Nolan v Owners Units Corporation No 369 (Unit Titles) - [2014] ACAT 32

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

NOLAN & ANOR v OWNERS UNITS CORPORATION NO 369
(Unit Titles) [2014] ACAT 32
UT 14/6
Catchwords: Units Titles – proposal to replace carpet flooring with bamboo floating floor in unit – whether change of flooring is a structural alteration – whether floor covering change needs an unopposed resolution at a general meeting of owners corporation – addressing noise problem in installation of timber floor – whether concern of adjoining unit owner could be a reason for not calling an owners corporation meeting – a meeting would be an opportunity to present information to unit owners about proposed replacement of carpet with wooden floor

Legislation:Owners Corporations Act 2006 (Vic), s 132
Unit Titles Act 2001, s 34
Unit Titles (Management) Act 2011, s 24 and Schedule 4 (default rules 4 and 8)

Subordinate
Legislation: Building (General) Regulations 2008, regulation 23

Strata Schemes Management Regulation 2010, regulations 14 and 15

Cases: Owners SP 10701 v Segelov & Ors [1999] NSWSSB 61

Smith v Hoopman [2005] NSWCTTT 291
United Petroleum v Skorpos and Anor [2012] SASC 151

Tribunal: Ms E. Symons – Presidential Member

Date of Orders: 26 May 2014
Date of Reasons for Decision: 26 May 2014

AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) UT 14/6

BETWEEN:
LUKE NOLAN &
MARIA CLAIR VICTORIA
Applicant

AND: THE OWNERS UNITS
CORPORATION NO. 369
Respondent

TRIBUNAL: Ms E Symons – Presidential Member

DATE:26 May 2014

ORDER

The Tribunal determines that the removal of carpets and the installation of a floating bamboo floor is not an erection or alteration to the structure as provided in default rule 4(i)(a) in Schedule 4 of the Unit Titles (Management) Act 2011 and the removal and installation does not require the approval of the owners corporation.

………………………………..
Ms E. Symons – Presidential Member

REASONS FOR DECISION

Background

In November 2013, the applicants purchased unit 10 in The Quadrant, 8 Howitt Street, Kingston. The relevant Units Corporation is No. 369. The Quadrant does not have specific Body Corporate Rules; it is governed by the default rules in Schedule 4 of the Unit Titles (Management) Act 2011 (UTMA).
Prior to the settlement of the purchase of unit 10, the applicants sought, in writing, permission from the owners corporation to change the flooring in their unit after settlement, by replacing carpet in the living areas, the kitchen and the hallway to the bedrooms with a bamboo floating floor with noise minimising underlay which meets the Building Code of Australia.
Mr Darren Walton, from ACT Strata Management Services, on behalf of the owners corporation, informed the applicants in writing on 16 September 2013 that the approval process for alterations and erections is by Special Resolution at a General Meeting or Annual General Meeting of Owners. He also informed the applicants that if the process is to be held outside of the Annual General Meeting, a Special General Meeting can be requested with approval from the requesting unit’s adjoining properties.
On 14 October 2013, the applicants provided Mr Walton with a letter to the owners corporation to which was attached a diagram of their unit, the bamboo flooring brochure and the acoustic test result. Mr Walton sent letters to the five adjoining owners. Two of these owners consented to the applicants’ proposed work, one owner did not consent, and the other two owners did not reply.
Mr Walton informed the applicants on 24 October 2013 that, as one of the adjoining owners had not consented, a General Meeting would not be called; therefore, they would not be able to present their request to the owners corporation and they could not install the floorboards.
On 2 April 2014, the applicants lodged an application under the UTMA with the ACT Civil and Administrative Tribunal (ACAT) in which they sought permission to remove the carpet from the concrete floor, and to install the floating bamboo floor boards and the sound proof overlay to their living areas, kitchen and passageway to the bedrooms.
In the reasons for the application the applicants stated that they:
(a)disagreed that the installation of floating bamboo floorboards was an alteration or erection to the unit structure;
(b)believed that being prevented from installing floating bamboo floorboards and from holding a general meeting because of rejection by one adjoining member is unreasonable and open to bias;
(c)believed the reason for rejection by the adjoining unit is invalid as a noise minimisation underlay will be used that meets the Building Code of Australia noise minimisation requirements; and
(d)do not believe that the existing owners corporation rules and events described in their letter attached to the application have a legal basis to stop the applicants from installing floorboards.
At a directions hearing on 17 April 2014, a preliminary issue arose in relation to “whether the proposed bamboo flooring is an ‘alteration to a structure’ as in the Owners Corporation rules.”[1] The Tribunal made directions requiring the parties to file their submissions in relation to this preliminary issue and reserved the decision. Both parties filed submissions in accordance with the directions.

