The Scenario

Mr Smith owns a residential lot in a strata building in Sydney.  The floor tiles in Mr Smith’s bathroom have cracked and are damaged beyond repair.  The building was constructed 30 years ago so matching replacement tiles cannot be found.  Is Mr Smith entitled to insist on the owners corporation re-tiling his whole bathroom so that the bathroom tiles have a uniform finish?  In this article we explore the answer to that question.

The Law

An owners corporation has a statutory duty to properly maintain and keep in good repair the common property and, where necessary to renew or replace any fixtures or fittings that form part of the common property under section 106 of the Strata Schemes Management Act 2015.

This duty requires the owners corporation to replace an item of common property when it is reasonably necessary to do so because, for example, the item has been damaged beyond repair: Glenquarry Park Investments Pty Ltd v Hegyesi [2019] NSWSC425.

So what happens when tiles on the floor or a wall of a bathroom that form part of the common property are damaged beyond repair but matching tiles cannot be found.  Can the owners corporation just replace the damaged tiles doing the best it can?  Or does the owners corporation have to re-tile the entire bathroom to ensure a uniform tiled finish?

Replacing Damaged Tiles

Where tiles are damaged beyond repair and matching tiles cannot be sourced, the duty of the owners corporation is to use replacement tiles that are substantially similar in appearance, characteristics, quality and amenity to the existing tiles.  This can require the owners corporation to replace a larger section of tiles to achieve substantial similarity: Selkirk v The Owners – Strata Plan No. 2661 [2024] NSWCATAP 17.

However, this does not necessarily mean that, where matching tiles cannot be found, the owners corporation is responsible for re-tiling the entire bathroom.  There are a number of cases which make this clear.

The Cases

1. In Stolfa v Owners Strata Plan 4366 & ors [2010] NSWSC 1507 a lot owner did work which damaged five tiles on a bathroom wall in another lot. The owner of the damaged bathroom applied for an order that the other owner compensate her for the cost to re-tile the whole bathroom because matching tiles could not be found. The Court rejected that claim and was unpersuaded that such a course was reasonable, particularly in the absence of evidence establishing that a reasonably approximate matching tile, albeit not a precise match, was unachievable. The Court allowed an amount to cover the cost of re-tiling the damaged wall only.
2. In Petropoulos v CPD Holdings Pty Ltd t/as The Bathroom Exchange (No 2) [2018] NSWCATAP 233 a builder renovated a bathroom and an ensuite bathroom for a homeowner but built the shower recesses too small. The owner wanted the builder to re-tile the whole bathroom floor after enlarging the shower recesses because matching tiles could no longer be found and the owner was concerned that a patch repair would compromise the waterproofing membrane. NCAT’s Appeal Panel rejected the owner’s request and concluded that it was reasonable for the builder to attempt to match the tiles rather than completely re-tiling each bathroom. The builder was ordered to ensure that replacement tiles were of the same colour, dimensions and type as the original tiles, or if no identical replacement tiles were available, of a colour that most closely matched the original tiles.
3. In The Owners – Strata Plan No 74602 v Brookfield Australia Investments Ltd [2015] NSWSC 1916 an owners corporation sued a builder for defects. The owners corporation alleged that there were waterproofing defects in bathrooms due to incorrectly installed water stop angles as a result of which bathrooms needed to be completely re-tiled due to the difficulties in obtaining matching tiles, even though only a small number of tiles needed to be replaced. The Court concluded that this would amount to the complete demolition and reconstruction of the bathrooms which was unreasonable and unnecessary particularly as there was no evidence of water leakage from the bathrooms.
4. In SP 62930 v Kell & Rigby Holdings Pty Ltd [2010] NSWSC 612 an owners corporation sued a builder for various defects including waterproofing defects in bathrooms. The owners corporation asked the Court to order the builder to pay damages to cover the cost of re-tiling all of the bathrooms because matching tiles could not be found and owners were entitled to a uniform tiled finish in their bathrooms. The Court concluded that it would be unreasonable for an owner to insist on replacement of a large quantity of undamaged tiles at great cost if a close match could be found and installed in a place (such as an architectural break) where the joinder of the tiles would not be immediately obvious. The Court held that the floor tiles within the showers in the affected lots should be replaced, making use of an appropriate existing architectural break, and that it was not reasonable for the owners corporation to insist upon the complete re-tiling of the entirety of the bathrooms.

