Issues arising from the obligation to repair and maintain in the cladding crisis

Commercial Directions

Introduction

Recent authority suggests an owners corporation’s duty to repair and maintain common property may include upgrading works if the non-compliant element poses a high risk of danger. In the current climate, this begs the question of whether an owners corporation is obliged to rectify cladding it knows to be non-compliant in the absence of a building order.

Is there an obligation to upgrade?

An owners corporation can approve upgrading works by special resolution. A legal obligation to upgrade property may arise in circumstances where a building order has been issued. The Tribunal was recently asked to determine whether an obligation also arises under the Occupational Health and Safety Act 2004 (‘OH&S Act’).

In Zhang v Owners Corporation RP4292 (Owners Corporation) [2019] VCAT 1850
(2 December 2019), a lot owner brought an application to replace the balcony and stairwell balustrades. The balconies was determined to be lot property. The maintenance plan identified the stairwell balustrades did not comply with current building codes and proposed they be upgraded in 5 years. Zhang alleged the Owners Corporation was in breach of s46 of the Owners Corporation Act 2006 and its obligations under s26 of the OH&S Act to ensure a safe workplace, and sought replacement within 60 days.

The Tribunal’s powers in relation to the OH&S Act are limited and no finding was made as to that legislation. However, the Tribunal suggested a duty to upgrade may arise under s5 of the Owners Corporation Act in circumstances where a defect poses a significant risk to the health and safety of people who are likely to attend the building.

The non-compliance was limited to rail spacing and height. Despite the possible exposure for the Owners Corporation to personal injury claims or building orders, the Tribunal did not consider the balustrades represented a significant enough risk to warrant immediate upgrade.

Takeaways

The authorities suggest that unless there is persuasive evidence of a need for repairs, for example a high risk of danger, an owners corporation will not be under an obligation to effect repairs or upgrades. An obvious question which springs to mind is what this decision means for owners corporations whose buildings have flammable cladding. It may well be arguable that where an owners corporation has identified a risk to occupants due to flammable cladding, s5 of the Owners Corporation Act compels the owners corporation to take action and upgrade the building, even in the absence of a building order. Whether a higher court would make such a bold finding though is difficult to predict.

Further information / assistance regarding the issues raised in this article is available from the authors, James Collier, Partner and Fabienne Loncar, Special Counsel or your usual contact at Moray & Agnew.


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