The Strata Schemes Management Act 2015 (NSW) introduced an important limitation on strata by-laws in New South Wales, stating they cannot be “harsh, unconscionable or oppressive.” This provision aims to protect the rights of lot owners and occupiers from overly restrictive or unfair rules imposed by owners corporations. Since its introduction, this restriction has been tested in various legal challenges, leading to significant court decisions that help clarify its application.

This article examines the meaning of “harsh,” “unconscionable,” and “oppressive” within the context of strata by-laws. By reviewing recent case law, particularly concerning issues like pet ownership, cost recovery, and restrictions on how lots can be used, we will illustrate what factors determine a by-law’s validity. We will also outline the process for challenging a potentially invalid by-law, providing information to help residents understand and protect their rights within a strata scheme.

Understanding Key Definitions

What Makes a By-law Harsh

A by-law is considered “harsh” if it is unreasonably severe or stringent in its application. This means the by-law’s negative impact on a lot owner’s rights must be disproportionate to any benefit it provides to the owners corporation or other residents.

When evaluating harshness in the legal context of strata by-laws:

• The restriction must be excessively severe compared to its purpose
• The negative impact on owners must outweigh any benefits to the corporation
• The limitation on property rights must be unreasonably inflexible

For example, a by-law that completely bans any use of balconies for any purpose, even quiet enjoyment, could be considered harsh due to its inflexible and excessive restriction on a lot owner’s property rights.

What Makes a By-law Unconscionable

The term “unconscionable” refers to a by-law that is so unreasonable or unfair that it would be considered shocking to the conscience of a fair-minded person. This often involves by-laws that are excessively one-sided.

A by-law may be deemed unconscionable when it:

• Takes advantage of a lot owner’s lack of bargaining power
• Imposes unreasonable conditions without justification
• Creates terms that would shock a reasonable person’s sense of fairness

Consider a by-law that allows the owners corporation to enter a lot owner’s property for any reason, at any time, without notice. Such a by-law would likely be considered unconscionable due to its significant intrusion on a lot owner’s privacy and lack of reasonable justification.

What Makes a By-law Oppressive

A by-law is deemed “oppressive” if it is unjustly burdensome, imposes unreasonable restrictions, or unfairly restricts a lot owner’s use and enjoyment of their property. This often involves by-laws that go beyond what is reasonably necessary to manage the strata scheme.

Characteristics of oppressive by-laws include:

• Restrictions that are unjustifiably burdensome to owners
• Rules that infringe on fundamental property rights
• Limitations that exceed reasonable requirements for property management

For instance, a by-law that restricts a lot owner from having visitors after 7 pm, even for quiet gatherings, could be considered oppressive due to its unreasonable limitation on a lot owner’s ability to use their property.

Examples of Invalid Harsh, Unconscionable and Oppressive Strata By-laws from Recent Cases

Pet By-laws

The landmark case of Cooper v The Owners – Strata Plan No 58068 [2020] NSWCA 250 involved a strata by-law in New South Wales that imposed a complete ban on keeping animals on the property. The court ultimately ruled that this by-law was overly restrictive and did not adequately consider the rights of owners to enjoy their property.

This decision highlighted the importance of by-laws striking a balance between the interests of all residents. Furthermore, a by-law that restricts behaviour that doesn’t infringe on others’ property rights but adversely affects the owner’s rights is likely to be considered unreasonable and, therefore, unenforceable.

This doesn’t mean an owners corporation can’t regulate pet ownership. By-laws that set reasonable conditions on pet ownership are generally enforceable. Such conditions might include:

• Requiring owners to clean up after their pets
• Keeping pets under control in common areas
• Ensuring pets don’t create unreasonable noise or disturbance

The key is that any restrictions must be justified and not overly burdensome on pet owners.

Cost Recovery By-laws

Several recent cases have dealt with the issue of cost recovery by-laws, where an owners corporation attempts to recover legal or other costs from lot owners or occupiers without a clear process for review or challenge. In many of these cases, the courts have found such by-laws to be harsh, unconscionable, or oppressive.

The courts have rejected various forms of unreasonable cost recovery by-laws, including:

• By-laws that allowed the owners corporation to deactivate access devices for residents who breached a by-law
• By-laws that permit recovery of enforcement costs without requiring those costs to be reasonable
• By-laws that lack an opportunity for review or challenge of imposed costs

For example, in one case, a by-law allowed the owners corporation to deactivate access devices for residents who breached a by-law. The court found this to be an unreasonable restriction on property rights, as it removed a key property right without due process.