Consideration
[1] Order 1 of Tribunal Orders dated 17 April 2014

The applicants’ evidence is that the floating bamboo floorboards will be laid without nailing or gluing and that there will be no structural change to the concrete flooring of the unit.
Default rule 4(i)(a) in Schedule 4 of the UTMA specifically provides that a unit owner may erect or alter any structure in or on the unit or the common property only in accordance with the express permission of the owners corporation by unopposed resolution, and that the permission given may be conditional.
“Structure” is not defined in the UTMA. In section 24(2), the UTMA refers to the following as structures, if load bearing: walls, columns, footings, slabs or beams. “Structural parts” may include eaves, gutters or downpipes.[2] The UTMA also does not define “alter”, “alteration”, “erect” or “erection”.
[2] Section 34 Unit Titles Act 2001
Regulation 23 of the Building (General) Regulations 2008 deals with substantial alteration. Subclause (2) provides that neither refitting a building nor replacing the internal elements of the building is an alteration of the building unless the layout and function of the internal spaces of the building have changed. Example 5 in this subclause provides:
5. A building contains a nightclub where a fire sprinkler system was installed 1 year ago. Plans now propose to upgrade the airconditioning system and floor coverings throughout the building. As the work does not alter the floor area or function of the building it would not amount to a substantial alteration. [emphasis the Tribunal’s own]
The respondent referred the Tribunal to the following definitions of both words in the Collins English Dictionary[3]:
Alter v. - make change, make or become different - alteration n.
Structure n. - (arrangement of parts in) construction, building etc; form; organization – v. give structure to – structural a.
[3] Respondent’s Response to Applicants’ Submission, dated 7 May 2014
The Tribunal has looked at case law and interstate legislation in relation to ‘structural alteration’. In Owners SP 10701 v Segelov & Ors[4] the Strata Schemes Board stated:
If the ordinary usage of the term “structural” is to be applied, the relevant definition in the Shorter Oxford Dictionary is “of or pertaining to the structure of a building as distinct from decoration or fittings.”
In my view the word “structural” does not limit the kind of alterations to alterations of load-bearing walls for example. Structural alterations would certainly include alterations which involve penetration of a common property floor slab.
...
The evidence in my view is sufficient for a finding that Mr Joseph and Ms Segelov included the penetration of the common property floor slab. In the absence of any evidence to the contrary by Ms Segelov or Mr Joseph such an alteration would attract the provisions of by-law 28 and clause (h).
[4] [1999] NSWSSB 61
In United Petroleum v Skorpos and Anor[5], Stanley J of the South Australian Supreme Court said the following:
[105]I am not satisfied that the fixing of gyprock panels to the walls constitutes "structural alterations to the premises".
[106] In Collins v Winter [[1924] NZLR 449] Sim J considered that the phrase "structural alteration" generally means building work done to the fabric of a building and that an improvement for the more convenient use of the building which did not involve any alteration in the structure of the building or its fabric is not a structural alteration.
