Introduction

The Supreme Court has confirmed that an owners corporation and NCAT can grant an owner retrospective approval of work or repairs done by the owner to the common property without the approval of the owners corporation.

However, the Court has also confirmed that there are some prerequisites that must be met before NCAT is able to grant retrospective approval for works done by an owner on common property without the approval of an owners corporation.

The Court has left open the question of whether an owner who does repairs to the common property which an owners corporation should have but did not perform can be compensated for the cost of those repairs.

Facts

Mr Colman owns a lot in a strata building in Pyrmont, Sydney.  Mr Colman and his wife sought the approval of their owners corporation to undertake alterations to a terrace on their lot which affected the common property.  Those alterations included removing and replacing tiles and waterproofing on the terrace. The Colmans alleged that work, or some of it, was necessary to repair defects in the common property which the owners corporation has failed or refused to fix.  Ultimately the Colmans undertook those works without first obtaining the permission of the owners corporation.

The Case

Mr Colman applied to NCAT for orders approving the works he did to his terrace on the grounds that the owners corporation had unreasonably withheld approval of those works and for the owners corporation to pay him damages.  Mr Colman’s application to NCAT was dismissed and an appeal to the Appeal Panel of NCAT was unsuccessful.  Mr Colman then appealed to the Supreme Court but was also unsuccessful.

Ruling

In its decision, the Supreme Court made some key findings about the operation of the Strata Schemes Management Act 2015 with respect to works done by owners that affect the common property.  In summary, the Supreme Court found that:

• Both an owners corporation and NCAT can give retrospective approval of works or repairs already carried out by an owner to common property directly affecting the owner’s lot, even if the owners corporation did not approve of those works before they were done;
• In the case of repairs to the common property undertaken by an owner without the consent of an owners corporation, the strata committee could retrospectively approve those repairs;
• If an owners corporation decides to retrospectively approve work that has been done to the common property by an owner after completion of the work, that approval must be given by special resolution if it involved major renovations;
• NCAT cannot grant retrospective approval for works or repairs that an owner has done to the common property without the permission of the owners corporation unless the owner has first sought the approval of the owners corporation for those works or repairs (even if that approval is sought after the works or repairs are done);
• Where an owner wants to do renovations that affect the common property, there is no reason why the owner cannot seek the owners corporation’s approval of those works and agree to take on responsibility for the maintenance and upkeep of the works by way of a special resolution approving a single by-law that both authorises the works and makes the owner responsible for their maintenance and upkeep – separate special resolutions to approve the works and then to adopt a by-law for the works are not necessary;
• An owners corporation can be taken to unreasonably refuse to approve an owner’s request for consent to carry out works that affect common property, even if the owner’s application for approval has not been voted on at a general meeting, for example, where the application for approval is urgent but the strata committee or secretary refuse to convene a general meeting to consider the issue or decline to do so within a reasonable time or accidentally omit it from the agenda of the next general meeting – in those circumstances there would be a constructive refusal of consent even though no formal decision has been made by the owners corporation at a meeting to reject the owner’s application;
• A by-law cannot delegate to the strata committee power to approve major renovations undertaken by an owner;
• An owner cannot recover compensation from an owners corporation for the cost of repairs the owner does to the common property without the authority of the owners corporation or an order approving that work made by NCAT (either prospectively or retrospectively);
• The question of whether an owner who carried out repairs to the common property which an owners corporation fails to perform can recover compensation from the owners corporation for the cost of those repairs if they are approved by the owners corporation or NCAT remains open and previous cases which indicated that repair costs could not be recovered by the owner under the previous strata legislation do not necessarily shut the gate on recovery of those repair costs under the current legislation;
• There is no need for an owners corporation to pass a resolution at a general meeting to authorise itself to carry out repairs to the common property – the decision to perform the repairs can be made by the strata committee;

Conclusion

The Colman case provided the Supreme Court with an opportunity to clarify a number of grey areas of strata law.  In doing so, the Court has clarified the power for an owners corporation and NCAT to retrospectively approve of work that has been done by an owner to the common property and also clarified that in some circumstances, an owner’s proposal to carry out work to common property can be rejected by an owners corporation even if the proposal is not put to a vote at a meeting, for instance, where the owners corporation delays dealing with the proposal.

Case citation: Colman v The Owners – Strata Plan No. 61131 [2025] NSWSC 63

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

Back in 2018, NCAT decided that a landlord is not responsible for ensuring that his or her tenants comply with the by-laws that apply to a strata building.  That decision was confirmed by the Appeal Panel of NCAT in Feletti -v- Eales [2019] NSWCATAP 100.

