As Summer Heats up so do the Air Conditioning Disputes!

As Summer Heats up so do the air conditioning complaints!

Summer is here and it’s predicted to be a hot summer season with temperatures in the high 30’s and some days even reaching 40’s.

It’s the time of year when lot owners and tenants look to install and use air conditioners to relieve themselves from the oppressive heat.

Did you know air conditioners are high on the list for strata disputes?

Air conditioners can cause all types of complaints in strata such as:

What if the noise of the unit upsets the peace and quiet?
Who’s responsible for maintenance?
What if the unit leaks water into another apartment?
Is it in line with the appearance of the lot?
and much more!

A Good By-law Addressing Air Conditioning Units is Important

For these reasons it’s important that you have a good by-law in place regulating the installation and use of them that covers the following (and much more):

What type of air conditioning equipment is appropriate?
Where can the unit be installed?
Will council approval be required?
Will owners corporation approval be required?
Will it be installed on common property?
Will a by-law be required for individual lots, or can it be covered under a general by-law?

A good by-law will ensure that your summer is as stress free as possible and reduces (and hopefully eliminates) any strata disputes in relation to air conditioners.

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

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For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

Your Strata Scheme is Being Sued for $850 Million

Lot Owner Claims Damages of $850 Million!

Generally we use these bulletins for educational purposes, but it’s getting toward that time of the year when everything goes a little crazy in the world of strata title, and so today the emphasis is on providing you with sheer relief that your strata scheme is not tied up with the sort of case in which a decision was recently made by the Supreme Court of New South Wales, where a lot owner commenced proceedings against the owners corporation claiming damages of $850 million!

The Strata Dispute Lot Owner Vs Owners Corporation

The dispute, between the occupant of an apartment located in Sydney and the owners corporation, began life as a tenancy dispute, but the occupant (tenant), having failed to enlist the support of the NSW Civil & Administrative Tribunal (NCAT), brought proceedings in the Supreme Court of NSW seeking among other things damages of $850 million against the owners corporation! You can imagine the insurer’s claims manager when that came through…

Needless to say, the proceedings in the Supreme Court of NSW were, to use the words of the Supreme Court Judge dealing with the final version of the proceedings, “frivolous and vexatious” and an abuse of the process of the Court. Notwithstanding this, the plaintiff lot occupant filed applications of various kinds in the proceedings, made scandalous allegations against the owners corporation’s legal representatives, court officials and even a judge of the Court.

At the heart of the lot occupant’s claim was the suggestion that the owners corporation had somehow been involved in a criminal conspiracy which allegedly caused the plaintiff loss and damage.

Finally, on the sixth application before the Court (some of those applications being interlocutory applications for stays, injunctions and applications for recusal of various judges) the entire application was dismissed and the lot occupant was ordered to pay the owners corporation’s legal costs on an indemnity basis. This means that the owners corporation was entitled to recover from the lot occupant not only the normal (“party/party”) costs but almost all the legal costs it had expended in having to deal with this application.

Conclusion

So as we head towards the end of the year, and if you are experiencing stress due to the matters which your owners corporation has to deal with, just remember – at least you haven’t been served with a law suit for $850 million!

If you do have issues in your strata scheme JS Mueller & Co Strata Lawyers have the experience and ability to assist you in dealing with these issues, whether they are disputes relating to the operation of the committee, questions about property and renovations, dealing with adjoining land owners and more please contact us on the details below for further assistance.

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Warwick van Ede I BEc LLM I Lawyer

Since 1990, Warwick has specialised in strata law, property law and litigation. Recognised for his expertise, he is also a NSW Law Society Accredited Specialist in Property Law. In 2021 he was selected to serve on the Property Law Committee of the Law Society of NSW. Profile I LinkedIn

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For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

Parking Space Levies – The Question of Visitor Spaces

Are Visitor Parking Spaces Exempt from Levies?

A recent decision of the Appeal Panel of NCAT has re-examined the question of as to whether visitor parking spaces in a residential strata complex qualify for exemption from levies which may be payable pursuant to the Parking Space Levy Act 2009 (NSW).

