Chapter 2 Basic operation of a scheme

(1) Part 2.2 sets out the general rules about forming and changing a scheme.

Note for subsection (1)

The termination of a scheme is governed by the Termination of Units Plans and Unit Title Schemes Act 2014.

(2) Part 2.3 sets out the special rules about each of the key elements of a scheme.

(3) Part 2.4 sets out the special rules about the following developments of a scheme:

(a) the progressive development of a scheme;

(b) the formation of a layered scheme;

(c) the amalgamation of 2 or more basic schemes.

(1) A unit title scheme is an arrangement set out in a written statement (the scheme statement) for:

(a) the creation of 2 or more units and common property from:

(i) land subdivided under a plan of subdivision when the scheme is formed; and

(ii) any changes to the land at a later time (including, for example, an addition to, or consolidation or further subdivision of, the land); and

(b) the formation of a body corporate constituted by the unit owners.

Note for subsection (1)

Section 54A of the Land Title Act 2000 provides that the plan of subdivision mentioned in subsection (1)(a) cannot be registered unless the first scheme statement is also registered at the same time.

(2) A scheme is formed when a scheme statement (the first scheme statement) is first registered for the scheme.

Notes for subsection (2)

1 For the requirements about a scheme statement, see section 18.

2 For the registration of a scheme statement, see Part 4, Division 4 of the Land Title Act 2000.

(3) The scheme must be identified by:

(a) if a scheme name is specified in the scheme statement – that name, the registration number of the scheme, or both; or

(b) otherwise – the registration number of the scheme.

Note for subsection (3)

A name may be reserved for a proposed scheme under section 54C of the Land Title Act 2000.

(1) On the formation of the scheme:

(a) the first scheme statement takes effect; and

(b) the body corporate of the scheme is formed; and

(c) the original owner becomes the registered owner of the units; and

(d) the body corporate becomes the registered owner of the common property.

(2) On and after the scheme is formed, the body corporate, unit owners and unit occupiers are taken to have agreed to comply with the scheme statement, management module and by-laws.

(3) Subsection (2) has effect subject to the scheme statement of each higher scheme.

(1) A matter specified in a scheme statement may be changed only if a replacement scheme statement (subsequent scheme statement) reflecting the change is registered.

Note for subsection (1)

On the registration of the subsequent scheme statement, the scheme statement previously in force is cancelled under section 54B(2)(c) of the Land Title Act 2000.

(2) Subsection (1) has effect except as prescribed by regulation, including, for example, a regulation:

(a) allowing another way to change the scheme statement; or

(b) prohibiting or restricting specified changes to a scheme statement.

Note for subsection (2)

The following are possible changes to a matter specified in the scheme statement:

a change to the unit entitlements;

a change to the scheme land (including, for example, further subdivisions of the units, consolidation of some of the units or a change resulting from an acquisition by an acquisition authority of part of the scheme land).

(3) This section does not limit the effect of Part 2.4, which sets out the special rules for particular changes that may be made to a scheme.

(1) A scheme statement must contain the following information:

(a) a description of the scheme land by reference to each plan of subdivision and plan of consolidation to which the scheme relates;

(b) a description of the nature and purposes of the scheme;

(c) a description of the units and common property;

(ca) if the scheme land is in a Restricted Water Extraction Area – the information required by section 14C(2) of the Water Act 1992;

(d) the entitlement schedules and a statement of the basis of any inequality between the unit entitlements of different units;

(e) if the developer intends the scheme to be developed progressively:

(i) a statement of that intention; and

(ii) the information prescribed by regulation about the nature and purposes of the development, each of its proposed and completed stages and the order of their implementation; and

(iii) any other information about the development prescribed by regulation;

(f) if the scheme is a higher scheme or subsidiary scheme – the information prescribed by regulation;

(g) any other information about a matter mentioned in paragraphs (a) to (f) or another matter prescribed by regulation.

(2) The scheme statement may:

(a) specify a name of the scheme (the scheme name) that ends with "Unit Title Scheme"; and

(b) specify a name of the body corporate (the body corporate name); and

(c) identify the management module applying to the scheme under section 94(4); and

(d) specify by-laws of the scheme; and

(e) specify any other matter prescribed by regulation.

(3) The scheme statement:

(a) must be in the approved form; and

(b) if it is the first scheme statement (otherwise than as mentioned in paragraph (c)(iii)) – must be signed by the original owner; and

(c) must be accompanied by an endorsement of the statement for its registration, in the approved form, by:

(i) the consent authority in relation to the matters prescribed by regulation; and

(ii) if it is a subsequent scheme statement – the body corporate; and

(iii) if it is the first scheme statement of a scheme formed by the amalgamation of 2 or more basic schemes under section 71 or 72 – the body corporate of each of the basic schemes; and

(d) must comply with other requirements prescribed by regulation.

A scheme statement:

(a) must not operate retrospectively; and

(b) cannot be changed except as provided by section 12.

