Hones News

Collective Sale Of Strata Apartments Land And Environment Court Decision

At long last, the Land and Environment Court has handed down a judgement dealing with the process and finalisation of the Collective Sale of a Strata Plan. This landmark decision was in the matter of the application by the Owners – Strata Plan No 61299 [2019] NSWLEC 111 and the decision by handed down by Payne, J.

Hones Lawyers have been involved in a number of projects dealing with agreement reached by owners for the collective sale of their apartments and we have been keeping a close watch on developments to understand how the Court will deal with some of the anomalies in the Act. The Court decision puts to rest 2 important elements, the first dealing with valuations and the second dealing with the conflict between distribution, i.e whether distribution is based on unit entitlement or by reference to the Land Acquisition (Just Terms Compensation) Act 1991 (Just Terms Act)

The Court confirmed that 2 independent valuations be obtained and those valuations must determine:

(a) The market value of the whole of the building and its site; and
(b) The values of the individual lots within the Strata Scheme by reference to the Just Terms Act.

The Court neatly resolved the tension between sections 171(1) and s182(1)(d) of the Strata Schemes Development Act by determining that unit entitlements be reallocated for reasons set out in section 236(1) of the Strata Schemes Management Act 2015.

This decision affirms the position that the proposed distribution of the proceeds of sale for the whole of the strata scheme must be apportioned in such a way that the compensation value payable for the lots is just and equitable in the circumstances and in accordance with the Just Terms Act. The need for the reallocation of unit entitlements in the matter arose out of a considerable difference in values between commercial and residential components within the Strata Scheme.

This is a very brief summary of a small portion of the provisions and how they operate. Hones Lawyers will be glad to provide information to developers or lot owners wishing to formulate the redevelopment of their Strata Scheme.


Major Court Ruling Redefines Asbestos Waste And Obligations Under Resource Recovery Exemptions

A major Court ruling, handed down on August 2, 2019, will impact on recyclers in NSW, particularly those dealing with construction and demolition (C&D) waste, those that may have exposure to asbestos risks, and all parties dealing with resource recovery exemptions – including consumers and transporters.

The NSW Court of Criminal Appeal (CCA) overturned an earlier Land and Environment Court (LEC) decision regarding waste-related legislation in NSW, and in doing so, has redefined how the meanings of “waste” and “asbestos waste” are understood, and obligations related to resource recovery exemptions under NSW environmental legislation. The decision means that the courts have now endorsed a zero-tolerance approach to the presence of asbestos in waste, and is likely to have serious consequences to the recycling industry – especially C&D recycling.

The NSW Environment Protection Authority (EPA) succeeded on all grounds in Environment Protection Authority v Grafil Pty Ltd; Environment Protection Authority v Mackenzie [2019], overturning almost all of the original findings of Justice Pain in Environmental Protection Authority v Grafil Pty Ltd; Environment Protection Authority v Mackenzie [2018] NSWLEC 99.

Background

The defendants, Grafil Pty Ltd and its director, owned a property in NSW. Grafil accepted thousands of tonnes of material from a number of recyclers for the building of an access road. That material was supplied under two resource recovery exemptions (which are exemptions that allow waste to be reused without the normal licensing requirements etc, if the generator has first carried out required testing, and certified that the material meets the relevant chemical and other criteria).

Grafil received material over a period of months, always with a certificate from reputable recyclers stating that the material had been tested, met all requirements, and therefore fell under resource recovery exemptions. However, when the EPA attended the site (months after some material had been received), it tested a range of stockpiles, and alleged that some of the material did not meet the relevant criteria, and moreover, since limited amounts of asbestos had been located (634.64 grams in 44,000 tonnes – representing some 0.000000014 percent), not only did the material not fall under the exemptions, but it was “asbestos waste”.

The EPA prosecuted Grafil for unlawfully using its land as a waste facility without a licence – an offence under the Protection of the Environment Operations Act 1997 (POEO Act).

In the Land and Environment Court, Justice Pain found Grafil and its director not guilty. This turned on a number of key points, three of which were the subject of the appeal – firstly, she found that the material was not “waste” under the POEO Act. Secondly, she found that the material was not “asbestos waste”. Finally, she held that since it is the generators that are required to carry out testing, it would be an unfair and unreasonable operation of our laws to hold the consumers of that material criminally liable if it turned out not to meet the criteria.