NSW Government Introduces the Parking Space Levy Act

An attempt to discourage or reduce traffic congestion in certain key Sydney business districts, in 2009 the NSW Government introduced the Parking Space Levy Act , the effect of which was to make a levy payable by landowners on certain off-street parking spaces located in specified districts.

In broad terms, the districts to which the legislation currently applies are:

Sydney CBD;
North Sydney/Milsons Point;
Bondi Junction;
Chatswood;
Parramatta; and
St Leonards.

There are designated maps which set out in detail the parts of those areas to which the levy applies, and the levy has two categories. Category 1 (Sydney CBD and North Sydney/Milsons Point) has the highest levy rate, and the balance of districts are designated as Category 2, for which a lower rate is payable.

The relevant legislation also contains exemptions, one of which is set out in Regulations 7 & 8 of the Parking Space Levy Regulation 2009 (the Regulation). One of the exempt purposes is where the parking spaces are for “the parking of motor vehicles by persons who reside on the premises or an adjoining premises”.

NCAT Disputes Visitor Car Space Assessment

The premises in question in this case were located in Milsons Point, and were therefore designated as “Category 1”. The Chief Commissioner of State Revenue made a determination that the strata scheme in Milsons Point was liable to pay a car space levy on 5 of 7 car spaces which were set aside for visitors to the property. The strata scheme itself is a mixed commercial and residential building containing 33 residential apartments and 7 commercial suites.

An application was made by the strata scheme to the NSW Civil and Administrative Tribunal (NCAT) disputing the assessment made by the Chief Commissioner of State Revenue on the basis that the visitor car spaces in question should have been considered as “exempt” parking spaces.

Specifically, the strata scheme’s original application to NCAT argued that the exemptions described in Regulations 7 and 8 of the Regulations for “the parking of motor vehicles by persons who reside on the premises or an adjoining premises” should include parking spaces set aside for visitors of persons who reside on the premises.

The original decision of NCAT was that visitor car spaces were not exempt. The owners corporation then appealed the original NCAT decision in relation to this issue to the Appeal Panel.

The Decision of the Appeal Panel

The Appeal Panel rejected the proposition that parking for guests of residents was intended to be covered by the relevant exemption.

The Appeal Panel noted that Regulations 7 and 8 contained a number of specific exemptions including for parking of contractors and consultants providing services on the premises. The Appeal Panel argued that if the Parliament had intended for an exemption to be granted for the parking of “guests”, then it could have included that exemption explicitly within those Regulations, which it did not.

The Appeal Panel noted that limiting the exemption in this way was also consistent with the aims of the legislation, being to discourage car use in the area. The Appeal Panel found that the parking spaces in question were for a combination of exempt and non-exempt purposes, and therefore not “exclusively” set aside for an exempt purpose.

The Appeal Panel therefore upheld the original decision of NCAT, and the original decision of the Chief Commissioner of State Revenue to apply the levy to these car spaces was affirmed.

The Conclusion

Although the Act and the Regulations apply only to a limited set of areas within Sydney, it is within the power of the Government to expand the list of areas to which that levy will apply in the future. In light of current public policy settings regarding driving and motor vehicle use generally, the exercise of that power to expand the list of leviable areas in Sydney must be considered a possibility.

Owners Corporations within Category 1 and Category 2 areas should be aware of their obligations under the Act and the Regulations, and the applicability of those legislative instruments to their particular circumstances.

Need Help with a Parking Issue?

We are happy to provide guidance to strata schemes who seek interpretation of the application of any Ruling in relation to levies of this kind or simply require general parking advice in relation to the issue.

Warwick van Ede I BEc LLM I Lawyer

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For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

Does the Joy of Keeping a Pet in Strata come at a Cost?

Keeping a pet in some strata schemes can be costly when schemes charge an additional fee or bond for the joy of having a pet!

The good news is that the NSW Government as part of the reform has labelled these fees and bonds as being costly, unreasonable, and unnecessary as lot owners already pay levies.

