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| Madam Speaker, I move that the bill now be read a second time. The purpose of this bill is to provide an additional mechanism for the termination of unit plans under the Unit Titles Act and the unit titles schemes under the Unit Titles Schemes Act. By way of shorthand I will refer in this speech to these plans and schemes as unit titles developments. The broad scope of the legislation is as follows. 1) It includes a new act to be called the Termination of Unit Plans and Unit Title Scheme Act - nearly all provisions dealing with the termination of unit titles developments. These current provisions in the Unit Titles Schemes Act and Unit Titles Act will be repealed. The only exception will be determinations that occur on the part of the amalgamation of developments in accordance with Section 72 of the Unit Titles Scheme Act. 2) It provides that terminations can occur by way of agreement of all of the unit title owners in the development. 3) It provides in respect of large developments - having ten or more units - for a process under part 4, whereby the majority of owners can, in specified circumstances, resolve that the development be terminated. 4) It provides for terminations by order of the Northern Territory’s Civil and Administrative Tribunal for small developments - having less than ten units – or as part of the consequence of the failed process under part 4. 5) It provides for new principles to be applied when the Northern Territory Civil and Administrative Tribunal is considering applications for termination or where dealing with appeals arising from the majority based on the decision-making process. The bill’s main purpose is that of providing new processes for terminating schemes based around the proponents of the termination having a prescribed level of support from other owners. It leaves in place the current provisions that permit owners to reach unanimous agreement without any need to comply with this new process. The focus of the legislation is that of the determination unit title scheme. The aim is to ensure unit owners know what is likely to happen if they agree to a termination. However, the legislation does not attempt to provide for rights and responsibilities post-determination. Whilst the Northern Territory Civil and Administrative Tribunal will have limited powers to deal with post-termination issues in considering whether to improve a termination the legislation does not provide for any specific controls over post determination redevelopments. As is the current position concerning terminations under agreement or by a court order, both proponents and unit owners will, as a general rule, need to develop appropriate contracts to govern what happens after termination. These contracts would range from a simple contract dealing with a payout, to a complex contract dealing with obtaining a new unit or share of the ownership of any subsequent development. Such a contract would need to deal with the timing of the development, financial contributions, the quality of the new unit and what happens if things go wrong and so on. The need for reform of current laws: currently, both acts provide for unit titles developments to be terminated by way of either agreement of all owners of units or by order of the Supreme Court. The majority problem with these provisions is they require either the agreement of all owners or an order from the Supreme Court. These kinds of proceedings in the Supreme Court have not taken place either in the Northern Territory or under equivalent legislation in other jurisdiction. The likely reason is that the current legislation both here and elsewhere is very open ended as to how the court might deal with the application. It is generally considered that the courts will tend to maintain the status quo in terms of protecting home ownership, rather than addressing issues of having regard to the disadvantages to other owners of not proceeding with determination. More detailed outlines of the bill: the bill, in parts 3 and 5, provides for the continuation of these methods of termination for small developments, accepting that the Northern Territory Civil Administrative Tribunal will take on the role currently performed by the Supreme Court. For large developments the same applies, accepting that contested termination can only occur after an attempt for termination is made under part 4. Class clause 7, ‘unanimous agreement’: Clause 7 provides that the unit titles development can be terminated by unanimous resolution of the body corporate. Such a resolution is one by which the number of votes in favour must equal the total number of units. In other words all owners must support the proposed termination. This provision replaces Section 15(A) of the Unit Titles Schemes Act and Section 96 of the Unit Titles Act. The difference between clause 7 and the current provisions in the Unit Titles Scheme Act and the Unit Titles Act is that the Northern Territory Civil and Administrative Tribunal, rather than the Supreme Court, will have jurisdiction. Terminations resulting from majority-based decision-makings are to be found in Part IV. The major reform of the bill is of the providing of Part IV for the termination of units developments based around consultation processes involving the proponent of termination and owners of the units. The majority voting process can only occur for developments that are of a specified age, with the required level of support for termination varying dependent on the age of the development. The relevant levels of support are set out in the definition of required percentage, as is contained in clause 4. A unit development must be at least 15 years of age before Part IV applies. The required percentages to support a termination under Part IV are as follows: 95% for a development aged 15 or more years, but less than 20 years; 90% for a development aged 20 or more years, but less than 30 years; 80% for a development aged 30 years or more. Obviously, there is no science in determining these periods or percentages. It is a matter of legislative judgment based around submissions made in the course of consultations on these proposals and the likely