Can a by-law make some by not all lot owners responsible for common property costs? And can the Tribunal make orders requiring an owners corporation repay contributions? The Appeal Panel in The Owners – Strata Plan No 76830 v Byron Moon Pty Limited  NSWCATAP 186 recently answered these questions.
The scheme had 30 lots, 27 of which were residential. The respondents owned two of the three non-residential lots. The hot water for 22 of the residential lots was supplied out of three hot water systems located on the common property. The common property hot water systems were connected to the common property electricity supply meaning that effectively all 30 of the lots in the scheme were paying for the electricity to heat water for 22 of the lots.
The respondents owned lots that were not serviced by the common property hot water systems. They raised the issue with the owners corporation requesting that the electricity for these tanks be paid for by the lots that used them. After an investigation, the owners corporation on the 25 October 2019 passed a by-law making lots 1 to 22 responsible for payment of all electricity metered charges for the hot water system located on common property which serviced those lots effective from 1 May 2019.
The respondents then made a claim in NCAT for repayment for approximately $18,000 which was the amount of their contributions that had been used to pay for the hot water systems. They were successful with the Tribunal making orders requiring the monies be repaid however the owners corporation appealed.
The Appeal Panel on 7 September 2020 held that the Strata Schemes Management Act 2015 (NSW) required (with two exceptions in sections 82 & 83) the owners corporation to levy contributions on all lot owners in accordance with their respective unit entitlements. As such, the owners corporation had to levy all lot owners, not just the 22 lot owners using the common property hot water system, for the past costs of the electricity. It also found that section 87 of the Act “did not in its terms permit any differential treatment of any individual lot owner by reference to the amount of contributions” and that the Act only allowed orders for an aggregate amount to be varied.
This Appeal Panel followed the decision in The Owners Strata Plan No 74835 v Pullicin; The Owners Strata Plan No 80412 v Vickery  NSWCATAP 5 and held that as there was no section of the Act that gave the Tribunal the power to make such an order, the decision making power of the Tribunal under section 232 was not enlivened. Therefore, the Tribunal had no power to make an order requiring monies to be repaid by the owners corporation and the appeal was upheld with the repayment orders quashed.
Interestingly, in respect of the by-law that was passed on 25 October 2019, the Appeal Panel considered that the terms of the by-law meant that the owners corporation was not responsible for the electricity costs for the hot water systems (the by-law made lots 1 – 22 responsible) and therefore the electricity charges for the hot water system no longer become monies needed to be considered as either actual or anticipated expenditure for recurrent expenses and were no longer required to be included within the amounts levied for the administrative fund. As such, the by-law was not inconsistent with any part of the action and in breach of section 136 (2).
Author: Allison Benson