Resolving Strata Disputes: NCAT’s Power and Limitations Explained

2 min read

In recent times, the powers bestowed upon the NSW Civil and Administrative Tribunal (NCAT) to settle strata disputes have been the subject of much debate. Specifically, the question arises as to whether NCAT has jurisdiction over all strata disputes or only certain ones. In this article, PBL Law Group aims to help both Owners Corporations, strata managers and lot owners understand the limited situations NCAT has to exercise their powers in relation to a dispute before deciding to commence proceedings in the NSW Civil and Administrative Tribunal.

Table of Contents

What gives NCAT Power to make Orders in Strata Disputes?

Under the Strata Schemes Management Act 2015, NCAT possesses the power to issue orders for the resolution of complaints or disputes relating to the operation, administration, management, or exercise of functions of strata schemes and Owners Corporations. Specifically, section 232 of the Act gives NCAT power to “make an order to settle a complaint or dispute” about a whole range of issues. 

The precise extent of this power, however, remains somewhat unclear. For instance, does NCAT have the authority to intervene and make orders in any strata dispute?

The Cause of Action Determines NCAT’s Authority

The cause of action of an NCAT matter can arise from various legal sources, such as from:

  1. common law (e.g., negligence);
  2. a strata scheme’s by-laws; and
  3. statute, such as the Strata Schemes Management Act 2015 (e.g. a claim for breach of the statutory duty of an Owners Corporation to repair common property).

Generally, if an applicant fails to establish a valid cause of action to resolve their strata dispute in NCAT, the tribunal lacks the authority to issue orders to resolve that dispute. This crucial distinction implies that, for example, if an Owners Corporation lawfully decides to change the building’s colour or install a certain type of tiles in an outdoor area of the common property, NCAT cannot halt these actions solely based on the objections of a minority of owners who do not like the new building colour or the type of tile being used. Essentially, NCAT does not possess the power to review the merits of decisions made by Owners Corporations if the cause of action is arising from a substantive legal right or obligation.

Case Study: Quo Warranto Pty Ltd v Goodman [2022] NSWCATAP 315

The Appeal Panel of NCAT provided insights into these questions through its recent ruling in the Quo Warranto case. In this particular instance, the dispute revolved around whether the Strata Schemes Management Act 2015 gives NCAT Power to order the re-allocation of ‘unit entitlements’ of lot owners in a strata scheme. NCAT had originally re-allocated a strata scheme’s ‘unit entitlements’ based on an application from two of the lot owners who argued it was unfair the proportion of a $950,000 special levy they had to pay was disproportionately and unfairly excessive. NCAT’s re-allocation had the effect of reducing the two lot owners’ proportion of the special levy they had to contribute while increasing that of another lot owner (the “appellant”). Specifically, after the re-allocation, one of the lot owners (the “appellant”) had their ‘unit entitlement’ increase from 25% to 33%. This meant that instead of having to contribute $237,500 to the special levy, they had to contribute $313,500 which was an increase of $76,000.

The appellant appealed the NCAT’s decision in the New South Wales Civil and Administrative Tribunal’s Appeal Panel arguing that NCAT did not have powers to make such orders. The Appeals Panel sided with the appellant and found that while NCAT’s power to issue orders for strata dispute resolution is broad, it is not without limits. Crucially, the Appeals Panel found that NCAT’s could not make an order to settle a strata dispute, in this case by re-allocating unit entitlements where the party requesting for that order to be made failed to demonstrate a legally recognisable cause of action.

Implications and Benefits for Owners Corporations and Lot Owners

Consequently, the ruling in the above case clarified that if an individual who applies for an order from NCAT does not possess a legitimate legal claim or cause, NCAT has no power to issue orders to settle the strata dispute related to the dispute. This is crucial to note as it implies, for instance, if an Owners Corporation makes a legitimate decision to alter the colour of a strata building or place certain type of tiles in an external, common area, NCAT cannot halt the operations simply because a minority of lot owners oppose it.

Ultimately, Owners Corporations can rest assured that they can continue to make decisions in accordance with their obligations without having legitimate exercises of their authority challenged for non-legally recognisable causes of action. And for lot owners, it is critical to understand that NCAT does not have the power to resolve all strata disputes, specifically those where the dispute does not arise from a substantive legal right or obligation.

If you are a strata committee member or a lot owner seeking legal advice on a strata dispute, PBL Law Group’s experienced strata lawyers, including Supreme Court of NSW lawyer Alex Ilkin, can provide trusted and independent legal advice to help you resolve your legal dispute. 

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Picture of Authored By<br>Raea Khan

Authored By
Raea Khan

Director Lawyer, PBL Law Group

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Gail Whitford
PBL handled my late mothers estate, they were very obliging and patient with any and all questions that we had, thank you to David , Sharon and the other staff that we dealt with, everyone was so easy to talk to and friendly .David came to the home where my Mother was living and helped her to get her will in order, Sharon helped us through the process of executing her wishes when the time came even doing a house call which was so much easier, thank you all so much
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I have experienced an excellent service from PBL (especially from Anita) during the sale of my recent property on Central Coast, and during the purchase of our current property in Sydney. Throughout many challengers, especially with the sale, Anita presented her very professional and knowledgeable conveyancer, positively solving all obstacles. "Above and Beyond" Award going to Anita!!! :-)
Amanda Reitzin
The five-star reviews are well-deserved. I needed a motion and a bylaw drawn up for urgent repairs of my strata unit and the AGM was in two weeks' time. My solicitor was friendly, efficient, knew what documents to ask for, and had all the paperwork prepared well within the timeframe. She also took the time to run through all the legalese and the different possible scenarios with me to make sure I understood. I am so glad to have found this firm and I will not hesitate to use their services again in future if the need arises.
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Trace M
I am so grateful for Anita Bradley from PBL Law Group helped me with this property settlement, she has went above beyond to ensure I understand everything because of our deafness. I will recommended Anita or their team. Thank you so much for all the hard work you have done for us.
Tricia Wheatstone
For almost 18 months I have been a client of Alex Ilkin. Alex is very knowledgeable and professional and has consistently provided me with thorough, honest and well set out advice, including steering my case through appeal proceedings. He always worked for my best interests with integrity and compassion. I recommend Alex and his team at PBL.