factual needs. Government is aware that in places such as Singapore, the periods are much shorter and the percentages are lower. The government is also aware that professional organisations such as the Property Council have suggested shorter periods and lower percentages. Nevertheless, the government considers these periods will meet all likely requirements in the Northern Territory. The developments in the Northern Territory likely to be in need of redevelopment are those involving buildings constructed before the year 1990. In developing the bill, one of the issues was how to determine what is the age of a development. This involved a choice of having to be made between the actual age of the building or the time which the development came into the scope of the Unit Titles Act or the Unit Titles Scheme Act. Clause 4(2) deals with this issue. It considers that the prime fact regarding the age of the development is the date on which one of the buildings forming part of the unit development can be proven to have been substantially completed. If that fact cannot be proven, the date is the date on which the occupancy was first permitted under the Building Act. If that fact is also not available, the final date for the age of the building is any other relevant information contained in the register of administrative information maintained by the Registrar General, under section 38 of the Land Title Act. If there is no evidence about the age of the buildings and the age of the development is deemed to be determined by reference to the date on which the unit development was registered by the Registrar-General, similarly for unit developments for which there are no buildings, processes under Part IV are, in summary as follows. The proponent of a termination must under clause 9(1) provide the information required by clause 9(2) to the scheme supervisor. The scheme supervisor is an independent statutory officer appointed under section 99 of the Unit Titles Scheme Act. The scheme supervisor must, under clause 10, assess whether the application for termination complies with clause 9(2). The required information includes the name of the proponent, an explanation of the termination process, details of any redevelopment of the land following termination and disclosure of proposed arrangements between the proponent and others concerning the development. If the application complies with clause 9(2) the proponent must, in accordance with clause 11(2), as soon as practicable after receiving the schemes supervisors’ approval certificates serve it on the body corporate for the development. The body corporate must then arrange a meeting of the body corporate to consider the proposed termination. This meeting must be held not earlier than three months after the service and no later than 12 months. It is critical that unit owners have sufficient time to consider the detail of the proposal, but not too long a period of time. If the resolution is passed by a required majority, the body corporate must serve copies of the resolution on each unit owner and mortgagee. An owner of a unit who has not supported the termination resolution can respond to the document served under clause 11(1) by supporting the termination, selling the unit to anyone, selling the unit to the proponent in accordance to clause 13, or appealing to the Northern Territory Civil and Administrative Tribunal against the proposed termination in accordance with clause 15(2)(a). The non-supporters include owners who did not indicate a position one way or another at the meeting conducted by the body corporate, as for example, might be the case for owners who did not attend the meeting. These non-supporting owners have 182 days - six months - in which to make that decision. Whilst this seems a long period of time, it has been determined as a policy having regard to working out what is a fair period of time for the owner forced to sell up and leave his or her home. The legislation provides an option for the compulsory sale of units. However, any transfer of unit also involves the terms and conditions regarding the sale, for example, as to the time of the settlement and vacant possession. In this case there could also be special conditions such as the making of a sale conditional on the termination going ahead. It is proposed that the regulations in the Northern Territory Civil and Administrative Tribunal provide various rules regarding the terms and conditions on which an objecting owner is obliged to sell their unit to the proponent. If a proponent does not achieve the required percentage support, the proponent has a right to apply to the Northern Territory Civil Appeals Tribunal for an order for termination. Clause 12 sets out a statutory scheme for the sale of units by objecting owners. In brief, the price is set by an independent valuer appointed under the auspices of the scheme supervisor and the relevant professional organisation. If either the proponent or unit owner disagrees with the independent valuation they have a right of appeal to the Northern Territory Civil and Administrative Tribunal. Clause 17 sets out the principles which the Northern Territory Civil and Administrative Tribunal and also the Supreme Court must apply when dealing with appeals by an objecting owner. For the purposes of determining the amount of compensation for objecting owners, compensation is determined as if the sale was compulsory. Owners in residence will be entitled to compensation for a solatium and with the compensation to be based on expert advice provided by a single valuer appointed by the relevant professional organisation as prescribed by regulation. After a successful resolution is made under Part IV, notice must be provided to the Registrar-General for the purposes of a recording being made under section 38 of the Land Title Act. From the time notice is given to the Registrar-General, an owner who gave support for a unit and any other subsequent owner of that unit is bound to maintain that support – it becomes binding for a period of 12 months. If there is a change of ownership before section 38 recording, the new owner is treated as if they are an objecting owner. Approval by the Tribunal: clauses 16 and 17 