Introduction

The property development industry has become more astute in recent years.  This has resulted in property developers putting in place corporate structures that are intended to protect their assets.  This often results in owners corporations being unable to recover compensation from developers to cover the costs to fix defects that affect their buildings.  So what can be done to avoid that problem?

In this article we take a look at a recent case in which an owners corporation represented by JS Mueller & Co succeeded in convincing the Supreme Court to make a freezing order against a developer to prevent the developer dissipating its assets to ensure that the developer would have sufficient assets to pay any compensation the owners corporation was awarded by the Court to cover the cost to fix building defects.

The Facts

There is a mixed use building in Milsons Point, Sydney containing 125 residential lots and 2 commercial lots.  The building was completed in July 2021.  Since August 2021, the developer has been selling the residential lots in the ordinary course.  The developer has now sold 121 of the 125 residential lots.  The developer still owns 4 of the residential lots. They are effectively the developer’s only assets.

The building contains defects.  The owners corporation has sued the developer in the Supreme Court for damages arising out of those defects.  In the case, the owners corporation has obtained evidence from a quantity surveyor to the effect that the estimated cost to rectify the defects is in the order of $10.6 million.

The Problem

The owners corporation became concerned that the developer’s only assets were the four residential lots that it owned in the building and that once those lots were sold, the sale proceeds would be dissipated and the developer would have no assets left to pay any damages the owners corporation was awarded by the Court.  That would have rendered to the continuation of the court case against the developer pointless.

Application for Freezing Order

In November 2024 the owners corporation applied to the Supreme Court for a freezing order to be made against the developer.  The purpose of that order was to prevent the developer from disposing of its assets up to the value of $10.6 million being the amount of the owners corporation’s claim.  The developer resisted the application for the freezing order and argued that there was no basis for the Court to make that order.

The Decision

On 6 February 2025 the Supreme Court published its decision in which it concluded that it was appropriate for a freezing order to be made against the developer generally in the terms sought by the owners corporation.  The Court was persuaded that there was a danger that any damages that were awarded to the owners corporation would be wholly or partially unsatisfied because the developer might dispose of its assets once it sells the remaining 4 lots in the building that it still owns.  The Court concluded that it was likely that the developer would sell those 4 lots in the future and that it would distribute the profit generated by the sale of the those lots either by way of dividend or as a loan to other members of its corporate group.  This was consistent with the way in which the developer had dealt with the proceeds of sale of other lots it had sold in the development.

Conclusion

The case shows that an owners corporation that is concerned that a developer against whom it has made a claim for damages arising from building defects can take steps to protect its interests and ensure that the developer does not dissipate its assets to avoid having to pay damages to the owners corporation.  The case shows that the Supreme Court will make freezing orders against developers in appropriate circumstances to safeguard the position of owners corporations who are at risk of being left with nothing if the developers of their strata schemes are able to deal with their assets without restraint.

Case citation: The Owners – Strata Plan No. 102081 v Aqualand Constructions Pty Ltd [2025] NSWSC 31

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

The Building Commission NSW has announced a delay in the implementation of planned fire safety reforms. Originally scheduled for February 2025, these reforms will now be rolled out in 2026 and 2027.

New regulations will significantly impact owners corporations, owners, strata managers, developers, and fire safety professionals. These changes, stemming from the Environmental Planning and Assessment (Development Certification and Fire Safety) Amendment (Fire Safety) Regulation 2022, aim to bolster fire safety standards and increase accountability.

What’s Changing?

The biggest shift involves aligning AFSS inspections with Australian Standard 1851-2012. This means:

• Increased Inspection Frequency: Seven critical fire safety measures now require monthly servicing, a significant jump from previous requirements.
• Stricter Record-Keeping: Detailed records of all inspections, including any missed servicing, must be kept onsite for at least seven years. These records must be readily available for inspection by authorities.
• Zero Tolerance for Non-Compliance: Failure to adhere to these new rules can result in hefty fines of up to $66,000 per incident.

The Impact on Your Owners Corporation

These changes translate to:

• Increased Costs: Expect a rise in maintenance costs due to more frequent inspections and potential repairs.
• Heightened Risk: The potential for costly fines adds a significant layer of risk for your Owners Corporation.
• Increased Administrative Burden: Maintaining comprehensive records and ensuring compliance with the new regulations will require careful planning and diligent record-keeping.

What Can Owners Corporation Plan Ahead for?

• Avoid the Rush: Schedule inspections and engage qualified fire safety practitioners early to avoid last-minute delays and potential penalties.
• Budget Accordingly: Factor in the increased costs of inspections and potential repairs into your financial planning.
• Review Existing Records: Gather all necessary fire safety records and ensure they are readily available for inspection.
• Consult with Experts: Seek guidance from strata compliance experts who can provide tailored advice on navigating these new regulations.
• Fire Safety By-laws: Reduce your risk and consult JS Mueller & Co Strata Lawyers to ensure your fire safety by-laws are current

New Key Dates and Changes

These new AFSS requirements are a significant shift. By proactively addressing these changes, your Owners Corporation can ensure compliance, mitigate risks, and protect the safety and value of your property.

