and normal rubbish coming from the premises. Neighbours or eye witnesses would also be questioned. Closed circuit cameras in busier areas would also be checked.
Once the evidence is collected, it is then the Council Ranger’s job to decide who’s guilty. But how much evidence is enough evidence for such a decision? What are the criteria against which the ranger will measure his or her decision? We have been informed that as long as there is enough evidence to lead the Ranger to “reasonably suspect” the guilt of a person, then a Clean-Up Notice can be issued. We are advised, however, that this will not usually happen before a warning and request for a cleanup is given.

So, if a person is considered to be guilty of illegally dumping rubbish on a street they will be issued a Clean-Up Notice under section 91 of the Protection of the Environment Operations Act 1997 and will be required to pay an administration fee of $433 (yes, you get to pay for the privilege of receiving the Notice). If that person fails to comply with the Clean-Up notice, another fine will follow, being $750 for individuals and $1500 for corporations.

We have not looked into the situation with other councils or suburbs. However, walking around the streets of Parramatta there seems to always be rubbish dumped on a street somewhere at some time. It must be asked, how do you stop someone else from dumping rubbish outside your house or strata plan? What does an Owners Corporation, or the strata manager, do when it disputes a Clean-Up Notice and fine issued by Council for illegally dumping rubbish?

Well, Council asserts that there is no right of appeal against a Clean-Up Notice! Amazingly this is reiterated in one of the fact sheets on the Department of Environment, Climate Change and Water website and other government publications. We do not feel this is correct. One of the fundamentals of administrative law is that administrative decisions must be a proper decision made appropriately, therefore subject to review. Council is at least required to afford procedural fairness, the lack of which can be a basis for appeal in itself.  

However, Parramatta City Council has advised that if a Clean Up Notice is issued to an Owners Corporation and the Owners Corporation wish to dispute it, they can call for Council to review the Notice for the purpose of revocation. The Owners Corporation will, however, be required to provide information and/or evidence to support its dispute. If Council refused to revoke the Notice, the next stop for the Owners Corporation will most likely be in the Land and Environment Court. The Court has the power to make orders of such kinds as the Court thinks appropriate, including reversal of orders from local councils. The down side of this is that the initial fee to make an application to the Court (if this type of matter is considered to be a Class 1 application) is $1,498 for a corporation. With no guarantee of success it is rarely worth it.

The fact of the matter is that there is little that an Owners Corporation can do to prevent other people from dumping rubbish in front of a Strata complex. Further, once rubbish has been dumped there is little that can be done to find out who it was. Council acknowledges the difficulty of this community problem. Thankfully, it appears (at least, we hope) that Council will only issue such notices and fines where there is clear evidence of who is responsible. However, as a preventative measure, the Owners Corporation can:

a) Inform owners and tenants of the consequences of dumping rubbish if it is a problem (as the case with my apartment block); and

b) Use this as a warning to all occupants that if any Clean-Up notices and/or fines are issued to the Owners Corporation a special levy will be raised to pay for the costs of compliance.

Depending on the severity of the offence, illegal dumping can attract fines from $750 up to $250,000. Knowledge of this and the warning of a special levy might give some incentive to all occupants to keep an eye out for dumpers.

This week’s Common Property Newsletter was authored by Shannon Lakic a solicitor with ACP/Leverage.

Shannon Lakic
B.Media; LLB,Cert IV TAA
Leverage Australia

Who’s Not a Naughty Boy?

Real Estate agents could be forgiven for feeling that they are unfairly picked on by Fair Trading. If you didn’t know any better, you would think that Real Estate Agents were the naughtiest boys on the block, and cause Fair Trading the greatest amount of grief.  Fair Trading figures themselves do not reflect this assumption.

In January 2010, Fair Trading published a press release setting out the top ten offenders for 2009.

In 2009, Fair Trading received 39,970 complaints (including real estate).  4,000 of these complaints were referred to the Consumer, Trader and Tenancy Tribunal and 3,000 were referred for investigation.  No details are provided regarding how many of those referrals resulted in disciplinary action.