Owners already pay for the upkeep of their strata schemes including the cost of insurance to cover damage to common areas as part of their levies.

The reform is part of phase one of the NSW Government’s review to ensure we have a more transparent and fairer strata system.

This week the NSW Government will move forward on critical reforms implementing changes to ensure the system is fairer and transparent… https://www.nsw.gov.au/media-releases/critical-reforms-to-strata-laws

So, will there be a blanket ban on pet fees and bonds under the reforms for strata laws governing community living arrangements?

ARE YOUR PET BYLAWS CURRENT? DO YOU NEED A REVIEW?

Adrian Mueller I BCOM LLB FACCAL I Partner

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For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

By-law Breach: NCAT Reject the Mixed Bag Approach

Lot Owners who Breach By-laws

An owners corporation is able to take legal action in NCAT against an owner who breaches its by-laws.

There are typically two types of legal action the owners corporation can take against the owner.

First, the owners corporation can apply to NCAT for an order to require the owner to comply with the by-laws or to stop breaching them. Second, the owners corporation can ask NCAT to impose a monetary penalty on the owner if the owner has breached a by-law after being given a notice to comply with the by-law.

However, what happens when an owners corporation seeks both an order to stop an owner breaching a by-law and a penalty in the same legal action? Can NCAT do both at the same time?

A recent decision by NCAT’s Appeal Panel sheds light on that issue.

Introduction to By-law Breach Case

Tania Brown lives in a unit in a strata building in NSW. Ms Brown keeps dogs in her unit.

The building is governed by a by-law which requires owners and occupiers of lots to obtain owners corporation approval to keep dogs in their units. The owners corporation alleged that Ms Brown had not obtained any approval to keep her dogs and that her dogs barked and caused a nuisance to other residents.

On 3 December 2021, the owners corporation issued Ms Brown with two notices to comply with by-laws.

The first notice alleged that Ms Brown had breached the noise by-law by allowing her dogs to constantly bark which disturbed the peaceful enjoyment of other residents.

The second notice alleged that Ms Brown had breached the keeping of animals by-law by having 4 large dogs within her unit without the approval of the owners corporation.

Prior to those notices being issued, Ms Brown had agreed to remove the dogs by 1 December 2021 in a settlement agreement made at a mediation conducted by NSW Fair Trading.

By-law Breach Legal Action

The owners corporation alleged that Ms Brown did not remove the dogs contrary to the settlement agreement and had continued to breach the by-laws after it issued the two notices to comply against her.

Consequently, the owners corporation commenced legal action in NCAT against Ms Brown. In that legal action the owners corporation sought an order for Ms Brown to remove her dogs and a further order that Ms Brown be penalised $1,100.00 for contravening the by-laws after the notices to comply were issued against her.

In July 2022, the NCAT case was listed for a hearing at which the owners corporation was successful and orders were made, by the consent of Ms Brown and the owners corporation, to require Ms Brown to pay an $1,100.00 penalty to the owners corporation and remove all but one dog from her unit. The order imposing the penalty would not apply if Ms Brown removed the dogs by 19 July 2022.

The Appeal Against NCAT

Shortly afterwards, Ms Brown filed an appeal against the orders made by NCAT, even though she agreed to those orders being made. Despite that, Ms Brown’s appeal was successful.

The orders made by NCAT were set aside and the case was sent back to NCAT for a further hearing.

A Mixed Bag?

During the course of the appeal, NCAT’s Appeal Panel considered whether it was possible for an owners corporation to seek in the same proceedings in NCAT both an order to require an owner to comply with a by-law (in this case by removing dogs from a unit) and a further order for a monetary penalty to be imposed on the owner.

The Appeal Panel concluded that this was not possible essentially for three reasons.

First, different procedural rules apply to a mixed application seeking general orders and the imposition of a penalty because, for example, the rules of evidence do not apply to an application for general orders but, in contrast, the rules of evidence do apply to proceedings for the imposition of a penalty.