[107]In my view the reference to "structural alterations" in cl 9.5(2) of the lease agreement is to be understood in its context as a reference to building work which would alter the structure of the building such as the knocking out of a wall or the insertion of a door or window into a wall, or the addition of a room. I do not consider that the fixing of gyprock cladding to a wall constitutes a structural alteration. Accordingly, the defendants' consent was not required for that work. In any event, even if it was considered to constitute a structural alteration, an exception is made within the terms of cl 9.5 for covering brickwork with compressed cement sheeting or other cladding provided the tenant does not bolt, cam lock or drill into the brick work for that purpose. That did not occur here. It follows that the plaintiff was entitled to undertake the work that it did.
[5] [2012] SASC 151
The NSW Consumer, Trader and Tenancy Tribunal has considered a number of cases involving change of floor coverings in units. In Smith v Hoopman[6], which concerned the replacement of carpet over wooden flooring with cork tiles, the tribunal said that there was no absolute obligation on a unit owner to prevent the transmission of noise, but only to prevent the level of noise that is likely to disturb the reasonable peace.
[6] [2005] NSWCTTT 291
The NSW Strata Schemes Management Act 1996 provides for by-laws to be made in relation to, without limiting other matters, floor coverings. By-law 14 in Schedule 1 of the Act deals with floor coverings, and states:
14. Floor coverings
(1) An owner of a lot must ensure that all floor space within the lot is covered or otherwise treated to an extent sufficient to prevent the transmission from the floor space of noise likely to disturb the peaceful enjoyment of the owner or occupier of another lot.
(2) This by-law does not apply to floor space comprising a kitchen, laundry, lavatory or bathroom.
Model by-laws adopted by the NSW Strata Schemes Management Regulation 2010 for residential strata schemes appear in Schedule 2 of the Regulations. For floor coverings the relevant model by-laws are as follows:
14 Changes to floor coverings and surfaces
(1) An owner or occupier of a lot must notify the owners corporation at least 21 days before changing any of the floor coverings or surfaces of the lot if the change is likely to result in an increase in noise transmitted from that lot to any other lot. The notice must specify the type of the proposed floor covering or surface.
(2) This by-law does not affect any requirement under any law to obtain a consent to, approval for or any other authorisation for the changing of the floor covering or surface concerned.
15 Floor coverings
(1) An owner of a lot must ensure that all floor space within the lot is covered or otherwise treated to an extent sufficient to prevent the transmission from the floor space of noise likely to disturb the peaceful enjoyment of the owner or occupier of another lot.
(2) This by-law does not apply to floor space comprising a kitchen, laundry, lavatory or bathroom.
The situation in Victoria is set out in the Victorian Owners Corporations Act 2006, which states at section 132:
132. Right to decorate interior walls, floors and ceilings
(1) If a boundary of a lot is shown on a plan of subdivision as being the interior face of the building, the lot owner has the right to decorate or attach fixtures or chattels to that face.
(2) This section permits works such as curtaining, painting, wallpapering and installing floor coverings, light fittings and other chattels.
Interestingly, the website of the New South Wales Department of Fair Trading[7] includes frequently asked questions with answers, one of which is:
Q. The people above me pulled up their carpet without permission of the owners corporation and put down a floating floor which is very noisy, what can I do?
A. Under the model by-laws that apply to most schemes, owners do not require permission to remove the carpet in their lot airspace. However the model by-laws require them to notify the owners corporation before proceeding. If a noise problem results, you can talk to them about it or ask the owners corporation to serve them with a Notice to Comply with a By-Law.

