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Recently in an article JimmyT mentioned the High Court established a formula for compensation when common property is sold to an owner. Could you please give me a reference to this decision as it is an onging issue with our Strata.
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First, a quick clarification: although I have referred to this as a High Court case, it was in fact a Supreme Court case although leave to appeal was denied in the High Court.
The case was Immer (No 155) P/L v Houghton and Ors [1996] NSWSC 427 (13 September 1996) and, if you have a couple of hours to spare, you can click on that link to read a full transcript.
In it, the majority lot holders in a strata scheme had extended their units into the roof space and had used their votes at a general meeting to award the body corporate $1 in compensation on the grounds that the common property was unusable and therefore had no value.
The other owners claimed this was a fraud on the minority and the judge basically agreed.
Right at the end of the (very long) transcript the judge assesses the compensation based on the difference between the value of the units before the alteration and after the alteration, minus the costs of the improvements.
This has become the standard formula for assessing the MINIMUM amount required for the sale of common property. The purchaser can, of course, pay more to persuade a reluctant committee. They can’t, however, use it to force the owners Corporation to sell.
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