Difficult Issue – Strata Complex - Work has been undertaken on the common property and there is no Registered By-Law. Who is responsible and what remedies are available?

20/04/2021

In a case of Davenport and Owners Strata Plan decided in 2018 by the Appeal Panel of the Civil and Administrative Tribunal of New South Wales (NCAT) considered issues that arose as to a balcony which formed part of the building located at the site at the time of the hearing.  The balcony was only accessible to one of the lots. 

Brief Facts

• The Lot was a residential unit in a four (4) Lot Strata Scheme.
• The proceedings were commenced by the Owners Corporation.
• The Lot Owner purchased the unit (Lot 1) with the attached balcony as constructed at the time of the purchase.
• The balcony was only accessible by the Owner of Lot 1.
• The balcony was not attached to the unit at the time of the registration of the Strata Plan and was constructed some time later.
• There was no By Law concerning the balcony and the rights and obligations of each of the Lot Owner and/or the Owners Corporation.

The issue

• What are the rights, obligations and responsibilities of each of the Lot Owner and separately, the Owners Corporation? and
• Secondly what remedies were available to either the Owners Corporation or the Lot Owner?

Generally the site such as the 4 unit strata scheme in this case, consists of lot property and the common property.  At the time of the registration of the Strata Plan it in effect, records those parts of the land which are lot property and those parts of the land which are common property.

Generally one firstly identifies what is “lot property” and the balance is “common property”.

The Strata Schemes Management Act 2015 and its predecessor the Strata Schemes Management Act 1996 and its predecessor the 1961 Act sets out the regime that applies in relation to changes to the overall property after the date of registration.

Section 108 of the Strata Schemes Management Act 2015 relates to changes to common property. 

Section 108 Changes to common property:

“(1)     Procedure for authorsing changes to common property.  An Owners corporation or an Owner of a lot in a strata scheme may add to the common property, alter the common property or erect …….a new structure on common property for the purpose of improving or enhancing the common property.

(2)      Any such action may be taken by the Owners corporation or Owner only if a special resolution has first been passed by the Owners corporation that specifically authorises the taking of the particular action proposed.”

The required special resolution must deal with the work to be undertaken and should deal with who is responsible for the ongoing maintenance of the works.  If a special resolution does not specify who is responsible to undertake the ongoing maintenance of the common property concerned, the Owners Corporation has the responsibility for the ongoing maintenance.

Section 106 of the 2015 Act relates to the duty of the Owners Corporation to maintain and repair property and provides in part:

Section 106 Duty of Owners corporation to maintain and repair property

“(1)     An Owners corporation for a strata scheme must properly maintain and keep in a state of good and serviceable repair the common property and any personal property vested in the Owners corporation.

(2)      An Owners corporation must renew or replace any fixtures or fittings comprised in the common property and any personal property vested in the Owners corporation.

(3)      This section does not apply to a particular item of property if the Owners corporation determined by special resolution that …

(a)      it is inappropriate to maintain, renew, replace or repair the property, and

(b)      its decision will not affect the safety of the building structure or common property in the strata scheme or detract from the appearance of any property in the strata scheme”.

(4)      ……...

(5)      ……...

(6)      ………

(7)      ………

(8)      ………

The question that arises is what happens if there is a change in the building structure however there is no record of a special resolution as required by Section 106 of the Strata Schemes Management Act 2015 or its predecessor?

Davenport and Owners Strata Plan case considered:

1. Section 106; the duty of the Owners Corporation to maintain and repair the property
2. Whether the balcony was an illegal structure?
3. Does the balcony form part of the common property of the Strata Scheme?
4. Whether there was an obligation on the Owners Corporation to return the common property to its original condition which must be as existed at the date the Strata Plan was registered?

At the first instance, the Tribunal held that the Owners Corporation was obliged to return the property as it existed at the date the Strata Plan was registered.

The NCAT Appeal Panel:

1. Overturned the original decision of NCAT and rejected the submission on behalf of the Owners Corporation that the balcony was illegal; and
2. Commented that it is quite usual that some common property as a consequence of its physical features and location, is only useable by 1 Lot Owner or a few but not all Lot Owners.

In this case the NCAT Appeal found that the construction of the balcony:

1. Was after the registration of the Strata Plan and was approved by the Local Council; and
2. Became common property of the strata scheme with no conditions attached to its construction in the nature of a special use By Law granting sole use or terms of use by the Owner from time to time of Lots 1.
3. The Owners Corporation was responsible for the repair and maintenance of the balcony.

In this case the question of approval was a highly contested factual matter.  It is critical in any case where a similar issue rises, that the full facts as can be ascertained are available for consideration by the Tribunal or Court who is to determine the issue as to the responsibilities associated with such works to which there is no evidence of a special resolution having been passed. 

It is to be noted that the special resolution required by Section 108 of the Act relates to the carrying out of the works, rather than as to the use and occupation of the common property created. 

In the usual course, where a particular Lot Owner obtains the benefit of the use of property there is a by law as agreed between the Owners Corporation and Lot Owner.

There are separate issues as to whether the Owners Corporation can by special resolution determine that it is inappropriate to maintain, renew, replace or repair the common property [under Section 106 (3)] of the Strata Schemes Management Act 2015 and what action the Owners Corporation can take for example, to reinstate the common property as it was at the date of registration of the Strata Plan.

These cases can be difficult particularly in determining the facts that applied in particular, if the work was carried out many years previously and the records of the Strata Plan are not complete.

It is important to establish the facts so as to ascertain the legal consequences of such works.

If you find yourself as either a Lot Owner or Owners Corporation where there are common property works which have been constructed after the registration of the Strata Plan where there is an issue as to rights and obligations of the Owners’ Corporation or Lot Owner there are alternatives for resolution of the issues that arise.

If you have any issues relating to strata matters, please contact the experienced Lawyers at Watson & Watson by contacting Richard Watson Senior Strata Lawyer or his Personal Assistant Shereen Da Gloria to discuss your matter.

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