(1) The following is responsible for preparing a scheme statement:

(a) for the first scheme statement of a scheme (otherwise than as mentioned in paragraph (b)) – the original owner;

(b) for the first scheme statement of a scheme formed by the amalgamation of 2 or more basic schemes under section 71 or 72 – the body corporate of each of the basic schemes;

(c) for a subsequent scheme statement reflecting an agreement to adjust the unit entitlements under section 41 – the parties to the agreement;

(d) for a subsequent scheme statement reflecting an acquisition of scheme land under section 42 – the acquisition authority;

(e) for a subsequent scheme statement implementing a stage of a development as mentioned in section 66 – the developer;

(f) for a scheme statement prescribed by regulation – a person specified in the regulation;

(g) otherwise – the body corporate.

(2) A person responsible for preparing a scheme statement under subsection (1) must also:

(a) obtain the endorsement of the scheme statement by the consent authority; and

(b) obtain the endorsement of the scheme statement by the body corporate if the person is not the body corporate and the scheme statement is a subsequent scheme statement; and

(c) lodge the scheme statement if it is a scheme statement covered by subsection (1)(b) or (g); and

(d) pay the costs associated with preparing, endorsing and registering the scheme statement.

(3) The original owner must, within 1 month after the first scheme statement is registered, give a copy of it and evidence of its registration to the body corporate.

Fault element: Strict liability offence.

Maximum penalty: 100 penalty units.

(4) Except as otherwise provided by this Act, a body corporate that has endorsed a scheme statement must lodge the scheme statement within 3 months after the endorsement.

Fault element: Strict liability offence.

Maximum penalty: 100 penalty units.

Note for subsection (4)

Section 40(5) may affect this subsection.

(5) It is a defence to a prosecution for an offence against subsection (3) or (4) if the defendant establishes a reasonable excuse.

(1) A body corporate's decision to endorse a scheme statement must be made by a resolution without dissent unless subsection (2), (3) or (4) applies.

(2) The decision must be made by a special resolution if the scheme statement is made only for the purpose of including or omitting a by-law (other than an exclusive use by-law).

(3) The decision must be made by an ordinary resolution if the scheme statement is made only for 1 or more of the following purposes:

(a) the approval of a reinstatement process;

(b) the implementation of a stage of the progressive development of the scheme as indicated in the existing scheme statement;

(c) the implementation of a proposed plan of subdivision or proposed plan of consolidation, to the extent to which the plan:

(i) relates to the subdivision of 1 or more units or consolidation of 2 or more units; and

(ii) does not change the sum of the unit entitlements of those units; and

(iii) does not affect the common property; and

(iv) does not involve the formation of a subsidiary scheme.

(4) The decision may be made in any way the body corporate considers appropriate if the body corporate is required to lodge the scheme statement under this Act.

Note for subsection (4)

Provisions that require the body corporate to lodge the scheme statement include sections 40(5), 42(5), 59(6), 66(2), 71(4) and 98(4).

(5) The regulations may prescribe additional requirements for the endorsement of a scheme statement by the body corporate.

(1) The consent authority must not endorse a scheme statement if it considers the statement is inconsistent with a development permit, exceptional development permit, plan of subdivision or plan of consolidation.

(2) In addition, if the proposed scheme land comprises non-contiguous lots, the consent authority must not endorse the statement unless:

(a) the lots are non-contiguous only because a road or watercourse crosses a part of the scheme land; or

(b) the consent authority considers the lots are of sufficient proximity to each other for the scheme to be administered efficiently.

(2A) If the proposed scheme land is in a Restricted Water Extraction Area, the consent authority must not endorse the statement unless it complies with the restrictions of sections 14A and 14B of the Water Act 1992 and the requirements of section 14C(2) of that Act.

(3) The regulations may prescribe additional requirements for the endorsement.

(1) The Registrar-General must, within 10 working days after a scheme statement is registered, give a copy of it to each affected local government authority and anyone else prescribed by regulation.

(2) The Registrar-General may do so in a way decided by the Registrar-General (including, for example, by giving the copy electronically).

Each unit owner of a scheme is a member of the scheme's body corporate.

Note for section 24

A unit owner of a higher scheme can be the body corporate of a subsidiary scheme. See section 38(1)(a).

(1) The body corporate must be identified by:

(a) if the body corporate name is specified in the scheme statement – that name, the registration number of the body corporate, or both; or

(b) otherwise – the registration number of the body corporate.

Note for subsection (1)

A name may be reserved for the body corporate of a proposed scheme under section 54C of the Land Title Act 2000.

(2) The body corporate must notify the Registrar-General of its current address (the body corporate address).

(3) The Registrar-General must record the body corporate address.

The body corporate must keep a seal for its official purposes in accordance with the management module.

(1) The body corporate has the following functions:

(a) managing the common property and body corporate assets for the unit owners and unit occupiers;

(b) participating in activities affecting the interest of the scheme (including, for example, activities promoting the wellbeing of the neighbourhood of the scheme land);

(c) performing other functions in relation to the scheme given to the body corporate under this Act or another Act;

(d) performing a function relating to paragraph (a), (b) or (c).

(2) In performing its functions, the body corporate must act reasonably and in accordance with this Act and the purposes of the scheme.

