Win for Owners Corporation: Access Disputes Do Not Equal “Dysfunction”

Introduction 

Disputes between an Owners Corporation and individual lot owners are common, especially during major renovations. But does a heated disagreement over access or a dilapidation report mean the entire scheme is “broken”?

In this recent case, PBL Law Group defended an Owners Corporation against claims that its aggressive approach to access constituted “dysfunction” warranting compulsory strata management.

The Facts 

The relationship between the Owners Corporation and a group of lot owners had become strained. There were active disputes regarding access to a lot and the independence of a dilapidation report. The Owners Corporation had even threatened to use a locksmith to gain access to progress the works. The lot owners argued that this behaviour—along with the delays—proved the Owners Corporation was acting with “disregard for the legitimate interests and rights of the lot owners”.

The Problem 

The applicants sought to use these specific operational disputes as evidence that the entire management structure had failed. They relied on Section 237 of the Strata Schemes Management Act 2015 (NSW), arguing that the management was “not functioning satisfactorily”. The risk for the Owners Corporation was that a single, contentious dispute could be weaponised to trigger a complete takeover of the scheme.

Defence at the Tribunal

PBL Law Group argued that the scheme was functioning properly “in all practical respects” despite the personal disagreements. We highlighted that the Owners Corporation had successfully agreed on a scope of works and appointed a superintendent. We submitted that while there were disputes, they did not amount to “serious misconduct” or a “dereliction of duty” as required by the precedent in Foo v Frew. Furthermore, we effectively argued that the Tribunal could manage the specific access dispute (via an injunction) without needing to replace the entire Owners Corporation.

The Decision 

The Tribunal ruled in favour of the Owners Corporation on the management issue. The Senior Member stated: “The Tribunal is not satisfied that these issues in dispute [access and dilapidation reports] demonstrate an ongoing disregard… that amounts to a risk of serious harm“. The Tribunal found “insufficient evidence” to support the claim that the Owners Corporation would disregard rights in the future, particularly given the other protective orders in place. The application for a compulsory manager was dismissed.

Conclusion

The case shows that operational disputes—even heated ones—are not enough to prove a strata scheme is dysfunctional. The Tribunal prefers to resolve specific issues (like access) with specific orders rather than appointing a compulsory manager. PBL Law Group’s successful defense confirms that an Owners Corporation can vigorously pursue its duties (including building works) without fear that a disagreement will lead to its removal.

If your Owners Corporation is facing a dispute or requires guidance on its management duties, it is crucial to seek expert legal advice. The specialist strata law lawyers at PBL Law Group can provide the strategic support needed to protect your scheme’s interests.