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

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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.

Adding Further Building Defects to an Existing Claim

On 17 April 2023, the New South Wales Court of Appeal in the case of Parkview Constructions Pty Ltd v The Owners – Strata Plan No. 90018 (Parkview), confirmed that an owners corporation can add new defects to an existing claim if the statutory warranty period in the Home Building Act 1989 (HBA) has not expired.

Supreme Court Amends Building Defects Statement of Claim

In the Parkview case, in the Supreme Court, the owners corporation sought to amend its Statement of Claim to add new defects. The Supreme Court granted permission to the owners corporation to add new defects to its existing claim.  The new defects that were added were not manifest when the owners corporation-initiated proceedings in the Supreme Court. Parkview appealed against the decision of the Supreme Court to the Court of Appeal.

Court of Appeal Win for Owners Corporation

The Court of Appeal upheld the decision of the Supreme Court by confirming that the owners corporation was entitled to add new defects to its existing claim and the addition was not a new cause of action but part of a single cause of action being a breach by the builder of the statutory warranties under the HBA.

Parkview argued that the addition of new defects introduced a “new” cause of action, and those new causes of action were not the same as the existing cause of action that was on foot. The Court of Appeal rejected that argument. It held that in a conventional case for breach of contract, there is a single cause of action.  That cause of action is complete when a defective structure is provided irrespective of the number of ways in which those defects have manifested themselves.  The Court of Appeal said that even though the HBA has created inroads into common law principles, however, those changes brought by the HBA do not alter the nature of the owners corporation’s claim.

Furthermore, the Court of Appeal said that a successor in title like an owners corporation sues a builder or a developer for statutory warranties under the HBA. The proceeding is based upon a breach of a single contract.  An amendment does nothing more than introduce further departures from the building contract that the builder and the developer had promised and that does not give rise to a new cause of action because the cause of action remains one, that is for a breach of the same contract.  Accordingly, the Court of Appeal held that the owners corporation’s amendments seeking to add new defects did not introduce a new cause of action and so the owners corporation was entitled to add them to its existing claim.

A Victory for Owners Corporations in NSW

This confirmation from the Court of Appeal is a great victory for owners corporations in NSW and it reconfirms the willingness of the judiciary to protect owners in strata schemes wherever it may be necessary.

Faiyaaz Shafiq I LLB GDLP I Lawyer

A highly experienced and respected, results driven Litigation Lawyer specialising in the areas of strata litigation, building & construction, commercial litigation, debt recovery, personal and company insolvency. 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.

Common Property and Water Leaks

NSW has received a significant amount of rainfall over the last 18 months which has led to an increase in the number of claims made by lot owners against owners corporations in regards to common property and water leaks.

These claims can be challenging and difficult for an owners corporation to defend but a recent decision by the NSW Court of Appeal provides a glimmer of hope.

Here we share the case… A Glimmer of Hope for Owners Corporations

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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 a by-law prohibit the cooking of food including toasting bread in a lot?

In short, the answer is “no” according to NCAT.  However, there is a silver lining in NCAT’s ruling.

The Background

There is a large residential strata building located in Newcastle, New South Wales.  The building contains 87 residential lots.  The building was previously an aged care facility.

The building contains a commercial kitchen for shared use by the building’s occupants.  Some of the lot’s also contain a kitchenette, other smaller lot’s do not and rely on the shared kitchen.

The By-law

The buildings cooking by-law prohibited the cooking of food in any lot without kitchen facilities. However, a lot owner objected to the by-law and applied to NCAT for an order to invalidate the by-law.

Here we share the case and outcome… NCAT Invalidates No Cooking By-law

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 recent NSW Supreme Court ruling invalidated a by-law that required several owners corporations in a prominent strata complex in Sydney to all use the same strata manager.

The Finger Wharf at Woolloomooloo Bay is a well-known Sydney landmark. It was redeveloped about twenty-five years ago and remains a prominent Sydney landmark where many people now live, and businesses thrive.

The Finger Wharf structures, including the associated marina, are subdivided into seven strata schemes and a stratum lot. The Finger Wharf is governed by a management statement (SMS).

Up until recently, the SMS required all owners corporations to appoint the same strata managing agent as the Building Management Committee’s (BMC) agent. There was a corresponding by-law for each strata scheme.

However, at a general meeting in 2022 three of the owners corporations voted to appoint a new strata managing agent for their buildings, challenging the SMS that had existed for the last two decades without issue.