Therefore, if a tenant is breaching a by-law, the owners corporation of the building is not normally entitled to take action against the landlord to require the landlord to ensure that his or her tenant complies with the by-law.

This means that the owners corporation needs to take action against the tenant instead of the landlord which it may not want to do because tenants come and go and it can be difficult to enforce NCAT orders against them.

How to Make Landlords Accountable for Tenants in Strata?

There is, however, a solution to the problem.

• An owners corporation can make a by-law that requires landlords to ensure that their tenants comply with the by-laws.
• That by-law will give the owners corporation the right to take action against a landlord when his or her tenants breach the by-laws.
• The by-law goes one step further and will also allow an owners corporation to take action against both landlords and tenants whose guests and invitees breach the by-laws.

Tenancy Laws are Changing in NSW in 2025

More recently the NSW Government has committed to ending ‘no grounds’ evictions. This means that the landlord will need a valid reason to end a tenancy, making it even more challenging for owners corporations if they’re a bad tenant – new laws are expected to be passed in 2025.

It’s now even more important that strata schemes consider introducing the following by-law to ensure a thriving and a well-run scheme.

We have drafted a by-law and a number of strata managers have introduced the by-law into the strata schemes they manage.

We expect that the by-law will prove very useful for owners corporations who introduce it because it will allow those owners corporations to take action against landlords whose tenants are breaching the by-laws.

ORDER YOUR BY-LAW NOW: ENFORCE LANDLORDS TO BE RESPONSIBLE FOR THEIR TENANTS

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

Adrian Mueller talks with Nikki Jovicic, LookUpStrata about the owners corporation’s responsibility to remedy water leaks and defects in NSW strata buildings.

Recent heavy rainfall across NSW has unfortunately led to a surge in water leaks and defects within strata buildings. These leaks can damage both common property and lot property, causing significant frustration and financial burden for apartment owners. As a result, disputes between owners and their owners corporation have become more frequent.

Understanding the Owners Corporation’s Responsibility

The Strata Schemes Management Act 2015 (NSW) clearly outlines the owners corporation’s duty to maintain and repair common property. This includes:

• Maintaining common areas: Roofs, external walls, plumbing systems, balconies, stairwells, and any other areas designated as common property in the strata scheme.
• Keeping them in a good state of repair: This means addressing any issues that could compromise the structural integrity, safety, or functionality of the common property.
• Renewing or replacing common property fixtures and fittings: Pipes, waterproofing membranes, sealant around windows, and other elements that naturally deteriorate over time.

Strict Liability and the Duty to Repair

The Act imposes a strict liability on the owners corporation for repairs. This means the owners corporation is responsible for fixing defects in the common property, regardless of cause. Even if the leak originates from faulty original construction or unforeseen circumstances, the owners corporation must address the issue.

This strict liability eliminates the option for the owners corporation to simply deny responsibility for repairs. Delays in fixing leaks, passing resolutions to avoid repairs, or claiming lack of funds are not valid excuses.

Remedies available to Lot Owners when an Owners Corporation Fails to Act

If your apartment suffers damage from water leaks or defects originating in the common property, and the owners corporation fails to take action, you have several options:

• Apply to NCAT (New South Wales Civil and Administrative Tribunal): You can file an application with NCAT seeking an order that compels the owners corporation to undertake the necessary repairs.
• Claim Damages: You can pursue compensation for losses incurred due to the water leak. This may include the cost of repairs to your unit, the replacement of damaged belongings, or lost rental income if you were unable to rent out your unit while repairs were ongoing.
• Administrator Appointment: In extreme cases, NCAT can appoint someone to manage the owners corporation and organise repairs. The compulsory strata manager will take control of the owners corporations affairs and arrange for the repairs to be completed.

Making a Strong Claim for Water Leaks and Defects as a Lot Owner

To maximise your chances of a successful claim, it’s crucial to have a well-documented case. You should:

• Verify Ownership: Ensure you are the current owner of the affected unit at the time of the claim.
• Identify the Source: Identify the specific defects in the common property causing the water leaks. This often involves obtaining a professional inspection report from a qualified specialist.
• Scope of Works: Outline the necessary repairs in a scope of works document. This document should be based on the expert’s recommendations and clearly define the repairs needed to address the leak and prevent future occurrences.
• Proof of Losses: Gather evidence to substantiate your financial losses. Receipts for repairs to your unit, damaged furniture replacement costs, and rental agreements proving lost income are all valuable documents.
• Timely Action: Don’t delay! File your claim with NCAT within two years of becoming aware of the water leaks, defects and the resulting damage.