The Appeal Panel considered those different rules indicated that the Legislature intended that separate proceedings would need to be brought by an owners corporation to seek general orders and the imposition of a penalty.

Second, the Appeal Panel held that procedural fairness could not be afforded to the parties in mixed proceedings where different rules of evidence applied and a party could claim civil penalty privilege when giving evidence in proceedings for the imposition of a penalty but doing so would disadvantage that party in proceedings seeking general orders for compliance with the by-law.

Third, the Appeal Panel noted that different appeal rights exist in relation to an application for general orders and an application for the imposition of a penalty. General orders can be challenged by way of an internal appeal to NCAT’s Appeal Panel whereas an appeal against a penalty needs to be filed in a Court.

The Appeal Panel concluded that the Legislature did not intend that an owner would be required to lodge two appeals to different bodies to challenge general orders and penalties made against him or her in the same proceedings in NCAT.

It was for these reasons that the Appeal Panel ordered the owners corporation to start again in NCAT and to only seek a general order to require Ms Brown to remove all but one of her dogs, not a penalty.

Conclusion

The decision of the Appeal Panel means that an owners corporation can no longer file one application in NCAT seeking both orders to require an owner or occupier of a lot to comply with a by-law and for a penalty to be imposed on the owner or occupier.

Instead, the owners corporation will either need to decide whether it wants to seek general orders or a penalty and commence one set of proceedings to seek either remedy or alternatively file two separate applications in NCAT, one seeking general orders for compliance with the by-law and the other seeking the imposition of a penalty.

No doubt commencing two separate proceedings would add to the time, cost and complexity of the case and quite possibly render it commercial unviable for an owners corporation to seek both general orders and a penalty against an owner or occupier who breaches its by-laws.

Case Name: Brown v The Owners – Strata Plan No. 82527 [2022] NSWCATAP 328

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Adrian Mueller I BCOM LLB FACCAL I Partner

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For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

Can you Ban Smoking without a By-law?

Restricting or Banning Smoking in Strata

Smoking in strata buildings is a hot topic as Queensland grapples with a proposal to change their strata laws to allow smoking to be prohibited in strata buildings. There are many buildings that have introduced by-laws banning smoking. But most strata buildings still do not have a by-law concerning smoking. So, is it possible to stop people smoking in a strata building without a by-law that bans smoking? And if it is possible to stop smoking without a by-law, is it still necessary or desirable to have a by-law that bans or restricts smoking and, if so, why?

Banning Smoking without a By-Law

Somewhat surprisingly, it is possible to stop residents of a strata building smoking in their lots or on common property without a specific by-law that prohibits smoking. Section 153 of the Strata Schemes Management Act 2015 prohibits residents from using or enjoying their lots in a manner or for a purpose that causes a nuisance or hazard to another resident. There are now three cases in which NCAT has made orders prohibiting residents in strata buildings from smoking on the basis that smoke caused by smoking constituted a nuisance to other residents in contravention of section 153.

NCAT Cases

In May 2019, a lot owner, Martin Gisks, succeeded in obtaining an order from NCAT prohibiting the resident of another lot in his building smoking on her balcony or in her bedrooms and requiring that resident to close all exterior doors and bedroom and bathroom windows when smoking inside her lot (Gisks v The Owners – Strata Plan No. 6743 [2019] NSWCATCD 44).

In October 2022, lot owners in a different building, Mr Pittman and Ms Cartwright, obtained orders from NCAT prohibiting the owners of another lot smoking or permitting any other person to smoke tobacco products on the balcony of their lot, and prohibiting them from permitting smoke from any tobacco product to be emitted from the interior of their lot into the lot of Mr Pittman and Ms Cartwright (Pittman v Newport [2022] NSWCATCD 173).

More recently, in June 2023, an owner in a strata building, Haydn Shaw, obtained an NCAT order prohibiting the owner and resident of another lot permitting the smoking of tobacco products in the courtyard of their lot (Shaw v Euen [2023] NSWCATCD 68).