In a highly technical decision, but one with big implications, the Court of Criminal Appeal roundly overturned Justice Pain’s decision – and in doing so, changed the landscape for waste in NSW.

Is the material “waste”?

Under the POEO Act, “waste” is defined in the following way: “waste includes…(a)…, or (b)…., or (c)…., or (d)….”. In the LEC, Grafil successfully argued that the use of “or” between the sub-definitions to “waste” meant that the definition is fairly narrow, as it can only fall within one, or the other sub-definition – but not both. This narrower meaning would mean that in some cases it would be uncertain if material was actually waste – and therefore, whether the POEO Act applies at all.

However, the CCA disagreed. It stated that the definition of “waste” is intended to be wide – and so, the word “or” is actually to be read “and/or” – that is, it can fall within one, or many sub-definitions.

The upshot is that if it walks, talks, and quacks like a duck – then it’s waste. If there is ever any doubt whether material may or may not be waste, this judgment means that it is safest to assume that it is waste.

Is it “asbestos waste”?

Possibly the most controversial aspect of the judgment, and with far-reaching consequences, is how the court approached the meaning of “asbestos waste”.

Under the POEO Act, “asbestos waste” is defined as “any waste that contains asbestos”. This definition is unfortunately extremely vague – there is no suggestion as to how much asbestos deems an entire stockpile or load as asbestos waste.

The NSW EPA has always adopted a zero-tolerance approach – any asbestos presence, even a microscopic amount, means that the entire stockpile/load is “asbestos waste”. This has serious implications, as a stockpile of, say, 1,000 tonnes of recyclable material with 0.2mg of asbestos would need to be disposed of as asbestos waste instead of being recycled/reused.

In the LEC, the trial judge adopted a pragmatic approach in stating that it is a matter of fact and degree in each case – that is, it would depend on the particular circumstances, such as the source, nature and volume of the waste in question.

The CCA overturned this. It held that if any amount of asbestos is present whatsoever – then the entire load/stockpile is classified as asbestos waste. Again, it is worth noting that the amount of asbestos discovered in the bulk samples in this case was 634.64 grams, representing an “incredibly minor” (per Justice Pain) amount in comparison to the per estimate of 44,000 tonnes of materials in the stockpiles – amounting to 0.000000014 percent of all material.

This has significant implications for the exposure of recyclers, transporters and others in the waste industry to asbestos risks. The industry now has to assume that the presence of even a fraction of a percent can deem an entire load of waste to be “asbestos waste” – and manage the risks accordingly. This includes re-examining due diligence and testing regimes, contamination and rejection clauses under contracts, protocols for checking and rejecting loads, as well as environmental insurance.

Are consumers to be liable?

The CCA did not explicitly look at the specific issue of whether it is a fair use of our criminal laws to make “innocent” consumers liable when they receive certificates stating that material has been tested, and meets all relevant criteria under a resource recovery exemption. But this is the implication of its decision – even an innocent consumer who has done all that is required of them under the POEO Act by ensuring that all material is supplied with certificates certifying that the material has been tested and meets the requirements of a resource recovery exemption – can nonetheless be criminally prosecuted, and/or ordered to remediate the site and dispose of the material at great cost – notwithstanding that it was the generator, not the consumer who was actually at fault.

This has significant implications for the resource recovery industry. If consumers receive no real protection by fulfilling their obligations to receive certificates, then will those consumers continue to receive material under resource recovery exemptions at all? And if these risks dampen enthusiasm for the resource recovery exemption – where is the material to go?

Watch this space

This decision means that the regulatory regime for waste in NSW has become tougher, and risks to all in the industry, as well as consumers, have increased – at an especially difficult time for the industry. However, Grafil may appeal the decision to the High Court of Australia – which would settle some of these issues once and for all.

Gavin Shapiro is a partner at Hones Lawyers. He specialises in the waste industry, including waste contracts, waste legislation, EPA investigations and prosecutions, and operational issues.