The strict liability makes it difficult for owners corporations to argue they are not responsible for repairs.

Adrian Mueller’s final thoughts for those owners corporations still avoiding their responsibility, at the end of the session: “that’s the law, like it or not…… sometimes you just have to suck it up”.

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

The Scenario

Mr Smith owns a residential lot in a strata building in Sydney.  The floor tiles in Mr Smith’s bathroom have cracked and are damaged beyond repair.  The building was constructed 30 years ago so matching replacement tiles cannot be found.  Is Mr Smith entitled to insist on the owners corporation re-tiling his whole bathroom so that the bathroom tiles have a uniform finish?  In this article we explore the answer to that question.

The Law

An owners corporation has a statutory duty to properly maintain and keep in good repair the common property and, where necessary to renew or replace any fixtures or fittings that form part of the common property under section 106 of the Strata Schemes Management Act 2015.

This duty requires the owners corporation to replace an item of common property when it is reasonably necessary to do so because, for example, the item has been damaged beyond repair: Glenquarry Park Investments Pty Ltd v Hegyesi [2019] NSWSC425.

So what happens when tiles on the floor or a wall of a bathroom that form part of the common property are damaged beyond repair but matching tiles cannot be found.  Can the owners corporation just replace the damaged tiles doing the best it can?  Or does the owners corporation have to re-tile the entire bathroom to ensure a uniform tiled finish?

Replacing Damaged Tiles

Where tiles are damaged beyond repair and matching tiles cannot be sourced, the duty of the owners corporation is to use replacement tiles that are substantially similar in appearance, characteristics, quality and amenity to the existing tiles.  This can require the owners corporation to replace a larger section of tiles to achieve substantial similarity: Selkirk v The Owners – Strata Plan No. 2661 [2024] NSWCATAP 17.

However, this does not necessarily mean that, where matching tiles cannot be found, the owners corporation is responsible for re-tiling the entire bathroom.  There are a number of cases which make this clear.

The Cases

1. In Stolfa v Owners Strata Plan 4366 & ors [2010] NSWSC 1507 a lot owner did work which damaged five tiles on a bathroom wall in another lot. The owner of the damaged bathroom applied for an order that the other owner compensate her for the cost to re-tile the whole bathroom because matching tiles could not be found. The Court rejected that claim and was unpersuaded that such a course was reasonable, particularly in the absence of evidence establishing that a reasonably approximate matching tile, albeit not a precise match, was unachievable. The Court allowed an amount to cover the cost of re-tiling the damaged wall only.
2. In Petropoulos v CPD Holdings Pty Ltd t/as The Bathroom Exchange (No 2) [2018] NSWCATAP 233 a builder renovated a bathroom and an ensuite bathroom for a homeowner but built the shower recesses too small. The owner wanted the builder to re-tile the whole bathroom floor after enlarging the shower recesses because matching tiles could no longer be found and the owner was concerned that a patch repair would compromise the waterproofing membrane. NCAT’s Appeal Panel rejected the owner’s request and concluded that it was reasonable for the builder to attempt to match the tiles rather than completely re-tiling each bathroom. The builder was ordered to ensure that replacement tiles were of the same colour, dimensions and type as the original tiles, or if no identical replacement tiles were available, of a colour that most closely matched the original tiles.
3. In The Owners – Strata Plan No 74602 v Brookfield Australia Investments Ltd [2015] NSWSC 1916 an owners corporation sued a builder for defects. The owners corporation alleged that there were waterproofing defects in bathrooms due to incorrectly installed water stop angles as a result of which bathrooms needed to be completely re-tiled due to the difficulties in obtaining matching tiles, even though only a small number of tiles needed to be replaced. The Court concluded that this would amount to the complete demolition and reconstruction of the bathrooms which was unreasonable and unnecessary particularly as there was no evidence of water leakage from the bathrooms.
4. In SP 62930 v Kell & Rigby Holdings Pty Ltd [2010] NSWSC 612 an owners corporation sued a builder for various defects including waterproofing defects in bathrooms. The owners corporation asked the Court to order the builder to pay damages to cover the cost of re-tiling all of the bathrooms because matching tiles could not be found and owners were entitled to a uniform tiled finish in their bathrooms. The Court concluded that it would be unreasonable for an owner to insist on replacement of a large quantity of undamaged tiles at great cost if a close match could be found and installed in a place (such as an architectural break) where the joinder of the tiles would not be immediately obvious. The Court held that the floor tiles within the showers in the affected lots should be replaced, making use of an appropriate existing architectural break, and that it was not reasonable for the owners corporation to insist upon the complete re-tiling of the entirety of the bathrooms.