of the bill provide that the Northern Territory Civil and Administrative Tribunal can provide termination of unit titles development following an application under clause 16(1) – small developments - or clause 16(2) - large developments. These provisions replace section 14(1) and (3) of the Unit Title Schemes Act and section 95 of the Unit Titles Act. The main difference between clauses 16 and 17 and the current provision relates to the basis on which a decision is made regarding the application for termination. Under the current provisions, the basis of the Supreme Court’s decision is that approval can only be given if the court ‘considers it just and equitable to so’. Under the new provisions there are three main factors and four secondary factors. The main factors are that: 1. ‘it is just an equitable do so’ - clause 17(1)(a) 2. ‘any objection … by an owner of a unit is unreasonable’ - clause 17(1)(b), and 3. termination ‘is otherwise necessary … taking into account any factors prescribed by regulations’ – clause 17(1)(c) The four other factors that must also be considered are: 1. the extent to which an owner would suffer consequences if the termination were ordered (clause 17(2)(a) 2. the extent to which the owner would suffer adverse consequence if the termination was not ordered (clause 17(2)(b) 3. the financial benefits and risks of the termination and, if applicable, any proposed redevelopment that is to be found in (clause 17(2)(c) 4. where an order other than termination would be more appropriate (clause 17(2)(d) for example, an order requiring owners of units to contribute to repairs and maintenance. The regulation proposed under clause 17(1)(c) will be developed in consultation with the Public and Professional Groups. These provisions seek to ensure that the Northern Territory Civil and Administrative Tribunal and the courts in dealing with applications will look at the consequences from the prospectives of all owners of units in the development when approving or not approving the application for termination. The objective is that the application must be approached from a neutral prospective there is no onise on the proponents to prove that the termination is just and equitable. I draw attention to a number of provisions. Clause14 of the bill provides for limits on the number of occasions that proposed terminations can be formally put to members of the body corporate. In brief, a second application cannot be made until six months after the first part four resolution. Tenants have no formal role in terminations but the Northern Territory Civil and Administrative Tribunal will have the power to terminate tenancies and provide for the payment of compensation to a tenant or unit owner. This policy position has been adopted on the basis that terminations relate to ownership rather than occupation it will be up to the unit owners to arrange for termination of tenancies. In other words a tenancy will not terminate simply because a unit scheme has been terminated. However, the Northern Territory Civil and Administrative Tribunal has been given the power to order the termination of a tenancy and to award compensation to a tenant (clause 17(4)(f) and, if appropriate, the objecting owner of the unit. Under section 15(b) of the Unit Title Schemes Act the underpinning legal document – that is the management module – could include a scheme for a termination of schemes once they reach 20 years of age if there is a 90% support for the termination. Given that there is now to be a statutory right of termination, there does not appear to be any need to retain this provision. There also appears to be no need for any transitional provisions that save the operation of the provision. Accordingly, the bill provides for the repeal of section 15(b) with no transitional provisions. The bill provides for consequential amendments to the Land Title Act, Unit Titles Act, the Unit Title Schemes Act, the Bill Property Unit Titles Act and the Real Property Unit Titles Regulations. Part 6 provides that a termination takes effect when the relevant documents are lodged with, and registered by, the Registrar General. These documents cannot be lodged or registered until such time as the period for appeal has expired or any decision regarding an appeal has been made. The bill also provides for transitional provisions. If any termination is in process under the Unit Title Schemes Act or the Unit Titles Act at the date of commencement it will continue to be covered by those acts as if this act and the amendments to them had not commenced. This proposed legislation is necessarily complex given that it deals with, in effect, the potential compulsory acquisition of privately owned property by private sector interests. The legislation sets out a framework that for developers will be complicated and expensive. They will not lightly commence action under the legislation. It is assumed that, in practice, unit owners and developers will negotiate outcomes having regard to the legislative framework. It is proposed that this legislation commence on 1 January 2015. For the purpose of ensuring this date is met, it is provided for in clause 2 of the bill. In order to ensure that there can be a comprehensive consideration of firm legislative proposals, I released a consultation draft of this bill as early as possible but with a view to the bill be introduced in October and debated in November 2014 sittings of parliament. My plan is that the bill be subject to extensive consultation, with there being a clear understanding to introduce the committee stage amendments in November 2014 if problematic matters relating to the drafting or policy or detail are identified. I fully anticipate there will be some changes. This bill is innovative for Australia insofar that the Northern Territory government is the first government to introduce legislation on this matter, despite the widespread view that something needs to be done. I note the New South Wales government is also formally reviewing the law and is actively also developing legislation as part of a major review of New South Wales strata title laws. I commend the bill to honourable members and table a copy of the explanatory statement. |