Conclusion
[7] type="1">
Having considered all of the matters before the Tribunal the Tribunal finds that, as this unit complex has adopted the default rules, the removal of carpets and the installation of a floating bamboo floor is not an erection or alteration to the structure as provided in default rule 4(i)(a) in Schedule 4 of the UTMA and it does not require owners corporation approval. The applicants unambiguously stated that the bamboo flooring will not be nailed or glued to the concrete floor. While Mr Walton referred in his submissions to “some complexes having developed a ‘Hard Floors policy”[8] there was no evidence of such a policy for The Quadrant before the Tribunal.
[8] Respondent’s Response to Applicants’ Submissions, dated 7 May 2014
The applicants are aware of the noise issue and default rule 8 in Schedule 4 of the UTMA. They had provided Mr Walton with documentation about the bamboo flooring and the acoustic test result on 14 October 2013. It appears to the Tribunal that this documentation may not have been sent on to the adjoining owners of the applicants’ unit. If, in fact, noise resulting from the installation of the bamboo floating floor is “reasonably likely to cause substantial annoyance to an owner, occupier or user of another unit”,[9] the affected person can take action through the owners corporation.
[9] Default rule 8(1), Schedule 4 of the Unit Titles (Management) Act 2011
Likewise, if nuisance or substantial annoyance to an owner, occupier or user of another unit results from the installation of the bamboo floating floor, the affected person can take action through the owners corporation.
As a result of this determination, it is not necessary for the Tribunal to further consider the applicants’ application. However, the Tribunal notes the other matters raised in the application and makes the following observations.
Mr Walton decided on a course of action which, the Tribunal is satisfied, resulted from his incorrect interpretation of default rule 4(1) (in that changing from a carpeted floor covering to a hard floating floor was altering a structure in or on the unit or the common property).
It also appears that he misunderstood the basis for calling an owners corporation meeting where a unit owner wishes to erect or alter any structure, as he told the applicants in an email dated 24 October 2013 that a General Meeting would not be called as one of the adjoining owners had informed him in a letter they did not consent to the installation of the bamboo flooring.
The Tribunal notes that that owner also stated in that letter that they were unaware of noise minimisation processes that are adequate and that they had noted the owners’ (i.e. the applicants’) intention to provide specifications for a noise minimising underlay at the General Meeting. A reasonable interpretation of this is that the adjoining unit owners’ refusal to consent is qualified to the extent that they believed the applicants would provide the relevant specifications at the General Meeting.
The applicants have not had the opportunity to provide this information as the General Meeting has not been called or held. The Tribunal is satisfied that the default rules do not require 100% consent to the proposed work from the relevant unit owners before the General Meeting can be called and held. While default rule 4 (1)(a) requires the express permission of the owners corporation by an unopposed resolution, the applicants, if they were to be erecting or altering any structure, should have the opportunity to put their proposal to the other unit owners at such a General Meeting. The owners would then have the opportunity to vote on a resolution.
........................................
Ms E. Symons
Presidential Member
Unit Titles (Management) Act 2011
Disputes involving the owners corporation—generally
(1)This section applies to a dispute relating to an owners corporation for a units plan between the corporation and any 1 of the following:
(a)an owner or occupier of a unit in the units plan;
(b)the manager (if any) for the owners corporation;
(c)a service contractor for the owners corporation;
(d)an executive member.
(2)A party to the dispute may apply to the ACAT for an order in relation to the other party if the application relates to the dispute.
Disputes between unit owners
(1)This section applies to a dispute relating to an owners corporation for a units plan between 2 or more unit owners.
(2)A party to the dispute may apply to the ACAT for an order in relation to the other party if the application relates to the dispute.
Kinds of ACAT orders
(1)The ACAT may make the following orders:
(a)an order requiring a party to do, or refrain from doing, a stated thing;
(b)an order requiring a party to exercise a function under this Act;
(c)an order requiring an owners corporation to do a stated thing that is ancillary to a function of the corporation under this Act;
(d)an order requiring a person to pay to the Territory or someone else an amount of not more than $1 000;
(e)a declaration—
(i)that a general meeting or executive committee meeting is void for irregularity; or
(ii)that a resolution of a general meeting or executive committee meeting is void for irregularity; or
(iii)that a rule of the owners corporation is invalid for irregularity;
(f)an order repealing or amending a resolution of a general meeting or executive committee based on a merits review of the resolution by the ACAT;
(g)an order giving effect to an unsuccessful motion for a resolution of a general meeting (either as originally proposed or as amended by the ACAT) if the ACAT is satisfied after a merits review of the motion that opposition to the motion was unreasonable;