In each case, NCAT concluded that the smoke caused by the smoking of cigarettes or tobacco products by residents constituted a nuisance which interfered with the amenity of other residents in contravention of section 153 of the Act. It was on that basis that NCAT made orders prohibiting or restricting smoking in each of these cases.

Is a By-Law Banning Smoking Desirable?

These NCAT cases beg the obvious question: does an owners corporation need to bother introducing a by-law prohibiting or restricting smoking? The answer is “Yes” if the owners corporation wants to make it easier to ban or restrict smoking in its building.

This is because without a by-law that bans or restricts smoking:

the owners corporation may not have standing to apply to NCAT for orders to prohibit residents smoking in a way that causes a nuisance to other residents because the owners corporation itself has not suffered from that nuisance (The Owners – Strata Plan No. 2245 v Veney [2020] NSWSC 134); and
there is a need to prove that not only particular residents are smoking but also that the smoke from cigarettes or tobacco products has caused a nuisance to other residents by unreasonably and substantially interfering with the use and enjoyment of their lots (something which may be difficult to do).

In other words, if a by-law exists that bans smoking the owners corporation is able to enforce that by-law and to succeed it does not need to show that smoke from cigarettes constitutes a nuisance to other residents. The owners corporation just needs to prove that particular residents are smoking in breach of the by-law. That is much easier to do.

Conclusion

It is possible to stop residents smoking without a by-law that bans smoking. However, it is much more difficult to do so because it requires proof that the smoking causes a nuisance to other residents. And there is real doubt that an owners corporation can apply to NCAT for an order to stop residents smoking in those circumstances. Introducing a by-law prohibiting or restricting smoking overcomes those problems, gives the owners corporation the right to take steps through NCAT to prevent residents smoking and makes it easier for the owners corporation to win the case and put an end to smoking in its building.

DO YOU NEED A BY-LAW THAT PROHIBITS OR RESTRICTS SMOKING? CLICK HERE NOW!

Adrian Mueller I BCOM LLB FACCAL I Partner

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For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

Dealing with Adjoining Owners and Disputes

Strata Disputes – Under the Ground up in the Air and Everywhere in Between

Strata disputes and common property come in all shapes and sizes, especially when dealing with neighbouring property owners.

As owners of real property, owners corporations find themselves dealing with the owners of neighbouring land in a multitude of circumstances.

Neighbouring Land Disputes

Easements
Ground Anchors
Cranes
Scaffolding
Trees, Fences and Walls
Law of Nuisance
Damage and Liability
And even, landslides

You’ve probably had reason to deal with one or more of the above – but if you haven’t, then get ready, because you almost certainly will at some point in time!

Read on… Common Property and Dealing with Adjoining Owners

DEALING WITH NEIGHBOURING PROPERTY – DO YOU NEED AN EASEMENT?

Warwick van Ede I BEc LLM I Lawyer

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For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

Don’t You Dare Sue Me – Overstepping the Mark

Strata Lot Owner and Owners Corporation in Dispute

Is it legitimate for a lot owner to pressure an owners corporation not to sue her or defend legal action she takes against the owners corporation? And what happens when the lot owner oversteps the mark? Can the owner be held in contempt of court? A recent NCAT case considered that very issue.

Background

There is an apartment building on Sydney’s lower North Shore which contains 6 lots. For several years, the owners corporation and a lot owner have been in dispute about various matters. The dispute culminated in proceedings being commenced by both the owners corporation and the owner in NCAT against each other. The owners corporation alleged that the owner engaged in conduct which was intended to intimidate, harass and deter the owners corporation from defending the proceedings she had commenced in NCAT against the owners corporation or to improperly induce a settlement of those proceedings. The owners corporation applied to NCAT to have the owner referred to the Supreme Court for contempt or a finding that the owner was in contempt of NCAT and that she be punished and restrained from communicating with representatives of the owners corporation in certain ways.

