The by-laws of a strata scheme are binding upon lot owners and occupiers alike (see section 135 of the Strata Schemes Management Act 2015 (“Act”)). If a lot owner or occupier breaches one or more of a strata scheme’s by-laws, the owners corporation has the ability to take steps to enforce those by-laws.
In summary, the by-law enforcement process is as follows:
- Prior to commencing formal enforcement proceedings, the owners corporation should first issue a letter to the lot owner or occupier to advise of the breach and ask that it cease. A copy of the by-law should be included with the letter. Where the breach is committed by a tenant, the letter should be issued to both the landlord and the tenant.
- If the breach continues despite the initial letter, the owners corporation should serve on the lot owner or occupier a formal notice to comply pursuant to section 146 of the Act (“Notice”, previously section 45 of the Strata Schemes Management Act 1996 (“Old Act”)). The Notice must require the lot owner or occupier to comply with by-law and must include a copy of the by-law in question. The Notice should give the lot owner or occupier a reasonable time to comply with the by-law, for example, 28 days. If more than one by-law has been breached, a separate Notice should be issued in respect of each. A template Notice from NSW Fair Trading can be accessed here. The Notice may be issued by the strata manager if this function has been delegated to the strata manager pursuant to the agency agreement. Otherwise, a resolution of the strata committee is required. The issuing of a notice is an essential step prior to further action being taken against the lot owner or occupier at the NSW Civil & Administrative Tribunal (“NCAT”).
- If a Notice is issued and the by-law has still not been complied with by the lot owner or occupier, the owners corporation can apply to NCAT for a penalty order under section 147 of the Act. The strata application form can be found here and is used for all strata disputes. This must occur within 12 months of the Notice. If NCAT is satisfied that the Notice was validly given and the lot owner or occupier has breached the by-law since that Notice, a monetary penalty of up to 10 penalty units (presently $1,100.00) may be payable. This penalty is payable to the owners corporation.
- If the lot owner or occupier breaches the same by-law again within 12 months of the monetary penalty, the owners corporation is entitled to apply to NCAT again without issuing a further Notice. If the lot owner or occupier is again found in breach of the by-law, a monetary penalty of up to 20 penalty units (presently $2,200.00) may be payable to the owners corporation.
Steeper penalties are payable for breaching the occupancy limits contained in section 137 of the Act.
So, what changed with the introduction of the Act late last year? There are two main differences between the Old Act and the current Act in terms of by-law enforcement.
Firstly, penalties for breaches of by-laws are payable to the owners corporation rather than NSW Fair Trading. Owners corporations no longer have to go to the expense of by-law enforcement proceedings with no chance of recovering any costs. Section 248 of the Act provides penalties may be recovered from lot owners as if they were a contribution under the Act.
Secondly, owners corporations no longer have the option to seek an order from the NCAT adjudicator requiring the lot owner or occupier to comply with the by-law. Under the Old Act, if an adjudicator’s order was made and there was still no compliance with the by-law, the owners corporation could apply for a penalty order. The new process is that the owners corporation may apply for an NCAT order under section 232 of the Act. If the lot owner or occupier breaches that order, then the next step is to seek a civil penalty.
There is currently a problem with the legislation in that section 202 of the Old Act, which provided for civil penalties for breaches of adjudicator’s orders, no longer exists. We are currently seeking clarification from NCAT in this regard. For more detail on this problem with the legislation, have a listen to Amanda Farmer’s podcast interview with Reena Van Aalst here.
The information contained in this article is not legal advice. This article is intended to provide general information in summary form only. You should not rely on the content of this article as legal advice. If you would like advice specific to you and your situation, please contact us.