Developers and Off-the-Plan Buyers

Developers and Buyers for Off-the-Plan properties, check these important changes to the conveyancing laws passed by the State government in November. The new laws bring in stronger protection for purchases who buy property off-the-plan, and also impose on developers greater obligations for disclosure. A link to the Registrar General’s page noting some of the changes, as well as expansions to electronic land transactions is:

https://www.registrargeneral.nsw.gov.au/news/changes-to-conveyancing-laws-off-the-plan-and-electronic-contracts

This is worth a read.

Key elements of the disclosure for off-the-plan contracts is the need for:

  • A copy of the proposed plan of the building as well as details of easements and covenants;
  • For strata and community properties, the proposed by-laws;
  • A schedule of finishes where building work is required as part of the contract.

New Additions to the Hones Lawyers Family

This year is proving to be a very exciting one for the Hones Lawyers family.  We are expanding our family.  Not only are we expecting one new addition, but two!

One of our solicitors, Peter Clarke and his wife are currently expecting baby number two any minute now.  Peter and Laura already have a beautiful four-and-a-half-year-old daughter and are most definitely looking forward to their new baby adding more fun to their growing family.  Whether the baby is a boy or a girl remains a secret, however we are certain both Peter and Laura will be over the moon to finally meet their new baby.  We are all excited for Peter and Laura and wish them both the best with their new baby.

In addition to that, Shiya Pan, our beloved Conveyancing Assistant, will be commencing her maternity leave in a couple of weeks in preparation for the arrival of her first baby.  Shiya is due to have her little boy in April and we all couldn’t be more excited to meet him.  Although we will miss Shiya for the six months she will be away, we would love nothing more than for her to be ready for the arrival of her first baby and to revel in motherhood as she gets to know her baby boy.  We would like to wish Shiya and her partner all the best in their new roles as parents and we hope this special time is filled with love and joy.


5 Common Misconceptions People Have When There’s A New Development On The Block

He who cannot put his thoughts on ice should not enter into the heat of dispute.” – Friedrich Nietzsche

There are few things that get people more hot under the collar than a new development proposed next door.  Whether it’s a single dwelling, a block of apartments or a commercial use, even Nietzsche would probably have had difficulties keeping his emotions in check if he felt that his lifestyle was about to be altered – for the worse – by a new development in his street.

Whether you’re the one carrying out the development or an existing resident who’s about to be impacted, it can be a turbulent time.  Feelings are fraught, tempers are frayed and neighbourly relations can quickly sour when the spectre of development rears its much-maligned head within a stone’s throw of someone’s treasured home and castle.

It’s a common situation that’s happening almost every day on any street in any suburb.  So you’d think that, by now, everyone would be reasonably clear about the rules and regulations that apply.  But, judging by the inquiries we receive, the matters we act in and the cases decided by the courts, there are still many myths, misconceptions and misunderstandings about what the legal position actually is whenever new development is proposed.

Here are 5 of the most common areas of confusion that we encounter as property, local government and town planning lawyers:

  1. If a council approves development a neighbour has a right of appeal

This is a prevalent belief that is the cause of unnecessary anxiety on the part of someone planning to construct a new building and gives false hope to neighbours.  As a general rule, only the person who lodged the development application can appeal from the decision of the council.  There are a few very limited circumstances (for certain specified types of development) in respect of which a neighbour has a right of appeal if the council approves a development, even if it is next door.

  1. A neighbour is entitled to input into the design of an adjoining development

While neighbours can certainly lodge their objections with the council, their opinions and preferences will not necessarily prevail, even if negative impacts can be demonstrated.  The council is required to take the objections into consideration but can decide not to implement the requested amendments.

  1. If a development does not comply with the council planning controls it will be refused

Not so.  The planning system in New South Wales incorporates a level of flexibility which means that strict compliance with all development standards is not necessary.  Even if there are a number of non-compliances with planning controls, while in some situations this may be indicative of an unsuitable development design the number of non-compliances is not, of itself, determinative.  In assessing the proposal, it’s necessary for the council to take into consideration the nature and extent of each of the non-compliances and the impacts which flow from them.

  1. If a design change would reduce or remove an impact then the council must require it to be done

Sometimes, a relatively minor change to a design would have the effect of diminishing or removing completely an impact on an adjoining home.  While it might make a lot of sense to do this, the council is not under a duty to require that change to be made.

