Introduction

Disputes are a common part of life in strata schemes. However, the landscape of strata law in New South Wales (NSW) has been fundamentally reshaped by a series of major reforms in 2024 and 2025, including the Strata Schemes Legislation Amendment Act 2025 (NSW). These changes introduce new responsibilities for owners corporations and strata committees, create new rights for lot owners, and alter how conflicts are managed.  

While mediation remains a key step in resolving disagreements, understanding this new legal environment is crucial for a successful outcome. This guide outlines the essential aspects of strata dispute mediation in NSW, updated to reflect the latest laws, and provides practical steps for effective preparation for both lot owners and owners corporations.

Why Should You Consider Mediating Strata Disputes?

Mediation is a valuable tool for resolving disputes within strata communities. It involves informal negotiations facilitated by a neutral mediator who helps the parties involved reach a mutually beneficial settlement. The process is particularly useful in community living situations, where disputes can be challenging and stressful for everyone involved.

The NSW Fair Trading offers a free mediation service designed to assist in resolving such disputes. The mediator’s role is to:

• Help parties identify the key issues in dispute
• Guide participants in exploring options for resolution
• Develop effective strategies to address these issues
• Facilitate constructive communication between parties

By participating in mediation, you gain a real opportunity to improve your living situation and foster a deeper understanding of how you and the other owners want to coexist within the community.

Mediation is especially beneficial when:

• You’re struggling to reach an agreement with the Owners Corporation
• Conflicts with other owners or residents seem unresolvable
• You feel stuck without a clear way forward

The process can help to enhance communication, rebuild relationships, and ultimately improve the way your community functions, creating a more harmonious living environment for everyone.

When is NSW Fair Trading Mediation Compulsory for Resolving Strata Scheme Disputes? 

As per the Strata Schemes Management Act 2015 (NSW), certain disputes must first go through mediation before they can be escalated to the NSW Civil and Administrative Tribunal (NCAT). This approach is designed to encourage parties to resolve their issues amicably without the need for formal legal intervention.

If a dispute remains unresolved after mediation, an application can be made to the NCAT for the purpose of resolving strata disputes. However, not all disputes can bypass mediation.

According to section 227 of the Strata Schemes Management Act 2015 (NSW), the Registrar of NCAT cannot accept an application to resolve a dispute unless:

• Mediation has been attempted but was unsuccessful
• One party refused to participate in mediation
• The Registrar deems mediation unnecessary or inappropriate under the circumstances

This mandatory mediation requirement ensures that parties make genuine attempts to resolve their differences before engaging in more formal tribunal proceedings.

What Type of Strata Disputes Are Suited for Mediation?

Mediation is particularly well-suited for resolving a wide range of issues that commonly arise in strata schemes. With the recent law changes, this now includes both traditional and new types of disputes:

• Repairs and Maintenance: Disagreements over the repair and upkeep of common property or individual units.
• Breach of Committee Duties: Disputes alleging that a strata committee member has breached their new statutory duties to act with honesty, fairness, and due care and diligence.
• Water Penetration Problems: Conflicts related to leaks, drainage, or water damage affecting multiple units or common areas.
• Alterations and Additions to Common Property: Disputes about modifications or improvements made to shared spaces, such as installing air conditioners or other fixtures.
• Air Conditioners: Issues surrounding the installation, noise, or impact of air conditioning units.
• By-Laws: Disagreements over the interpretation, enforcement, or amendment of the rules governing the strata community.
• Noise Problems: Conflicts arising from excessive noise within the building, whether from other residents or external sources.
• Parking on Common Property: Disputes related to the use and allocation of parking spaces on shared property.
• Pets: Issues regarding the keeping of pets, including breaches of pet-related by-laws or disputes over pet behaviour. Following the landmark case of Cooper v The Owners – Strata Plan No 58068 NSWCA 250, by-laws imposing a blanket ban on pets are not enforceable.  
• Validity of Meetings: Challenges to the legality or procedural correctness of strata meetings.
• Insurance Matters: Disputes involving insurance coverage, claims, or the management of insurance policies within the strata scheme.
• Building Managers: Conflicts involving the performance, duties, or actions of building managers.
• Levy Payment Plans: Disputes where a lot owner believes their request for a payment plan for overdue levies has been unreasonably refused by the owners corporation.  

