Strata Law – Is the Exclusion of Lot Owners from the Use of Common Property Legal Legal?

09/08/2016

In Strata Law disputes sometimes an Owners Corporation makes a resolution in a meeting or makes a By-Law that comprises a rule that some lot owners cannot use and enjoy common property.

This is a complex area of the law, however in certain cases the Courts in New South Wales have decided that the exclusion of lot owners from use of common property is illegal because it is called “a fraud on the minority”. 

Watson & Watson Strata Lawyers in Sydney act for individual lot owners or Owners Corporations in relation to all areas of Strata Law.

A recent New South Wales Supreme Court case illustrates this. 

The lot owners have a right in law to use the common property in a Strata Scheme.  The common property comprises areas such as hallways, entrance areas, swimming pools and balconies, for example.  In this particular case, there was a dispute between various owners as to a right to use an exhaust ventilation system in a number of commercial lots which were in a Strata Scheme. The commercial lots comprised a number of shops, some of which wanted to use a ventilation system.

At a meeting of the Owners Corporation, the Executive Committee passed a resolution saying that only the lot owners who were already connected to the exhaust ventilation system had a right to use that system.  The result was some of the lot owners who were not yet connected were excluded from connecting their shops to the exhaust ventilation system which had the effect that those owners could not properly ventilate cooking facilities within their lots.

The lot owners who had been excluded took a case to the Supreme Court asking the Court to rule that they had the right to use the common property, namely is the ventilation system.  The Court held that the Applicants in that case namely the excluded shop owners, had a right to use the common property, being the exhaust ventilation system.  The Court decided that the exclusion at the Executive Committee meeting of the shop owners was illegal because it was “a fraud on a minority”. 

The concept of a fraud on the minority can be a useful issue to consider in circumstances where an individual lot owner (or a group of lot owners) attempt to take control of the common property for their exclusive use. 

The question is whether the taking over of such property could be a fraud on a minority and possibly illegal.  If the lot owner or owners who have been excluded from the use of that common property were in a minority, then it may be that the exclusion of that lot owner or some others was illegal because it was a fraud on the minority.  The exclusion in order to be illegal must arise from a formal event such as a resolution at a meeting or the passing of a By-Law. 

If there has been such an unlawful exclusion, then it is possible to ask a court or tribunal to reverse that exclusion and to order that access to the common property can be ordered.

Watson and Watson, Strata Lawyers are experienced experts in the area of Strata Law.  We regularly advise on disputes involving strata property.  We assist with bringing Applications to resolve disputes and represent parties in Court or Tribunal proceedings.  We are experienced at preparing the necessary evidence and submissions in support of Applications in such disputes. 

If you have any enquiries in relation to any aspect of strata law please feel free to contact Richard Watson of Watson and Watson, Solicitors to discuss these issues.