For more information including the new key dates and changes scheduled for 2026 and 2027 visit NSW Government

Strata, Mitigate your Risk…

It is critical that you prepare and ensure you are across the new  regulations, new key dates and in preparation your fire safety by-laws are up to date.

DOES YOUR FIRE SAFETY BY-LAW NEED UPDATING? CLICK HERE NOW…

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist

In a significant victory for owners corporations across Australia, the High Court has ruled that builders and developers cannot escape liability for negligent construction work. The landmark decision in Pafburn Pty Limited v The Owners – Strata Plan No 84674 affirms that developers and head contractors bear a non-delegable duty to ensure the quality of construction, even if the work is outsourced to subcontractors. This ruling has far-reaching implications for the building industry and provides greater protection for property owners.

On 11 December ds2024, the High Court of Australia handed down its judgment in the case of Pafburn Pty Limited v The Owners – Strata Plan No 84674. The key findings of the decision are as follows:

Key Findings

1. Appeal Dismissed: The appeal by Pafburn Pty Limited and Madarina against the NSW Court of Appeal decision in favour of the owners corporation was dismissed with costs. This means that the decision is in favour of the owners corporation.
2. Non-Delegable Duty: The court held that the duty imposed by Section 37(1) of the Design and Building Practitioners Act 2020 (NSW) (DBPA) is a non-delegable duty. This means that the developer and the head building contractor cannot limit their liability by delegating construction work to others.
3. Proportionate Liability: The court found that the proportionate liability scheme under Part 4 of the Civil Liability Act 2002 (NSW) (CLA) does not apply to claims for breach of the duty under Section 37 of the DBPA. The liability for breach of this duty is personal and cannot be apportioned among concurrent wrongdoers.
4. Vicarious Liability: The court clarified that Section 5Q of the CLA, which deals with liability based on non-delegable duties, applies to the duty under Section 37(1) of the DBPA. This means that the developer and the head building contractor are treated as vicariously liable for the negligence of those to whom they delegated construction work.
5. Economic Loss: The court confirmed that the owners corporation is entitled to claim damages for economic loss caused by defects in the building arising from the construction work, as per Section 37(1) of the DBPA.
6. Legislative Intent: The court emphasised that the DBPA was enacted to address public concerns about building defects and to ensure that owners have effective redress for economic loss caused by such defects. The provisions of the DBPA are intended to impose individual and collective responsibility on building practitioners for their work.
7. Outcome: The matter was remitted to hearing to determine whether the list response pleading can be maintained against all alleged wrongdoers, specifically whether they can be characterised as persons who carry out construction work under the DBPA.

These findings reinforce the non-delegable nature of the duty of care imposed on developers and head contractors under the DBPA and clarify the interaction between the DBPA and the CLA. This is good news for an owners corporation because it means that a builder and developer cannot attempt to limit or apportion their liability by arguing that the work was done by someone else, in other words, their duty cannot be delegated to a subcontractor (non-delegable duty).

An owners corporation can still take direct action against subcontractors (if necessary), although the owners corporation must be able to establish that the subcontractors carried out construction work within the meaning of the DBPA and breached the duty in section 37 of DBPA. We also note that the decision does not prevent cross claims by the builder and developer.

Complex Area of Law

This is a complex area where we have significant experience please contact us if you have a similar case.

Helen Amanatiadis I LLB LLM I Lawyer

Helen is admitted as a practitioner of the Supreme Court of NSW and High Court of Australia. Highly qualified Helen has over 25 years of experience in commercial dispute resolution, with a primary focus on building and construction and strata law. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

The NSW Government has released a new guide to help strata property owners better understand the ins and outs of strata living.

The Strata Living Guide covers a range of essential topics, including by-laws, financial obligations, renovations, and dispute resolution.

Strata managers it is important that you share a copy of the Strata Living Guide to new and existing owners to help them better understand how strata living works.

The guide aims to empower strata owners by providing them with the knowledge and tools they need to effectively manage their properties and resolve common issues.

It also offers practical advice on how to navigate the complexities of strata living, such as understanding their rights and responsibilities, attending meetings, and making informed decisions.

Key topics covered in the guide include:

• The basics of strata
• Common property and individual ownership
• Key roles and responsibilities within a strata scheme
• Financial obligations and levies
• By-laws and rules governing strata schemes
• Meetings and decision-making processes
• Repairs and maintenance of common property
• Renovating your property
• Resolving disputes and conflicts

The NSW Government is committed to improving the regulatory framework for strata living and ensuring that all strata owners have access to the information they need to make informed decisions.

