When an Owners Corporation Fails to Comply with a Tribunal Order

Introduction

When a strata owners corporation fails to comply with a legally binding Tribunal order, lot owners can face ongoing issues with common property and unresolved disputes. The consequences for non-compliance can be significant, including financial penalties and legal costs, as demonstrated in recent Tribunal decisions.

This guide explains the legal obligations of a strata owners corporation, the steps lot owners can take to enforce Tribunal orders, and highlights the importance of proactive action through a case study involving PBL Law Group’s successful representation in Westbury v The Owners – Strata Plan No 64061 [2021] NSWCATEN 3.

Interactive Tool: See If You Qualify for Strata Penalty Action

The Legal Duty of a Strata Owners Corporation to Comply

NCAT Orders Are Legally Binding on Your Strata Scheme

Orders issued by the NSW Civil and Administrative Tribunal (NCAT) are not mere suggestions; they are legally binding directives that your strata scheme must follow. Under the Civil and Administrative Tribunal Act 2013 (NSW), a person or entity, including an Owners Corporation, must not contravene a Tribunal order without a “reasonable excuse.”

This legal obligation means that once an order is made, the Owners Corporation is required to comply with its terms. As established in legal proceedings, a party bound by a Tribunal order must adhere to it.

If challenges arise that may cause delays or difficulties, the corporation has a duty to:

• Take proactive steps to address them
• Avoid simply ignoring the directive

The Core Duty to Maintain Common Property in Your Strata Scheme

Many disputes that result in NCAT orders stem from an Owners Corporation’s failure to fulfil its most fundamental responsibility: the duty to repair and maintain common property. This core obligation is set out in Section 106 of the Strata Schemes Management Act 2015 (NSW), which imposes a strict requirement on every strata scheme.

For instance, a lot owner might initiate Tribunal proceedings due to persistent water ingress caused by the Owners Corporation’s failure to properly maintain the common property waterproofing. The resulting NCAT order to carry out rectification works is a direct consequence of the strata scheme not meeting its primary statutory duty.

Case Study: PBL Law Group’s Success in Westbury v The Owners Strata Plan No 64061

Background: The Initial Strata Order for Rectification Works

The case of Westbury v The Owners – Strata Plan No 64061 [2021] NSWCATEN 3 began with a common strata dispute over property maintenance. The Westburys, represented by Alex Ilkin of PBL Law Group, were lot owners in a Wollongong strata scheme who had been dealing with persistent water ingress and drainage problems on their balcony for a significant time.

These issues stemmed from defects in the common property affecting their lot. After the initial legal proceedings, the NSW Civil and Administrative Tribunal (NCAT) ordered the Owners Corporation to carry out the necessary rectification works.

An amended order was made on 11 October 2019, which set a firm deadline for the completion of all repairs by 20 December 2019.

The Challenge: The Owners Corporation’s Failure & ‘Reasonable Excuse’ Defence

Although the Owners Corporation commenced some of the required work, it failed to complete the rectification by the Tribunal’s deadline. The project became complicated when it was determined that the original scope of works was insufficient to resolve the water issues permanently.

A new plan was required, which involved installing additional drainage. This new plan created a significant hurdle, as it required access to the garage spaces of two other lots within the strata scheme to install new pipework.

When the owners of those lots refused to grant access, the Owners Corporation ceased all work. Faced with penalty proceedings for non-compliance, the strata corporation argued that it had a “reasonable excuse” because its inability to gain access was a matter beyond its control.

PBL Law Group’s Winning Strategy Arguing Against Inaction

The legal strategy formulated by PBL Law Group focused on the Owners Corporation’s passive response to the access issue. The core of the argument was that simply stopping work and claiming a reasonable excuse was not enough to satisfy its legal obligations.

The Tribunal agreed that a party bound by an order must take proactive steps when faced with compliance difficulties.

PBL Law Group successfully argued that the Owners Corporation had failed to take appropriate action to manage the situation. The strata corporation could have, and should have, taken several steps, including:

• Making a formal application to the Tribunal for an extension of time to complete the works.
• Applying to the Tribunal for a stay of the orders, which would have temporarily paused the compliance deadline while it resolved the access dispute.
• Seeking other forms of relief from the Tribunal to address the unforeseen complications.

The Owners Corporation’s failure to pursue any of these available options demonstrated a lack of diligence, which ultimately dismantled its defence.

The Outcome: A Penalty & Costs Order Against the Strata Corporation

The Tribunal was persuaded by the arguments presented and rejected the Owners Corporation’s “reasonable excuse” defence. The failure to proactively seek a variation or stay of the orders was a critical factor in the decision.

As a result of the successful enforcement application, the Tribunal imposed a significant penalty of $6,600 on the Owners Corporation for its contravention of the order.