(h)an order requiring stated accounts of an owners corporation to be audited, whether by a stated person or a person of a stated kind;
(i)an order allowing an applicant to examine records of the owners corporation;
(j)an order requiring an owners corporation to make or repeal a rule and register a copy of the resolution making or repealing the rule;
(k)an order appointing an administrator to exercise all or stated functions of the owners corporation, the executive committee or an office-holder in the committee;
(l)if the dispute relates to a matter mentioned in section 126 (1) (a)—an order to remove the animal from the unit if—
(i)a condition requiring the owners corporation’s consent to keeping the animal is not complied with; or
(ii)the animal is causing a nuisance.
(2)The ACAT may make any other order it considers reasonably necessary or convenient to resolve a dispute under this part.
(3)This section does not limit the orders the ACAT may make in relation to a dispute under this part.
Schedule 4Default rules
(see s 106)
NoteThe owners corporation may amend the default rules under s 108.
Definitions—default rules
(1)In these rules:
executive committee representative means a person authorised in writing by the executive committee under rule 10 (4).
owner, occupier or user, of a unit, includes an invitee or licensee of an owner, occupier or user of a unit.
(2)A word or expression in the Act has the same meaning in these rules.
Payment of rates and taxes by unit owners
A unit owner must pay all rates, taxes and any other amount payable for the unit.
Repairs and maintenance
(1)A unit owner must ensure that the unit is in a state of good repair.
(2)A unit owner must carry out any work in relation to the unit, and do anything else in relation to the unit, that is required by a territory law.
Erections and alterations
(1)A unit owner may erect or alter any structure in or on the unit or the common property only—
(a)in accordance with the express permission of the owners corporation by unopposed resolution; and
(b)in accordance with the requirements of any applicable territory law (for example, a law requiring development approval to be obtained for the erection or alteration).
NoteAn example is part of the Act, is not exhaustive and may extend, but does not limit, the meaning of the provision in which it appears (see Legislation Act, s 126 and s 132).
(2)Permission may be given subject to conditions stated in the resolution.
Use of common property
A unit owner must not use the common property, or permit it to be used, to interfere unreasonably with the use and enjoyment of the common property by an owner, occupier or user of another unit.
Hazardous use of unit
A unit owner must not use the unit, or permit it to be used, so as to cause a hazard to an owner, occupier or user of another unit.
Use of unit—nuisance or annoyance
(1)A unit owner must not use the unit, or permit it to be used, in a way that causes a nuisance or substantial annoyance to an owner, occupier or user of another unit.
(2)This rule does not apply to a use of a unit if the executive committee has given an owner, occupier or user of the unit written permission for that use.
(3)Permission may be given subject to stated conditions.
(4)Permission may be withdrawn by special resolution of the owners corporation.
Noise
(1)A unit owner must not make, or permit to be made, such a noise within the unit as might (in the circumstances) be reasonably likely to cause substantial annoyance to an owner, occupier or user of another unit.
(2)This rule does not apply to the making of a noise if the executive committee has given the person responsible for making the noise written permission to do so.
(3)Permission may be given subject to stated conditions.
(4)Permission may be withdrawn by special resolution of the owners corporation.
Illegal use of unit
A unit owner must not use the unit, or permit it to be used, to contravene a law in force in the ACT.
What may an executive committee representative do?
(1)An executive committee representative may do any of the following in relation to a unit at all reasonable times:
(a)if the committee has reasonable grounds for suspecting that there is a breach of the Act or these rules in relation to a unit—inspect the unit to investigate the breach;
(b)carry out any maintenance required under the Act or these rules;
(c)do anything else the owners corporation is required to do under the Act or these rules.
(2)An executive committee representative may enter a unit and remain in the unit for as long as is necessary to do something mentioned in subrule (1).
(3)An executive committee representative is not authorised to do anything in relation to a unit mentioned in subrule (1) unless—
(a)the executive committee or the representative has given the owner, occupier or user of the unit reasonable notice of his or her intention to do the thing; or
(b)in an emergency, it is essential that it be done without notice.
(4)The executive committee may give a written authority to a person to represent the corporation under this rule.
Seal of owners corporation
For the attaching of the seal of the owners corporation to a document to be effective—
(a)the seal must be attached by decision of the executive committee; and
NoteExecutive committee decisions must be made by majority vote, or by unanimous vote if there are only 2 members of the committee (see sch 2, s 2.10).
(b)the seal must be attached in the presence of 2 executive members; and
(c)the executive members witnessing the attaching of the seal must sign the document as witnesses.