These matters often benefit from the mediation process, as it allows parties to discuss their concerns in a structured yet informal setting, with the aim of reaching a mutually acceptable resolution.

Which Matters do not Require Strata Mediation Before Approaching the NCAT?

Certain matters, however, do not require mediation before being brought before the Tribunal. These exceptions include:

• Appointment of a Compulsory Strata Managing Agent: If an order is sought to appoint or require the appointment of a strata managing agent.
• Allocation of Unit Entitlements: Disputes related to the allocation of unit entitlements can go directly to NCAT.
• Access to a Lot by the Owners Corporation: This includes situations where access is needed to inspect or repair common property.
• Strata Records and Penalty Disputes: Disputes over access to strata records, or those involving the imposition of monetary penalties and associated costs, are also exempt from mandatory mediation.

For those disputes where mediation is required, the process begins by obtaining a mediation application form from the NSW Fair Trading website. After completing the form, it is lodged with NSW Fair Trading, which then contacts the parties involved to schedule the mediation session.

A New Era in Strata: Understanding the 2025 Strata Reforms

The NSW Government has introduced significant changes to strata laws, primarily through the Strata Schemes Legislation Amendment Act 2025 (NSW), which roll out in stages through 2025 and 2026. These reforms aim to increase accountability, transparency, and fairness in strata schemes. Understanding these key changes is vital, as they may form the basis of your dispute.

Key changes include:

Area of Reform	What’s New	Impact on Disputes
Committee Governance	Strata committee members now have new, legally defined duties to act with honesty, fairness, and due care and diligence. Mandatory training is also being introduced.	Disputes can now be based on a breach of these specific duties, which is often easier to prove than arguing a decision was simply “unreasonable”.
Financial Hardship	Owners corporations must now offer a payment plan to an owner with overdue levies before starting debt recovery action. Interest on overdue levies is capped at 6% per annum.	If an owners corporation fails to follow this process, it can be a valid defence for an owner in a dispute over unpaid levies, which is a central aspect of strata levy recovery.
Manager Accountability	Strata and building managers face stricter rules on disclosing commissions and any financial connections they have with suppliers or developers.	A failure to disclose can be grounds for a dispute and may lead to an application to NCAT to terminate the manager’s contract.
Developer Obligations	Developers of new multi-storey buildings must provide independently certified maintenance schedules and levy estimates before the first Annual General Meeting.	This provides new owners with stronger evidence to hold developers accountable for strata building defects or inaccurate financial planning from the start.

What Does the Dispute Resolution Process in Mediation Look Like?

The dispute resolution process in mediation for resolving NSW strata disputes through NSW Fair Trading is designed to be a more informal and less adversarial way to handle conflicts within strata schemes. Here’s an overview of what the process typically looks like:

Filing a Mediation Application

• The process begins when one party submits a mediation request to NSW Fair Trading. This request typically outlines the nature of the dispute, the parties involved, and any relevant documentation that supports the claim.
• Filling out your mediation application is a straightforward process that usually takes about 15 minutes to complete. You will require to submit the following details while lodging an application for mediation:
  • Your Personal Details: Make sure you have all your personal information ready, such as your name, contact details, and any other relevant identification information.
  • Details of the Person(s) Involved in the Dispute: Gather the contact details and any other relevant information about the individuals or parties you are in dispute with.
  • Strata Plan Number: Have your strata plan number on hand, as you will need to include this in your application.
  • Supporting Documents: If you have any documents that support your case, such as emails, reports, or photographs, make sure these are ready to be attached to your application.
• NSW Fair Trading assesses whether the dispute is suitable for mediation. Not all disputes can be resolved this way, so they will determine if mediation is an appropriate course of action.