(1) The body corporate has:

(a) all the powers that are necessary for performing its functions; and

(b) any power given to it under this Act (including, for example, a provision of the management module mentioned in section 94(3)) or another Act.

(2) Without limiting subsection (1), the body corporate may, in performing its functions:

(a) acquire, hold and dispose of property; and

(b) carry on a business; and

(c) carry on any activity with another person; and

(d) create an interest relating to the common property (including, for example, an easement) and deal with the interest; and

(e) employ or engage people; and

(f) invest its money; and

(g) take legal action; and

(h) supply a utility service (including, for example, supplying water to the unit occupiers).

(3) The body corporate must not acquire or dispose of an interest in real property unless the acquisition or disposal:

(a) complies with this Act (including, for example, the requirement to register a scheme statement reflecting a change of the scheme land) and any other law in force in the Territory; and

(b) is approved by the body corporate by a resolution without dissent.

(1) A body corporate asset of a scheme is property acquired and held by the body corporate.

Notes for subsection (1)

1 A body corporate asset cannot be the common property. See section 33(2).

2 A body corporate may acquire and incorporate lots and units into the common property. See section 35.

(2) Without limiting subsection (1), each of the following is a body corporate asset:

(a) a statutory easement that benefits the common property;

(b) an interest in a unit of the scheme that is leased to a service contractor or letting agent.

(3) A body corporate may hold property, as tenant in common, with the body corporate of another scheme.

(4) Except as provided by subsection (3), property cannot be a body corporate asset of more than 1 scheme.

(5) A body corporate may mortgage or create a charge over a body corporate asset only as provided by the management module.

(6) The right of the body corporate over the body corporate assets of a higher scheme is subject to the scheme statement of each higher scheme.

(1) The body corporate may, by writing, delegate any of its functions and powers to any of the following:

(a) the body corporate manager;

(b) the committee, a specified committee member or a specified unit owner.

(2) The management module may provide for the delegation (including, for example, the approval and revocation of the delegation).

The body corporate is declared to be an excluded matter for section 5F of the Corporations Act 2001 in relation to the whole of the Corporations legislation to which Part 1.1A of that Act applies.

(1) The scheme land of a scheme:

(a) comprises the units and common property of the scheme; and

(b) includes any scheme building.

(2) A scheme building:

(a) is any fixed structure on the scheme land (including, for example, a swimming pool) or a thing prescribed by regulation; but

(b) does not include any of the following:

(i) coverings for a ceiling, floor or wall;

(ii) any fixtures installed by a lessee of a unit that are removable at the end of the lease;

(iii) a thing prescribed by regulation.

(1) The common property of a scheme is the part of the scheme land specified as the common property in the scheme statement.

(2) A unit or part of a unit, or a body corporate asset, cannot be common property.

(3) A lot cannot be common property of more than 1 scheme.

(1) The body corporate holds the common property, and may sue and be sued in relation to the common property, as its registered owner.

(2) A unit owner or unit occupier:

(a) has rights and responsibilities in relation to the common property as provided by this Act; and

(b) without limiting paragraph (a) and subject to this Act – is entitled to the lawful enjoyment of the common property.

(3) The body corporate, a unit owner or a unit occupier, of a scheme or of a subsidiary scheme, may exercise the rights of a member of a higher scheme in relation to the common property of the higher scheme.

Example for subsection (3)

A unit owner of a subsidiary scheme may use a BBQ area that is the common property of a higher scheme.

(4) Subsection (3) has effect subject to the scheme statements of the schemes.

(1) The body corporate may acquire and incorporate into the common property any of the following:

(a) an estate in fee simple in a lot outside the scheme land;

(b) a unit of the scheme;

(c) a lot that:

(i) is created by the subdivision of a unit, or consolidation of units, of the scheme or a subsidiary scheme; and

(ii) does not become all or part of a unit or units of a scheme.

(2) Subsection (1) has effect subject to section 28(3) (about the requirements that must be met in relation to the acquisition).

The body corporate may exercise the rights of the original owner under a contract entered into before the scheme was formed for work carried out, or to be carried out, in relation to the common property.

(1) A unit of a scheme is a lot:

(a) created on the registration of a plan of subdivision or plan of consolidation; and

(b) specified as a unit in the scheme statement by reference to a cubic space, a parcel of land unlimited in its vertical dimensions, or both.

Example for subsection (1)(b)

A unit comprising an apartment and courtyard.

(2) Except as otherwise specified in the scheme statement, a fixed structure (including, for example, a ceiling, floor or wall) separating a unit from another lot is not part of the unit.

(3) A unit may be specified in the scheme statement as a unit for immediate occupation or further development.

(4) A unit may form the whole of the scheme land of a subsidiary scheme.

Note for subsection (4)

For the formation of a subsidiary scheme, see section 63(1).

(5) A reference to a unit of a scheme that has a subsidiary scheme does not include a reference to a unit of the subsidiary scheme.

Note for subsection (5)

In general, a scheme operates independently of its subsidiary schemes and higher schemes. See section 68(3).

