Monthly Archives: January 2012

The Finances of Litigation

Financing any form of litigation is extremely expensive and building defect litigation is no exception. In fact, because construction defect cases often involve multiple rounds of testing and investigation, additional expert fees can make this one of the most expensive forms of litigation.

Using Reserves

By their nature, building defect cases tend to arise early in the life of a scheme when capital reserves will be low or non-existent. However, if there is money in the sinking fund, this can be used to finance litigation to the extent that the claim relates to repair, replacement, restoration or maintenance of major components for which the sinking fund was established.

Bank Loans

Some banks will lend money to strata schemes to maintain and repair common property but so far this has not extended to financing defect investigations and litigation. Owners corporations and community associations are not permitted to give security for such loans and this makes financing litigation difficult.

Solicitor’s Finance

Unlike the current trend in America, construction defect lawyers in Australia are unlikely to finance testing and repairs or other outlays like barristers fees because of the constraints in Australia on contingency or success fees. The practice of advancing money for outlays or extending credit for work in progress is fraught with conflicts of interest on the part of the lawyer in terms of being objective about the advice to the client when the lawyer has a financial interest in the outcome.

Thanks to Teys Lawyers

Housing Review a major step forward

The NSW Government’s review of potential housing opportunities reported in the media today shows the government’s commitment to boosting housing supply and increasing affordability in a common-sense and transparent way, UDIA NSW believes. In what is one of the biggest steps forward for NSW housing supply for years, the Government has given a commitment to pursuing housing opportunities where the landholdings are, rather than designated growth areas that suffer major land fragmentation issues.

Late last year Planning and Infrastructure Minister Brad Hazzard made a public call to developers with large landholdings, close to infrastructure, to approach the State Government with their projects, in recognition that residential development in NSW had stagnated for many years. This month, the Government published online the results of that process: a list of 43 sites which are potential candidates for rezoning for urban development under the Review of Potential Housing Opportunities on Landowner Nominated Sites.

In the Sydney region, the sites are in the local government areas of Auburn, Blacktown, Camden, Campbelltown, City of Sydney, Hornsby, Liverpool, Penrith, Pittwater, Sutherland, The Hills, and Wollondilly. Regionally, the sites are in the local government areas of Cessnock, Clarence Valley, Hawkesbury, Port Stephens, Wingecarribee, and Wyong. Submissions closed on November 29 and the review process is predicted to be finalised in the first quarter of this year.

The projects are being assessed on three criteria, according to the Department of Planning and Infrastructure’s website:

  1. Housing delivery: The site is suitable for urban development and has viable prospects to produce houses in the short term.
  2. Infrastructure: Infrastructure and services for new communities will be delivered in a timely and efficient manner and at no additional cost to Government.
  3. Strategic setting: The proposal supports the broadly planned pattern of growth and urban policies.

The process is governed by a Chief Executives’ Review Committee, which is chaired by the Director-General of the Department of Premier & Cabinet. Recommendations will then be made to State Government. Consultation will take place with the relevant Councils to seek their feedback on the proposals. Today, in the Sydney Morning Herald, Minister for Planning and Infrastructure Brad Hazzard said many of the nominated sites were outside the growth centres and that the growth centres strategy had failed. “The lines on the maps for the growth centres are supposed to encourage development in those areas, but it has not worked and the corollary has been it deterred development outside these lines,” Mr Hazzard told the newspaper.

UDIA NSW believes this process shows the government is deeply committed to fostering housing growth and that it is also being transparent about the process and consultative with councils, which is essential. UDIA NSW Chief Executive Stephen Albin said says he believes the process is a realistic approach to fostering development where the landholdings are, rather than simply rezoning land in areas of fragmented ownership. “Our own research, which we have put to Government, clearly shows that the large sites where the landowners have been ready, willing but not yet able to develop are largely outside the growth centres,” he said. “It is clear, for the state to meet its future population and economic growth targets, that the process needs to take into account achievable development rather than operating off a wish-list that may not be viable or achievable.” “We support development that is led by the realities of the industry, whether it is inside or outside a growth centre – so long as it is commercially viable, sustainable, and supported by the appropriate infrastructure.” “As an industry group, we feel it is important to stress that this process is one that will benefit the state as a whole, in terms of housing affordability and economic growth.”

Thank you to UDIA NSW for this Article

Tenants’ groups push for renters to have a greater say on building management

TENANTS should be allowed to attend owners’ corporation meetings to give renters a much greater say in how their strata buildings are managed and maintained, tenants’ groups and strata experts have said.

There should also be changes to the legislation to stop the misuse of bylaws, such as banning pets from buildings, as part of the state government’s review of the strata laws, a leading strata law expert, Cathy Sherry, said.

As part of its review, the government last month launched an online forum to give people and businesses the chance to discuss and debate potential amendments to the strata legislation.

One of the big issues raised was inviting tenants to meetings held by the owners’ corporation.

Chris Martin, the senior policy officer with the Tenants’ Union of NSW, said strata bylaws were often the biggest problem faced by tenants, especially those banning pets in buildings or delays in repairs to common areas.

“About half the people living in strata [buildings] are tenants so generally we would be supportive of tenants being given more of a say,” he said.

He said one of the most problematic bylaws tenants came up against was the prohibition of pets. “Really it should be about the ability of a responsible adult to make a responsible decision,” Mr Martin said.

The last review of the Strata Schemes Management Act was carried out in 2004 and a review of the Community Land Management Act was last conducted in 2006, but the government said only “cosmetic reforms” were achieved.

Ms Sherry, a senior lecturer in law at the University of NSW, said there was good reason for tenants to be more active in the running of their building, especially if they have lived in it for many years.

“Tenants are often much more connected to the building than an absent investor-owner,” she said.

“Owners obviously need to have a say because they are the ones that own the buildings but there should also be a way to give renters a say, so perhaps that could be renters collectively getting one vote or a tenants’ forum.”

More than 2 million people now live in over 70,000 strata schemes in NSW and within 20 years, half the state’s population are expected to be living in strata and community schemes.

Alexandra Smith

Thank you for TEYS Lawyers for this article