Analysis

These cases demonstrate that both NCAT and the Supreme Court have rejected claims for entire bathrooms to be re-tiled when a small section of tiles are damaged or defective and perfectly matching tiles cannot be found.

However, in general, the owners corporation will still need to ensure that the work it does to replace the damaged tiles achieves an acceptable aesthetic finish.  This may require the owners corporation to re-do more than just replace the damaged tiles.  It can require the owners corporation to replace, for example, one or more walls which contain damaged tiles or an entire shower recess by making use of appropriate architectural breaks.

Ultimately, each case turns on its own facts but it will often be the case that it will be unreasonable for an owner to insist on an owners corporation replacing a large quantity of undamaged tiles at great cost if a close match can be found to achieve an acceptable aesthetic finish.

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

Lot Owner Claims Damages of $850 Million!

Generally we use these  bulletins for educational purposes,  but it’s getting toward that time of the year when everything goes a little crazy in the world of strata title, and so today the emphasis is on providing you with sheer relief that your strata scheme is not tied up with the sort of case in which a decision was recently made by the Supreme Court of New South Wales, where a lot owner commenced proceedings against the owners corporation claiming damages of $850 million!

The Strata Dispute Lot Owner Vs Owners Corporation

The dispute, between the occupant of an apartment located in Sydney and the owners corporation,  began life as a tenancy dispute, but the occupant (tenant), having failed to enlist the support of the NSW Civil & Administrative Tribunal (NCAT),  brought proceedings in the Supreme Court of NSW seeking among other things damages of $850 million against the owners corporation! You can imagine the insurer’s claims manager when that came through…

Needless to say, the proceedings in the Supreme Court of NSW were, to use the words of the Supreme Court Judge dealing with the final version of the proceedings, “frivolous and vexatious” and an abuse of the process of the Court.  Notwithstanding this, the plaintiff lot occupant filed applications of various kinds in the proceedings, made scandalous allegations against the owners corporation’s legal representatives, court officials and even a judge of the Court.

At the heart of the lot occupant’s claim was the suggestion that the owners corporation had somehow been involved in a criminal conspiracy which allegedly caused the plaintiff loss and damage.

Finally, on the sixth application before the Court (some of those applications being interlocutory applications for stays, injunctions and applications for recusal of various judges) the entire application was dismissed and the lot occupant was ordered to pay the owners corporation’s legal costs on an indemnity basis.  This means that the owners corporation was entitled to recover from the lot occupant not only the normal (“party/party”) costs but almost all the legal costs it had expended in having to deal with this application.

Conclusion

So as we head towards the end of the year, and if you are experiencing stress due to the matters which your owners corporation has to deal with, just remember – at least you haven’t been served with a law suit for $850 million!

If you do have issues in your strata scheme JS Mueller & Co Strata Lawyers have the experience and ability to assist you in dealing with these issues, whether they are disputes relating to the operation of the committee, questions about property and renovations, dealing with adjoining land owners and more please contact us on the details below for further assistance.

Warwick van Ede I BEc LLM I Lawyer

Since 1990, Warwick has specialised in strata law, property law and litigation. Recognised for his expertise, he is also a NSW Law Society Accredited Specialist in Property Law. In 2021 he was selected to serve on the Property Law Committee of the Law Society  of NSW.  Profile I LinkedIn

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

Lot Owners who Breach By-laws

An owners corporation is able to take legal action in NCAT against an owner who breaches its by-laws.

There are typically two types of legal action the owners corporation can take against the owner.

First, the owners corporation can apply to NCAT for an order to require the owner to comply with the by-laws or to stop breaching them.  Second, the owners corporation can ask NCAT to impose a monetary penalty on the owner if the owner has breached a by-law after being given a notice to comply with the by-law.

However, what happens when an owners corporation seeks both an order to stop an owner breaching a by-law and a penalty in the same legal action?  Can NCAT do both at the same time?

A recent decision by NCAT’s Appeal Panel sheds light on that issue.

Introduction to By-law Breach Case

Tania Brown lives in a unit in a strata building in NSW.  Ms Brown keeps dogs in her unit.