The dispute among the residents and occupants of the Finger Wharf about its management ended up in the NSW Supreme Court.

The Supreme Court ruled that the SMS provision and by-law that required all of the strata schemes to use the same strata manager as the BMC was void for uncertainty and invalid.

The Court concluded that the SMS provision and by-law were void because it was not clear what functions of each owners corporation were required to be delegated to the same strata manager.

The full case details can be found here:

Walker Corporation Pty Ltd v The Owners – Strata Plan No 61618 [2022] NSWSC 1246

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.

Tenants, Building Defects, NCAT and Rent Relief

In a recent case, a property manager failed to inform a landlord of defects in the common property of a strata building and take any steps to investigate issues that a tenant had complained about.

The tenant applied to NCAT for a rent reduction as the landlord had breached their obligation to keep the rented premises in a reasonable state of repair as water leaked into the premises. The tenant was successful.

Who Could be Liable?

If a tenant claims rent relief from NCAT due to defects in a strata building, it’s important to note that NCAT could deem that it is the responsibility of the:

• Landlord who could lose rent (or worse) if they do nothing;
• Property manager if they fail to fix defects in the premises that they are authorised to repair following a tenant’s complaint in a timely manner;
• Property manager if they have not advised the landlord of defects (where they are not authorised organise repairs) following a tenant’s complaint;
• Owners corporation who could also be held liable for a landlord’s loss of rent.

A Timely Reminder for Managing Agents!

Ensure your professional indemnity insurance is current;

• Ensure your professional indemnity insurance is current
• Obtain landlord consent on a minimum amount for repair works which can be dealt with without the landlord’s approval;
• Allocate sufficient resources to attend to repair requests in a timely manner to avoid issues which could lead to court proceedings;
• Request that any common property defects are promptly repaired by the owners corporation;
• Ensure that the relevant strata by-laws for the apartment block are up to date to minimise your risk

Here we share some cases…

• https://www.caselaw.nsw.gov.au/decision/18261da0208ae3ceaf03173b
• http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/nsw/NSWDC/2019/9.html

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.

Who is Responsible for Common Property Repairs Caused by Rain?

Australia recently had its wettest November in 122 years. March and April 2022 have also seen unprecedented rainfall in New South Wales.

Extensive rainfall events test the patience of every strata manager resulting in numerous complaints about water leaks into strata lots.

Faced with endless demands, owners corporations need to be very clear about their responsibilities, so it’s timely to revisit some of the “fundamentals”.

In the article below we discuss…

Step 1 – Is it the owners corporation’s responsibility?

Step 2 – If it leaks has the common property failed?

Step 3 – Are damages payable by the owners corporation for common property failures?

For more read Rain and Maintaining Common Property – Who is Responsible?

A recent decision by NCAT reinforces the need for strata managers to dot their I’s and cross their T’s if they want to be paid for work they do for owners corporations.

The case sends an important message for strata managers to ensure that they have a strata management agency agreement signed by the owners corporation before providing any services to the owners corporation.

Here we share this case including some valuable lessons to be learnt with Strata Management Agency Agreements.

For all NSW strata legal including by-laws, building defect and levy collection advice contact us here or call 02 9562 1266, we’re happy to assist.

The use of surveillance cameras in both private and public spaces is increasing significantly.

Security cameras are installed by local councils and private enterprise, and you can expect to be digitally recorded walking into a shopping centre, travelling on public transport, and even taking the dog for a walk in a local park.

An often vexed issue is what rights do strata lot owners and owners corporations have to install their own security cameras?

Owners corporations and lot owners should be aware of the Surveillance Devices Act 2007 (NSW). Do you need a by-law?

These two recent NCAT cases share some lessons Strata, Owners Corporations Lot Owners and Security Cameras

For NSW strata legal or levy collection advice please contact us here or call 02 9562 1266, we’re happy to assist.

Do explanatory notes need to be included in the agenda of a general meeting of an owners corporation?  The answer might surprise you.

Since the commencement of the Strata Schemes Management Act 2015 on 30 November 2016, a practice has arisen for explanatory notes to be included in an agenda of a general meeting of an owners corporation.  The purpose of the explanatory notes is to provide a brief explanation of the purpose of each motion that appears on the meeting agenda.

But are these explanatory notes necessary? Click here to find out – Are Strata Meeting Explanatory Notes Required

For NSW strata legal or levy collection advice please contact us here or call 02 9562 1266, we’re happy to assist.