  1. Once a development has been approved there is nothing that the neighbours can do

In very limited circumstances, legal proceedings can be commenced to have a development consent declared invalid.  On its face, this appears to contradict the first point which states that there is no right of appeal for neighbours.  However, this is not the same as a right of appeal.  In order to succeed in proceedings of this nature, you must be able to establish that there was a legal flaw in the approval process.

Whenever change is proposed, it’s understandable that people can become concerned about what the possible impacts might be.  But, as with any situation where there are conflicting interests, it’s essential to properly understand the facts and know your rights before you make any decisions.

Whether you’re a developer, a neighbour or a concerned local resident, no matter which side of the fence you’re sitting on, it’s always important to know where you stand.

This article does not constitute legal advice.

Susan Hill, Special Counsel with Hones Lawyers, is an Accredited Specialist in Local Government & Town Planning Law.  She has been a solicitor for over 30 years, with extensive experience in Land and Environment Court matters.


5 reasons you should see a lawyer

5 Reasons You Should See a Lawyer

For a big percentage of people, when they think about lawyers they instantly link them to problems.  But if you’ve got a development project in the pipeline then early engagement with your legal team could add even more value to your bottom line.

If you predicted that most people would rate the enjoyment factor of a visit to a solicitor’s office at about the same level as a trip to the dentist then you’d be on a pretty safe bet!

A glance into our waiting room on any day of the week would quickly confirm why there’s such a negative mindset out there.  Nine times out of ten, clients are sitting in our offices because they’ve encountered a legal situation that’s just about guaranteed to be nothing more than a long, drawn-out headache.  They’re focused on the day that it will finally be finished so that they can leave it behind them and get on with their lives.

Continue reading…


Getting the appropriate compensation matters

Compensation matters

The acquisition process for a number of the State Governments key new rail station sites has begun in earnest for the new Sydney Metro City and Southwest rail line.

Hones Lawyers are currently acting for a number of (soon to be) dispossessed landowners and lease holders. Thus far the compensation being offered falls well short of appropriate compensation – in some case not even including any allowance for disturbance costs or down turn in business because of having to relocate.

Getting the appropriate compensation matters – it can be, and often is, is a question of life and death for a business – in many cases even more so for a small family operated business.

When an organisation the size of the State Government knocks on your door and tells you they are purchasing your property at a certain price, most individuals feel confused as well as significant stress and pressure. While selling your property to the government may be impossible to avoid, the level of compensation for your property asset is not necessarily fixed per the government offer.

Unfortunately a simple negotiation is rarely successful in these State Government property acquisitions and legal representation is necessary. To fight such cases, Hones Lawyers have over the years, put together teams of some of Sydney’s best consultants in the sphere of land compensation and compulsory acquisitions. Our teams are solely focussed on gaining fair compensation for our clients and normally includes some of the best barristers, valuers, town planner and business loss analysts in the country.

It is going to be an interesting time ahead as there seem to be many unhappy landowners and lease holders contacting us at Hones Lawyers already. Contact us if you are soon to be dispossessed and would like to discuss your options.


Tree disputes under the Trees Act of NSW

Tree dispute under the Trees Act

Hones Lawyers assisted owners in Castle Cove in their application under the Trees Act of NSW.

The Trees Act provides the opportunity for a party to apply to the Land and Environment Court in circumstances where a tree or trees on an adjoining property create damage, severe obstruction to views or severe obstruction to solar access.

Our Clients were faced with a most significant problem in that adjoining owners planted Bamboo on an adjoining property which, over time, spread onto our Clients’ property resulting in substantial damage to existing gardens and paved areas on our Clients’ property. Unfortunately, previous efforts by our Clients to resolve the significant problem of the Bamboo infestation with the adjoining owners had failed.

Accordingly, our Clients had no choice but to seek our services to lodge a Trees Act application before the Land and Environment Court seeking various orders requiring the adjoining owners to remove the Bamboo from our Clients’ property, remove the Bamboo on the adjoining property within 3m of the common boundary, undertake maintenance for a lengthy period to ensure that the Bamboo did not return and payment of costs for repair of damage to our Clients’ property.

In a very recent decision by Commissioner Fakes of the Land and Environment Court, our Clients were successful and Court Orders reflecting the above were made.


