Challenging an Unreasonable Strata Payment Plan Refusal at NCAT

Introduction

Financial pressures can arise unexpectedly, making it difficult for strata owners to keep up with levy payments. In response, the New South Wales Parliament enacted significant reforms to the strata framework through the Strata Schemes Legislation Amendment Regulation 2025 (NSW), which commenced on 27 October 2025 and amended the Strata Schemes Management Act 2015 (NSW) and related Regulations. These reforms provide clearer rights and statutory processes for owners who need to request a levy payment plan and challenge an unreasonable refusal by their owners corporation.

Under the updated laws, owners corporations and strata committees must handle payment plan requests fairly and transparently—removing the ability to adopt blanket refusal policies and introducing timeframes and procedural requirements that protect both owners and schemes. Understanding your options for seeking orders from the NSW Civil and Administrative Tribunal (NCAT) has therefore never been more important. Consulting a qualified lawyer can help you navigate these legislative changes, interpret Tribunal decisions, and ensure your interests are protected throughout the process.

Understanding Key Reforms for Strata Levy Payment Plans

Prohibiting Blanket Refusal Policies for Owners Corporations

Under the Strata Schemes Legislation Amendment Regulation 2025 (NSW), owners corporations are required to manage payment plan requests with fairness and consistency. A significant change is the prohibition of “blanket refusal” policies. This means strata committees can no longer automatically reject all requests for payment plans. Instead, they are legally obligated to consider each application on its individual merits.

Your Rights as a Strata Owner When Requesting a Payment Plan

The reforms provide strata owners with clear rights when they need to request a payment plan for overdue levies. Owners can use the standardised “Request for a Payment Plan for Overdue Contributions form” to make their application. These plans are designed to be flexible and can extend for a period of up to 12 months.

When you submit a request, the strata committee must adhere to several key requirements:

• Respond in writing within 28 days: This ensures you receive a timely decision regarding your application.
• Provide clear written reasons for refusal: If your request is denied, the owners corporation must explain its decision in writing.
• Not charge a fee: You cannot be charged any fees for submitting or maintaining a payment plan request.

What Constitutes a Reasonable Refusal by an Owners Corporation

Assessing the Financial Impact on the Strata Scheme

An owners corporation is not required to approve every payment plan request. However, any refusal must be based on reasonable and sound financial grounds. A rejection is only considered reasonable if accepting the payment plan would prevent the strata scheme from meeting its financial obligations.

A refusal may be justified in situations where approving the plan would lead to significant financial instability for the strata scheme. This includes circumstances where:

• The administrative or capital works fund would be forced into a deficit.
• There would be insufficient money available to carry out urgent and necessary repairs or maintenance.
• The scheme would be unable to cover its routine, day-to-day expenses.
• It would prevent the scheme from complying with a notice, undertaking, or order issued by NSW Fair Trading.

If an owner believes a refusal was unreasonable, they can file a strata dispute with NCAT for review.

The Requirement for Written Reasons for a Refused Payment Plan

When an owners corporation decides to refuse a payment plan request, it has a legal obligation to communicate this decision in writing. The correspondence must provide clear and transparent reasons for the refusal, explaining the specific financial grounds that justify the decision.

This requirement is a crucial step in the process, as it ensures transparency and accountability. The written reasons form the basis for an owner’s potential challenge. If an owner believes the refusal is unfair, they can use the provided reasons as evidence when applying for mediation or making their case before NCAT.

How to Apply to the NCAT to Challenge a Refused Payment Plan

The Initial Step of Mediation with NSW Fair Trading

If you believe an owners corporation has unfairly refused your request for a payment plan, you have the right to challenge the decision.

Before approaching the tribunal, you should attempt to resolve the dispute through mediation, which involves:

• lodging an application for mediation with NSW Fair Trading;
• seeking to settle the dispute before escalating it further.

Filing Your Application & Preparing Your Case for the NCAT Hearing

Should mediation with NSW Fair Trading fail to resolve the issue, you can then take the matter to NCAT.

When applying to NCAT, be mindful that the tribunal can:

• issue an order that compels the owners corporation to agree to the payment plan;
• make NCAT orders if it finds the refusal unreasonable, requiring the scheme to approve the plan.

The Role of Legal Professionals in Your NCAT

Seeking Guidance from Strata Lawyers

Given the complexities of tribunal processes, it is critical to seek expert advice when challenging an owners corporation’s decision. Experienced strata lawyers can provide essential guidance in preparing a strong case for your NCAT application.

They ensure that all procedural requirements are correctly met and that your arguments are presented effectively. Engaging a legal professional also helps you understand the specific evidence needed to support your claim that a refusal was unreasonable.

Their assistance can be invaluable in preparing for the hearing and ensuring your case is as compelling as possible.

Understanding the Legal Implications & Potential NCAT Orders

A strata lawyer can explain the potential outcomes of an NCAT hearing and the legal effect of any orders the Tribunal might make. If the Tribunal finds that the owners corporation’s refusal of your payment plan was unreasonable, it has the power to issue NCAT orders compelling the scheme to approve the plan.

Under the Civil and Administrative Tribunal Act 2013 (NSW), the Tribunal has broad powers to resolve disputes. Depending on the specifics of your case, the potential NCAT orders could include:

• Dismissing the application if the owners corporation’s refusal is found to be reasonable.
• Setting aside the decision of the owners corporation to refuse the plan.
• Substituting the decision with a new one, such as an order requiring the approval of the payment plan.
• Varying the terms of the proposed payment plan to ensure it is fair to both parties.
• Ordering the owners corporation to reconsider the application in accordance with specific directions from the Tribunal.

Conclusion

Recent strata law reforms provide owners with clear rights to request levy payment plans and challenge decisions that are not based on reasonable financial grounds. Understanding the process, from mediation with NSW Fair Trading to making an application at NCAT, is essential for protecting your interests.

If your owners corporation has unreasonably refused your payment plan request, it is crucial to seek professional guidance. For specialised advice on preparing your NCAT application and understanding potential NCAT orders, contact the experienced strata lawyers at PBL Law Group today.

Frequently Asked Questions