Introduction
In the complex world of strata property management, strata by-law is essential for maintaining communal harmony and equitable governance. Their effectiveness, however, depends on their fairness and relevance to contemporary living standards. Section 139(1) of the Strata Schemes Management Act (SSMA) plays a critical role in ensuring this, as it mandates that by-laws should not be harsh, unconscionable, or oppressive. By-laws that impose absolute prohibitions or fail to consider the unique circumstances of individual lot owners may be subject to legal challenges under the strata law. Similarly, by-laws that unduly restrict everyday domestic activities might be deemed incompatible with modern community norms.
The NSW Civil & Administrative Tribunal, through Section 150 of the SSMA, is instrumental in reviewing and potentially invalidating such by-laws. This serves as a reminder of the importance of creating thoughtful and balanced by-laws.
This article delves into the intricacies of strata by-laws, drawing on insights from recent Tribunal cases. These cases illuminate various aspects of strata living, including administrative cost recoupment, pet ownership, and property management, reflecting the dynamic nature of strata legislation. They underscore the need for by-laws that respect the rights and reasonable expectations of all community members.
For lot owners and strata managers seeking to understand the robustness and relevance of their by-laws in today’s context, this article provides an insightful exploration. It highlights the ongoing evolution of strata law and the critical need for by-laws that are adaptable, fair, and attuned to the changing dynamics of community living. Want to know if your strata by-laws have stood the test of time? Review your by-laws today.
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Key changes shaping strata by-law jurisprudence under NSW strata law: Is it time to review your current by-laws?
| Recouping administrative expenses by strata management | The Nikitopoulos v The Owners – Strata Plan No 52311 [2023] case addressed a critical legal issue concerning the validity of special by-laws for the recoupment of legal and administrative costs by an owners corporation. The Tribunal found the impugned by-laws to be harsh, unconscionable, and oppressive, and thus, not enforceable. This ruling serves as a crucial reminder of the limitations on the authority of Owners Corporations in creating by-laws. It emphasises that while Owners Corporations have the power to establish by-laws, these regulations must be grounded in fairness and equity. They should not disproportionately target specific lot owners or place unreasonable burdens on them. |
| Levy of costs for failure to comply and entering into the owner’s property | The case of Owners – Strata Plan No. 77109 v Gokani-Robins Pty Ltd [2023] centered on the validity of a specific by-law related to compliance with the Strata Schemes Management Act. This by-law, titled “Failure to comply with By-Law and Recovery of Costs,” allowed the Owners Corporation to recover expenses associated with enforcing and rectifying breaches. The by-law also granted the Owners Corporation the authority to enter an owner’s property for necessary works, specifying the conditions under which such entry could take place. The Tribunal declared this strata by-law invalid, deeming it harsh, unconscionable, or oppressive. The decision hinged on the excessive powers granted to the owners corporation, especially concerning property entry and enforcement actions. |
| Limitation on the number of pets lot owners can adopt | In the case of Bruce v The Owners – Strata Plan No. 98803 [2022] NSWCATCD 83, the central issue was the interpretation of a by-law regarding pet ownership within the strata scheme. The Tribunal was called upon to determine whether the by-law in question limited a lot owner to having only one pet, as interpreted by the strata committee. Contrary to the strata committee’s interpretation, the Tribunal concluded that the by-law did not explicitly limit pet ownership to just one animal per owner or tenant. This decision was significant in the context of enforcing and interpreting by-laws related to pet ownership in strata schemes. It emphasised the importance of clear and unambiguous language in the drafting of by-laws, ensuring that the rights of pet owners within strata communities are not unjustly restricted by vague or misinterpreted regulations. |
| Appointment of strata managing agent for the strata scheme | In the case of Walker Corporation Pty Ltd v The Owners – Strata Plan No 61618 [2023] NSWCA 125, a significant legal dispute arose concerning the resolutions passed in a general meeting by the owners corporations of three out of seven strata schemes to replace their strata managing agent. The central issue revolved around whether these resolutions conflicted with a clause in the registered strata management statement (SMS) of the strata complex development scheme. This particular clause mandated that each owners corporation appoint and retain the same strata managing agent as determined by the Building Management Committee (BMC). The Tribunal ruled that the SMS, along with a similar by-law, were invalid. It found that the clause and by-law were void due to their lack of clarity. They failed to specify the specific functions to be delegated to the strata managing agent or the terms of their appointment. The clause and by-law were also deemed inconsistent with the Strata Schemes Management Act 2015, which upholds the autonomy of an owners corporation in matters concerning the appointment and management of strata managing agents. The Tribunal determined that the clause exceeded the permissible limits under the Strata Schemes Development Act, which provides guidelines for the contents of strata management statements. The ruling by the Tribunal in this case is significant as it reinforces the autonomy of owners corporations in making decisions regarding their strata management. It ensures that their rights are not unduly constrained by broader complex-wide agreements or statements. |
