On the 11 December 2023 the NSW strata and community title legislation changes came into effect.

If you live or work in strata or community title it is important that you are aware of the changes to the law as follows: 

Original Owners Votes

•  If a scheme comprises of more than two lots the amendments provide that the value of a vote cast by an original owner, usually a developer, of a strata scheme may be reduced.

Strata Committees

• Committee member removal now only requires an ordinary resolution and once removed they’re not eligible to be on the committee for 12 months.

• Where it is called for, an election for a committee can take place at any general meeting, not just the AGM.

• A call for nominations to the committee must be included in the general meeting notice.

• A member with a conflict of interest must be excused from voting and discussion on that matter.

Strata Managers

• Must provide notice to the owners corporation 6 months prior to expiration of their agency agreement.
• Fair Trading can recommend to NCAT that a compulsory agent be appointed to manage dysfunctional strata schemes.

Internal Funds Transfer 

• Under the amendment for internal funds transfers, the owners corporation must, within three months of the transfer, decide at a general meeting, if the funds should be repaid, and if yes, how it should be done – via a simple reverse transfer or by special levy.

Emergency Repair Levies 

• The amendments will reduce from 30 days to 14 days the time period for payment of a special levy for urgent repairs. This amendment is for necessary building repairs to mitigate any serious and imminent threats to the health and/or safety of building occupants.

Work Quotes

• Multiple quotations for works exceeding $30,000 will now be required for all schemes – small and large – Also, the comparative quotations will need to be for people or companies that are not connected with each other.

Pets

• A pet bond or fee can no longer be charged by the owners corporation.
• A by-law cannot impose unreasonable burdens on people with assistance animals.

By-laws

• Under the changes, owners corporations may consolidate the by-laws for the scheme only by special resolution – whether or not a by-law has been amended, repealed or added.
• Two lot strata schemes do not need to pass a resolution to issue a ‘Notice to Comply’ regarding a by-law breach.

Books and Records

• The strata roll and other mandatory records must now be kept electronically.

Rentals

• Rental agents will be required to give tenants and lessees a copy of a strata scheme’s by-laws and strata management statement on commencement of a lease and whenever documents are updated if they are not provided by the landlord or head tenant.
• Rental agents will have to provide the owners corporation notice that a lot has been leased or subleased if the notice hasn’t been provided by the landlord or head tenant.
• Tenants can give notice of the lease to the owners corporation if the landlord, head tenant or rental agent fails to do so. In giving notice of the lease or sublease the regulations may prescribe the documents or other evidence a tenant must provide.

Service of Documents

• The regulations may provide for the service of documents, including by prescribing additional methods of service.

Meetings

• General Meeting Notices – time period for notices increases from 7 days to 14 days.
• Company Nominees – number of votes to be limited in a similar way to the way proxy votes are limited.
• AGM – Delivery of development documents by the developer must be done 14 days before the first AGM.

Community Titles 

• Most of the above proposals will also apply to Community Title regulations.

Strata Renewals

• Allowing a strata renewal committee to operate for 2 years instead of 1 year to reflect the length of time it can take for that committee to develop a strata renewal proposal.
• Permitting the Land and Environment Court to allow a collective sale of a strata building to proceed even though some of the preliminary steps associated with the sale have not been followed correctly (eg; inadequate meeting notice periods) if that has not resulted in a substantial injustice.
• Allowing dissenting owners who do not object in good faith to have costs awarded against them (eg; where an objecting owner is a developer who is trying to obstruct a collective sale to another developer)

More information

NSW Government – https://www.nsw.gov.au/media-releases/critical-reforms-to-strata-laws

Amendment Bill – https://www.parliament.nsw.gov.au/bills/Pages/bill-details.aspx?pk=18511

Timeline – https://www.parliament.nsw.gov.au/bill/files/18511/SPI%20-%20Strata%20Legislation%20Amendment%20Bill%202023.pdf

CLICK HERE NOW FOR STRATA REFORM ADVICE

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

Contact Us

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. 

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

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

Contact Us

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-laws for BBQs, Pools and Gyms

Hot summer weather and the festive season is upon us and what a better time for lot owners and tenants to get fit, have a dip and pull out the barbie on a balmy summers day.

As the weather warms up to higher temperatures, so does the festive cheer. We recommend that reviewing and updating the following by-laws to help ensure that your strata blocks have clear rules and a stress free summer festive season.

BBQs – Fire Safety and Smoke Drift

For safety and smoke drift purposes it is highly recommended that a comprehensive by-law regulating (sometimes prohibiting) the use of BBQs on balconies.

Regulations on the type of BBQs such as

• Smokers
• Open fires
• Storage of LPG bottles, inflammable liquids and other substances and materials

All of these items should be considered as part of your by-laws.

