Monetary Liabilities (QLD)
Monetary liabilities – part 1
It’s 2am Saturday morning and the student on the bottom floor unit burns his toast looking for a post-midnight snack. The fire alarm triggers, the whole building is evacuated and the firies give up their weight room workout for a bit and roll up to do nothing more than charge the body corporate for their services (and of course to ensure the safety of everyone).
This is an increasingly common situation in strataland and is our case study for this and next week’s article.
Our hypothetical building’s by-laws say that:
“If an Occupier causes the fire alarm system in the Building to send a false alarm, and the Body Corporate spends money in answering that alarm, then the Occupier must indemnify the Body Corporate for the amount spent.”
The student has to foot the bill because that’s what the by-law says, right?
Wrong!
We review hundreds of sets of by-laws across any given year. We reckon at least 80% or more of them have a by-law like this which seeks to impose a monetary liability.
Just because the by-law are registered at the Titles Office does not mean they are valid. Registration just means the blanks on the necessary forms have been filled in correctly.
Every single by-law in Queensland is subject to the Body Corporate and Community Management Act 1997 (Qld) which says in section 180(6) that:
“A by-law (other than an exclusive use by-law) must not impose a monetary liability on the owner or occupier of a lot included in a community titles scheme.”
This section applies to any by-law which seeks to make someone responsible to pay anything. The typical examples we see are:
- utilities (usually bulk supply arrangements but also including pest control and the like);
- moving bonds;
- damage to common property; or
- indemnities.
An exclusive use by-law can be granted on the condition that the person who holds it maintains the area to which it relates. This then imposes a maintenance cost obligation on the holder. This is the only exception to the statutory prohibition on monetary liabilities being contained in by-laws.
These styles of issues have obviously been litigated. One example of a decision was in The Lakes Coolum [2007] QBCCMCmr 218 where the Adjudicator relevantly said (our emphasis):
“…section 180(6) prohibits the imposition of a monetary liability by means of a by-law, which I believe is wide enough to preclude the recovery of costs incurred by the body corporate pursuant to the by-laws of the scheme. While there may be other means by which a body corporate may recover costs which it has incurred, it may not do so by means of a by-law and any such by-law is invalid to the extent that it purports to do so. I believe this interpretation is consistent with the intention of that provision of the Act as applied in previous decisions of Adjudicators.”
None of this is to say that a body corporate does not have the ability to deal with these things. It can. What it cannot do is address them in the by-laws.
So what does the body corporate do now if the by-law is useless?
In the next instalment, we answer that question. Stay tuned!
In the meantime have a look at your by-laws. If you see a by-law like this, and want to see what else you might have that is wrong with your by-laws, click here to be take to a page where you can upload your CMS for us to prepare a no obligation cost free proposal to review them for you.
This article was contributed by Frank Higginson from Hynes Legal.
Leave a Reply
Interesting article by Frank Higginson, however, I feel his inclusion of what firefighters may or may not be doing before answering an alarm of fire is totally unwarranted and is nothing more than a cheap shot.
The fact that they are on shift and away from their family and friends day and night ready to answer that call seems to have escaped him and is deserving of a little more respect.
Charging for services, well Frank is also uninformed. If the toast was burnt and not consumed then it was a fire and not a false alarm. No charge.
I agree with the previous comment. My husband is a retired Station Officer and cheap shots like those comments (as well as other emergency services which have been voiced over the years) detract from people reading the point of your article. Pity, otherwise it could be a good article.
Agreed with previous comments. I had no interest in reading the rest of the article. What a rude, disrespectful and uninformed way to start. Clearly someone like Frank sitting behind a desk has absolutely no idea what firies do. I hope that if you ever have an emergency, Frank, that the firies do a little more than just “roll up” like your article suggests.
I apologise for the offence caused. I always write tongue in cheek (because legal articles are usually very dry) and I did add the bit about ‘(and of course to ensure the safety of everyone)’ to show that I do respect firies. My father in law was a police inspector so I know the grief that comes with public service jobs in this domain.
Really an interesting blog I have gone through. There are excellent details you posted here. Thank you for sharing this blog.
Six years on, does this still stand? Also our BCC has created a by-law instructing owners to cover their air conditioner units on their balconies with a specific type of cover, spec and colour. Each cover will be roughly $500. Is this permitted or is it a monetary liability by means of a by-law?