The building is governed by a by-law which requires owners and occupiers of lots to obtain owners corporation approval to keep dogs in their units.  The owners corporation alleged that Ms Brown had not obtained any approval to keep her dogs and that her dogs barked and caused a nuisance to other residents.

On 3 December 2021, the owners corporation issued Ms Brown with two notices to comply with by-laws.

The first notice alleged that Ms Brown had breached the noise by-law by allowing her dogs to constantly bark which disturbed the peaceful enjoyment of other residents.

The second notice alleged that Ms Brown had breached the keeping of animals by-law by having 4 large dogs within her unit without the approval of the owners corporation.

Prior to those notices being issued, Ms Brown had agreed to remove the dogs by 1 December 2021 in a settlement agreement made at a mediation conducted by NSW Fair Trading.

By-law Breach Legal Action

The owners corporation alleged that Ms Brown did not remove the dogs contrary to the settlement agreement and had continued to breach the by-laws after it issued the two notices to comply against her.

Consequently, the owners corporation commenced legal action in NCAT against Ms Brown.  In that legal action the owners corporation sought an order for Ms Brown to remove her dogs and a further order that Ms Brown be penalised $1,100.00 for contravening the by-laws after the notices to comply were issued against her.

In July 2022, the NCAT case was listed for a hearing at which the owners corporation was successful and orders were made, by the consent of Ms Brown and the owners corporation, to require Ms Brown to pay an $1,100.00 penalty to the owners corporation and remove all but one dog from her unit.  The order imposing the penalty would not apply if Ms Brown removed the dogs by 19 July 2022.

The Appeal Against NCAT

Shortly afterwards, Ms Brown filed an appeal against the orders made by NCAT, even though she agreed to those orders being made.  Despite that, Ms Brown’s appeal was successful.

The orders made by NCAT were set aside and the case was sent back to NCAT for a further hearing.

A Mixed Bag?

During the course of the appeal, NCAT’s Appeal Panel considered whether it was possible for an owners corporation to seek in the same proceedings in NCAT both an order to require an owner to comply with a by-law (in this case by removing dogs from a unit) and a further order for a monetary penalty to be imposed on the owner.

The Appeal Panel concluded that this was not possible essentially for three reasons.

First, different procedural rules apply to a mixed application seeking general orders and the imposition of a penalty because, for example, the rules of evidence do not apply to an application for general orders but, in contrast, the rules of evidence do apply to proceedings for the imposition of a penalty.

The Appeal Panel considered those different rules indicated that the Legislature intended that separate proceedings would need to be brought by an owners corporation to seek general orders and the imposition of a penalty.

Second, the Appeal Panel held that procedural fairness could not be afforded to the parties in mixed proceedings where different rules of evidence applied and a party could claim civil penalty privilege when giving evidence in proceedings for the imposition of a penalty but doing so would disadvantage that party in proceedings seeking general orders for compliance with the by-law.

Third, the Appeal Panel noted that different appeal rights exist in relation to an application for general orders and an application for the imposition of a penalty.  General orders can be challenged by way of an internal appeal to NCAT’s Appeal Panel whereas an appeal against a penalty needs to be filed in a Court.

The Appeal Panel concluded that the Legislature did not intend that an owner would be required to lodge two appeals to different bodies to challenge general orders and penalties made against him or her in the same proceedings in NCAT.

It was for these reasons that the Appeal Panel ordered the owners corporation to start again in NCAT and to only seek a general order to require Ms Brown to remove all but one of her dogs, not a penalty.

Conclusion

The decision of the Appeal Panel means that an owners corporation can no longer file one application in NCAT seeking both orders to require an owner or occupier of a lot to comply with a by-law and for a penalty to be imposed on the owner or occupier.

Instead, the owners corporation will either need to decide whether it wants to seek general orders or a penalty and commence one set of proceedings to seek either remedy or alternatively file two separate applications in NCAT, one seeking general orders for compliance with the by-law and the other seeking the imposition of a penalty.

No doubt commencing two separate proceedings would add to the time, cost and complexity of the case and quite possibly render it commercial unviable for an owners corporation to seek both general orders and a penalty against an owner or occupier who breaches its by-laws.

Case Name: Brown v The Owners – Strata Plan No. 82527 [2022] NSWCATAP 328

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

Strata Lot Owner and Owners Corporation in Dispute

Is it legitimate for a lot owner to pressure an owners corporation not to sue her or defend legal action she takes against the owners corporation?  And what happens when the lot owner oversteps the mark?  Can the owner be held in contempt of court?  A recent NCAT case considered that very issue.