However, by-laws that allow for the reimbursement of fixed charges imposed on the owners corporation by a statutory authority, such as fire brigade call-out fees, are more likely to be upheld.

Cooking Restrictions

In the case of Franklin v The Owners—Strata Plan No. 87497 [2022] NSWCATCD 210, a by-law restricted cooking in lots that did not have cooking facilities originally installed, even though there were no council restrictions on cooking in those lots. The court found this by-law to be too broad and restrictive, as it unreasonably interfered with an occupier’s right to use their property for a common activity like cooking.

This case established several important principles regarding by-law restrictions:

• Blanket bans on common activities are unlikely to be enforceable
• Restrictions must consider the actual impact on other residents
• By-laws cannot unreasonably interfere with basic property rights

While by-laws can regulate activities within a strata scheme, they must balance the interests of all parties involved. The Franklin case demonstrates that overly restrictive rules that limit normal residential activities without proper justification will likely be invalidated.

What Makes a By-law Valid

Reasonable Restrictions

While the concept of what makes a by-law “harsh, unconscionable, or oppressive” might seem subjective, recent case law in NSW provides guidance on the types of restrictions considered reasonable and therefore valid. By-laws, while designed to regulate behaviour within a strata scheme for the benefit of all residents, must balance these regulations against the rights of individual lot owners.

For a by-law to be considered valid, any restrictions it imposes should aim to protect the peaceful enjoyment of the property for all residents. Reasonable by-laws typically:

• Regulate issues that directly impact the shared living environment
• Address matters necessary for harmonious community living
• Balance community needs with individual property rights

For instance, a by-law regulating noise levels during certain hours or requiring residents to dispose of garbage properly would likely be deemed reasonable. These types of by-laws address issues that directly impact the shared living environment and are generally accepted as necessary for harmonious community living.

Protecting Other Residents’ Rights

By-laws that focus on protecting the rights of other residents in the use and enjoyment of their lots are generally considered valid. This means that a by-law cannot unreasonably restrict one owner’s use of their property if it doesn’t impact others.

Examples of generally valid by-laws include those that:

• Prohibit playing musical instruments at high volumes during nighttime hours
• Restrict activities that create excessive noise affecting neighbouring lots
• Regulate behaviours that directly interfere with others’ peaceful enjoyment

However, a by-law attempting to dictate the interior decoration of a lot, such as the colour of curtains or type of flooring, would likely be considered unreasonable and therefore invalid, as long as these choices don’t impact other residents or the structural integrity of the building.

The key takeaway is that for a by-law to be considered valid, it must strike a balance between the interests of individual lot owners and the collective well-being of the strata community as a whole.

What You Can Do About Invalid By-laws

Challenging a By-law

If you believe a by-law in your strata scheme is harsh, unconscionable, or oppressive, you can challenge its validity through the NSW Civil and Administrative Tribunal (NCAT). This process involves presenting evidence and legal arguments to demonstrate why the by-law should be declared invalid.

To succeed in challenging a by-law, you need to prove that it falls under one or more of the following categories:

• Harsh: The by-law is excessively strict or severe in its application, imposing an unreasonable burden on lot owners or occupiers.
• Unconscionable: The by-law is unjust or unreasonable, going beyond what is considered acceptable in the context of strata living.
• Oppressive: The by-law unfairly restricts the rights or freedoms of lot owners or occupiers, creating an imbalance of power in favour of the owners corporation.

Seeking Legal Advice

Navigating the complexities of strata law and challenging a by-law can be daunting. Seeking legal advice from a specialist strata lawyer is highly recommended. A lawyer experienced in strata by-law disputes can provide invaluable assistance by:

• Assessing the Validity of Your Claim: They can analyse the by-law in question, considering relevant case law and legislation to determine the strength of your case.
• Gathering Evidence: A lawyer can guide you on the types of evidence needed to support your claim, such as witness statements, documentation, or expert reports.
• Representing You at NCAT: They can prepare and present your case effectively at NCAT, advocating for your rights and interests throughout the proceedings.

Conclusion

Understanding the nuances of strata by-laws, particularly those deemed harsh, unconscionable, or oppressive, is vital for residents in NSW strata schemes. Recent court decisions emphasise that by-laws must be reasonable and fair, striking a balance between regulating community living and respecting individual lot owners’ rights, especially concerning issues like pet ownership, cost recovery, and property usage.

If you are facing a potentially invalid by-law or require assistance navigating strata disputes, seeking expert legal advice is crucial. Contact PBL Law Group to speak with our experienced NSW strata lawyers who can provide clarity on your rights and guide you through the process of challenging unfair or oppressive by-laws.

Frequently Asked Questions