The press release states that the top ten consumer complaints for 2009 could be listed as follows:

1.      Household electrical and white goods

2.      Residential building work

3.      Used cars and motorcycles

4.      Goods including furniture, furnishings and Manchester

5.      Automotive repairs and servicing

6.      Computer technology and hardware

7.      Building trades, which includes household repairs

8.      Clothing, foot wares and accessories

9.      Travel and tourism

10.    Residential tenancy

Where are the naughty boys?!  I did not see any mention of Real Estate Agents!  Maybe the reference to residential tenancy does include some Real Estate Agents.  Nevertheless, this also brings into account all of the landlords who may have received complaints.

Hence, Real Estate Agents are not in the top ten consumer complaints for 2009.  The Australian Bureau of Statistics survey completed in 2002, sets out that Real Estate Agents and the Real Estate Industry amounts to 0.6% of Gross Domestic Products.  If they were so bad then, they would have been more highly ranked than being outside the top ten.

Fair Trading’s focus on Real Estate Agents has always been based on the price paid for housing in New South Wales.  It has never been based on the “naughtiness factor”. Quite frankly, Real Estate Agents on the whole have never been as bad as the press have attempted to infer.  Based on the statistics, Real Estate Agents are definitely behind builders, renovators and travel agents.

Real Estate Agents have good reason to believe that they are hard done by. Furthermore, they have a right to advertise themselves as having integrity and honesty in an industry that does everything it can to comply with an onerous set of regulations.

Where are the peak industry bodies such as the National Real Estate Institutes and the National Real Estate Franchise Associations?  It is a great industry and should be promoted as being such.

Real Estate Agents have a reason today to tell the world that they are an honest bunch and should go forward in force to state this fact.

Cheers,

Bailey Compton and

the team at ACP Leverage!

NEW YEAR RESOLUTIONS!

Most new year resolutions are in the garbage about the same time as you swallow your first drink for the New Year.  That is the one you have after midnight.  Most resolutions fail because they are delivered under the courage of alcohol or some other performance enhancer.

New year resolutions are nonsense!! The 1st of January is just another day, one where we do not feel well, but still, just another day!!!  The calendar is just a man-made construct.  The animals don’t know that something has changed, except that their masters are new characters in the same body.  The Chinese even have a different start date to their new year.  Christmas and New Year is a reason for a rest and a party, and they should be confined to that status, a bloody good time.  To think that we could ever achieve objectives in this environment is dumb.

Ironically, no one ever enquires about how many objectives people do not achieve other than those made at the beginning of the year.  If the truth be known, many objectives go the way of the trash can.  “I am going to give up smoking”, “I am going on a diet”, and “my business objective is …” Are objectives set at various times of the year, which do not come to fruition. 

I wonder how many businesses really achieve their key performance objectives and key performance indicators for a given year?  I think if the research is done, not many.  We have been operating as business consultants for 7 years, and only about 2% achieve what they promised themselves.

Objectives normally fail for two reasons: Firstly, no leverage; and secondly, no follow through.

If you want to achieve anything in life, you must have your eye on an outcome or objectives.  If you don’t know what your destination is, how can you possibly make the journey. So you must set your course.  In saying that, you must know why you are taking that journey and check that you are not getting lost.

Here are some tips on outcome realisation that you may wish to consider:

