The high price of border wars in strata

By Grantlee Kieza, Industry Reporter

Neighbourhood disputes can quickly turn into ugly border wars that leave devastated casualties on each side of the fence.

There are no residential disputes quite like those in strata complexes, where neighbours not only live side by side, but often on top of each other.

Strata disputes can quickly escalate into pitched battles that become emotionally devastating and financially crippling.

Gold Coast couple Nick and Soula Hronis have seen a difference of opinion in a strata building turn into a legal minefield.

They recently told the Channel 9 program ‘A Current Affair’ that they were on the brink of losing their home after one of Australia’s ugliest body corporate wars.

The couple says they thought they had all the necessary approvals to build the balcony on their apartment at the Malibu unit complex at Mermaid Waters.

The long-running dispute has cost the shattered couple half a million dollars after they decided five years ago to upgrade their small balcony to a much larger one.

One of Queensland’s leading property lawyers Frank Higginson, from Hynes Legal (who is not involved in the case) says the problem with many strata disputes is that “people are emotionally invested in the outcome” and unable to step back to look at the cost of the bigger picture.

He said anyone thinking about legal action should first calculate the cost of it - financially, emotionally and physically.

“For many people their unit is the only property they own so they’re too emotionally connected. In a business sense, if two parties don’t like each other they don’t have to deal with each other ever again –it’s the same with contractors and service providers. But in a strata situation you are tied in with other people whether you like it or not, which means that you’re constantly having to deal with them.

“My experience in seeing some of these types of longrunning and costly disputes is that in the end the people aren’t even fighting over the thing that caused the dispute in the first place.

“The dispute becomes a manifestation of something else that has gone wrong along the way, and which probably wasn’t even a legal thing.”

Mr Higginson said to avoid costly court battles, people in dispute must step back and look at the problem objectively.

“I warn clients that if a stoush goes to court they have to expect to spend whatever it might be. In the long run is it really worth that?

“When people are presented with what the costs could be, they usually decide it’s not worth pursuing. The people who have a ‘win at all costs’ attitude are the ones who suffer.

“With long running disputes the worst thing isn’t even the money, it’s the emotional cost that can take its toll over years. It can have a terrible effect on people’s health. They wake up at three in the morning thinking about the case and they have to be constantly involved.

“That’s not good for anyone’s mental health.”

Mr Higginson said independent advice could often rescue potential litigants from disaster.

“It doesn’t even have to be a lawyer. Just someone who can talk to people involved in these strata disputes who can say ‘step back and ask yourself is this legal fight that you are entering into really worth it?’”

In June 2021, a magistrate ordered Nick and Soula’s balcony to be removed and appointed an administrator to oversee that process.

In an email the administrator said, “an appropriate amount to begin and substantially progress the administration (if not complete it) would be $16,000.”

Mr Hronis, who is on a disability carers pension, paid that amount within six weeks of the order being made.

But he told ‘A Current Affair’ a quote was obtained from a licensed builder, and the cost of the work increased dramatically to $100,000.

The administrator told a court that Mr and Mrs Hronis displayed “persistent and pervasive recalcitrance” in accepting the works needed to be done.

There is no suggestion that the administrator did anything wrong, but with interest added, the bill is now a whopping $267,000 from the administrator alone, with a court ordering an additional $52,000 be paid to the other party’s lawyers.

Nick and Soula have engaged five different lawyers and taken out a mortgage to pay their legal fees, leaving them with a total bill of $500,000.

Chris Irons, the former Commissioner for Body Corporate and Community Management, who now runs his own strata mediation firm, Strata Solve, says the balcony dispute at the Malibu complex has been one of the most extreme examples in Queensland of a body corporate dispute gone wrong.

Mr Irons, a qualified mediator, said the commissioner’s office should have “far more resources to intervene” in cases.

“In an ideal world, it would never get to this point,” Mr Irons said, “everyone would try to get it sorted out to save the incredible drain of time, money and stress.”

He said once things get as bad as they have at the Malibu, “there are few winners, except for lawyers”.

