Owners Corporation eventually withdraws Claim against Lot Owner relating to claimed unauthorised works by Lot Owner

05/03/2020

Often we receive enquiries from Lot Owners where it appears that the Owners Corporation are taking a very hard line against a particular Lot Owner which is inconsistent with the approach adopted by the Owners Corporation generally throughout the strata building.

It is very difficult to obtain any Orders based on bad faith by the Owners Corporation however there are some circumstances where it can be obtained.  Other cases where the Lot Owner believes the Lot Owner is being bullied by the Owners Corporation can be resolved by ensuring compliance with the various Laws that bind the Owners Corporation and Lot Owners.  Such an approach is appropriate and can in many circumstances, defeat an over anxious Owners Corporation taking steps, which are on face value, inappropriate.

Recently in a matter in which we acted for the Lot Owner, there were suggestions by the Lot Owner and no denial by the Owners Corporation that the real issue was not one that was being litigated.

In August 2019 on an Ex-parte Application by the Owners Corporation (without the Lot Owner being aware of the Application or being informed and present at the Hearing) the New South Wales Civil and Administrative Tribunal (“NCAT”) made orders that the Lot Owner of a shop in a building which was leased to a tenant operating a business, refrain from undertaking works to the Common Property.  The Order was served directly on the tenant who was the occupant of the premises and person undertaking the works with a letter from the Solicitor for the Owners Corporation which sought that “all works” be immediately stopped. This was not an accurate statement having regard to the form of the Orders made by NCAT which orders were limited to Common Property Works.

We made submissions to NCAT and the Ex Parte Injunction was not continued as it inappropriate notwithstanding that the proceedings were not resolved.

In relation to various injunctions we refer to our further article as to requirements generally in relation to a party obtaining an Ex-Parte Injunction – see Strata Interim Order, Power and Obligations. 

Under the Strata Schemes Management Act 2015 (“SSM Act”) there are now different requirements in relation to different types of works being undertaken in connection with a Lot.  Some works require approval from the Owners Corporation by simple majority and some works require a special resolution and some works do not require any approval from the Owner Corporation.

The fundamental issue is whether there is any works being undertaken for which approval is required.  This often requires a very careful consideration of the exact works being undertaken.  Sections 108, 109, 110 and 111 of the SSM Act relate to Common Property and in particular to works undertaken by Lot Owners affecting the Common Property.  One can see that the different parameters apply depending on the type of the work being undertaken and the effect on the common property. 

Each Owners Corporation is bound by the SSM Act and associated regulations, the terms of the various By-Laws and notations on the register Strata Plan.  There can also be other documents or agreement between the parties which may create an estoppel or a basis for the Owners Corporation not obtaining an Injunction or an Order.

The Owners Corporation in this particular case obtained an “Expert” Engineer who prepared a report indicating that much of the work that had been undertaken required approval from the Owners Corporation which had not been obtained.

In this particular case on a review of the circumstances it became clear that some of the works which were desired to be undertaken by the Lot Owner would be minor works pursuant to Section 110 of the SSM Act which would require Owners Corporation approval.  We advised our client that those works should not be undertaken without the appropriate approval.  Having regard to the particular commercial needs of the client for an early resolution of the matter, the Lot Owner refrained from making those items an issue in the proceedings and did not attempt to undertake those works.

In this particular case the “Expert” on behalf of the Owners Corporation prepared a report making assertions that various works were undertaken without any approval, which were to Common Property connected to the Owners Lot and which required the Owners Corporation approval.

After investigation on behalf of the Lot Owner, including reviewing many years of records held by the Owners Corporation it became clear that the instructions provided to the Expert did not include all relevant matters to enable to the determination of that issue. 

Based on our investigation, we briefed an appropriate Expert to consider the Expert’s Report on behalf of the Owners Corporation.  Fundamentally the factual matters referred to in the report of the Expert briefed on behalf of our client was such that the Owners Corporation at long last was forced to accept that our client had not undertaken any works that required approval by the Owners Corporation.

Following service of that Report, the Owners Corporation offered to settle the matter on the basis of taking no issue with the works. 

After further negotiation we negotiated for additional works which did require approval of the Owners Corporation.  Eventually the Orders allowing our client to undertake the additional works were made by Consent. 

We understand the cost to the Owners Corporation were in excess of $60,000 to achieve in our view, nothing.  The result achieved financial stability for our client, the Lot Owner.

The Tribunal only deals with the evidence that is presented to the Tribunal in coming to a determination of the matter.  It is critical that the appropriate evidence, including the appropriate Expert Evidence, is available for the Tribunal or a Court in the appropriate circumstances, to come to a decision which is favorable to our client. 

At Watson & Watson our highly experienced Strata Solicitors can provide advice and assist you in relation to all strata matters including Owners Corporation issues, common property disputes and Strata matters before NCAT.   If you have any issues in relation to Strata matters, please contact Richard Watson Senior Strata Solicitor or his personal assistance Shereen Da Gloria to discuss your matter and obtain appropriate advice as to your circumstances. 

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 9221 6011.