(1) The unit owner of a unit is:

(a) for a unit that is the whole of the scheme land of a subsidiary scheme as mentioned in section 37(4) – the body corporate of the subsidiary scheme; or

(b) otherwise – the registered owner of the unit.

(2) The unit occupier of a unit is a person (whether the unit owner or a lessee) who occupies the unit as a resident or for business purposes.

(1) The entitlement schedules of a scheme are the following:

(a) a schedule (the contribution schedule) setting out the contribution entitlement of each unit;

(b) a schedule (the interest schedule) setting out the interest entitlement of each unit.

(2) An entitlement (a unit entitlement) mentioned in subsection (1)(a) or (b) must be a whole number other than 0.

(3) The contribution entitlement of a unit divided by the total contribution entitlements of all the units is the ratio representing the unit owner's share of annual contributions to the body corporate.

(4) The interest entitlement of a unit divided by the total interest entitlements of all the units is the ratio representing the unit owner's share of interest in the scheme land and body corporate assets.

(5) To the extent to which it is just and equitable to do so:

(a) the contribution entitlement of each unit must be equal; and

(b) the interest entitlement of each unit must reflect the differences in market value between the units when the scheme statement creating the unit, or the scheme statement last adjusting the entitlement, is lodged.

(6) Except as otherwise provided by the regulations, the following must be taken into account for subsection (5):

(a) the characteristics of the scheme and units;

(b) whether the scheme is a layered scheme, higher scheme or subsidiary scheme;

(c) the market value of the units as determined by a valuer as defined in section 4(1) of the Valuation of Land Act 1963.

(7) A unit entitlement may be used for any purpose of this Act, other than the following purposes:

(a) working out a liability for supplying a utility service to the unit if its consumption by the unit occupier can be separately measured (including, for example, by a meter);

(b) a purpose specified in the scheme statement.

Example for subsection (7)

The contributions entitlements are relevant for a resolution of the body corporate for section 79(7)(a) or (8)(b).

(1) A unit owner may apply to the Tribunal for the adjustment of the unit entitlements (including the unit entitlements of other units).

(2) Despite any other provision of a law of the Territory:

(a) the respondents for the proceedings of the application are the body corporate and each unit owner who has given written notice to the body corporate to join as a respondent; and

(b) each party to the proceedings is responsible for the party's own costs.

(3) The Tribunal must:

(a) approve the application by making an order adjusting the unit entitlements as the Tribunal considers appropriate; or

(b) refuse the application.

(4) In deciding the application, the Tribunal must:

(a) have regard to section 39(5) and (6); but

(b) disregard:

(i) the applicant's state of knowledge about the unit when acquiring the unit; and

(ii) the current market value of the unit.

(5) The body corporate must lodge a subsequent scheme statement reflecting an order under subsection (3) within the time specified in the order.

Fault element: Strict liability offence.

Maximum penalty: 100 penalty units.

(1) Two or more unit owners may agree in writing to adjust the unit entitlements of those units if:

(a) the sum of the unit entitlements of the units will not change under the agreement; and

(b) each mortgagee of the units has consented to the agreement.

(2) The unit owners must:

(a) notify the body corporate of the agreement; and

(b) prepare a subsequent scheme statement reflecting the agreement; and

(c) request the body corporate to endorse the statement.

(3) The body corporate must, within 3 months after receiving the request, decide whether to accept the request, having regard to:

(a) section 39(5) and (6); and

(b) any advice received by the body corporate in relation to the unit entitlements.

Note for subsection (3)

The body corporate must lodge the scheme statement within 3 months after endorsing the statement if it accepts the request. See section 20(4).

(1) An acquisition authority proposing to acquire any scheme land must, before the acquisition takes effect, notify the body corporate of the proposed acquisition.

(2) Within 3 months after receiving the notification, the body corporate must decide whether any changes should be made to the unit entitlements, having regard to:

(a) section 39(5) and (6); and

(b) any advice received by the body corporate in relation to the unit entitlements.

(3) The body corporate must, within 1 month after making the decision under subsection (2), notify the acquisition authority of the decision.

(4) The acquisition authority must:

(a) prepare a scheme statement reflecting the acquisition and the decision of the body corporate; and

(b) request the body corporate to lodge the statement.

(5) The body corporate must lodge the statement within 3 months after the request is made.

(6) The body corporate must comply with subsections (2), (3) and (5).

Fault element: Strict liability offence.

Maximum penalty: 100 penalty units.

(1) This Subdivision applies to a contract for the sale by a person (the seller) to another person (the buyer) of a unit that will come into existence when a scheme is formed or changed.

(2) This Subdivision has effect despite anything to the contrary in the contract.

(1) A party must not compel another party to complete the contract before the end of 10 working days after the seller notifies the buyer by writing that the unit has come into existence.

(2) In this section:

party means the seller or buyer.

(1) The seller must, before the buyer enters into the contract, give the buyer a scheme disclosure statement (a disclosure statement) in force under subsection (3) for the unit.