Preparation and Agreement to Mediate

Before mediation can begin, several important steps must occur:

• NSW Fair Trading reviews the dispute to determine if it’s suitable for mediation
• If suitable, NSW Fair Trading contacts the other party to gauge their willingness to participate
• Both parties must explicitly agree to mediate for the process to proceed
• Once agreement is obtained, a specific date and time for the mediation session is scheduled
• An independent, neutral mediator is assigned by NSW Fair Trading to facilitate the process

The Mediation Session

The mediation session follows a structured but flexible format:

• Both parties are given equal opportunity to present their perspective on the dispute
• The mediator facilitates the conversation, ensuring balanced participation
• Each party has adequate time to speak and be heard
• The mediator keeps the discussion focused and constructive
• The mediator remains neutral throughout, not making decisions or taking sides
• The process emphasises exploring possible solutions that could be acceptable to all parties

Reaching an Agreement

If the parties can find common ground:

• The terms of agreement are documented in writing
• This initial agreement is not automatically legally binding
• Parties can choose to formalise the agreement into a binding document
• Formalisation options include further legal action or consent orders
• The written agreement serves as a clear record of what was decided

Post-Mediation

After the mediation concludes:

• If an agreement is reached, the matter is considered resolved with no further action required
• If no resolution is achieved, parties may pursue other dispute resolution options
• Unresolved matters may proceed to be heard as a strata dispute in NCAT (NSW Civil and Administrative Tribunal)
• Mediation outcomes and all discussions remain confidential
• Information shared during mediation cannot be used in subsequent tribunal or court proceedings without consent from both parties

How Should You Prepare for a Mediation Session?

Thorough preparation before submitting a mediation application is crucial to achieving a positive outcome, especially in cases that require expert testimony or evidence.

Gathering Expert Evidence

In disputes like water ingress in your property, it’s essential to have an expert report that clearly identifies the problem’s source and outlines the necessary steps for repair.

The report should be detailed, specifying:

• The exact location of the issue (e.g., specific rooms or areas of common property)
• A comprehensive plan for the work needed
• Critical stages where inspections might be necessary, such as during the installation of waterproofing membranes

It’s important to quantify the required work, such as the number of tiles to be replaced or whether windows need to be entirely replaced instead of repaired. If the repairs disrupt living conditions, consider whether alternative accommodations will be necessary.

Any related damage, like damaged flooring or areas needing repainting, should also be carefully detailed and measured.

Collecting Additional Evidence

Beyond expert reports, it’s significant to compile all relevant documentation that supports your case.

For example, in a situation involving water damage, gather records such as:

• Documentation showing when the problem first appeared
• Your communications with the strata committee or strata manager, and their responses
• Photos of the damage, such as mould
• Any related communications with tenants or real estate agents regarding health concerns or rent reductions

If possible, obtain quotes from contractors based on the expert’s recommended repairs. These quotes should outline:

• The costs involved
• Potential start dates
• Expected completion times

It’s preferable that these quotes be addressed to the owners corporation for their approval.

All this documentation should be included with your mediation application to support your case.

Setting Out Proposed Terms for Mediation

When applying for mediation, it’s beneficial to clearly state the terms you seek in the agreement. For example, you might request that the owners corporation:

• Commit to carrying out the repairs specified in the expert report
• Ensure the work is inspected at critical stages by a qualified consultant
• Address any additional damage identified during repairs
• Complete the work by a specified deadline

Additionally, you could ask for compensation for any losses you’ve incurred, such as reduced rent or costs related to expert and legal services.

Seeking Legal Advice

Given the complexity of preparing evidence for mediation, it’s often advisable to consult a legal professional before submitting your application. Our team of expert lawyers can help ensure your evidence is thorough, and your application is well-prepared, increasing the likelihood of a successful mediation process.

Conclusion: Mediation Makes Resolving Strata Disputes Easier, Faster and Affordable

Mediation presents a valuable, often mandatory first step for resolving a wide range of strata disputes in NSW, offering a more efficient, cost-effective, and less confrontational alternative to formal NCAT proceedings. Success in mediation hinges on thorough preparation, including gathering comprehensive evidence, potentially expert reports, and clearly outlining desired settlement terms. Understanding the types of disputes suited for mediation and the process involved is crucial for both lot owners and owners corporations.

Given the complexities, seeking guidance from experienced NSW strata lawyers can significantly improve your position and the likelihood of a favourable outcome. Contact PBL Law Group’s strata dispute lawyers for expert assistance in preparing for mediation and navigating your strata dispute effectively.

Frequently Asked Questions (FAQ)