Introduction

Living in strata in New South Wales (NSW) can be a bit like learning to ride a bike without training wheels. Strata by-laws are like the secret map everyone follows to keep things smooth. They’re rules everyone in the complex—owners, residents, and stakeholders—needs to stick to. Every now and then, though, someone might not follow these rules, and that’s when things can get tense. It’s not fun dealing with disputes and all the drama that comes with it. Want to dodge these headaches and enjoy harmonious living? Stick around—there’s a lot more to explore!

Our comprehensive guide here aims to provide in-depth information about the nature of strata by-law in NSW, their importance, and the consequences of breaching them. This will equip residents with necessary knowledge, promote harmony in the community and prevent unwarranted legal ramifications. 

What are strata by-laws? 

By-laws are rules governing the general administration and management of an organization, community, or institution. They define the methods, norms, and principles that members or participants must adhere to to function in proper order.

Strata by-laws regulate the administration, operation, and usage of common property in a multi-unit housing complex. These by-laws in your strata scheme are created by the homeowners association or strata company of the property and apply to all residents and property owners within the community. Strata by-laws address a range of issues related to harmonious living in strata properties, including – 

1. Quiet hours, noise levels, and restrictions on activities that could disturb other residents.
2. Pet ownership, including the types and sizes of pets allowed, leash regulations, designated pet areas, and waste disposal requirements.
3. Ability to rent out units, this can include limitations on the number of rental units, minimum lease terms, and tenant screening processes.
4. Usage of shared facilities such as gyms, pools, parking lots, and recreational areas.
5. The type and scale of home businesses.
6. Use of common property like parking allocation, guest parking, and rules for visitor parking. 

What are the legislations governing strata by-laws? 

Property owners possess the authority to establish and enact by-laws that align with the envisioned strata plan lifestyle. These by-laws, in conjunction with the NSW Strata Act 2015 and the strata schemes Management Regulation 2016, outline the regulations governing a strata scheme. 

 The Strata Schemes Management Act 2015 (“SSMA”)

The SSMA focuses on providing strata management of strata schemes, handling disputes over strata schemes and by-law enforcement. Additionally, it offers 18 model by-laws that the owners can modify while ensuring that the fundamental aspects are already included. It further provides detailed financial reporting requirements and functions that the strata committee is required to do. 

Strata Schemes Development Act 2015 (“SSDA”)

The SSDA governs:

1. how common property and lots in strata schemes are dealt with,
2. the sub-division of lands into spaces to create leasehold and freehold strata schemes, and
3. lastly, the variation, renewal, and termination of strata schemes.

Contrary to the SSMA, this act focuses on the building and planning of strata properties, while the management of the owners corporation or strata manager, strata residents and lot owners is handled in SSMA.

What restrictions apply to strata scheme by-laws? 

By-laws are limited by Section 139(1) of the SSMA, which states that they cannot be unfair, overly severe, morally unacceptable, or oppressive. The assessment of whether a by-law violates these limitations rests with New South Wales Civil and Administrative Tribunal (also commonly abbreviated as NCAT) which has the authority to nullify any by-law that fails to meet these criteria. We have sought to highlight examples of by-laws deemed to be unfair, overly severe, morally unacceptable or oppressive with reference to two recent cases:

Cooper v The Owners – Strata Plan No 580068 [2020] NSWCA 250

The famous “Cooper Case” (Cooper v The Owners-Strata Plan No 58068 [2020] NSWCA 250) involves a breach of the by-law under the scheme “The Horizon” in Darlinghurst, Sydney, where a by-law prohibited animals on the premises. Despite this by-law, residents kept pets, leading to legal proceedings. In October 2020, the New South Wales Court of Appeal declared the by-law invalid, emphasizing that to comply with a by-law, it must be rational, not oppressive, and directed towards preventing disturbances to others’ enjoyment, setting a precedent for similar cases in NSW.

Franklin v The Owners – Strata Plan No. 87497 [2022] NSWCATCD 210

Another example of a by-law being found to be unfair, overly severe, morally unacceptable or oppressive is seen in the case of Franklin v The Owners where the applicant contested the validity of the by-law that prohibited all cooking except using a kettle within lots. The disputed by-law also imposed financial responsibility for fire brigade attendance due to triggered alarms. In this case, the NSW Civil and Administrative Tribunal ruled that the by-law imposing a blanket ban on cooking was overly unfair and oppressive and ruled it to be invalid.