“You just don’t wake up one morning and decide your body corporate needs an administrator,” Mr Irons said, “it happens over several years so at sometime within that period of several years you would think there would be an opportunity to arrest the slide and claw it back.”

He said he would like to see the commissioner’s office have powers and resources to step in at a building “when they see things going astray”.

“There might be a few calls or a few disputes in a short period from a particular building and you can say ‘OK this place is starting to sound like bad news. Let’s offer some assistance’. That might be as simple as a phone call, ‘are you guys OK here?’

“In really bad situations where it looks like things are starting to get out of control maybe some resources and powers should go to the site to bring parties together and say, ‘Look if this keeps going it’s going to get bad, so what can we do to stop it?’”

Mr Irons said he would advise all parties in a dispute to get in early and try and fix it before the problem festers.

“Emotion makes things snowball in these sorts of disputes and they can get blown out of all proportion,” he said, “and you wake up two years later looking at huge legal costs and you wonder how it happened and how did it get to this?

“Once you let these disputes fester there’s a very high likelihood that another problem will come in on top. One thing leads to another and then another; so, my advice is to try and nip it in the bud and avoid going to the commissioner’s office and applying for orders.

“You’ll be saving costs, time and toil. Look at options such as facilitated discussions, mediation, and town hall meetings. I’m very fond of saying that you don’t need to like the people on the body corporate, all you need is a minimum working relationship to take it forward.

“If you need someone’s help to do that; if you need a process to help you do that, it’s still a much better and cheaper way than going to court.”

Nick Hronis told ‘A Current Affair’ that when he built his balcony, he had body corporate approval from the previous owner.

“I had approval from the Gold Coast City Council. I had an approval from a building certifier. I had approval from a structural engineer,” he said. Some of those claims are in dispute, though, and the long-running legal battle eventually found the balcony was illegally encroaching onto common property.

Soula Hronis said the couple would never have pursued the matter if they expected it to cost even a tenth of what it has so far. Bankruptcy proceedings are now underway to recover the debt.

Mike O’Farrell, the director of MLR Services and an executive with more than 30 years in strata buildings, said the balcony dispute was “very complicated” and involved points of the law that “unfortunately now have escalated into thousands of dollars being spent and for what?”

“There will not be a winner here,” Mr O’Farrell said.

“I will say though if the owner is saying he had all the appropriate approvals it seems very unfair he would be placed in this position. The problem of course is the law does not recognise ‘fair’. “Whenever you go into a courtroom the meter is running and on and on it goes.”

In 18 months of ongoing delays and disputes, the administrator was not able to remove the illegal balcony so earlier this year Mr Hronis stepped outside the proper process and had it taken down himself at his own cost of $3500. A new dispute has now emerged over whether it was done correctly without causing structural problems to the building.

The chairperson of the Malibu Body Corporate told ‘A Current Affair’ that “The only one who has not complied with the law is Mr Hronis. Every other owner has complied with the law.”

ARAMA CEO Trevor Rawnsley has seen many similar disputes over the years, and they rarely end well.

“Sometimes people get bloody minded about issues,” he said. “It’s a little bit like the Black Knight in Monty Python. He gets his arms cut off, and then loses his legs, and he still wants to continue the fight by biting their ankles off.

“Some people just don’t know when to quit.

“There was a fight in Noosa between two lawyers over a balcony and lack of approval, and it turned into a fight that cost more than $100,000.

“There was another case over levy arrears. The body corporate took the matter to court. The levies in arrears amounted to $1100 but the bill at the end of the case was $120,000.

“I’ve seen a management rights dispute over a $35,000-a-year gardening agreement turn into a battle that cost $930,000.

“Most of the time these things escalate on emotion rather than common-sense.

“Some people are just not suited to living in strata. If you can’t get along with people who have a different opinion, strata is not the place for you.

“Some people become very adversarial in strata situations because they see their shelter – a basic human need – being attacked and they forget even what they were arguing about in the first place.”