1. OUTCOMES:  Clearly identify your outcomes for the year.  Make them tangible so that they can be measured for success.
2. CREATE OUTCOMES:  When setting your outcomes, make them big.  If you do not create a mountain to climb, you will not improve your plight.  Psychologists have counseled over the years to make your goals “realistic and achievable”.  This is done on the basis that if you know you can do it, you will not suffer disappointment.  What a load of rubbish.  This stopped stress, but leaves you in the same place.  If you want to improve yourself, you must create the mountain to climb.  If you don’t make it, the attempt will take you further then you would have got by playing it safe.  If you are stupid enough to feel disappointed, remember the feeling of disappointment, and use it to spur you on next year.
3. GET LEVERAGE:  This is not a promotion of our company.   Leverage is something that everyone needs to succeed (that is a promotion).  There must be a compelling enough reason to seek to achieve.   No one wants to be fat, but they cannot find enough reasons to exercise or change their eating habits to climb the mountain.  The Leverage is needed so that when times get tough, you will have something compelling to keep you going.  So write down next to each outcome, WHY you want to achieve it.
4. FOLLOW THROUGH: We need to follow through.  Each week, set a simple action list you must do to facilitate your outcomes.  It may be only one thing.  For example, I want to lose weight this year.  I set a target of walking 200 minutes in the first week.  I did it.  I will now set 250 minutes for the second week.  I have done this with all my objectives.  This allows me to chunk my mountain into achievable steps.
5. VISUALISE: Every morning you should read your outcomes and leverage them.  You should visualise what will happen when you get there.  Then commit to your weekly action plan.

There is much more to the science of achievement, however this is a good start.  If you find these tools of any success, (or you find them a load of BS), tell us on our blog. 

By the way:  I set my objectives on New Years Eve.  I pray they don’t go the way of the Scotch bottle.

Cheers,
Bailey Compton and the team at
ACP Leverage!

God saved the client!

It is now tradition that the last Leverage News and Common Property of the year is a message of hope or a story of amenity. This has been a year where very few laughs have been shared and humour has not been part of what is otherwise an energetic and exciting industry. 2009 has not been a year which has made people smile. Every year we have published funny stories about real estate agents and strata managers. Apart from the unfortunate events that have surrounded Andrew Drane of Harcourts Baulkham Hills, our newsletters have been dower, and have been left to focus on solely legal issues. Nevertheless, one story is a standout. Considering Christmas was traditionally a Christian festival, this seems the most poignant time to tell the story. Early this year, a real estate agent instructed Leverage Australia to defend him against one of the largest franchises. He was once a Director of a company who had signed up to a franchise agreement. He was a shareholder, and as he was a Director, he was required to sign a Directors Guarantee. This simply meant that if the franchise fees were not paid, and the corporation was not in a position to pay the fees, the Director would have to cover the loss. Our client left his agency after some twelve months. The agency was continued by his fellow Director some time after my client had left. That Director was not able to make the business succeed and the business consequently had to fold. This left the company owing a considerable amount of franchise fees. Before leaving the company, our client contacted the franchise to see if he could be released. They indicated that all he needed to do was send them a letter. He did. He was not however released from his guarantees. The action commenced and we filed the traditional defense. Our junior solicitor, who describes herself as a heathen, was advised by our client that God would look after him. Our young solicitor indicated that this would be good, however we still need to apply proper legal principles – which she did. The action commenced and the litigation went into its full flung process. Offers and counter offers where exchanged between the parties. With the initial claim from the franchisor being $75,000, after some time, the franchisor made an offer of $25,000 which our client countered with $12,500, which is obviously half way. The franchisor’s solicitor indicated that $25,000 was about as low as their client would go as the initial action had commenced at $75,000. One Tuesday morning, unexpectedly, we received correspondence from the franchisor’s solicitor. They indicated that the other Director had paid his share and that the franchisor would be seeking no further money from our client. They made an offer of settlement that both parties pay their own legal costs and that no monies be payable to the franchisor. Effectively, our client was released from all liability and a Deed of Release was signed to that effect. I would like to say it was some clever legal maneuver or legal statement on our behalf, but I cannot. We had raised a defense which was reasonable, however not one that would have anyone shaking in their boots. If it were not us who caused this case to settle, who was it? At Christmas, I would like to believe that God would look after our client. For the heathens, like our young solicitor, this would be rationalised as coincidence. For those of us who have faith, God may have played a hand in the conclusion. If we could have just a little bit of that faith of our client rub off on us, and have the same result, maybe, just maybe 2010 will again bring an industry which can laugh and smile. Considering there have been little laughs, I need to at least finish the year with one joke! “What happened to the dyslexic, agnostic insomniac?” “He lay awake all night, wondering if there was such a thing as a dog” From all the team at Leverage Australia and the Australian College of Professionals, we wish everyone a Merry Christmas and hope that you all have a safe holiday. As a very quick post script to this our last Leverage News of 2009, this morning, Monday 21st December, Bailey contacted a solicitor in Maitland to request that he attend to a court mention on our behalf in Newcastle today. This is a common practice amongst solicitors who are unable to attend. The Maitland-based solicitor was more than happy to assist us and our client. Bailey then asked him for the cost for this service, to which he quickly responded that there was no charge – that as he would be at the court anyway, it would be a pleasure to attend to our matter for no fee. He noted that in years gone by, fees were never charged between solicitors for such services. Such a level of respect is something that is perhaps missing these days between professionals. What a wonderful and surprising event on the eve of Christmas – there are truly some wonderful people in this world.