Pools – Don’t Ignore the Potential Risks

A communal pool in strata has its benefits, but the risks cannot be ignored that’s why it’s important to have a clear set of communal rules in the form of a by-law to ensure everyone stays safe.

A by-law with clear communal rules such as:

• ‘No running’, ‘no diving (in shallow water)’ and ‘no bringing of glass’ at the pool are all great ways to help ensure everyone’s safety.
• Electricity and water do not mix well, so it’s important to minimise the risk of accidents by limiting electrical use around pools.
• And…who can and cannot use the pool.

Gyms – Reduce your Risks

Like pools, gyms in strata complexes have many benefits however come with safety risks and that’s why it’s critical to have a set of by-law rules to ensure everyone’s safety.

• Keeping noise to a minimum
• Hours of gym operation
• Safety rules
• Use and cleaning of equipment and more

Our specialist team of strata lawyers have been developing and reviewing by-laws for over 40 years. So, if you’re looking for a by-law or a review, we’d be happy to assist.

Get your by-laws right – speak to the experts!

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

Contact Us

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.

Strata be Warned of Telecommunications Providers

Earlier this year we wrote about an increasing rise of telecommunications providers who are licensed under the relevant Commonwealth telecommunications legislation, using their powers to gain compulsory access (at no cost to them!) to owners corporation’s buildings.  In that article (Pushy Telco’s and Owners Corporations) we drew to the attention of owners corporations that such telecommunications providers use the processes set out in the Telecommunications Act and the Telecommunications Code of Practice and in particular, the use of a Notice to Inspect and a Notice to Install.  We pointed out in that article that if an owners corporation does not respond within very precise timeframes to these Notices, then the owners corporation loses its ability to object to the proposals set out in those Notices,  and they lose their ability to require the relevant telecommunications provider to consider any alternatives.

Ongoing Developments Since Our Original Article

Since the time of our original article, it has been clear that the activities of these telecommunications providers (which go by various names,  including GigaComm, and Servicestream) has continued, with more and more Notices to Inspect and Notices to Install coming to our attention.

Owners Corporations Act or Lose your Rights

Telecommunications service providers have written to us unhappy that they are being challenged,  and they have suggested that they are only utilising the rights which they have under the telecommunications legislation.  What they fail to comprehend is that landowners (such as owners corporations) also have rights to object to the proposals by telecommunications service providers, and certain rights  to require telecommunications service providers to properly justify these proposals.

To be clear, if an owners corporation wishes to question a proposal which they receive from a telecommunications service provider, then it is essential and critical that the owners corporation acts in a timely and immediate fashion to ensure that a properly draft Notice of Objection is served on the telecommunications service provider, or the owners corporation may be stuck with whatever proposal the telecommunications service provider wishes to proceed with.

Unsure What to do…

If your owners corporation requires assistance with a proposal from a telecommunications service provider, we are experienced in the processes under the telecommunications legislation including in drafting Notices of Objection in compliance with that legislation.

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

Contact Us

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.

Do your strata by-laws keep pace with strata law changes?

In Nov 2016, every owners corporation was required to review its by-laws within 12 months.

Most owners corporations completed their by-law review by 2018.

Since then, there have been numerous changes to the laws affecting strata buildings.

Strata law changes affecting strata buildings

They include substantial changes to the laws regulating:

• Short term rental accommodation arrangements – a by-law can now ban short term lettings in certain circumstances;
• Pets – a by-law can no longer ban pets and by-laws that do are not enforceable;
• Renovations – the Design and Building Practitioners Act 2020 now applies to many renovations – do your renovations by-laws require owners to comply with the Act?;
• Fire Safety – news fire safety laws will be introduced to increase fire safety standards for strata buildings – do your by-laws allow your owners corporations to recover fire safety upgrade costs from owners?;
• Sustainability Infrastructure – new strata laws relax the requirement for approval of sustainability infrastructure such as solar panels and electric vehicle charging stations;
• Levy Recovery – there remains controversy about recovery of debt collection costs – do your by-laws allow these costs to be recorded in an owner’s ledger and recovered by the owners corporation?

Do your by-laws take into account these changes to the law?

If not, they might not be enforceable or they might simply be outdated.

So is it time to again review your by-laws? We have conducted 100’s of by-law reviews for owners corporations across NSW.

DO YOU NEED A REVIEW OF YOUR BY-LAWS?

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

Contact Us

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.

An owner is entitled to appoint a “person” to act as his or her proxy at a general meeting of an owners corporation.

But does that allow an owner to appoint a company as his or her proxy rather than an individual?  The answer might surprise you.

 Is it Possible for an Owner to Appoint a Company as their Proxy?

Owners in strata buildings regularly appoint other people to act as their proxies at general meetings of owners corporations.  Invariably, those proxies are individuals, often other lot owners.  But is it possible for an owner to appoint a company as his or her proxy to vote at a general meeting of an owners corporation?  If so, who is entitled to exercise voting rights on behalf of the company as proxy?  The answer lies in the Strata Schemes Management Act 2015 (Act) and other legislation.