Furthermore, the Tribunal found that “special circumstances” warranted an award of costs, ordering the strata corporation to pay the Westburys’ legal costs associated with bringing the enforcement proceedings.

The Consequences of Non-Compliance for a Strata Scheme

Significant Financial Penalties

An owners corporation that fails to comply with a Tribunal order faces significant financial repercussions. Under Section 77 of the Civil and Administrative Tribunal Act 2013 (NSW), the Tribunal has the authority to impose a monetary penalty of up to $22,000 for a corporation that contravenes its orders without a reasonable excuse.

This power was demonstrated in the case of Westbury v The Owners – Strata Plan No 64061 [2021] NSWCATEN 3, where the Tribunal ordered the non-compliant strata scheme to pay a penalty of $6,600. The penalty reflected:

• the seriousness of the strata corporation’s failure to carry out the required rectification works
• its inaction in seeking a formal extension from the Tribunal

Liability for the Applicant’s Legal Costs

In addition to financial penalties, a non-compliant strata owners corporation may also be ordered to pay the legal costs incurred by the lot owner who brought the enforcement application.

While the standard rule in the Tribunal is that each party pays their own costs, an award can be made if “special circumstances” are established under Section 60 of the Civil and Administrative Tribunal Act 2013 (NSW).

In the Westbury case, the Tribunal determined that such special circumstances existed. It found that the owners corporation’s failure to comply with the orders necessitated the enforcement proceedings, and as a result, ordered the strata scheme to pay the Westburys’ legal costs on an ordinary basis.

Your Step-by-Step Guide to Enforcing a Strata Tribunal Order

Step 1 Obtain Consent from the Solicitor-General

Before you can formally ask the Tribunal to penalise your strata scheme for non-compliance, you must first obtain written consent from the Solicitor-General of New South Wales. This is a mandatory procedural requirement under Section 75 of the Civil and Administrative Tribunal Act 2013 (NSW).

This step is crucial because, without this official consent, any application for a penalty order will not be considered valid. As shown in Westbury v The Owners – Strata Plan No 64061 [2021] NSWCATEN 3, obtaining this consent allows a lot owner to be recognised as an authorised official who can properly commence civil penalty proceedings against the strata corporation.

Step 2 Apply to NCAT for a Penalty Order

Once you have secured the Solicitor-General’s consent, the next step is to file a formal application with the NSW Civil and Administrative Tribunal (NCAT). This application is made under Section 77 of the Civil and Administrative Tribunal Act 2013 (NSW), which empowers the Tribunal to impose a monetary penalty if it is satisfied that a person or entity has contravened one of its orders.

At the hearing, the Tribunal will undertake the following actions:

• review the evidence presented in support of the allegation
• determine whether a contravention occurred without a reasonable excuse
• decide on the appropriate penalty to impose on the strata owners corporation

What the Tribunal Considers When Imposing Strata Penalties

The Need for Deterrence in the Strata Community

When deciding on a penalty, the Tribunal considers the need for both specific and general deterrence. Penalties are intended to discourage the specific owners corporation from failing to comply with orders again.

More broadly, they serve as a warning to the entire strata community. The aim is to ensure that orders are taken seriously and that non-compliance is understood to have significant consequences, promoting better governance across all strata schemes.

The Impact of the Breach on the Lot Owner

The Tribunal carefully assesses the real-world impact of the non-compliance on the affected lot owner. Under Section 77(4)(c) of the Civil and Administrative Tribunal Act 2013 (NSW), any loss or damage sustained by the owner is a key consideration.

For instance, in the Westbury case, the Tribunal noted the owners had suffered an ongoing loss of use of their property. Their balcony was left unusable and prone to flooding for an extended period, which demonstrated the tangible harm caused by the strata corporation’s failure to act.

The Strata Owners Corporation’s Pattern of Behaviour

The Tribunal also examines whether the non-compliance is an isolated incident or part of a larger pattern of behaviour. Section 77(4)(d) of the Civil and Administrative Tribunal Act 2013 (NSW) allows the Tribunal to consider if the owners corporation has a history of failing to comply with orders.

In Westbury, the owners corporation had already failed to meet the deadline of the original rectification order before also breaching the amended one. This history demonstrated a pattern of non-compliance, which was a relevant factor in the decision to impose a penalty.

Conclusion

When a strata owners corporation fails to comply with a Tribunal order, they are breaching a binding legal duty, often stemming from their core obligation to maintain common property. Lot owners have a clear pathway to enforce these orders, which can result in significant financial penalties and adverse cost orders against a non-compliant strata scheme.

If your strata corporation is ignoring its obligations, it is crucial to act decisively to protect your rights and property. Contact the specialist strata dispute lawyers at PBL Law Group today for expert legal guidance and to learn how our proven expertise as strata lawyers can help you enforce Tribunal orders effectively.

Frequently Asked Questions