Background

There is an apartment building on Sydney’s lower North Shore which contains 6 lots.  For several years, the owners corporation and a lot owner have been in dispute about various matters.  The dispute culminated in proceedings being commenced by both the owners corporation and the owner in NCAT against each other.  The owners corporation alleged that the owner engaged in conduct which was intended to intimidate, harass and deter the owners corporation from defending the proceedings she had commenced in NCAT against the owners corporation or to improperly induce a settlement of those proceedings.  The owners corporation applied to NCAT to have the owner referred to the Supreme Court for contempt or a finding that the owner was in contempt of NCAT and that she be punished and restrained from communicating with representatives of the owners corporation in certain ways.

Owner’s Conduct

The conduct of the owner which the owners corporation considered constituted contempt included threats of disciplinary action against the owners corporation’s solicitor made by the owner, communications by the owner which impugned the professional and mental capacities and motives of the owners corporation’s solicitor, contact by the owner with partners of the firm at which that solicitor worked concerning the conduct of the solicitor, contact by the owner with employers of strata committee members and references to family members of the strata committee members made by the owner in various communications.  The case of the owners corporation was that those communications by the owner impermissibly sought to pressure the owners corporation into deciding not to defend, or to settle, the proceedings in NCAT that the owner had commenced against the owners corporation.

The Law

A person can commit a contempt of court if he or she seeks to dissuade a litigant from prosecuting or defending proceedings by making unlawful threats, by abuse or by misrepresenting the nature of the litigation.  The law distinguishes between proper and improper pressure in punishing interference with litigants.  The question is whether the pressure sought to be applied in a particular case can be described as improper which, in turn, depends on all the circumstances of the case.  Improper pressure can interfere with the administration of justice and that is why it can constitute a contempt of court.

The Outcome

NCAT concluded that whilst some of the owner’s communications were inappropriate and included abusive emails that were puerile in their tone and content, the owners corporation did not prove that those communications caused the representatives of the owners corporation to be intimidated or caused the owners corporation to capitulate or settle the proceedings the owner had commenced against it.  In other words, even though the owner may have engaged in conduct which was intended to intimidate the owners corporation or its solicitor to discourage them from defending the proceedings, the evidence did not establish that the owner had been successful in doing so or had deterred, or was reasonably likely to deter, the owners corporation from defending the proceedings the owner had commenced against it or from prosecuting the proceedings it had commenced against the owner.  Consequently, NCAT concluded that it had not been established that the owner committed a contempt and therefore refused to refer the owner to the Supreme Court.

Anything Else?

The NCAT case contains an interesting, albeit brief, discussion of the consequences for an owner who sends threatening, rude or offensive communications to representatives of an owners corporation.  NCAT concluded that the owner’s communications may expose her to the risk of defamation proceedings and observed that communications which attempt to threaten, intimidate or influence witnesses are unlawful under the Crimes Act 1900 and that use of telecommunications devices, such as emails, that threaten or harass any person also constitutes criminal conduct under the Crimes Legislation Amendment (Telecommunications Offences and other Measures) Act (No. 2) 2004.  That indicates that representatives of the owners corporation who receive abusive, rude and offensive communications from an owner are not without remedy.

Case: The Owners – Strata Plan No. 38308 v Gelder (No. 2) [2023] NSWCATEN 7.

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

There are more than 85,000 strata schemes in NSW with approximately one in seven NSW residents living in strata apartments and it’s estimated by 2040 this will grow by 50 percent in Greater Sydney!

So, it’s no suprise that the number of people living in strata applying to NCAT for orders to resolve strata disputes has significantly increased by 45% over the last 5 years.

Cases related to water leaks, delays in fixing leaks and claims for compensation for rental loss have played a major role in the growth of NCAT cases.

In this article we take a closer look at the responsibility of an owners corporation to repair common property water leak damage.

The Duty to Repair

Section 106 of the Strata Schemes Management Act 2015 (Act) imposes on an owners corporation a duty to:

(a) properly maintain and keep in a state of good and serviceable repair the common property;

(b) where necessary, renew or replace any fixtures or fittings comprised in the common property.

This duty requires an owners corporation to fix any defects in the common property that are allowing water to leak into a lot.

The Nature of the Duty to Repair

The duty of the owners corporation to maintain and repair common property has been considered in a number of cases.