Owner’s Conduct

The conduct of the owner which the owners corporation considered constituted contempt included threats of disciplinary action against the owners corporation’s solicitor made by the owner, communications by the owner which impugned the professional and mental capacities and motives of the owners corporation’s solicitor, contact by the owner with partners of the firm at which that solicitor worked concerning the conduct of the solicitor, contact by the owner with employers of strata committee members and references to family members of the strata committee members made by the owner in various communications. The case of the owners corporation was that those communications by the owner impermissibly sought to pressure the owners corporation into deciding not to defend, or to settle, the proceedings in NCAT that the owner had commenced against the owners corporation.

The Law

A person can commit a contempt of court if he or she seeks to dissuade a litigant from prosecuting or defending proceedings by making unlawful threats, by abuse or by misrepresenting the nature of the litigation. The law distinguishes between proper and improper pressure in punishing interference with litigants. The question is whether the pressure sought to be applied in a particular case can be described as improper which, in turn, depends on all the circumstances of the case. Improper pressure can interfere with the administration of justice and that is why it can constitute a contempt of court.

The Outcome

NCAT concluded that whilst some of the owner’s communications were inappropriate and included abusive emails that were puerile in their tone and content, the owners corporation did not prove that those communications caused the representatives of the owners corporation to be intimidated or caused the owners corporation to capitulate or settle the proceedings the owner had commenced against it. In other words, even though the owner may have engaged in conduct which was intended to intimidate the owners corporation or its solicitor to discourage them from defending the proceedings, the evidence did not establish that the owner had been successful in doing so or had deterred, or was reasonably likely to deter, the owners corporation from defending the proceedings the owner had commenced against it or from prosecuting the proceedings it had commenced against the owner. Consequently, NCAT concluded that it had not been established that the owner committed a contempt and therefore refused to refer the owner to the Supreme Court.

Anything Else?

The NCAT case contains an interesting, albeit brief, discussion of the consequences for an owner who sends threatening, rude or offensive communications to representatives of an owners corporation. NCAT concluded that the owner’s communications may expose her to the risk of defamation proceedings and observed that communications which attempt to threaten, intimidate or influence witnesses are unlawful under the Crimes Act 1900 and that use of telecommunications devices, such as emails, that threaten or harass any person also constitutes criminal conduct under the Crimes Legislation Amendment (Telecommunications Offences and other Measures) Act (No. 2) 2004. That indicates that representatives of the owners corporation who receive abusive, rude and offensive communications from an owner are not without remedy.

Case: The Owners – Strata Plan No. 38308 v Gelder (No. 2) [2023] NSWCATEN 7.

Adrian Mueller I BCOM LLB FACCAL I Partner

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For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

Owners Corporation – NCAT Enforces By-laws

Does an owners corporation have to enforce its by-laws? If an owners corporation decides to ignore breaches of its by-laws, can NCAT force the owners corporation to take action and enforce its by-laws? A recent NCAT case provides the answer to these questions.

Introduction

Almost every strata building is governed by a set of by-laws. Those by-laws set out rules that regulate behaviour, noise, the keeping of pets and, among other things, the performance of renovations. The by-laws are binding on the owners corporation and the owners and occupiers of the lots. An owners corporation has the power to enforce the by-laws if they are breached. For example, an owners corporation can issue an owner or occupier of a lot with a notice to comply with a by-law or apply to NCAT for an order to require the owner or occupier to obey a by-law. But what happens when an owners corporation decides to turn a blind eye to a breach of a by-law committed by an owner? Can the owners corporation be forced to enforce the by-law against the culprit? If so, by whom? A recent NCAT case reveals the answers to these questions.

The Case

Suzanne Lyon owns a lot in a residential strata scheme in Wollstonecraft, Sydney. In August 2020, the owners corporation created a common property rights by-law to give the owner of the lot beneath Ms Lyon’s lot, Mr Swanson, the right to build a pergola over his rear courtyard. Subsequently, Mr Swanson built the pergola, but Ms Lyon claimed that the pergola did not comply with the by-law because it was too high. The by-law had permitted the pergola to be 2.7m above the concrete floor of the courtyard but it was built about 3.21m above that concrete floor. Ms Lyon wanted the pergola to be removed or modified but the owners corporation was not prepared to force Mr Swanson to change the pergola. For that reason, Ms Lyon sued the owners corporation in NCAT and sought orders to require the owners corporation to remove Mr Swanson’s pergola or enforce the common property rights by-law by requiring the pergola to comply with it.