(2) The seller must ensure a disclosure statement for the unit contains the following information:

(a) an estimate of the amount of annual contributions reasonably expected to be payable to the body corporate for the unit;

(b) the information prescribed by regulation about the engagement or proposed engagement of a body corporate manager or service contractor;

(c) the information prescribed by regulation about the authorisation or proposed authorisation of a letting agent;

(d) the information prescribed by regulation about any existing or proposed body corporate assets;

(e) the existing and proposed scheme statements, management modules and by-laws of the scheme and higher schemes (whether existing or proposed to be formed or changed);

(f) anything required to be included in the disclosure statement by the management modules;

(g) the information prescribed by regulation about any proposed plan of subdivision or proposed plan of consolidation relating to the unit;

(h) the method of adjudicating disputes arising from the disclosure statement as prescribed by regulation;

(i) any other matter prescribed by regulation.

(3) The disclosure statement is in force if:

(a) it is signed by or for the seller; and

(b) it is registered together with any document prescribed by regulation.

(4) The seller must comply with subsections (1) and (2).

Fault element: Strict liability offence.

Maximum penalty: 100 penalty units.

(1) This section applies if, before the contract is completed, the seller becomes aware the disclosure statement in force for the unit contains:

(a) inaccurate or incomplete information; or

(b) information that is out of date.

(2) Within 20 working days after the seller becomes so aware, or a longer period agreed between the buyer and seller, the seller must give the buyer a replacement scheme disclosure statement in force under section 45(3) (a replacement statement) that corrects the information.

Example for subsection (2)

If the proposed scheme statement included in the disclosure statement has been revised, the seller must give the buyer a replacement statement that includes the revised proposed scheme statement.

(3) The seller must not compel the buyer to complete the contract before the end of 10 working days after giving the replacement statement.

(4) The seller must comply with subsections (2) and (3).

Fault element: Strict liability offence.

Maximum penalty: 100 penalty units.

(1) The seller is taken to have warranted:

(a) when entering into the contract – the information in the disclosure statement is accurate; and

(b) when completing the contract:

(i) the contract discloses all latent and patent defects of the common property and body corporate assets, other than defects arising through ordinary usage; and

(ii) the contract discloses all actual, contingent and expected liabilities of the body corporate, other than liabilities relating to the normal operation of the scheme; and

(iii) there are no circumstances relating to the scheme that might substantially prejudice the buyer, other than circumstances disclosed in the contract.

(2) The warranty has effect as part of the contract to the extent to which the seller knows, or ought reasonably to have known, of the matter to which the warranty relates.

(1) The buyer may cancel the contract if:

(a) the contract has not been completed; and

(b) the buyer is substantially prejudiced in any of the following circumstances:

(i) the seller contravenes section 45(1) or (2)(d), (e) or (g);

(ii) a disclosure statement for the unit contains inaccurate or incomplete information, or information that is out of date (whether or not the disclosure statement is currently in force under section 45(3));

(iii) there is a breach of the warranty in section 47.

(2) The buyer must cancel the contract by written notice given to the seller before the date of the completion of the contract and within 10 working days:

(a) after the buyer becomes aware of the circumstances mentioned in subsection (1)(b); or

(b) if the cancellation relates to a replacement statement mentioned in section 46(2) – after the buyer is given the replacement statement.

(3) If the contract is cancelled under this section, the seller must repay any amount the buyer paid to the seller for the sale.

A power of attorney enabling the seller to act for the buyer:

(a) must be exercised in accordance with any written conditions specified by the buyer when giving the power; and

(b) ceases to have effect 1 year after the unit comes into existence unless it expires at an earlier time.

(1) The exercise of a right under an easement over any scheme land (other than a statutory easement or an easement created by another law of the Territory) must not unreasonably interfere with the lawful enjoyment of the scheme land.

(2) In addition, the scheme statement prevails to the extent to which the rights and obligations arising from the easement are inconsistent with the statement.

(3) The owner of a lot intending to enter another lot under an easement must give reasonable notice to the following before doing so:

(a) the owner of the other lot;

(b) if the other lot is a unit – the unit occupier of the unit.

(4) Subsection (3) does not apply in an emergency.

(1) An easement (statutory easement) exists for a lot (the benefited lot) against another lot for the following purposes:

(a) an easement for establishing, maintaining and replacing a utility infrastructure located in the other lot;

(b) an easement for maintaining or replacing the lateral or subjacent support provided by the other lot to the benefited lot;

(c) an easement for maintaining and replacing a shelter provided by a scheme building in the other lot to a scheme building in the benefited lot;

(d) an easement for maintaining and replacing a part of a scheme building in the benefited lot (including, for example, eaves and guttering) that projects into the other lot;

(e) an easement for maintaining and replacing a part of a scheme building in the benefited lot that is at, or adjacent to, the boundary between the lots;

(f) an easement for the purposes prescribed by regulation.

(2) The owner of the benefited lot is entitled to enter the other lot for the purposes relating to the statutory easement as mentioned in subsection (1).

(3) A statutory easement continues until the scheme is terminated.

(4) A statutory easement has effect subject to an easement registered under the Land Title Act 2000.

(1) The body corporate of a scheme:

(a) has an insurable interest in the scheme land; and

(b) must ensure there is an insurance policy (body corporate policy) for the common property that complies with sections 53 to 55 (whether comprising 1 or more contracts of insurance).