In those cases, the Supreme Court and NCAT has said that the duty to repair common property:

(a) is compulsory;

(b) is absolute; and

(c) is not a duty to use reasonable care to maintain and repair common property or to take reasonable steps to do so but a strict duty to maintain and keep in repair.

This means that an owners corporation cannot delay any repairs that need to be carried out to fix defects in the common property that are causing water to leak into a lot.  Even if it is impossible to find contractors who are available to repair those defects, that does not provide an owners corporation with a lawful excuse for delaying any necessary repairs to common property.

Other Aspects of The Duty to Repair

There are other aspects of the duty to repair common property that are often overlooked particularly in the case of new buildings or where a tenant damages common property.

The Supreme Court and NCAT have held that the duty to repair common property:

(a) extends to require the remediation of defects in the original construction of the building;

(b) must still be fulfilled even if the owners corporation did not cause the damage to the common property which needs to be repaired.

This means that, in general, an owners corporation cannot blame an original builder or developer for defects in the common property and refuse to fix them.  However, if the owners corporation takes legal action against a builder or developer in respect of defects in the original construction of the common property, then the owners corporation can put on hold its obligation to repair common property defects.

Further, the cases say that even if a person damages the common property, in general, the owners corporation must still repair that damage, even though it may have a right to recover the cost of that repair from the offender.  Alternatively, under section 132 of the Act, the owners corporation can apply to NCAT for an order to require an owner or occupier to repair damage to the common property caused by them.  It appears that if the owners corporation takes legal action against an owner or occupier in NCAT to obtain that order, that allows the owners corporation to put on hold its duty to repair the damage.

Anything Else?

The duty to repair the common property also requires the owners corporation to carry out repairs which are not for the benefit of the majority of owners.  Indeed, the owners corporation is obliged to carry out repairs to the common property that only benefit a single owner.  This means that an owners corporation cannot refuse to repair a leaking window on common property on the basis that the leak only affects one lot.

Is there an Escape Route?

There are generally two ways for an owners corporation to relieve itself from its duty to repair common property (apart from the ways we have discussed above).

First, an owners corporation can pass a special resolution at a general meeting to determine that it is inappropriate to repair a particular item of common property.  This can be done under section 106(3) of the Act but only if the decision will not affect the safety of the building or detract from the building’s appearance.

Second, an owners corporation can make a common property rights by-law that transfers its responsibility for the repair of a particular item of common property to one or more owners.  The by-law needs to be approved by a special resolution at a general meeting.  However, the by-law also needs to be approved by the owners who will be responsible for repairing the item of common property under the by-law.  Often it proves difficult to obtain the consent of those owners.

What about Compensation?

Inclement weather can cause a substantial increase in claims for compensation being made by owners against owners corporations who have failed to repair defects that have allowed water to leak into and cause damage to lot property.  Typically, those claims are made by investor owners for rental loss when the damage to their lots become so severe that the lots are uninhabitable.  But compensation claims can also cover alternate accommodation expenses if an owner occupier is forced to move out of a lot due to damage caused by water ingress, the costs an owner incurs cleaning and repairing lot property (e.g. replacing saturated carpet), experts’ fees and legal costs.  The liability of an owners corporation to pay compensation to an owner is a strict one.

This can make it difficult for owners corporations to defend compensation claims that are made by owners as a result of common property defects that allow water to leak into and damage lot property. Indeed, one Court has remarked that this puts an owners corporation into the position of an insurer.

Conclusion

Even though it may be difficult to find contractors who are able to repair common property defects, that does not provide an owners corporation with a lawful excuse for delaying essential repairs and maintenance.  The duty to repair is a strict one and there are limited exceptions to that rule.  This emphasizes the importance of proactive and ongoing building maintenance to help avoid the problems that many owners corporations are now encountering.

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

Does an owners corporation have to enforce its by-laws?  If an owners corporation decides to ignore breaches of its by-laws, can NCAT force the owners corporation to take action and enforce its by-laws?  A recent NCAT case provides the answer to these questions.

Introduction

Almost every strata building is governed by a set of by-laws. Those by-laws set out rules that regulate behaviour, noise, the keeping of pets and, among other things, the performance of renovations.  The by-laws are binding on the owners corporation and the owners and occupiers of the lots.  An owners corporation has the power to enforce the by-laws if they are breached.  For example, an owners corporation can issue an owner or occupier of a lot with a notice to comply with a by-law or apply to NCAT for an order to require the owner or occupier to obey a by-law.  But what happens when an owners corporation decides to turn a blind eye to a breach of a by-law committed by an owner?  Can the owners corporation be forced to enforce the by-law against the culprit?  If so, by whom?  A recent NCAT case reveals the answers to these questions.