Heritage Works

The first apartments in Sydney were modelled on those of New York and Paris and date from the early 1900s. During the interwar period apartment building started to become widespread and with the introduction of the first Strata Titles Act in 1961, many company title apartments converted to strata title. And some of these are, or can become, heritage listed.

So what, as a strata manager, do you need to keep in mind when managing a heritage listed building? Well, the big one is that no works should be undertaken on the building without first checking whether or not you need to check with Council…and that process can seem as convoluted as that sentence!

Never fear, however, as due to the nature of heritage there is lots of information, resources, officers and consultants around to help you. In most cases involving a heritage item or building, however, you will need to ‘check’ with Council and that means making a Development Application (DA). Only ‘exempt’ development does not require consent. As for what you will need to include in a DA, this will generally depend on a number of factors. Two main ones are obviously the significance of the heritage item or building and the proposed development. The Heritage Council of NSW has pointed out that ‘significance’ is not about ranking, but context, i.e. ‘local’ significance, ‘state’ significance, etc.

The best place to start is the Heritage Branch of the NSW Department of Planning, which is guided by the Heritage Council of NSW established under the NSW Heritage Act 1977. Their website, www.heritage.nsw.gov.au, has a ‘State Heritage Inventory’ (online database) which records all heritage items on statutory lists in NSW and includes information about the name, address and listing of heritage items.

The ‘listing’ details of a heritage item are important because that will tell you where the heritage building you are managing is ‘listed’ as a heritage item. For example, finding out in which Local Environment Plan (LEP) a building of local significance is listed will tell you what Development Control Plan (DCP) is relevant to any works undertaken on the heritage building.

What’s more, most websites of local councils actually have a heritage related section or link and clearly indicate what instruments apply to development on, or to, heritage items within a given jurisdiction. Those instruments will tell you what you need for, and to include in, a development application.

As an example, let’s take a heritage building of local significance within the City of Sydney. There is a dedicated “City of Sydney Heritage Development Control Plan 2006.” Assuming the proposed works are not exempt, clause 1.10 of that DCP sets out what details, in addition to general requirements, are required for development applications relating to heritage buildings, sites and elements and buildings older than 50 years requiring a heritage impact statement:

• “Measured drawings of the existing building including elevations, and                    clearly indicating, in colour, existing walls and building elements to be retained and those proposed for removal or alteration;
• Plans at a scale of 1:50 for detailing including dormer windows, balustrade and the like;
• Details of materials, finishes and colour schemes; and
• A Heritage Impact Statement, Conservation Management Plan, and/or Conservation Management Strategy as required by the relevant LEP.

Additional submission requirements which may include:

Structural Report – major alterations may also require a report from a structural engineer verifying that the proposed works will not have a detrimental impact on the structural stability of the building, on significant building elements, or on neighbouring properties.

Archaeological Assessment Report – where there is a likelihood of disturbance of significant archaeology, an Archaeological Assessment will be required.

