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Strata/Units and Urban Development

05 April 2019 - By Thomas Gibbons

In late February and early March, the Australian College of Strata Lawyers (ACSL) held its conference in Auckland. New Zealand’s Unit Titles Acts (both 1972 and 2010) have drawn heavily on Australian models, and there is much to be learned from cross-jurisdictional study. This short article editorialises on some key themes and ideas from the conference, with acknowledgement to those who presented on these topics.

Space and time

A row of townhouses

Our cities are intensifying, and not just in Auckland. Infrastructure costs, road congestion, and concerns about urban sprawl are all driving greater densities. For some, greater housing density means concerns about slums, anti-social behaviour, and loss of an imagined New Zealand way of life. For others, greater density reflects a modern world, changing demographics and ways of living, and reflects good urban design.

What seems clear is that density needs greater understanding not just in spatial terms, but across time. The Unit Titles Act 2010 and Resource Management Act 1991 do not speak to each other very well. Unit titles are often thought of as a method of subdivision, but what happens once the plan deposits? They need to be understood as a mode of governance as well. A mode of urban governance.

Short stays

The regulation of short-stay holiday accommodation – and these services are offered by a number of providers – is a critical issue in many jurisdictions. Different Australian states have reached entirely different conclusions on whether body corporate rules (often called ‘bylaws’ in Australia) can regulate short stays or even the use of units in general. The Privy Council’s decision in O’Connor (Senior) v Proprietors, Strata Plan No 51 [2017] UKPC 45, though influential, has proved not to be the last word on the matter. Some bodies corporate oversee populations the size of a small village, and – as case law continues to show – owners do have interests in what the body corporate and other owners are doing. Some bodies corporate in Australia seek to avoid the issues that surround bylaws restricting use in other ways – for example, saying that anyone staying in a unit must pay a ‘health and safety induction fee’ of $100, or $300 if after hours. This has impacts on those seeking to let out a unit for short term stays.

Disputes

In developments of all sizes, issues around pets, short-term letting, and other matters can be highly emotive. Effective dispute resolution mechanisms can be challenging. Generally, Australian states have tribunal models which have low costs of access (no application fee, or a fee of less than $100), but extreme levels of legal cost can arise – in one example, over $700,000 in legals. This also means the Australian states place high emphasis on tribunal decisions as, effectively, quasi-precedents. In New Zealand, our Tenancy Tribunal has high access costs ($850 or $3,300) in its unit title jurisdiction, hears fewer matters, and lawyers generally debate court cases rather than tribunal decisions. Over time, this may change. The availability of tribunal decisions remains an issue for New Zealand, and access to justice considerations suggest these should be more widely available.

Caretakers

Another issue arising in Australia is the role of caretakers, and the difficulty of enforcement when a caretaker does not do their job properly. Since Body Corporate 396711 v Sentinel Management Ltd [2012] NZHC 1957, there has been little case law on management contracts in New Zealand, but anecdotally at least, issues remain, especially the long-term nature of many of these agreements, and the difficulties in their enforcement and termination.

Redevelopment

It has been noted that Auckland’s existing intensification – a round of cross-leases in the 1970s and 1980s – is now impeding further intensification. The same issues apply, in different ways, in states like Queensland, which has a large number of small, six-unit, developments. Broader issues arise in jurisdictions like Singapore, where the scarcity of land means that the ability to activate redevelopment is critical. This inevitably has an impact on property rights. Examples from Japan suggest that large-scale redevelopment and reconstruction is possible.

Finally, the conference heard from Martin Gold from Columbia University, New York, who spoke on the redevelopment of Times Square. There, a multi-decade project involved a combination of private developer payments, public sector monies, tax concessions, land agglomeration, ground leases, and municipal bonds to create the Times Square we know today, with more tourists, more jobs, better businesses, and less crime.

How we live

When we think about what our cities look like, and how people live in them – and when we think about what an urban development authority might do – it is useful not just to think locally, but to look further afield. Any lawyer acting on unit title matters should have some knowledge of developments in Australia, and any lawyer looking at broader topics of urban development should have an eye even further afield.

As we attain greater recognition of the costs of infrastructure, the externalities of sprawl, and the needs of the many, the balance between property rights and the collective interest may be shifting – both within the area of unit titles, and in urban development more broadly.

Greater attention is needed to private governance, as well as public governance, and what this means for the future of our urban areas.


Thomas Gibbons thomas.gibbons@mccawlewis.co.nz is a director of Hamilton firm McCaw Lewis. He writes and presents extensively on property law.

Last updated on the 5th April 2019