Analysis

These cases demonstrate that both NCAT and the Supreme Court have rejected claims for entire bathrooms to be re-tiled when a small section of tiles are damaged or defective and perfectly matching tiles cannot be found.

However, in general, the owners corporation will still need to ensure that the work it does to replace the damaged tiles achieves an acceptable aesthetic finish.  This may require the owners corporation to re-do more than just replace the damaged tiles.  It can require the owners corporation to replace, for example, one or more walls which contain damaged tiles or an entire shower recess by making use of appropriate architectural breaks.

Ultimately, each case turns on its own facts but it will often be the case that it will be unreasonable for an owner to insist on an owners corporation replacing a large quantity of undamaged tiles at great cost if a close match can be found to achieve an acceptable aesthetic finish.

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.

Is it Possible to Ban E-bikes and E-scooters?

There have been a recent spate of fires in Sydney apartment buildings caused by the charging of e-bikes and e-scooters.  Those fires have resulted in a number of strata buildings introducing by-laws to ban or regulate e-bikes and e-scooters.  But is it possible to ban e-bikes and e-scooters?

An owners corporation has a broad power to make by-laws to manage, control and administer the use of the lots and common property in its building.  This enables an owners corporation to make a by-law that stipulates what residents can and cannot do within their lots.

However, there are some restrictions on the by-law making power of an owners corporation.  In particular, a by-law cannot be harsh, unconscionable or oppressive.  Any by-law that is, is unenforceable.

In 2020, the NSW Court of Appeal handed down a ruling providing guidance on the circumstances in which a by-law will be harsh, unconscionable or oppressive.  In that case, the Court said that if a by-law prohibits an activity that is capable of being carried out in a manner that does not have a detrimental impact on the use and enjoyment of the lots and common property by residents, then the by-law will be harsh, unconscionable and oppressive.

In that case, the Court concluded that a by-law banning pets in a strata building was harsh because it was possible for residents to keep some types of pets in the building without having a detrimental impact on the amenity of other residents: see Cooper v SP 58068 [2020] NSWCA 250.

This begs the question:

Can a By-law Prohibit the Charging of E-bikes and E-scooters in a Strata Building?

The answer to that question is most likely “no”.  This is because it is possible to charge e-bikes and e-scooters without creating a fire risk or otherwise having a detrimental impact on the use and enjoyment of the lots and common property by other residents.  Indeed, any by-law that bans e-bikes and e-scooters is not likely to be enforceable.

So what are the options for any owners corporation that wants to reduce the fire risk created by the charging of e-bikes and e-scooters?  There is nothing wrong with an owners corporation introducing a by-law that restricts the right of residents to charge e-bikes and scooters.  For example, a by-law could require residents to apply to and obtain the consent of the owners corporation to charge e-bikes and e-scooters in the building.

Further, a by-law could introduce rules that must be obeyed by residents to minimize the fire safety risk created by the charging of e-scooters and e-bikes.  For instance, a by-law could stipulate that residents need to ensure that their e-bikes and e-scooters (including the lithium batteries that power them and the chargers for them) comply with the applicable Australian standards, that residents periodically monitor their e-bikes and e-scooters whilst they are being charged and residents otherwise take all reasonable steps to minimize a fire safety risk created by the charging of e-bikes and e-scooters.

Whilst it can be difficult to police by-laws that regulate the charging of e-bikes and e-scooters, doing so is not impossible and these by-laws at least give owners corporations the right to control the charging of e-bikes and e-scooters and to do something when residents disobey the by-law.

Can an E-bike and E-Scooter By-law Protect the Owners Corporation?

Further, these types of by-laws can provide the owners corporation with protection in the event that a resident disobeys the by-law and causes a fire when charging an e-bike or e-scooter.  For instance, a by-law could require the resident to indemnify the owners corporation against any property damage that is caused by such a fire and to cover the costs the owners corporation incurs repairing any damage caused by the fire.

Ultimately, the use of e-bikes and e-scooters is on the rise and this means that is now necessary for many owners corporations to grapple with the problem created by the charging of e-bikes and e-scooters.  Introducing an appropriately worded by-law is best practice and will provide an owners corporation with the greatest amount of protection to minimize the risk of a fire caused by the charging of an e-bike or e-scooter.

DO YOU NEED AN E-BIKE AND E-SCOOTER BY-LAW?

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.