Interpretation Strategy – major alterations to a heritage item may also require the production of an interpretation strategy, detailing how the significant aspects and uses of the building may be publicly interpreted.”

A heritage impact statement is required to accompany all development applications that are required to be considered by the Heritage Council of NSW. The Heritage Council is the joint consent authority with the local council (and sometimes with other State agencies) for approving changes to items on the State Heritage Register. Local councils are encouraged to require such a statement, and they do in many instances.

Together with supporting information, a heritage impact statement should address:

• Why an item is of heritage significance
• What impact the proposed development will have on that significance
• What measures are proposed to mitigate negative impacts; and
• Why more sympathetic solutions are not viable.

Depending on the circumstances, such assessment can become quite complicated and involve the assistance of external consultants. However, time spent at the outset in determining if development consent is required, and what is required to be submitted to obtain that consent, can save a lot of headaches and money down the track.

As a strata manager delegated such responsibility, you owe a duty to the owners corporation to ensure that all checks are done and all required approvals obtained in relation to works on a heritage building. Even if you have done your homework and are confident that consent is not required, make sure that you take reasonable steps to further mitigate risk.

We know of one case where an owners corporation intends to proceed with remedial works to the value of approximately $400,000 – $500,000. No development application has been made on the assumption that the works are exempt due to no ‘structural or other changes’ taking place and that the ‘same materials will be used’. When asked at the outset what confirmation, warranty or guarantee had been obtained from the contractors that the materials to be used were in fact ‘the same’ there was a very strange pause on the other end of the telephone.

This is not to say that everything is not in order in this particular case. We merely make our point as a warning – works already costing an owners corporation a packet can obviously blow out where development consent is required and not obtained and the owners corporation is slapped with a council order, fine and/or legal proceedings. As clearly shown, the controls around heritage items are even more stringent. It is worth getting the advice of a consultant with knowledge and experience in the area of planning and heritage, and any other legal protections available, before the construction tools come out.

Decibels and Decibels!

Two recent noise cases in the CTTT demonstrate the need to have good evidence if you wish to succeed. Both cases concerned alleged breaches of by-law 14 of the Schedule 1 by-laws. By-law 14 provides that an owner must ensure that the floor space within a lot is covered or treated so as to prevent the transmission of noise that is likely to disturb the peaceful enjoyment of the occupants of any other lot. However this does not apply to the floor space of kitchens, laundries, lavatories or bathrooms. In Owners Corporation SP 3921 v Wang & Xu [2009] NSWCTTT 219 (4 May 2009) Tribunal Member Corley found that there had been a breach of By-law 14. Wang and Xu, as owners of unit 12, had carried out certain renovations including removing carpet and installing a laminated timber floor. The owner of unit 6 (directly below unit 12) and the owner of unit 18 (directly above unit 12) complained about the noises of daily living coming from unit 12. They also gave evidence at the hearing in relation to the level and persistence of noise emanating from unit 12. The owners corporation had obtained a report from Day Design Pty Limited, a firm of acoustical engineers, and this report was in evidence. The report made it clear that there is not one universally agreed standard in relation to sound insulation; it mentioned three sets of guidelines; those of the Building Code of Australia (known as BCA); those of Hornsby Shire Council; and those of the Association of Australian Acoustical Consultants (AAAC). Interestingly the block of units was in Epping and within the Parramatta Council area, not Hornsby. The noise levels being transmitted downwards from unit 12 to unit 6 just met the BCA and Hornsby Council standards but failed to meet those of the AAAC. The noise from unit 12 to unit 18 met all three standards. The flooring in unit 12 was of a 2 – 3 star rating, and if flooring with a 3 star rating was utilized, ordinary speech would be “just audible”. Member Corley held that the standard imposed by By-law 14 was to be interpreted objectively and accordingly the test is whether the noise being transmitted is likely to disturb the peace and enjoyment of a reasonable person, and not somebody hyper-sensitive to noise. The member found that there was objective evidence presented as to noise levels and in the member’s view the noise level from unit 12 was likely to disturb the peace and enjoyment of a reasonable person. The owners of unit 12 were fined $100 and it was noted if they did nothing about it a higher penalty might be imposed in the future. The decision in Dorahy v Janzen [2009] NSWCTTT 286 (1 June 2009) went the other way. Tribunal Member Smith found there had been no breach of By-law 14 and dismissed an appeal. Ms Janzen had carried out renovations in 2006 to her unit, including removing walls and replacing the kitchen and bathroom. All of this was with appropriate approvals. At the same time but without proper approval she removed carpet and installed tiles with a sound proof underlay. Mr Dorahy gave evidence that since the new flooring was installed the noise from Ms Janzen’s unit had increased and that it disturbed his occupation of his unit. He put soundproofing on part of the ceiling of his unit. Mr Koraca, a previous occupier of Mr Dorahy’s unit, gave evidence that he could hear television noise, walking and movement of furniture. Under cross examination he was asked if the noise disturbed him and he said “No, I work in a noisy environment.” Tahir Hasimi the current occupier of the unit said he could hear television noise, people walking around and furniture being moved and items dropping on the floor. In response to a similar question in cross examination he said “Not much.” On the evidence Member Smith was not satisfied that the installation of the tiles had resulted in a breach of By-law 14. If you want to succeed in a noise case you need to get evidence of the breach. Clearly, it is not much good if people giving evidence admit the noise does not bother them. It would seem that a report by reputable acoustical engineers will provide some objectivity as to noise levels and will assist a case where the noise levels are excessive. The Tribunal recognises that every Strata Plan has whingers and every lot owner that causes noise believes that they do not interfere with the quiet peace and enjoyment of anyone. The Tribunal is looking for independent evidence that is not swayed by the lot owner or the complainant.