Strata Schemes Development Act

Strata Schemes Development Act 2015

New jurisdiction for the Land and Environment Court.

The new Strata Schemes Development Act 2015 (the “Act”) has been passed by Parliament and is expected to come into effect after July 2016.

These laws present a profound transformation in strata law. Presently, strata schemes can only be terminated by way of agreement of all lot owners, however the new laws will allow the re-development or sale of strata schemes without the unanimous agreement of owners.

Part 10 of the Act sets out the new regime. Our reading of the Act shows it is complex with a number of steps to be followed, with each step allowing the process to be halted or changed depending on the outcome of that step, and the fact that every application for a forced sale or re-development of a strata scheme will require an order from the Land & Environment Court means that the involvement of strata specialists early on in negotiations is paramount.

The steps in the process can be summarised as follows:

Step 1 – Opt In (Existing freehold schemes must opt in to the scheme by way of ordinary resolution at a general meeting of the owners’ corporation).

Step 2 – Submit a Strata Renewal Proposal (Anyone, including developer who is not a present lot owner, may give a strata renewal proposal to an owners’ corporation).

Step 3 – Strata Committee to Consider (Within 30 days of receipt of the strata renewal proposal, the strata executive committee must consider the proposal at a committee meeting).

Step 4 – General Meeting to Consider (If at the committee meeting it is determined that the strata renewal proposal warrants further consideration then a general meeting of the owners’ corporation must be convened. This meeting should take place within 30 days of the committee meeting).

Step 5 – Establish a Strata Renewal Committee (If at the general meeting it is decided that the strata renewal proposal warrants further investigation then a strata renewal committee (SRC) must be elected by the owners)

Step 6 – Prepare a Strata Renewal Plan (This must be prepared by the committee elected at Step 5. The committee may engage third parties to assist in the preparation of the strata renewal plan (SRP).

The SRP will be for either the collective sale of the strata scheme or for its re-development.

The different plans can be described as follows:

A collective sale is the sale of all lots within the scheme. A collective sale plan must include details such as the name of the purchaser or details of the proposed sale of the overall site by auction or tender. The plan must provide for the purchase of each owner’s lot for no less than the compensation value for the lot. Additionally the amount paid for the sale of the lost and common property must be apportioned amongst the owners of the lots in accordance with their unit entitlements. The L&E Court will have the discretion to vary the unit entitlements where the existing allocation is unreasonable.

A re-development plan is a more complex beast, as this plan must allow for the sale of dissenting owners lots, along with (for example) a different tailored or potentially more complex arrangement applying to the lots of supporting owners (such as ownership of a lot in the new strata scheme). This plan must include details such as the name of the proposed developer, financing arrangements, any planning approvals, requirements for vacant possession and details of the terms of settlement for each owner who supports the scheme. The plan must provide for each dissenting owner’s lot to be purchased for (at least) the “compensation value” for the lot.

The requirement for the payment of “compensation value” as a minimum amount is a significant safeguard. It is more than just market value, as it also includes such amounts as extra payments equivalent to those in a compulsorily acquired sale of land. These payments must compensate the owner for the special value that the property might have, the out of pocket expenses incurred as a result of a forced sale, such as relocation and expenses associated with the acquisition of a new property, and some compensation for the disadvantage of losing a principal place of residence (a difficult component to value, not unlike “non-economic loss damages” in a personal injury case).
As you can see, involvement of experts at this step is critical to the success of the plan.

Step 7 – General Meeting to Consider the SRP (Once the SRP is deemed ready for consideration, a general meeting must be convened to consider the SRP. It may be decided that the SRP requires more work, in which case it must be sent back to the SRC. Alternatively, if it is decided that the SRP is to proceed, then a special resolution must be made to formally present the SRP to the owners for their consideration. This special resolution requires at least 75% to vote in favour.

Step 8 – SRP Formally Given to Owners (The owners in support of the SRP may then give the SRC’s appointed officer a “support notice”. This notice must be signed by both the owner and each registered mortgagee or covenant charge of the owners’ lot. It must be given no earlier than 60 days and no later than three months after receipt of the SRP.