(2) The body corporate must comply with subsection (1)(b).

Fault element: Strict liability offence.

Maximum penalty: 100 penalty units.

(3) It is a defence to a prosecution for an offence against subsection (2) if the defendant establishes a reasonable excuse.

(1) The body corporate policy must insure against all reasonable costs for the reinstatement of any damaged common property (including any damaged scheme building that is common property).

(2) The reinstatement of the damaged common property is work that is reasonably required for restoring it to substantially the same condition as existed immediately before it was damaged.

Examples for subsection (2)

1 Work required for clearing debris.

2 Work undertaken by an architect and building contractors for rebuilding scheme buildings.

The body corporate policy must insure against the liability of the body corporate for a claim:

(a) relating to an individual's illness, injury or death, or the loss of or damage to property, suffered on the common property; and

(b) of an amount not less than $10 000 000, or another amount prescribed by regulation.

(1) The body corporate policy must:

(a) provide for the insurer giving a notice of cancellation mentioned in section 59 of the Insurance Contracts Act 1984 (Cth) to the mortgagee of each unit; and

(b) prohibit a cancellation of the policy on the sole basis of a breach of its conditions by someone other than the body corporate.

(2) The body corporate policy may provide for a right of indemnity of the insurer against a unit owner who breaches a condition of the policy.

(3) The body corporate policy has effect as if the interests of the mortgagee of each unit had been recorded on the policy.

The body corporate may, by an ordinary resolution, decide to maintain an additional insurance policy against liabilities:

(a) relating to the exercise of its powers or performance of its functions; or

(b) not otherwise covered by section 53 or 54.

The mortgagee of a unit must not require the unit owner to maintain an insurance policy (the owner policy) for an interest already covered by a body corporate policy unless:

(a) the amount insured under the body corporate policy for the interest is less than the amount owing under the mortgage; and

(b) the owner policy covers the difference between the amounts.

(1) Damaged scheme land may be reinstated only under a reinstatement process approved under section 59 or 60 (an approved reinstatement process).

(2) A reinstatement process is a statement outlining:

(a) the steps that must be taken for the reinstatement of damaged scheme land; and

(b) any related matters.

Note for section 58

For the registration of a subsequent scheme statement that reflects an approved reinstatement process, see section 54D of the Land Title Act 2000.

(1) Any of the following may apply to the Tribunal for the approval of a reinstatement process for damaged scheme land:

(a) the body corporate of a scheme, or of a subsidiary scheme, whose scheme land is or includes the damaged scheme land;

(b) a unit owner or mortgagee of any of the schemes mentioned in paragraph (a).

(2) The application must specify the reinstatement process in the approved form.

(3) The following are the respondents for the application:

(a) each insurer of the scheme land;

(b) the body corporate of each of the schemes.

(4) The Tribunal must:

(a) approve the application by:

(i) approving the specified reinstatement process; or

(ii) approving the specified reinstatement process with changes made by the Tribunal; or

(b) refuse the application.

(5) In approving the reinstatement process, the Tribunal may make any order reasonably required for its effective implementation, including, for example, an order for:

(a) the application of an amount paid under a body corporate policy; or

(b) the payment of an amount to a body corporate, unit owner or mortgagee; or

(c) the lodging of a subsequent scheme statement to reflect the reinstatement.

(6) If the Tribunal orders the lodging of a subsequent scheme statement, the body corporate must comply with the order.

Fault element: Strict liability offence.

Maximum penalty: 100 penalty units.

(1) The bodies corporate of the schemes mentioned in section 59(1)(a) may, each by a resolution without dissent, approve a reinstatement process for damaged scheme land.

(2) The reinstatement process has effect only:

(a) if all the bodies corporate approve the process under subsection (1); and

(b) to the extent to which:

(i) the scheme land is insured by a body corporate policy; and

(ii) the insurer approves the process.

(3) In approving the reinstatement process, the bodies corporate may do anything reasonably required for its effective implementation, including, for example:

(a) the application of an amount paid under a body corporate policy; or

(b) the payment of an amount to a body corporate, unit owner or mortgagee; or

(c) the lodging of a subsequent scheme statement to reflect the reinstatement.

(1) The Tribunal may vary an approved reinstatement process (whether or not it was approved by the Local Court or Tribunal) on application by anyone who could apply under section 59(1) for the approval of a reinstatement process.

(2) Section 59 applies to the variation under subsection (1) in the same way as it would apply to the approval of the process.

(3) Alternatively, the bodies corporate of the schemes mentioned in section 59(1)(a) may, each by a resolution without dissent, vary the process.

(4) Section 60 applies to the variation under subsection (3) in the same way as it would apply to the approval of the process.

(1) This Part provides for the following:

(a) the progressive development of a scheme;

(b) the formation of a layered scheme;

(c) the amalgamation of basic schemes.

(2) The progressive development of a scheme:

(a) will result in a change in the scheme land (including, for example, a reduction of the scheme land or a further subdivision of any of the units); and

(b) may result in the formation of 1 or more subsidiary schemes or layered schemes.

