In this podcast, Dan Toombs talks with Strata Lawyer, David Sachs about new developments in strata law in New South Wales.
In New South Wales, like other states of Australia, strata laws are constantly changing. In recent times, there’s been a few important decisions. And to learn a little bit more about the impact of those cases, I’m with David Sachs of Sachs Gerace Lawyers. David, what are those changes?
Yes, there are people often neglect when they’re thinking about strata law, be that there are decisions that come down from the Civil and Administrative Tribunal and its appeal panel that are very important about the way in which bylaws and the operation of the Strata Schemes Management Act are to be interpreted. And there’ve been two very important decisions of the appeal panel in recent months. The first deals with the validity of no pets bylaws, and the second deals with the tribunal’s power to award damages to lot owners who’ve been affected, by the way, in which an owner’s corporation has conducted its affairs.
I’ll tell you, there’s been a lot of newspaper reporting and lots of discussions about these no pets bylaws. But the importance of that decision goes way beyond just whether an owner’s corporation can make a bylaw to prevent owners having any pets whatsoever because the importance of that decision is that it deals with a provision in the Strata Schemes Management Act that says that an owner’s corporation cannot have a bylaw that is oppressive, unreasonable or unconscionable.
So, David, in the context of this, no pet by law, is is the new decision explicitly saying that no pet by-laws are now OK?
Yes, that’s what the appeal panel has said, that an owner’s corporation can make a by-law prohibiting pets in strata and that that will not of itself be harsh, unconscionable or oppressive. Right, because there been earlier decisions of the lower level of the tribunal where they’d said that a bylaw that purports to prohibit pets was itself, by its very nature, harsh, unconscionable or oppressive. The appeal panel said, no, that’s not the case. But then there’s more because I’m a particularly concerned pet owner living in the horizon building has decided to challenge the appeal panel’s decision.
And it’s taking this appeal to the Court of Appeal of the Supreme Court of New South Wales. So we will in due course if this appeal is ultimately pursued all the way. And I suspect it will if someone’s prepared to pay tens of thousands of dollars to protect their right to have a pet, we will in the next few months, maybe the next six to eight months, have a decision of the Court of Appeal that will expound on these issues about whether an owner’s corporation can prohibit pets and in particular, of broader interest.
To what extent the harsh, unconscionable and oppressive restriction applies restricts an owner’s corporation’s ability to make particular by laws that meet the needs of its particular owners.
So no doubt there’ll be owners, corporations out there that will be looking to amend their bylaws accordingly.
Yes, it’s a very touchy topic because whenever you get a group of people, there’ll be a range of views about the way in which noise should be managed, the way in which, you know, pet ownership should be managed. And in any community scheme, there’s always an element of majoritarianism where people who reach a certain threshold of votes are able to make decisions which are imposed on other people and other people who want to live in that community are bound to comply with them.
In a way, it’s the age-old story about how the law operates. When you put it impose it in a microcosm, like a strata community, then it can be very difficult and create a lot of conflict within strata. And these conflicts are often expressed in proceedings in the tribunal, the appeal panel and now the Court of Appeal. But it’s an expensive process and what it emphasises is how, you know, complicated and difficult strata law can be because it’s not just simply a matter of looking at a rule and applying it to a particular circumstance, because those circumstances can be pretty broad-ranging.
But look, there was another decision of the appeal panel that’s also very important, which is to do with when an honest corporation fails to repair and maintain the common property or doesn’t do that properly. And a lot owner suffers damage to their lot, which is not, you know, my rugs are wet and I’ve had to throw them out of my lounge, got ruined or the tiles have come off my bathroom floor. But where they’re using the property for investment and their tenant has demanded a reduction in rent or their tenant has moved out and they find that the unit is on rentable.
And they say that as a consequence of the owner’s corporation’s failure to repair and maintain, they’ve suffered financial loss. Now, unfortunately, unfortunately, for people who like the law to move in a logical and sensible way, the appeal panel has said the tribunal, whilst it can order in owners corporation to repair common property, whilst it can order an owners corporation to repair consequential damage to lost property and owners, the tribunal cannot order an owners corporation to pay monetary compensation to a lot owner who has, you know, suffered damage as a result of the very thing that has caused damage to bits of property.
