In order for an owners corporation to repeal an exclusive use by-law that confers on the owner of a lot, or the owners of several lots, certain rights or privileges to use a part of the common property, section 52 of the Strata Schemes Management Act 1996 (“SSMA”) requires the written consent of the owner(s) of the lot(s) concerned. In general, this means the written consent of the owners receiving the benefit of the common property in question.

 

Having said the above, the Strata Schemes Adjudicator has the power, under the SSMA, to repeal an exclusive use by-law if the lot owners concerned unreasonably refuse to consent to the repeal of the exclusive use by-law.

 

In Croyden & Anderson v The Owners – Strata Plan No. 1583 [2015] NSWCATCD 104 the NSW Civil and Administrative Tribunal overturned an Adjudicator’s earlier order and found that lot owners who had the exclusive use of common property car spaces pursuant to an exclusive use by-law were acting reasonably in refusing to provide their written consent to the Owners Corporation’s proposed repeal of the by-law.

 

Facts:

The Owners Corporation made Special By-Law 1 on 1 April 1991 which granted the owners of Lots 12 and 15 from time to time the exclusive use of 1 car space each, situated on the common property;

 

At an Annual General Meeting held on 10 September 2013, the Owners Corporation attempted to have Special By-Law 1 repealed. The owners of Lots 12 and 15 objected to the repeal and did not give their written consent to the Owners Corporation.

 

The Owners Corporation argued that it proposed to obtain revenue from the common property car spaces by either renting out or selling the car spaces. Since Lots 12 and 15 had never paid any money for the exclusive use of the car spaces, the Owners Corporation argued that the interests of all owners in the use and enjoyment of their lots and common property outweighed the rights and reasonable expectations of the lot owners deriving a benefit under Special By-Law 1.

 

The owners of Lots 12 and 15 argued that the Owners Corporation and all the owners in the building had the opportunity to, and did, make their decision in 1991 in relation to the conditions Special By-Law 1 would contain, and it was now too late for the Owners Corporation to change its mind. Furthermore, the repeal of Special By-Law 1 would have extinguished a valuable proprietary interest that Lots 12 and 15 had in the car spaces without any compensation to them.

 

Findings:

The Tribunal decided to uphold Special By-Law 1 and allow the lot owners’ appeal on the following basis:

 

 

Lessons learned:

 

An exclusive use by-law can be hard, if not impossible, to repeal if an owners corporation does not have the written consent of the lot owner(s) with the benefit of the exclusive use by-law.

 

If owners corporations are concerned about making money from lot owners using various parts of the common property (for example, parking spaces), they should ensure the original exclusive use by-law incorporates a fee as a condition for the making of the by-law, and this requirement is expressly in place at the time the exclusive use by-law is made. It may be too late to repeal or amend the by-law later.

 

Furthermore, an owners corporation may wish to include a ‘sunset clause’ in the by-law, providing that the right of exclusive use will expire on a particular date. This would cater for any unforeseen circumstances arising many years down the track, where an owners corporation may decide it wishes to regain control over the relevant area of the common property.

6 Responses

  1. My question is, would there be a good chance of repealing an exclusive use by law if the council’s original development approval to build our four units stipulated that we must have four visitor park spaces, and the exclusive use by law gave away one of those visitor parks on the common property.
    The planning officer at our council said we
    must have an approved modification order of our planning approval before we can make such a by
    law allowing lot owner use if one of the visitor parks. Does that mean that the
    exclusive use by law is not legal and can be revoked on that basis without lot owner consent.

  2. My question is we had an exclusive use-bylaw granted whilst under “compulsory strata management – S237” – & now that it is out of compulsory strata management, the other lot owner wants compensation paid to the owners corporation ( its a 2 lot strata) for the exclusive use bylaw (verandah area 9m2 which was pre-existing). Are there grounds for such compensation given that the bylaw was already granted & registered 6 months ago under compulsory strata management ?

    1. Hi Marc, there may be grounds for compensation and the Tribunal could order an amendment to the by-law to require this. The first step in that process is that a motion is put forward at a general meeting to amend the by-law (by special resolution) requiring the owner who benefits to pay some compensation. Even if the special resolution is achieved, it will have no effect unless the owner with the benefit provides their written consent. They are unlikely to do that. The matter can then be taken to the Tribunal for determination of the question “is the owner with the benefit unreasonably refusing to consent to this amendment?” Refusal may be reasonable or not, it depends on the circumstances.

  3. Hi Amanda, I am the owner with the bylaw above, whilst it is now “exclusive use”, the area provides exclusive private access to 2 separate doors & 3 windows to our lot & the area is pre-existing. The bylaw was more for privacy than anything else. If the matter was to end up at NCAT, could the applicant request for a cost order if they were successful at NCAT ?

    1. NCAT is a ‘no costs’ jurisdiction, so we start from a place where each party pays their own costs, regardless of success. The Tribunal does have the power to award costs in ‘special circumstances’. See section 60 of the Civil and Administrative Tribunal Act for an explanation of special circumstances.

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