(3) The amalgamation of 2 or more basic schemes will result in 1 of the following:

(a) the formation of a layered scheme;

(b) the formation of a new scheme to replace the basic schemes.

(1) A scheme (first scheme) is a subsidiary scheme of another scheme (second scheme) if the scheme land of the first scheme (first scheme land) is part of the scheme land of the second scheme because:

(a) the first scheme land is a unit of the second scheme; or

(b) the first scheme land is a unit of another scheme whose scheme land is part of the scheme land of the second scheme.

Note for subsection (1)

Subsection (1)(b) applies if there are 2 or more interposed schemes forming a chain between the first scheme and second scheme. The scheme land of each interposed scheme (except the last one in the chain) is a unit of the next interposed scheme. The scheme land of the last interposed scheme is a unit of the second scheme.

(2) If the first scheme is a subsidiary scheme of another scheme, the other scheme is a higher scheme of the first scheme.

(3) A scheme that is not a higher scheme of any scheme is a basic scheme.

Notes for section 63

1 Diagram 63.1 shows how a basic scheme might be structured.

2 Except as otherwise provided by this Act, a scheme must operate independently of any of its subsidiary schemes or higher schemes. See section 68(3).

Diagram 63.1 – Basic scheme

(1) A scheme is intended to be developed progressively if:

(a) the developer intends that all or part of the scheme land is to be further developed (including, for example, by a further subdivision or consolidation of all or part of the land); and

(b) the implementation of a stage of the development (whether or not the stage is specified in the scheme statement) will require the issuing of a development permit or exceptional development permit under the Planning Act 1999; and

(c) at least 1 stage of the development is yet to be completed.

Note for subsection (1)

The scheme statement must specify certain information about the development. See section 18(1)(e).

(2) Without limiting subsection (1), a scheme is intended to be developed progressively in each of the following circumstances:

(a) part of the scheme land is intended to be further subdivided to create more units (whether or not forming the scheme land of another scheme);

(b) part of the scheme land is intended to be excised from the scheme land (whether or not forming the scheme land of another scheme);

(c) additional lots are intended to be incorporated into the scheme land.

(3) Subsection (1) does not prevent a scheme not intended to be developed progressively from becoming a scheme that is so intended.

Example for section 64

Diagrams 64.1 and 64.2 show how a scheme develops progressively by subdividing a unit (unit 1) to create units 4 and 5.

Diagram 64.1 – Before implementing a stage of development

Diagram 64.2 – After implementing a stage of development

(1) This section applies if:

(a) a scheme is intended to be developed progressively; and

(b) the developer proposes to implement a stage of the development otherwise than as indicated in the scheme statement.

(2) Without limiting subsection (1)(b), the implementation of a stage of the development is otherwise than as indicated in the scheme statement if:

(a) the stage is not specified in the statement; or

(b) the stage will not be implemented in the order specified in the statement; or

(c) the implementation will affect or change the nature or purposes of the development otherwise than as specified in the statement; or

(d) the implementation will involve a further subdivision or consolidation of land not specified in the statement.

(3) The developer must give written notice of the implementation of the stage to the following at least 1 month before applying for the development permit or exceptional development permit for the implementation:

(a) the body corporate;

(b) anyone who has entered into a contract with the developer to buy a unit that will come into existence as a result of the implementation of the stage, or a later stage, of the development.

Fault element: Strict liability offence.

Maximum penalty: 100 penalty units.

(1) This section applies if:

(a) a scheme is intended to be developed progressively; and

(b) the developer proposes to implement a stage of the development; and

(c) the developer requests the body corporate to lodge a subsequent scheme statement reflecting the implementation.

(2) The body corporate must lodge the subsequent scheme statement:

(a) if the developer proposes to implement the stage as indicated in the existing scheme statement – within 1 month after the body corporate receives the request; or

(b) if the developer proposes to implement the stage otherwise than as indicated in the existing scheme statement as mentioned in section 65(2) – within 1 month after the following conditions are satisfied:

(i) the developer has given the body corporate a notice of the implementation in accordance with section 65(3);

(ii) the subsequent scheme statement is consistent with a development permit or exceptional development permit that has been issued for the implementation;

(iii) the consent authority has endorsed the subsequent scheme statement.

Fault element: Strict liability offence.

Maximum penalty: 100 penalty units.

(1) The regulations may prescribe requirements in relation to a scheme intended to be developed progressively.

(2) Without limiting subsection (1), the regulations may prescribe:

(a) the provision and maintenance of security by the developer or another person:

(i) as approved by the schemes supervisor under the regulations; or

(ii) as otherwise provided by the regulations; and

(b) the conditions under which a person may be taken to be the developer of the scheme under the regulations, including, for example:

(i) the qualifications of the person; and

(ii) the approval of the transfer of the developer’s rights to the person.

(1) A scheme is a layered scheme if:

(a) it is not a subsidiary scheme of another scheme; and

(b) it is a higher scheme of 1 or more other schemes.

Note for subsection (1)

The scheme land of the layered scheme therefore consists of the following:

(a) the scheme land of all its subsidiary schemes;

(b) the common property of the layered scheme;

(c) any other unit of the layered scheme.