SUPERANNUATION!- THE DANGER OF EMPLOYING COMMISSION ONLY STAFF!

We had a recent experience with a client in Melbourne who had employed all their staff on a commission only basis. All the staff had the equivalent of a certificate of registration and were paid a fee for each property that they listed and sold.

Many are concerned that this practice is a breach of the Property, Stock and Business Agents Act 2002. This could not be further from the truth!  All the Property, Stock and Business Agents Act 2002 says is that if a person is employed, they must hold a certificate of registration.  Section 3(1) says that an employee is a person who is paid salary, commission, or other remuneration. This means that it is legal to employ a commission only employee under that Act.

Where there is a problem is the industrial relations laws.  Firstly, real estate agents are employed under the NSW Real Estate Industry (State) Award 2003. This Award requires a minimum salary.  Secondly, the Fair Work Act 2009 also requires a minimum wage.

If a person is an employee, all employers in Australia are required to pay 9% superannuation contributions.

Our client in Melbourne was in shock. They had paid commission to many of their employees, but had a number of agents who had not succeeded in selling any property. They were first taken to the Industrial Relations Commission and sued for unpaid wages.  What is worse, however, are the compulsory superannuation ramifications.

Unpaid superannuation is not like an industrial Award.  An individual can make a complaint to the Australian Taxation Office and make a claim on the Superannuation Guarantee Fund. If they deem the person an employee, they will pay the superannuation to that employee. They will then pursue the employer for unpaid superannuation.

Our client had been employing commission only people for some five years. We worked out that their Compulsory Superannuation Guarantee would cost them in the vicinity of $1,000,000. The company is now out of business.

There are ways and means to get commission only people to be certificate holders. The simplest and easiest way to ensure that you do not get caught in this trap is to make the person get a licence.  Considering the ease of obtaining a licence with recognised prior learning, accelerated learning and no minimum period of holding a certificate in New South Wales, it is far cheaper to ensure that people get their licence. The agreements which are required to make people independent contractors and hold a certificate are as expensive as actually doing the training to get a licence.

Don’t take the risk. The ATO do have teeth and will pursue unpaid superannuation. Get your people licensed so that you can have better protection.