This timing is of the essence, as the SRP will lapse if at least 75% of the owners do not provide support notices within the timeframe provided. This means that small schemes with only a couple of lots will require unanimous agreement before they can be terminated under these provisions.
Car parking and storage areas are not included in the 75% calculation.

Step 9 – SRP recorded on title (LPI must be notified if 75% support for a SRP is achieved within the 3 month period. The fact that a SRP is in existence will then be noted on the title of the common property.

From this point on, once recorded, the support notice will bind future owners of the lots.

Step 10 – General Meeting to Discuss Court Application (A GM of the owners’ corporation must then take place. This meeting will decide whether to apply to the L&E court for an order to give effect to the SRP).

Step 11 – Application to L&E Court (Dissenting owners and their registered mortgagees and covenant charges must be notified of the application and may lodge an objection with the Court. If the SRP provides for a re-development rather than a collective sale then the local council can also file an objection.

Unless otherwise ordered by the court, the costs of a dissenting owner are payable by the owners corporation (similar to a s88K where the costs of the burdened lot owner are payable by the beneficiary of the easement). The owners’ corporation cannot then levy a contribution towards these legal costs upon the dissenting owner/s.

Step 12 – Mediation in the Court (The court may order mediation to ascertain whether agreement can be reached between the parties).

Step 13 – Court Orders Made (The court may make an order giving effect to the SRP if it is satisfied as to the following:

  • Whether the SRP has been prepared in good faith
  • Whether the necessary processes have been followed

If the plan is for a collective sale:

  • The proposed distribution of the proceeds of sale apportioned to each lot is not less than the “compensation value” of the lot; and
  • The terms of the settlement under the plan are just and equitable in the circumstances.

If the plan is for a re-development:

  • The amount to be paid to a dissenting owner is (at least) the larger of
  • The compensation value of the owners lot;
  • An amount equal to the value to the dissenting owner if that owner had been a supporting owner;
  • The terms of the settlement order under the plan (as those terms apply to any dissenting owner) are just and equitable in the circumstances.

Step 14 – Sale in Accordance with the Court Order (If the Court makes an order giving effect to a “collective sale” SRP, all owners must sell their lots.

If the court makes an order pursuant to a “re-development” SRP, the dissenting owners must sell their lots.

The court may also order that compensation is paid to a tenant whose lease is terminated as a consequence of the SRP being given effect.

Every single SRP must go to the L&E Court by way of an application seeking orders authorising the implementation of the SRP. This is the case even if the dissenting owners are passive or all owners are in agreement. The court must be satisfied that all necessary procedural steps in the process have been carried out properly. This will require careful management from the initial stages by the developers, the owners’ corporation and their advisers to ensure that all requirements are met.

We strongly suggest that you speak to us first for advice and assistance every step of the way for your strata developments needs.


New Swimming Pool Legislation

New swimming pool legislation

All properties with a swimming pool or spa being sold or leased on or after 29 April 2016 will need a valid certificate of compliance or a relevant occupation certificate. A relevant occupation certificate is one less than three years old which authorises the use of the swimming pool. In the event of a sale, the certificate must be attached to the contract for the sale of land.

Where a certificate of compliance cannot be obtained, the vendor will be able to transfer the responsibility to obtain a certificate of compliance to the purchaser. The responsibility is transferred by attaching a certificate of non-compliance to the contract for the sale of land. The purchaser will then have 90 days from the date of settlement to rectify defects listed in the certificate of non-compliance and obtain a certificate of compliance.

In addition to a certificate of compliance, certificate of non-compliance or relevant occupation certificate, a certificate that the swimming pool is registered must also be attached to the contract for the sale of land.

Failure to attach the certificates may allow the purchaser to rescind the contract for the sale of land within 14 days of exchange, unless settlement has already occurred.

There are some exceptions, including strata or community schemes comprising more than 2 lots, and if the contract is an off the plan contract.

A certificate of compliance can be obtained from the local council or an independent accredited certifier who is registered with the Building Professionals Board. Further information can be found on the Swimming Pool Register website at
https://www.swimmingpoolregister.nsw.gov.au/

We suggest you allow plenty of time to obtain a certificate of compliance as anecdotal evidence suggests that around 95% of pools fail at the first inspection. With many councils it can take up to 90 days before a pool becomes compliant.