The Outcome

Ms Lyon’s claim was partially successful. NCAT agreed with Ms Lyon that the pergola was too high and was not built in accordance with the by-law. NCAT then considered whether it had power to make an order to force the owners corporation to enforce the by-law and require Mr Swanson to comply with it by changing the height of the pergola. NCAT concluded that it did have that power because it could make an order, on the request of an owner, to settle a complaint or dispute about the failure of an owners corporation to exercise its functions including its power to enforce a by-law. NCAT held that there would be a sufficient basis to make an order where an owners corporation has a discretion to exercise a function (such as its discretionary power to enforce a by-law) but decides not to do so. NCAT considered that there was little point in the strata legislation creating a mechanism for an owners corporation to pass a common property rights by-law merely to have that by-law flouted and for the owners corporation to fail to act in the face of complaints from other owners and legal advice it had received. Ultimately, NCAT concluded that the owners corporation’s failure to manage Mr Swanson’s non compliance with the by-law, or to make any attempt to require him to comply with the by-law, meant that an order should be made requiring the owners corporation to exercise its functions to administer the strata scheme for the benefit of the owners and in accordance with the by-laws.

The Orders

For those reasons, NCAT ordered the owners corporation to take all necessary steps to require Mr Swanson to comply with the by-law by requiring him to reduce the height of the pergola to 2.7m above the concrete surface of his courtyard. However, NCAT gave the owners corporation 6 months to comply with that order to allow Mr Swanson sufficient time to apply to the owners corporation for approval to amend the by-law to permit the pergola to remain at a height of 3.21m above the courtyard floor and for that amendment to the by-law to be approved by the owners corporation.

Analysis

This case is one of the first times that NCAT has made an order to compel an owners corporation to enforce its by-laws. The decision does break new ground because it was previously thought that because the Strata Schemes Management Act 2015 does not explicitly require an owners corporation to enforce its by-laws but rather gives an owners corporation a discretion to do so, it was not possible for NCAT to force an owners corporation to require owners and occupiers to comply with its by-laws. The order made in the case begs the question: What does the owners corporation need to do to take “all necessary steps” to require an owner to comply with a by-law? Does that require the owners corporation to issue a notice to comply with the by-law against the owner? Or does it require the owners corporation to do more and, if necessary, take legal action against the owner to force him or her to comply with the by-law? And what if the owners corporation is successful in that legal action, but the owner ignores orders that are made to require him or her to comply with the by-law? What is the owners corporation required to do then? It remains to be seen whether those questions will need to be answered by NCAT in the future.

Conclusion

The case sends a message that owners and occupiers of lots who are affected by breaches of the by-laws committed by other owners and occupiers are not helpless. They can apply to NCAT for orders to force their owners corporation to enforce the by-laws against those in breach of them. It remains to be seen whether the decision in Lyon v The Owners – Strata Plan No. 11045 [2023] NSWCATCD 31 will be followed in future cases.

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Adrian Mueller I BCOM LLB FACCAL I Partner

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For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

Dealing with Fire Orders Affecting a Lot Property

Fire Orders and Cost Recovery By-laws

An owners corporation is only responsible for the common property in its strata scheme. So how does an owners corporation deal with a fire order that requires it to do work to lot property? Can a Council issue a fire order against an owners corporation to do work to lot property? If so, can the owners corporation make a by-law to recover from owners the costs it incurs doing fire safety work in their lots? The answers might surprise you.

Strata Law

An owners corporation is the owner of the common property it is strata scheme. The owners corporation is responsible for managing and controlling the use of the common property and maintaining and repairing the common property. Those obligations arise under the Strata Schemes Management Act 2015 (Strata Act).