The Trouble With Poo

All of us are confronted with it!  If we are healthy, we are normally confronted with it on a daily basis.  Poo is something which we must do, but is something we do not wish to encounter.

Serious reflux and blocked toilets which interfere with a person’s need to poo, is an emerging issue.  In actual fact, it has been an emerging issue for some period of time. 

The CTTT was recently forced to hear the case of Grants Strata Management v Murdaca wherein it had to deal with a problem of access into a unit.

Ironically, unit 2 had problems because of a toilet blockage.  It appeared that the toilet blockage was created from within the realms of unit 1.

The strata manager, believing that it was normally common property, attempted to resolve the issue.  They contacted unit 1 with no success.  The tenant of unit 1 would not provide them with access to check it out.  Unfortunately, Grants were unsuccessful at the CTTT.  The CTTT ruled that a strata manager does not have standing at the tribunal for lot disputes.  ‘Standing’ in lay persons’ terms, within this context, means that a strata manager cannot take action where it is a dispute between lot owners.

For a strata manager to take action, the CTTT indicated that four things must be available:

• There must be evidence that the strata manager has been appointed by the owners corporation to attend on their behalf.   This should be provided merely showing the strata plan and producing the managing agency agreement.
• There must be evidence that the problem is emerging from common property.
• There must be an expert opinion that shows that it is a blockage in the common property.
• Evidence must be produced that access was refused.

The problem with this case is that the owners corporation would never be able to obtain evidence that it was a common property issue.  To prove that it was common property and thereby an owners corporation issue they needed access. So without access they had no evidence.  In these circumstances, the owner of lot 2 should have taken action against lot 1 for failure to provide access so that proper repairs could be undertaken.

If you think this is a problem, think of a vision impaired mate of mine.  He arose one morning to find that his toilet had suffered reflux.  This guy was totally blind.  How he determined that it was reflux is not by the normal means.  Unfortunately, he stepped in it.  He then checked with his fingers to identify what his foot had found, and confirmed it with the only facility he had available – smell.

I must admit, I immensely enjoyed being advised of this story.  Nevertheless, his unit was re-carpeted, re-tiled and the owners corporation was required to pay for his accommodation for 6 weeks.  I think he still believes, however, that this is minor compensation for his encounter with poo.

Truth Time!

From time to time, Leverage returns to provide advice in relation to franchise law.  We specifically do this in relation to real estate because of the number of real estate agents in franchise arrangements.

The Trade Practices (Franchise Industry Code) Regulation 1998 requires every franchise to produce a disclosure document for the year ending 30 June.  This must be published prior to 31 October of that year.  This means that truth time is nigh for franchisors.  They are not required to issue it to all franchisees; however franchisees can obtain it upon request.

The franchise disclosure document should outline:

• A background to the franchise agreement;
• A summary of the history of the franchise;
• Identification of who are franchisees;
• An outline of the terms in the franchise agreement; and
• An outline of the economic fabric of the franchise.

It is not normally edifying or exciting reading.  Nevertheless, if you want to know something about your franchise, you should ask for the disclosure document:  if nothing else, just to annoy them.

There are a number of cases which have affected franchises in recent times.  The Australian Consumers and Competition Commission (ACCC) has recently ruled that a fourteen day compliance clause in a franchise agreement as unfair.  In the matter of Scotty’s Premium Pet Foods P/L the ACCC ruled that, in the case of a breach, it was unfair for a franchise agreement to have a clause which empowered the franchisor to issue a notice upon the franchisee stating that they had fourteen days to comply with the agreement. In this particular matter, the ACCC considered that this time frame was unreasonable and that the notices did not sufficiently describe the alleged breaches or the remedy required.

In other words, the standard clause, whereby a franchisee is threatened with termination if any breaches have not been remedied within fourteen days, has been determined by the ACCC as void. In Scotty’s Premium Pet Foods P/L, the franchisor wasn’t prosecuted, but the company provided court enforceable undertakings to prevent the conduct from recurring.