It’s a ridiculous situation. It’s a gap in the law, but it is what we’re faced with today. There’d been earlier decisions of the tribunal that have said it could award damages. And now there’s a serious decision of the appeal panel. By serious, I mean, because the president of the appeal panel, the president of the tribunal, who is a Supreme Court judge, has said it doesn’t. Now, that case itself is also going to the court of appeal.
So I imagine before the end of the year, we’ll have another definitive decision by it on whether on what the jurisdiction of the tribunal is about, awarding damages. It seems illogical.
I mean, how do other states of Australia deal with its. Well, everybody, unfortunately, one of the complications of our federation is that every state deals with strata law in a slightly different way. And so in Queensland, they’ve got their own particular rules. In Victoria, they’ve got different rules. Again, in the act, they’ve got different rules. And whilst sometimes we can be assisted, by the way, in which other states operate, the reality is their laws being different.
They’re not necessarily translatable into New South Wales.
You need to be a real specialist in this area to be not only up with the way in which our act operates but the way in which our civil and Administrative Tribunal deals with the particular New South Wales legislation.
David, just shifting gears a little bit, COVID-19, how is it impacting on, you know, strata schemes currently? I mean, I know there’s been a whole lot of conjecture and a lot of discussion in legislative updates. What’s the current state of play?
Well, there was I think that was a very important decision that was made by the New South Wales parliament, which removed the roadblock that prevented owners, corporations who had not previously adopted an electronic or alternative means of voting in meetings from being able to conduct their normal business. There were owners, corporations that have been cut short because they hadn’t sort of anticipated the impossibility of holding a meeting and therefore, for many months had gone by.
They couldn’t raise levies. They couldn’t make important decisions. The parliament has stepped in now and amended the regulations to the Strata Schemes Management Act and then have allowed all owners, corporations to be able to conduct their meetings electronically or by voting by paper beforehand. People can participate in meetings, by video link or by telephone or sending their votes by email. And that’s a great relief, particularly for larger schemes that really can’t, you know, convene without breaching social distancing regulations.
And it just enables strata schemes who just need to get on with their day to day lives and operate in an efficient way to keep doing that without being blocked by, you know, a legal obstacle and the fear of making decisions, invalid meetings.
Yeah, it just makes sense, doesn’t it? Indeed, I’d like to see more of it, we’ve had this Strata Schemes Management Act for about, you know, three years or so now and a lot of the wrinkles have been identified. Amending legislation is a complicated process. Often you move one part and you don’t realize what other parts move. But it probably would be a good opportunity now for the parliament to do a mini-review of the act and fix up some of the wrinkles.
Some of the things that I’ve spoken about today, for example, like whether the parliament wants the tribunal to have the power to award damages, that might be a good idea to amend the act to make that very clear. Which case problem solved.
It’s a dynamically changing area of law, isn’t it? I mean, when you look at other, you know, facets of legal practice, they’re a little bit more slow-moving family law or otherwise. But strata, there’s just so much going on that I suppose the risk is, is that if you were needing help in this regard, you need to make sure that the legal help you get has got the smarts. Exactly, one of the particular features of working in the strata industry and working in strata law is that everybody’s different and they’re all people problems and not everybody’s problems or issues or conflict or dispute or whatever is the same, because they’re all different people living in a different building, in a different environment, with a different situation.
And you know, what people need when they’re trying to match that into the way the law works is to get some realistic and straightforward advice about how the law applies to their particular circumstances and what the pros and cons of following a particular path are and what the risks and costs of doing that are. I mean, that’s exactly what lawyers do. Sometimes we can provide a very clear answer, but often we can provide very clear guidance to people about how they want to deal with their problems and more particularly how they want to resolve their problems.
Looking back on those cases, when you see two cases going to the Court of Appeal than it’s a failure. So if people are disputing things about pets and damages to the extent where they’re running a full hearing in the tribunal, a full hearing in the appeal panel. Yeah, and now they’re going to run a full hearing in the Court of Appeal. That’s very expensive litigation and it’s a failure of people being able to resolve their problems.