| By-law allowing owners corporation to deactivate access devices of lot owners | In the case of The Owners – SP No 91684 v Liu [2022] NSWCATAP 1, a pivotal decision was made concerning the extent of powers an owners corporation can wield under its by-laws. The focus was on a by-law related to short-term letting, which endowed the owners corporation with broad powers, including the authority to deactivate access devices and recover costs for breaches of the by-law. The Tribunal concluded that this by-law was invalid, as it exceeded the scope of by-law framing powers of the owners corporation under the Strata Schemes Management Act. Due to these overreaching powers, the by-law was declared invalid. This decision reinforced the principle that while owners corporations are empowered to create by-laws for managing common property and regulating the conduct of lot owners and occupants, there are boundaries to this authority. |
| Prohibition on smoking | The Tribunal case of Pittman v Newport [2022] marked a notable development in the regulation of smoking within strata schemes, highlighting the legal complexities of imposing a complete smoking ban through strata by-laws. The case indicated that a by-law enforcing a total ban on smoking within a building could be subject to legal challenges. The contention lies in the argument that such a by-law might be excessively restrictive and could infringe upon the rights of residents and contravenes the provisions of Section 139 of the SSMA. A by-law that entirely prohibits smoking could be perceived as overstepping this boundary, especially if it fails to provide reasonable accommodation or designated smoking areas. |
| Mandatory hard surface flooring in the strata apartment | The Gurram v Owners Corporation SP36589 [2017] NSWCAT case stands as a significant legal precedent in the realm of strata by-laws. The lodged dispute revolved around a strata by-law that mandated the exclusive use of carpet as flooring within the strata scheme. Mr. Gurram, a lot owner, challenged this by-law, arguing against its restrictive nature. The Tribunal deemed the by-law, which prohibited any flooring material other than carpet to be harsh, unconscionable, and/or oppressive. This judgment was based on the by-law’s lack of flexibility and its failure to accommodate minor renovations, which are permissible under the SSMA without requring a special resolution. |
| Discriminatory by-laws in the strata plan | In Araya v Owners Corporation SP65717 [2021] NSWCATAD 5 case, decided in January 2021, the dispute involved a disabled resident and her husband, and the owners corporation of their strata scheme. The resident, who had a disability, consistently used a visitor parking space designated for disabled visitors, contrary to the by-laws of the owners corporation that prohibited residents from using visitor parking spaces. The Tribunal was tasked with determining whether the owners corporation discriminated against the resident due to her disability by enforcing the by-law that prohibited her from parking in the visitor space. The NCAT ruled that the enforcement of the by-law by the owners corporation was not due to the resident’s disability. The Tribunal also found that the restriction against parking in visitor cars paces did not constitute discrimination against the disabled resident. The case has broader implications for owners corporations in terms of potential claims under the Anti Discrimination Act 1977. NCAT’s finding that an owners corporation “provides services” suggests that all actions taken by an owners corporation in managing and dealing with common property could potentially expose it to discrimination claims. |
| Cooking prohibited by the strata committee | The Franklin v The Owners—Strata Plan No. 87497 [2022] NSWCATCD 210 case stands as a pivotal judgment in the realm of strata law, particularly concerning the enforcement and validity of strata by-laws. This case specifically addressed a by-law that completely prohibited cooking within a residential unit in a strata scheme. The Tribunal ruled this by-law to be invalid. The Tribunal considered the “blanket ban” on cooking to be unnecessary and disproportionate, as it aimed to “protect against unreasonable interference with another occupant’s use and enjoyment of the occupant’s lot or the common property.” |
| New rules on short-term letting | The introduction of a new planning framework on 1 November 2021 aimed at better controlling short-term letting under planning law and ensuring fire safety, included the incorporation of Section 137A into the SSMA. This section establishes a legal basis for owners’ corporations within strata schemes to regulate short-term rental accommodation arrangements on platforms like AirBnB. An owners corporation can adopt a by-law that prohibits a lot within the strata scheme from being used for short-term rental accommodation, but this restriction is applicable only if the lot is not the principal place of residence of the owner. This legislative change aims to balance the interests of lot owners who wish to earn income from short-term rentals with those of other residents who may have concerns about the impacts of such rentals, like increased noise or security issues. The regulation also ensures that properties used for short-term rentals adhere to necessary fire safety standards, protecting occupants and neighbours within the strata scheme. |
Conduct by-law reviews and frame new by-laws compliant with strata legislation: Speak to a strata lawyer today!
Navigating the complexities of strata by-laws requires an in-depth understanding of their evolving nature, shaped by changes in legislation, societal norms, and legal interpretations. Tribunal cases often reveal that by-laws, though valid at their inception, may not indefinitely retain their enforceability due to these shifting contexts. Adopting a static approach to by-laws can lead to challenging disputes and potentially burden an owners corporation or association with unforeseen legal complications and expenses. To mitigate such risks, regular by-law reviews are not just beneficial but strategically essential. PBL Law Group’s strata lawyers offer expert assistance in reviewing and updating by-laws to align with contemporary legal standards. Whether you have concerns about the enforceability of specific by-laws or seek guidance on recent legal developments, our team is prepared to provide the necessary clarity and direction. Time to review your by-laws!