What happens if by-laws are breached?

Notice to Comply with a strata by-law

Under the SMMA, when a strata by-law is breached, the strata committee may convene to vote to issue a ‘Notice to Comply’ by either post or email to the party suspected of breaching the by-law. If the party suspected of breaching the by-law is an owner occupier, the notice can be issued to the owner directly and if the party suspected of breaching the by-law is a tenant, the notice can be issued to the landlord and property manager as well.

Financial penalties for breaching a by-law

In Strata disputes, the owners corporation can apply to the NSW Civil and Administrative Tribunal to impose a civil monetary penalty ranging from 10 to 100 penalty units for by-law violations based on the type and frequency of the by-law violation. To seek a penalty, it’s essential to note that an application to the NSW Civil and Administrative Tribunal must be initiated within 12 months of the notice. 

Furthermore, a potential fine of up to $1,100(penalty of up to 10 units), with the prospect of an additional fine of $2,200 if NSW civil and administrative tribunal finds that the person continues to breach a by-law again within 12 months of the initial penalty. 

What steps can you take if by-laws are breached?

Communication

When someone breaches a by-law within your strata property, it is suggested to initiate a cordial and transparent conversation as a starting point and try to resolve the matter. Effective communication often proves beneficial in resolving issues. Whether your neighbour is disregarding parking regulations, causing disturbances, neglecting pets, or accommodating disruptive guests, express how their behaviour impacts both you and your fellow owners.

Ask for assistance from the strata manager or committee

If direct communication fails, ask the strata committee or strata manager for help. An impartial strata committee member can act as a mediator and can offer effective solutions and conflict-resolution strategies. The committee can also educate the violator on communal living principles and the repercussions of ignoring by-laws or regulations.

Collect evidence for breaches of by-laws

It is advisable to maintain a detailed record of the violations. This record should encompass essential information, such as the individuals involved, the nature of the breach, how it occurred, the timing and the duration. To bolster your case for potential future actions, gather supporting evidence through documents, photographs, or videos. This documented evidence can be pivotal in guiding subsequent steps.

Issue a notice to comply 

Despite all your efforts, if the individual continues to breach the same by-law, the owner corporation can furnish a formal notice to comply within a reasonable time, along with a copy of by-laws in question. If various by-laws have been breached, then another notice to comply should be given for each by-law. 

Dispute resolution

If the formal notice to comply with the by-law does not result in a response, the owners corporation has the option of seeking mediation through NSW Fair Trading. This entails convening both parties i.e. the occupier and property manager in the presence of an impartial mediator appointed by NSW Fair Trading for mediation to resolve the dispute. The mediator facilitates the identification of the specific issue, in this instance, the by-law breach, and guides each party in expressing their concerns constructively while exploring potential resolutions for addressing the breach. Before an owners corporation can apply for mediation, a strata committee meeting must be held to pass a resolution confirming the occurrence of the breach and gaining consent to proceed with the mediation application. 

File an application to NCAT

If mediation fails to yield a resolution, the owners corporation can make an application to the NSW Civil and Administrative Tribunal.

In essence, a proactive and structured approach to address the issue if someone continues to breach the by-law involves communication, involvement of strata professionals, documentation, formal notices, emergency protocols, and, if needed, legal recourse. By navigating this process diligently, strata communities can uphold their by-laws and foster a harmonious living environment.

Update your by-laws (if required)

In the case where the by-law that was allegedly breached is found by NCAT to be:

1. Harsh, oppressive, or unconscionable
2. Not addressing the issues arising properly
3. An old by-law that is not relevant for today’s time
4. Not in the best interest of owners and residents

then the strata committee must update the by-law. This is achieved through a special resolution followed by a registration of change within 6 months of the passing of the resolution as per section 141 of SSMA. 

How can our strata legal services help?

Drafting, updating, and dealing with by-law breaches within a Strata Scheme can become tiresome. Therefore, reaching out to our expert team of strata lawyers can guide you through amending, adding, or deleting by-laws to better serve your community’s needs. Our strata legal team has 50+ years of legal experience so reach out to us today for your free initial consultation.