If you get such a notice, you can tell your franchisor that it is unfair and that you need more time to resolve the problem.  This will force them to reissue the notice to defend any termination in the future.

Remember, you pay your franchisors – they don’t pay you.

It’s All About People

Since the inception of the Strata Titles Act 1959-61, the laws relating to strata living and community living have been under review.  Between 1973 and 1996, the legislation was amended no less than 40 times. New statutes were introduced in 1973 and in 1996 to resolve perceived problems. Since 1996, 3 reviews have been undertaken with 2 major overhauls. Unfortunately, the problems still remain.

For 50 years now, the legislature has been attempting to come to grips with the problems associated with community living. The latest amendments in 1996 set two clear objectives:
• The creation of a system of management; and
• The establishment of a scheme for resolving disputes.

Like the rest of the Act, these objectives are logical. They essentially go to the issues of peace and good order. Goals which we would all like to achieve in our own household.

Parliament has believed that if you establish a set of rules or guidelines, it will prevent chaos and allow parties to live together in some harmony. The question is  – can the laws do this alone?

I have sometimes referred to strata title as nothing more than a “sophisticated hippie colony”.  The only thing I forget is that those that wanted to live in a hippie colony, usually come together with some common goals in mind.

Strata schemes however bring together people from different socioeconomic groups, different ethnicity and different political and social views. It is an unrealistic goal of anyone, let alone the government, to expect that peace and good order can be achieved simply by creating laws when you put an non-homogenous group together in a single civilized polis.

The apartment in a strata complex is merely someone’s home or their investment. In the main part, it is people’s homes. We often do not achieve peace and good order in our own homes, so therefore the issue of obtaining peace and good order in a strata complex with this cobbled together group is impossible merely by creating laws.

Nevertheless, corporations and organisations down the ages have found ways of bringing together different people with different talent and different views to reach a common goal. The objectives of the Strata Schemes Management Act 1986 is a common goal that we all would like to achieve. Those who live in a strata complex do have common goals apart from good peace and harmony:
• They want to advance the value of their assets;
• They want to live comfortably; and
• They want to live without chaos.

These common goals may be used as a spring board to allow common principles to change. Presently, the reaction to strata is a legal one and one which relates to the standards imposed by the statutes and the courts. Maybe we should consider what can be done with people by establishing a centralised vision with a core set of values. Maybe those of us involved with strata should consider the human resource principles applied in successful corporations as a tool for creating a functioning civilised polis.

The best companies in the world have been based on people’s solutions not economic, political or legal solutions. Even Bill Gates had a people solution to his IT empire. He understood that people would want computers on their desks at home whilst many considered it as an unrealistic dream. He understood people and assisted people to get what they wanted. A lesson which may be overtaken into strata.

Gladly Wrong…..
I would like to say that I have received extensive amounts of mail relating to my comments about licensing in the Strata industry. Unfortunately, in actuality we really only received three responses to my claim that I had heard that the Institute of Strata Title Management may have a view that strata managers should not be licensed. I should note that this is not based on my view of the world. I was advised and did see documentation that would indicate that this view may be held by some persons within the Institute.

David Ferguson was the response that I was most happy to receive. David sent me an email and we did have a conversation.  David advised that the Institute is committed to licensing in the Strata Management industry. He supported the latest newsletters of the Institute which noted that the Institute has made submissions to the Office of Fair Trading to restrain strata licensing.  What was most refreshing was that he is going to continue the fight when national licensing is introduced next year to have strata management licences retained at least in New South Wales.

It appears that my information was somewhat misleading. For that I gladly admit that I was wrong. If this has sparked a ground swell of support for licensing in New South Wales and maybe in Australia, my heart is further gladdened.

If any one has any comment on the content of these newsletters, I refer you to our blog at http://leverageaustralia.wordpress.com/ which is an opportunity for feedback and to allow the industry to communicate fully and frankly about the issues raised in these newsletters. We are always happy to be proven wrong or to encourage debate regarding important issues.