An Analysis

An owner is entitled to appoint a “person” to act as his or her proxy at a general meeting: cl 23(3) and 26(1), Sch 1 of the Act.  However, the Act does not provide a definition of a “person”.  But it is clear that a person can be an individual or a company for several reasons.

First, the Interpretation Act 1987 says that in any Act “person” includes an individual or a company: section 3(3) and Sch 4.

Second, the expression “person” is used throughout the Act in a way that makes clear that it can include both an individual or a company.  For example:

• section 7 expressly provides that a person can be a company for the purpose of determining whether a person is connected with another person;
• section 10(2) prohibits an owners corporation delegating any of its functions to a person unless the delegation is specifically authorised by the Act and it is clear that a “person” in that context would include a strata managing agent which would typically be a company;
• section 12 allows the owners corporation to employ any person that it thinks fit to assist it exercise its functions which includes a building manager which typically carries on business through a company;
• section 22 requires a “person” who has an interest in a lot that gives the person a right to cast a vote either personally or by nominee at meetings of the owners corporation to give the owners corporation written notice of that interest – in that context, a “person” clearly includes a company which owns a lot which is able to cast a vote via a company nominee.

There are other indications from the language used in the Act that a person is not limited to an individual but can include a company.  For example:

• The Act gives a co owner of a lot (which could be company) the right to vote at a general meeting in certain circumstances: cl 23(4) and (5) Sch 1;
• An original owner (i.e. the developer) can cast a vote by means of a proxy in certain circumstances (and a developer is almost invariably a company): cl 25(5) and (6), Sch 1; and
• A building manager or strata manager can vote as a proxy provided that their vote does not result in them obtaining a material benefit (and a building manager and strata manager are typically a company): cl 25(7), Sch 1.

Moreover, the expression “person” where used in legislation has repeatedly been interpreted by the Courts to mean both an individual and a company: see In the matter of Metal Storm Limited (in liquidation) (Receivers and Managers Appointed) (No. 2) [2019] NSWSC 1682.

There are other reasons why an owner can appoint a company as his or her proxy.  For example, a company can be appointed as an attorney under a power of attorney and the appointment of an attorney is similar to the appointment of a proxy given that in both cases a person is appointing another person or company to act as his or her agent.

And in sphere of company law, a shareholder can appoint a “person” as his or her proxy to vote at meetings of a company and it is clear that the person who is appointed as the proxy can be either an individual or a company: see section 249X of the Corporations Act 2001.

Finally, there is nothing in the Act which explicitly prohibits an owner appointing a company as his or her proxy.

Who Exercises Proxy Voting Rights?

Where an owner appoints a company as his or her proxy, the company itself cannot exercise voting rights as the proxy.  So who does?

Obviously, a company that is appointed as a proxy needs to appoint an individual to exercise the powers of the company as a proxy.  That would typically be done by a written notice given by the company to the owners corporation specifically empowering the individual to act on behalf of the company as proxy at meetings of the owners corporation.  Normally, that individual would be the company secretary or a director of the company.  But as long as the person is properly authorised by the company to exercise proxy voting rights on its behalf, and the owners corporation has notice of that authority, he or she may do so.

Conclusion

Whilst it is uncommon for an owner to appoint a company as his or her proxy, that situation can arise.  When it does, an individual with the authority of the company that the owners corporation has notice of is able to exercise the company’s proxy voting rights on behalf of the owner.

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

Contact Us

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.

There are more than 85,000 strata schemes in NSW with approximately one in seven NSW residents living in strata apartments and it’s estimated by 2040 this will grow by 50 percent in Greater Sydney!

So, it’s no suprise that the number of people living in strata applying to NCAT for orders to resolve strata disputes has significantly increased by 45% over the last 5 years.

Cases related to water leaks, delays in fixing leaks and claims for compensation for rental loss have played a major role in the growth of NCAT cases.

In this article we take a closer look at the responsibility of an owners corporation to repair common property water leak damage.

The Duty to Repair

Section 106 of the Strata Schemes Management Act 2015 (Act) imposes on an owners corporation a duty to:

(a) properly maintain and keep in a state of good and serviceable repair the common property;

(b) where necessary, renew or replace any fixtures or fittings comprised in the common property.

This duty requires an owners corporation to fix any defects in the common property that are allowing water to leak into a lot.

The Nature of the Duty to Repair

The duty of the owners corporation to maintain and repair common property has been considered in a number of cases.

In those cases, the Supreme Court and NCAT has said that the duty to repair common property:

(a) is compulsory;

(b) is absolute; and

(c) is not a duty to use reasonable care to maintain and repair common property or to take reasonable steps to do so but a strict duty to maintain and keep in repair.