(2) The following are the member schemes of the layered scheme:

(a) the layered scheme;

(b) each subsidiary scheme of the layered scheme.

(3) Except as otherwise provided by this Act, a member scheme must operate independently of another member scheme.

Notes for subsection (3)

1 A decision of the body corporate of a subsidiary scheme is not normally required to be endorsed by the body corporate of a higher scheme unless it is specifically required under this Act.

2 Provisions of this Act that might affect the general rule in this subsection include sections 11(3), 13(2), 29(6) and 52(1)(a).

3 The member schemes are not required to have the same management module and by-laws. See sections 94(6) and 95(4).

A layered scheme may be formed only in 1 of the following ways:

(a) the progressive development of a basic scheme into a layered scheme;

(b) the amalgamation of 2 or more basic schemes to form a layered scheme under section 71;

(c) the formation of a subsidiary scheme from the subdivision of a unit of a basic scheme otherwise than as part of the progressive development of the basic scheme;

(d) the formation of a subsidiary scheme from additional lots acquired for a basic scheme;

(e) as otherwise provided by the regulations.

Example for section 69

Diagram 69.1 shows how a layered scheme is formed as a result of the progressive development of a basic scheme (Scheme A). Unit 2 of Scheme A is subdivided to form a subsidiary scheme (Scheme B). Scheme A then becomes a layered scheme.

Diagram 69.1 – Layered scheme formed from a basic scheme

Except as provided by sections 71 and 72, schemes cannot be amalgamated to form another scheme.

(1) Two or more basic schemes that are not subsidiary schemes may be amalgamated to form a layered scheme if:

(a) the Tribunal orders the formation of the layered scheme on application by a unit owner or the body corporate of at least 1 of the basic schemes; or

(b) the body corporate of each of the basic schemes, by a unanimous resolution, agrees to form the layered scheme.

(2) The order or resolution must provide for the following:

(a) the first scheme statement of the layered scheme;

(b) a subsequent scheme statement of each of the basic schemes reflecting the order or resolution;

(c) the rights and liabilities accrued in relation to the basic schemes;

(d) other matters prescribed by regulation.

(3) The Tribunal may make an order under subsection (1)(a) only if the Tribunal considers it is just and equitable to do so.

(4) The body corporate of each of the basic schemes must lodge the subsequent scheme statement mentioned in subsection (2)(b) before the layered scheme is formed.

Fault element: Strict liability offence.

Maximum penalty: 100 penalty units.

Note for subsection (4)

The bodies corporate of the basic schemes must prepare and lodge the first scheme statement of the layered scheme. See section 20(1)(b) and (2)(c).

(5) Except as otherwise provided by this Act, the amalgamation does not affect any accrued liability for a tax or charge relating to the scheme land of any of the basic schemes.

(6) A thing done for any of the basic schemes has effect after the formation of the layered scheme to the extent to which it is consistent with the scheme statement of each of the basic schemes and of the layered scheme.

(7) This section does not prevent any changes being made to any of the basic schemes under this Act in conjunction with the amalgamation (including, for example, a consolidation of any of the units).

Example for section 71

Diagram 71.1 shows the structure of 2 basic schemes (Schemes A and B).

Diagram 71.2 shows the structure of a layered scheme (Scheme C) formed as a result of the amalgamation of Schemes A and B. Parts of the common property of Schemes A and B (including a swimming pool and tennis court) become the common property of Scheme C.

Diagram 71.1 – Before amalgamation

Diagram 71.2 – After amalgamation

(1) Two or more basic schemes that are not subsidiary schemes may be amalgamated to form a single new scheme to replace the basic schemes if:

(a) the Tribunal orders the formation of the scheme on application by the body corporate or a unit owner of at least 1 of the basic schemes; or

(b) the body corporate of each of the basic schemes, by a unanimous resolution, agrees to form the new scheme.

Note for subsection (1)

In contrast to an amalgamation under section 71, an amalgamation under this section will result in the termination of the basic schemes.

(2) The order or resolution must provide for the following:

(a) the first scheme statement of the new scheme;

(b) the termination of the basic schemes;

(c) the rights and liabilities accrued in relation to the basic schemes;

(d) other matters prescribed by regulation.

Note for subsection (2)

The bodies corporate of the basic schemes must prepare and lodge the first scheme statement of the new scheme. See section 20(1)(b) and (2)(c).

(3) The Tribunal may make an order under subsection (1)(a) only if the Tribunal considers it is just and equitable to do so.

(4) On the registration of the first scheme statement and the documents required under section 54E of the Land Title Act 2000:

(a) the basic schemes are terminated and the new scheme is formed; and

(b) the scheme land of the basic schemes become the units and common property of the new scheme as set out in the first scheme statement; and

(c) except as otherwise provided by this Act:

(i) any accrued liability for a tax or charge in relation to the scheme land or body corporate of any of the basic schemes are vested in the new scheme; and

(ii) anything done for any of the basic schemes has effect as if it had been done for the new scheme.

(5) The regulations may provide for a matter arising from this section.