Understanding Harsh Unconscionable & Oppressive Strata By-laws in NSW

Introduction

Strata by-laws in New South Wales must strike a fair balance between the needs of the community and the rights of individual lot owners. The Strata Schemes Management Act 2015 (NSW) makes it clear that by-laws cannot be harsh, unconscionable, or oppressive, ensuring that all residents are treated equitably within a strata scheme.

Understanding what makes a by-law invalid is essential for both lot owners and for those seeking legal advice for Owners Corporations, as recent legal cases have shown that unfair or overly restrictive rules can be successfully challenged.. This guide explains the principles behind valid strata by-laws and provides practical insights for anyone living in or managing a strata property.

Interactive Tool: Check If Your Strata By-law Is Harsh, Unconscionable & Oppressive

Defining Harsh Unconscionable & Oppressive Strata By-laws

What Makes a Strata By-law Harsh

A strata by-law is considered “harsh” when it is unreasonably severe or stringent in its application. In such cases, the by-law’s negative effect on a lot owner’s rights is disproportionate to any benefit it offers the owners corporation or other residents.

To determine if a by-law is legally harsh, the following factors are often considered:

• The restriction must be excessively severe in relation to its intended purpose.
• The negative impact on individual owners must clearly outweigh any advantages for the wider strata community.
• The limitation it places on property rights is unreasonably inflexible.

For instance, a strata by-law that completely prohibits any use of balconies—including quiet enjoyment—could be deemed harsh because of its excessive and inflexible restriction on a lot owner’s property rights.

Understanding Unconscionable Strata By-laws

The term “unconscionable” applies to a strata by-law that is so unreasonable or unfair it would shock a fair-minded person. These by-laws are often excessively one-sided, creating a significant imbalance.

A strata by-law may be found unconscionable if it:

• Exploits a lot owner’s lack of bargaining power.
• Imposes unreasonable conditions without proper justification.
• Includes terms that would offend a reasonable person’s sense of fairness.

Consider a by-law addressing whether an owners corporation can enter your lot property without consent, for any reason at any time and without prior notice. Such a rule would likely be seen as unconscionable due to its severe intrusion on privacy and the absence of reasonable justification.

Identifying an Oppressive Strata By-law

A strata by-law is deemed “oppressive” if it is unjustly burdensome or unfairly restricts a lot owner’s use and enjoyment of their property. Typically, oppressive by-laws go beyond what is reasonably necessary for effective management.

Key characteristics of an oppressive by-law include:

• Restrictions that are unjustifiably burdensome for owners to follow.
• Rules that infringe upon fundamental property rights.
• Limitations that exceed what is reasonably required for property management.

For example, a by-law that prohibits a lot owner from having any visitors after 7 p.m., even for quiet gatherings, could be considered oppressive because it imposes an unreasonable limitation on a lot owner’s ability to use and enjoy their property.

The Legal Framework for Challenging Invalid Strata By-laws

The Role of the Strata Schemes Management Act 2015

The legal foundation for challenging unfair by-laws in New South Wales is established by the Strata Schemes Management Act 2015 (NSW). Specifically, Section 139(1) of this legislation provides a critical protection for lot owners by explicitly stating that a strata by-law must not be harsh, unconscionable, or oppressive.

• harsh
• unconscionable
• oppressive

This requirement ensures that while an owners corporation can create rules for the management and use of lots and common property, these rules cannot unjustly interfere with the property rights of owners.

The introduction of this standard in the 2015 reforms created a clear pathway for lot owners to dispute by-laws that are overly restrictive or unfair.

How NCAT Can Invalidate a Strata By-law Under Section 150

The primary mechanism for challenging a by-law is through an application for strata disputes at NCAT (the NSW Civil and Administrative Tribunal). NCAT’s powers under Section 150 of the Strata Schemes Management Act 2015 (NSW) include:

• Section 150 grants NCAT the specific power to make an order declaring a by-law invalid.
• An owner can apply to NCAT if they believe a by-law is harsh, unconscionable, or oppressive.

If the Tribunal agrees that a by-law fails to meet the standard set by Section 139(1), it can invalidate it.

When NCAT makes such an order:

• It serves as the essential enforcement tool for lot owners seeking recourse against unjust strata rules.
• It renders the by-law void and unenforceable from the date the order is recorded (or an earlier date specified by the Tribunal).

Key Case Studies on Invalid Strata By-laws for Your Scheme

Pet By-laws & Blanket Bans

The landmark case of Cooper v The Owners – Strata Plan No 58068 [2020] NSWCA 250 provided significant clarity on the question of can you keep a pet in a NSW strata scheme. The NSW Court of Appeal invalidated a blanket ban on keeping any animals within the strata scheme. It was determined that such a restriction was oppressive because it interfered with a lot owner’s property rights without providing a material benefit to other residents.

The court established that a by-law limiting property rights is only valid if it protects other occupants from a material and adverse effect on their use and enjoyment of their lots or common property. It held that a complete ban on pets—even a goldfish in a bowl—was an unreasonable interference. Moreover, the decision clarified that an owners corporation’s desire to avoid the administrative work of assessing pet applications on a case-by-case basis is not a valid justification for a blanket ban.

Reasonable conditions a strata scheme may enforce include:

• Requiring pets to be supervised on common property
• Ensuring owners clean up after their animals
• Addressing issues related to unreasonable noise or disturbances

Unreasonable Cooking & Lifestyle Restrictions

In Franklin v The Owners—Strata Plan No. 87497 [2022] NSWCATCD 210, the NSW Civil and Administrative Tribunal examined a by-law banning all cooking, including toasting bread, in most lots. Although the building had a large communal kitchen, the tribunal found the by-law harsh, unconscionable, and oppressive.