This means that an owners corporation cannot delay any repairs that need to be carried out to fix defects in the common property that are causing water to leak into a lot.  Even if it is impossible to find contractors who are available to repair those defects, that does not provide an owners corporation with a lawful excuse for delaying any necessary repairs to common property.

Other Aspects of The Duty to Repair

There are other aspects of the duty to repair common property that are often overlooked particularly in the case of new buildings or where a tenant damages common property.

The Supreme Court and NCAT have held that the duty to repair common property:

(a) extends to require the remediation of defects in the original construction of the building;

(b) must still be fulfilled even if the owners corporation did not cause the damage to the common property which needs to be repaired.

This means that, in general, an owners corporation cannot blame an original builder or developer for defects in the common property and refuse to fix them.  However, if the owners corporation takes legal action against a builder or developer in respect of defects in the original construction of the common property, then the owners corporation can put on hold its obligation to repair common property defects.

Further, the cases say that even if a person damages the common property, in general, the owners corporation must still repair that damage, even though it may have a right to recover the cost of that repair from the offender.  Alternatively, under section 132 of the Act, the owners corporation can apply to NCAT for an order to require an owner or occupier to repair damage to the common property caused by them.  It appears that if the owners corporation takes legal action against an owner or occupier in NCAT to obtain that order, that allows the owners corporation to put on hold its duty to repair the damage.

Anything Else?

The duty to repair the common property also requires the owners corporation to carry out repairs which are not for the benefit of the majority of owners.  Indeed, the owners corporation is obliged to carry out repairs to the common property that only benefit a single owner.  This means that an owners corporation cannot refuse to repair a leaking window on common property on the basis that the leak only affects one lot.

Is there an Escape Route?

There are generally two ways for an owners corporation to relieve itself from its duty to repair common property (apart from the ways we have discussed above).

First, an owners corporation can pass a special resolution at a general meeting to determine that it is inappropriate to repair a particular item of common property.  This can be done under section 106(3) of the Act but only if the decision will not affect the safety of the building or detract from the building’s appearance.

Second, an owners corporation can make a common property rights by-law that transfers its responsibility for the repair of a particular item of common property to one or more owners.  The by-law needs to be approved by a special resolution at a general meeting.  However, the by-law also needs to be approved by the owners who will be responsible for repairing the item of common property under the by-law.  Often it proves difficult to obtain the consent of those owners.

What about Compensation?

Inclement weather can cause a substantial increase in claims for compensation being made by owners against owners corporations who have failed to repair defects that have allowed water to leak into and cause damage to lot property.  Typically, those claims are made by investor owners for rental loss when the damage to their lots become so severe that the lots are uninhabitable.  But compensation claims can also cover alternate accommodation expenses if an owner occupier is forced to move out of a lot due to damage caused by water ingress, the costs an owner incurs cleaning and repairing lot property (e.g. replacing saturated carpet), experts’ fees and legal costs.  The liability of an owners corporation to pay compensation to an owner is a strict one.

This can make it difficult for owners corporations to defend compensation claims that are made by owners as a result of common property defects that allow water to leak into and damage lot property. Indeed, one Court has remarked that this puts an owners corporation into the position of an insurer.

Conclusion

Even though it may be difficult to find contractors who are able to repair common property defects, that does not provide an owners corporation with a lawful excuse for delaying essential repairs and maintenance.  The duty to repair is a strict one and there are limited exceptions to that rule.  This emphasizes the importance of proactive and ongoing building maintenance to help avoid the problems that many owners corporations are now encountering.

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

Contact Us

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 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

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

Contact Us

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.

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

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

Contact Us

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.

Strata apartments come with many perks for owners and tenants but of course, there’s also a downside with one of the biggest complaints being noise. As more and more people enjoy apartment living noise complaints have increased in recent times by 33%* and they continue to rise.

What are top noise complaints in strata?

• Barking dogs
• Power tools
• Loud music
• Alarms
• Construction/renovations
• Vehicles
• Wooden/tiled floors
• Children

And… some of the more unusual complaints in more recent times include:

• Tap dancing
• Assembling IKEA furniture
• Loud urinating at night is becoming one of the most common reasons for sleep-­deprived apartment dwellers
• Late night showers

What if your strata by-law neglects to mention specific issues around noise?

A well written noise by-law can go much further than the model by-law and provide residents with guidelines and time restrictions for when they can and can’t make noise. It also lets neighbours know their rights if they feel the need to make a noise complaint.

Did you know if your noise by-laws are insufficient or lacking clarity on noise related matters our specialist team of strata lawyers can assist you in updating or developing your noise by-law.

*NSW Department of Fair Trading

DOES YOUR NOISE BY-LAW NEED TO BE REVIEWED?

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

Contact Us

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.