The Strata Living Guide is a valuable resource for anyone who owns or is considering purchasing a strata-titled property in NSW.

You can download the full guide here: NSW Strata Living Guide 

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

NSW Fire and Rescue (FRNSW) continues to grapple with a concerning surge in e-bike and e-scooter fires, with at least five incidents per week in NSW linked to lithium-ion batteries.

A recent fire at an inner Sydney e-bike shop, resulting in the evacuation of an entire apartment block, underscores this alarming trend.

FRNSW emphasizes the need for increased awareness and education regarding the safe selection, use, charging, storage, and disposal of lithium-ion batteries to minimize the risk of fires.

Key Safety Tips

• Never leave charging devices unattended: Avoid sleeping or leaving your home while lithium-ion batteries or powered devices are charging.
• Disconnect chargers: Unplug chargers once batteries are fully charged.
• Avoid hazardous storage: Keep batteries away from exits and flammable materials.
• Proper disposal: Do not dispose of batteries in regular trash or recycling bins.
• Recycling: Take used lithium-ion batteries to nearby BCycle battery recycling drop-off points.
• Buy reputable brands: Purchase batteries and chargers from trusted sources.
• Avoid mixing components: Do not combine batteries or chargers from different brands.
• Implement a by-law: Owners corporations should adopt an e-bike/e-scooter by-law to manage resident safety and mitigate fire risks.
• For more information, visit FRNSW Lithium-ion Battery Safety.
• In case of a fire, evacuate immediately and call 000.

A By-law Can Proactively Safeguard Your Strata Community

By implementing a well-crafted by-law, Owners Corporations can significantly reduce the risk of e-vehicle fires and establish clear guidelines, including:

• Protection for owners corporations in case of battery fire incidents
• Safe charging practices for lithium-ion batteries
• Restrictions on battery types to ensure safety
• Proper disposal procedures to prevent hazards
• Registration and storage requirements for e-vehicles
• Resident education for e-vehicle safety

We strongly recommend implementing an e-vehicle by-law for e-bikes, e-scooters, and other e-vehicles, especially as warmer weather approaches and more residents use these modes of transportation.

GET YOUR E-BIKE / E-SCOOTER BY-LAW HERE NOW!

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

New laws will soon commence in New South Wales to increase transparency and accountability in the strata management industry.

Strata managing agents who engage in unethical practices, such as undisclosed kickbacks or failing to disclose conflicts of interest, will face harsher penalties.

The new laws aim to protect the interests of strata owners by giving them greater control over their buildings and common property.

The big changes are:

• Increased penalties: Maximum penalties and penalty infringement notice amounts for agents who fail to disclose information about commissions have been raised.
• Strengthened conflict-of-interest disclosure: Agents will be required to provide more detailed information about potential conflicts of interest.
• Ban on insurance commissions: Agents will no longer be allowed to receive commissions on insurance products unless they actively help residents find the best deals.
• Enhanced enforcement powers: NSW Fair Trading has been granted additional authority to investigate and prosecute breaches of strata laws.

Best Practice Guide

The new disclosure requirements are largely in line with the Strata Community Association’s best practice guide.

This means that strata managers who are already following the guide will not need to make significant changes to their practices.

The new laws will also ensure that all strata managers are subject to the same standards.

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

In a recent NSW Supreme Court case the builder brought an application to the Court seeking an order that the owners corporation provide security for costs to protect the costs of the builder in the litigation in the event the builder was successful and unable to recover his costs from the owners corporation.

So, did the court grant with the builder’s application? Owners Corporation Litigation Security for Costs

For NSW strata legal or levy collection advice contact us here or call 02 9562 1266, we’re happy to assist.

In a recent decision, NCAT upheld a security fob by-law made by an owners corporation.  This is a good decision as it demonstrates that appropriately worded security fob and access key by-laws can be made by owners corporations.

Introduction

Many strata buildings contain security systems which restrict access to and egress from the buildings.  These systems often include security access keys or fobs which are distributed to owners and occupiers to enable them to get into and out of the building.

Did you know owners corporations are able to implement appropriately worded security fob and access key by-laws?

So, what was included in this particular by-law Security Access, NCAT and By-laws

For NSW strata legal or levy collection advice please contact us here or call 02 9562 1266, we’re happy to assist.

It’s the Gold Coasts crumbly ‘faulty tower’ with almost 1,000 building defects. Building experts have described the building as life threatening.

Only seven years old and the apartment block may have to be demolished. Literally sick of living with leaks, rust and mould the long-suffering strata residents of the Silverstone apartment complex are taking ASX-listed property developer Villa World, seeking $20 million in damages.

View the full strata mould article here Silverstone Apartment Defects

For NSW strata legal or levy collection advice please contact us here or call 02 9562 1266, we’re happy to assist.