The Case

Suzanne Lyon owns a lot in a residential strata scheme in Wollstonecraft, Sydney.  In August 2020, the owners corporation created a common property rights by-law to give the owner of the lot beneath Ms Lyon’s lot, Mr Swanson, the right to build a pergola over his rear courtyard.  Subsequently, Mr Swanson built the pergola, but Ms Lyon claimed that the pergola did not comply with the by-law because it was too high.  The by-law had permitted the pergola to be 2.7m above the concrete floor of the courtyard but it was built about 3.21m above that concrete floor.  Ms Lyon wanted the pergola to be removed or modified but the owners corporation was not prepared to force Mr Swanson to change the pergola.  For that reason, Ms Lyon sued the owners corporation in NCAT and sought orders to require the owners corporation to remove Mr Swanson’s pergola or enforce the common property rights by-law by requiring the pergola to comply with it.

The Outcome

Ms Lyon’s claim was partially successful.  NCAT agreed with Ms Lyon that the pergola was too high and was not built in accordance with the by-law.  NCAT then considered whether it had power to make an order to force the owners corporation to enforce the by-law and require Mr Swanson to comply with it by changing the height of the pergola.  NCAT concluded that it did have that power because it could make an order, on the request of an owner, to settle a complaint or dispute about the failure of an owners corporation to exercise its functions including its power to enforce a by-law.  NCAT held that there would be a sufficient basis to make an order where an owners corporation has a discretion to exercise a function (such as its discretionary power to enforce a by-law) but decides not to do so.  NCAT considered that there was little point in the strata legislation creating a mechanism for an owners corporation to pass a common property rights by-law merely to have that by-law flouted and for the owners corporation to fail to act in the face of complaints from other owners and legal advice it had received.  Ultimately, NCAT concluded that the owners corporation’s failure to manage Mr Swanson’s non compliance with the by-law, or to make any attempt to require him to comply with the by-law, meant that an order should be made requiring the owners corporation to exercise its functions to administer the strata scheme for the benefit of the owners and in accordance with the by-laws.

The Orders

For those reasons, NCAT ordered the owners corporation to take all necessary steps to require Mr Swanson to comply with the by-law by requiring him to reduce the height of the pergola to 2.7m above the concrete surface of his courtyard.  However, NCAT gave the owners corporation 6 months to comply with that order to allow Mr Swanson sufficient time to apply to the owners corporation for approval to amend the by-law to permit the pergola to remain at a height of 3.21m above the courtyard floor and for that amendment to the by-law to be approved by the owners corporation.

Analysis

This case is one of the first times that NCAT has made an order to compel an owners corporation to enforce its by-laws.  The decision does break new ground because it was previously thought that because the Strata Schemes Management Act 2015 does not explicitly require an owners corporation to enforce its by-laws but rather gives an owners corporation a discretion to do so, it was not possible for NCAT to force an owners corporation to require owners and occupiers to comply with its by-laws.  The order made in the case begs the question: What does the owners corporation need to do to take “all necessary steps” to require an owner to comply with a by-law?  Does that require the owners corporation to issue a notice to comply with the by-law against the owner?  Or does it require the owners corporation to do more and, if necessary, take legal action against the owner to force him or her to comply with the by-law?  And what if the owners corporation is successful in that legal action, but the owner ignores orders that are made to require him or her to comply with the by-law?  What is the owners corporation required to do then?  It remains to be seen whether those questions will need to be answered by NCAT in the future.

Conclusion

The case sends a message that owners and occupiers of lots who are affected by breaches of the by-laws committed by other owners and occupiers are not helpless.  They can apply to NCAT for orders to force their owners corporation to enforce the by-laws against those in breach of them.  It remains to be seen whether the decision in Lyon v The Owners – Strata Plan No. 11045 [2023] NSWCATCD 31 will be followed in future cases.

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

Common Property and Water Leaks

NSW has received a significant amount of rainfall over the last 18 months which has led to an increase in the number of claims made by lot owners against owners corporations in regards to common property and water leaks.

These claims can be challenging and difficult for an owners corporation to defend but a recent decision by the NSW Court of Appeal provides a glimmer of hope.

Here we share the case… A Glimmer of Hope for Owners Corporations

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.