Do you want to renovate your unit but your proposed exclusive use by-law has been refused by the Owners Corporation? Or, do you believe that the terms of a works by-law that has been made are unreasonable? In either case you may be able to make an application to the NSW Civil & Administrative Tribunal (NCAT) for Strata Schemes Adjudicator’s orders under section 158 of the Strata Schemes Management Act 1996 (NSW) (the Act) for the making of the proposed exclusive use by-law or the repeal or amendment of an existing exclusive use by-law.
The key consideration in the first instance is whether the owners corporation has unreasonably refused to make the exclusive use by-law and in the second whether the terms of the by-law providing for maintenance and upkeep of the affected common property are unjust. A related type of application under section 158 can be made if a lot owner has unreasonably refused to consent to the terms of a proposed exclusive by-law or has unreasonably refused to consent to the amendment or repeal of an existing exclusive use by-law.
The purpose of a section 158 application is to ensure so far as possible in a strata scheme that the interests of all lot owners, including the lot owner wishing to do works or having the benefit of an existing exclusive use, and the owners corporation are protected. Why is this important? In a recent matter, one of our clients, a long term owner in the strata scheme wanted to renovate his lot obtain exclusive use of the common property roof space directly above his lot to add an attic room to make room for a growing family. The simple majority of lot owners supported our client. However, a special resolution was required and three investor owners holding a just over 25% of the unit entitlements blocked the motion for an exclusive use by-law that would have authorised our client’s planned renovations. In this case our client had offered to pay a significant sum of money to the Owners Corporation by way of compensation for the use of the unused roof space.
As the motion failed to pass our client would have, without section 158 of the Act, been without recourse and been unable to conduct the works. As it was with our assistance they obtained orders that the proposed by-law be made. NCAT, in considering an application under section 158 must consider the interests of all owners in the use and enjoyment of their lots and the common property and also the rights and reasonable expectations of the lot owner who anticipates a benefit from the proposed by-law (or in the case of an existing by-law derives a benefit from it). In this case it was in the interests of all lot owners and the owners corporation for the by-law to be made.
A section 158 application can be an invaluable second chance to have their proposed by-law made or an existing by-law amended or repealed through an objective third party making a determination. It is a tool for ensuring fairness within divided schemes. Before making an application we strongly recommend that you seek legal advice.
Kerin Benson Lawyers
Author: Allison Benson
Office: Sydney & Newcastle
Date: 14 October 2014