An owners corporation does not own the lots in its strata scheme, and under that Act, the owners corporation has virtually no responsibility in relation to any of the lots. This is because the lots are privately owned and the owners and occupiers of the lots are generally responsible for managing and maintaining them. So, under the Strata Act, the owners corporation is generally not responsible for maintaining and repairing lot property. Further, in general, the owners corporation is only able to adopt budgets and raise levies to cover expenses associated with the common property, not lot property

Fire Orders

But what happens when a Local Council issues a fire order that requires an owners corporation to carry out work to both common property and lot property. Does the Council have power to issue that order? And does the owners corporation have power to comply with the order and do work that affects lot property?

Planning Laws

The Environmental Planning and Assessment Act 1979 (EPA Act) gives a Local Council power to order the owner of premises to do things that are specified in the order in order the promote adequate fire safety in a building when provisions for fire safety in the building are inadequate to prevent, suppress or prevent the spread of fire. The EPA Act says that premises include a building and that an owner includes, in the case of land that is the subject of a strata scheme, an owners corporation. Therefore, the EPA Act gives a Local Council power to order an owners corporation to carry out work to improve fire safety to both common property and lot property.

Case Law

This was confirmed by the NSW Court of Appeal as long ago as 1985. In 1985, the Court decided the case of Proprietors of Strata Plan 159 v Parramatta City Council. In that case, the Council had issued a fire safety order to the owners corporation of a strata building which required the owners corporation to carry out fire safety upgrades principally in two lots which were to be used as a restaurant. The owners corporation challenged the order and argued that the order unfairly burdened other owners with the costs of carrying out fire safety upgrades predominately to those two lots. However, the Court concluded that the statutory language was clear in permitting a Council to issue a fire order against an owners corporation that required work to be done to lot property. The Court acknowledged that this meant that sometimes the costs of complying with a fire order would be shared by all of the owners even when the need for fire safety upgrades was confined exclusively to the lots of some of the owners which may seem inequitable.

But the Court considered that there were two answers to this problem. First, if the legislation clearly allowed a fire order to require an owners corporation to do work to lot property the mere fact that might produce a sense of injustice between owners was not a reason for the Court frustrating the clearly expressed intention of the legislature and it was a matter for the Parliament to change the legislation to overcome any unfairness if it saw fit to do so. Second, fire is a phenomenon which endangers all owners and occupiers of lots meaning all owners have a common interest in fire prevention and fire safety. This meant that it made sense for the legislation to allow the Council to issue one fire order against the owners corporation rather than have to issue and monitor compliance with multiple fire orders against numerous parties. Ultimately, the Court considered that it was in the common interest of all owners for the Council to have the power to issue the fire order against the owners corporation. The Court’s decision has recently been referred to with approval by NCAT.

Recovery of Costs

If a Council can require an owners corporation to carry out fire safety upgrades to lot property, can the owners corporation recover the cost of performing those upgrades from the relevant owners? There is no clear answer to that question. Many owners corporations have introduced cost recovery type by-laws that purport to allow them to recover costs from owners in a variety of circumstances. There have been several recent cases in which NCAT has invalidated cost recovery type by-laws. But there are also cases where NCAT has upheld cost recovery type by-laws. Ultimately, if an owners corporation wants to seek to recover from certain owners the costs it incurs carrying out fire safety upgrades in their lots, a cost recovery type by-law will need to be put in place but there may be difficulty enforcing the by-law.

Conclusion

A Council is entitled to issue a fire order against an owners corporation that requires fire safety upgrades to be carried out to lot property. Where that occurs, the Strata Act gives the owners corporation the right to enter the lots in order the do the work required by the fire order. If an owners corporation wants to recover the costs it incurs carrying out fire safety upgrades in a particular lot, a cost recovery type by-law will need to be put in place for that purpose. However, NCAT has recently raised question marks over the validity of cost recovery type by-laws so the recovery of those costs cannot be guaranteed.

Adrian Mueller I BCOM LLB FACCAL I Partner

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