In a recent case brought under the Equal Opportunities Act, the court held that the Owners Corporation (‘OC’) was a service provider. Consequently, the court determined that a disabled lot-owner was entitled to require reasonable works to be done by the OC to enable her to have sufficient access to the common property.
One important aspect on which the court did not rule, was whether the work requested was reasonable. It returned the matter to VCAT to decide on this question.
The consequences of the case could be far reaching for OCs. It is now the State of the Law in Victoria that an OC could be forced to do work which is required by a single lot owner or a tenant. If the cost of the works is substantial, such as would be the case with, say, the installation of a lift, this is a matter of concern for OC members.
Consequential questions for OC members
The questions which arise for owners include:
1) What if the work is impractical or impossible to complete in the block?
2) Who is liable to pay for the work?
What if the work is impractical or impossible?
Consider the circumstance of an apartment block built years before current legislative and other requirements came into force. In such a block it may be impractical, or impossible, to do works which would meet the needs of the party making the request for changes. In our view, the most likely outcome in these circumstances is that it would not be reasonable for the OC to have to make the changes requested and, consequently, it would not be forced to do so. However, until there is greater clarity on what is reasonable there is uncertainty in this area.
Who is liable to pay for the work?
The court did not deal with the allocation of the liability of owners to pay for the required works in the recent case. We expect that the fees levied to pay for works of this type would be treated by the OC as ‘special fees’ rather than ‘annual fees’. We also expect that these costs, rather than being allocated equally amongst lots, would be allocated using the ‘benefit principle’. The benefit principle simply means that those who benefit more, pay more. However, it is not straight forward to determine the share of benefit. For example, the party requiring the OC to carry out the works could argue that completion of the works will raise the value of the entire building and, consequently, suggest that all owners should pay a share.
What can your OC do to protect you and other members from the risk of being required to pay for a share of works carried out at the request of a single owner or tenant?
We recommend that OCs consider reviewing their rules with a view to making amendments, if necessary, which make clear that:
a) the liability for the cost of works carried out pursuant to the Equal Opportunities Act at the request of one (or more but not all) owners/tenants is to be treated as a special fee and
b) are to be allocated to the lot owner(s) requiring the works.
This course of action would provide owners with a line of protection against the potential risk.
Please contact Rama Murugesu from Interface Property Group (an Owners Corporation expert) by email at email@example.com or by phone on 0427 513 239 if you would like to consider such a course of action for your OC.