The tribunal reasoned that cooking is a common incident of property ownership and a right connected with one’s home. It held the blanket ban was an unreasonable interference because it failed to assess actual impact on other residents. Instead, potential issues like fire risk or cooking smells could be managed through other means, such as:

• Opening a window
• Using an exhaust fan

Unlawful Strata Cost Recovery & Indemnity Clauses

A series of cases have addressed by-laws permitting an owners corporation to recover costs from a lot owner without a fair and independent review process. For example, in The Owners – Strata Plan 91684 v Liu [2022] NSWCATAP 1 and Gokani-Robins Pty Ltd v The Owners – Strata Plan No. 77109 [2022] NSWCATCD 164, such by-laws were found to be invalid.

The key issue is that these clauses often operate in an arbitrary manner, giving the strata scheme unilateral power to determine costs.

Characteristics rendering cost-recovery by-laws harsh, unconscionable, or oppressive include:

• They do not require the costs to be reasonable or proportionate to the breach.
• They lack a mechanism for the lot owner to challenge or seek an independent assessment of the costs.
• They attempt to recover costs as a “levy debt,” which the Strata Schemes Management Act 2015 (NSW) does not authorise.
• They appropriate the role of a court by pre-determining liability for costs without judicial oversight.

However, not all cost recovery by-laws are invalid. A by-law is more likely to be upheld if it includes safeguards, such as:

• Requiring the owners corporation to recover costs through a court or tribunal, ensuring that the reasonableness of the charges is subject to independent review
• Allowing for the reimbursement of fixed charges from a statutory authority, like fire brigade call-out fees

These features help ensure that the by-law is fair and not oppressive.

Understanding What Makes a Strata By-law Valid & Enforceable

The Importance of Reasonable Restrictions

For a strata by-law to be valid and enforceable, it must impose reasonable restrictions that are necessary for harmonious community living. Moreover, these by-laws are intended to regulate behaviour within a strata scheme for the benefit of all residents, yet they must strike a careful balance with the rights of individual lot owners.

Valid and reasonable by-laws typically address issues that directly impact the shared living environment. Specifically, they:

• Regulate matters essential for peaceful cohabitation, such as noise levels during specific hours.
• Ensure the proper use and maintenance of common property, like rules for garbage disposal.
• Balance the needs of the community with individual property rights without being overly restrictive.

To illustrate, in the case of Norman v The Owners – Strata Plan No. 60182 [2022] NSWCATCD 152, a by-law imposing strict conditions on flooring works was upheld. The Tribunal found the restrictions were necessary to protect other residents from excessive noise, thereby preserving their right to enjoy their own lots peacefully.

Protecting the Rights & Enjoyment of Other Residents

A strata by-law is generally considered valid if its primary purpose is to protect other occupants from a material and adverse effect on their use and enjoyment of their lots or the common property. Furthermore, a rule cannot unreasonably restrict an owner’s use of their property if that use has no tangible impact on others.

Examples of valid by-laws that protect residents’ rights include those that:

• Prohibit playing loud musical instruments during late-night hours.
• Restrict activities that generate excessive noise or disturbances affecting neighbouring lots.
• Regulate behaviours that directly interfere with the peaceful enjoyment of others.

Conversely, a by-law that attempts to control aspects of a lot that do not affect others—such as dictating the colour of internal curtains—would likely be considered an unreasonable interference and therefore invalid.

Your Guide to Challenging an Unfair Strata By-law

The Process for Challenging a Strata By-law at NCAT

If you believe a strata by-law is unfair, you can challenge its validity by making an application to the NSW Civil and Administrative Tribunal (NCAT).

Moreover, the process requires you to present evidence and legal arguments to demonstrate why the by-law should be invalidated.

To succeed, you must show that the by-law falls into one or more of the following categories:

• Harsh: The by-law is excessively strict or severe in its application, placing an unreasonable burden on lot owners or occupiers.
• Unconscionable: The by-law is fundamentally unjust or unreasonable, going far beyond what is considered acceptable within a strata living environment.
• Oppressive: The by-law unfairly restricts the rights and freedoms of lot owners, creating a significant power imbalance that favours the owners corporation.

Why Seeking Specialist Strata Legal Advice is Crucial

Navigating the complexities of strata law and knowing how to resolve common strata disputes can be a difficult process.

Therefore, it is highly recommended to seek legal advice from a lawyer who specialises in strata disputes.

An experienced strata lawyer can provide essential assistance in several key areas:

• Assessing the Validity of Your Claim: A specialist can analyse the by-law in question, review relevant case law and legislation, and provide an informed opinion on the strength of your case.
• Gathering Evidence: Your lawyer can guide you on the specific types of evidence needed to support your claim, which may include witness statements, expert reports, or other important documentation.
• Representing You at NCAT: A legal professional can prepare and present your case effectively before the Tribunal, ensuring your rights and interests are advocated for throughout the proceedings.

Conclusion

Strata by-laws in NSW must be reasonable and fair, balancing community living with individual property rights, as established by the Strata Schemes Management Act 2015 (NSW). Key legal decisions have consistently invalidated rules that are harsh, unconscionable, or oppressive, particularly those involving blanket pet bans, unreasonable lifestyle restrictions, and unfair cost recovery clauses.

If you are facing a potentially invalid by-law or need help with a strata dispute, it is crucial to seek expert legal advice. Contact the strata dispute lawyers at PBL Law Group to speak with our experienced team, who can provide clarity on your rights and guide you through the process of challenging unfair or oppressive by-laws. For more specific guidance on by-law drafting, enforcement, or challenges, you can also consult our strata by-law lawyers for tailored advice.

Frequently Asked Questions