Over the past few years there has been a huge push for people to buy EV vehicles of all kinds putting significant strain on strata buildings.

The increased number of electric vehicles now in strata blocks comes with a high risk of fire as residents charge their lithium-ion batteries throughout their buildings in their apartments, parking spaces, garages and other areas.

As people look for cheaper and quicker modes of transport e-bikes and e-scooters have become all the rage.

E-bikes and e-scooters have lithium-ion batteries and have sparked a series of fires in strata apartment buildings and based on statistics* pose a major threat as they continue to increase in popularity with a 16% increase in fire related incidences in 2023 and a 94% increase on the previous year.

The risk of e-bikes and e-scooters in strata blocks include:

1. Fire Hazards
2. Improper Charging Practices
3. Storage Challenges
4. Liability Concerns
5. Electricity Costs

How do strata schemes proactively manage the EV situation to reduce the risk of fire and other concerns?

By implementing a comprehensive by-law, covering the areas below, strata schemes can proactively manage e-bike and e-scooter hazards in strata.

1. Proper Charging Guidelines
2. Storage Solutions/Options
3. Registering E-vehicles with Regular Inspections
4. Resident Education Initiatives

Banning e-bikes and e-scooters would be extremely difficult and is unlikely to be enforceable given a lot of owners rely on this mode of transport for work.

An effective by-law will minimise the risk of e-bike and e-scooter fires and enhance the safety of residents and property within the community ensuring proper processes are in place to manage and reduce the risk.

* October 2023 ACCC Lithium-ion batteries and consumer product safety

CLICK HERE FOR AN E-BIKE / E-SCOOTER BY-LAW

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. 

By-laws that regulate e-Bikes and e-Scooters.  

e-Bike and e-Scooter lithium-ion batteries have sparked a series of fires in strata apartment buildings and based on the following statistics* pose a major threat as they continue to rise.

• Between January 1 and September 15, 2023, Fire and Rescue NSW reported 149 battery-related incidents – a 16 per cent increase on the same time last year.
• Of these incidents, 22 per cent involved e-mobility devices — a 94 per cent increase on the same period the previous year.

All strata buildings should, before it’s too late, put in place by-laws to regulate the storage and charging of e-scooters and e-bikes to help prevent fires from lithium-ion batteries.

* October 2023 ACCC Lithium-ion batteries and consumer product safety

A BY-LAW THAT REGULATES THE STORAGE & CHARGING OF E-BIKES & E-SCOOTERS

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. 

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

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.

 

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

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.

Will your by-laws need updating in line with the new Strata Laws?

Since last week’s article where we spoke about ‘phase 1’ of the strata law reforms, the proposed amendments to the Strata Schemes Management Act 2015 (NSW) have been released.

Below we explain the new proposed strata laws and share the timeline for their introduction here.

Original Owners Votes

•  If a scheme comprises of more than two lots the proposed 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 proposed 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 proposed 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 proposed 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

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.

The NSW Strata Reforms Phase 1

The NSW Government is moving ahead with phase one of the reforms to strata laws providing benefit to those living in strata. The first phase includes:

• Providing transparency – with collective sales and renewal processes
• Removing restrictions on pets – residents with pets will no longer be required to pay fees, bonds or for insurances for the joy of having a pet
• Requiring multiple quotes – ensuring competitive pricing is obtained for goods and services
• Giving Fair Trading approval to ask NCAT – to appoint compulsory strata managing agents to help manage dysfunctional strata schemes

Some Significant Changes…

Some of the more significant changes include:

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 an AGM 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

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

Quotations

• Multiple quotations for works exceeding $30,000 will now be required for all schemes – small and large

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

Books/Records

 Must now be kept electronically

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 (e.g. 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 (e.g. 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

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.

A Short Term Accommodation Levy for NSW?

Key tourism area’s across NSW are weighing in on Victoria’s short term rental accommodation (STRA) levy, agreeing that bed taxes were essential..

However, they’re concerned about the lack of details  on how the levy would work across platforms such as Airbnb and Stayz across NSW.

Is your Short Term Accommodation By-law Current?

Levy or no levy it’s important to ensure that your STRA by-laws are up to date and in line with you local council short term rental accommodation regulations, especially coming up to the festive season?

DOES YOUR SHORT TERM RENTAL ACCOMMODATION NEED A REVIEW?

Will NSW be the next state to impose a short term rental accommodation levy? Read on…

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.

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

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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