[The Hood]

While I search for the case that J S Mueller made reference to without citation I will let you ponder the by-law enforcement provisions.

By-law Enforcement

146 Notice by owners corporation to owner or occupier

(1) An owners corporation for a strata scheme <u>may</u> give a notice, in a form approved by the Secretary, to the owner or occupier of a lot in the scheme requiring the owner or occupier to comply with a specified by-law if the owners corporation is satisfied that the owner or occupier has contravened that by-law.

We then drift off to the Interpretation Act and find:
9   Meaning of may and shall

(1)  In any Act or instrument, the word “may”, if used to confer a power, indicates that the power may be exercised or not, at discretion.

(2)  In any Act or instrument, the word “shall”, if used to impose a duty, indicates that the duty must be performed.

Applying 9(1) to s 146.
The power in s 146  to issue a NTC , to pursue enforcement of a by-law, may be exercised <u>or not, at discretion</u>.
Simply put there is no obligation under s 146 to send a NTC. It follows there is no mandatory obligation, function or duty to enforce the by-laws. The OC can at its discretion, even if satisfied there is a breach, choose not to pursue the matter. The discretionary nature of the power to pursue a by-law breach as found in s 146 means there is no obligation on the SC / OC to enforce the by-laws.
It is not a function of the OC to enforce the by-laws if s 146 is our guide and there is nothing explicit anywhere else to guide us.

[The Hood]

Some NCAT level case law that supports the idea the OC must pursue by-law enforcement.

(redacted)
Paragraph
106. The circumstances in which the management structure may not be functioning or functioning satisfactorily include where the relevant level of management;

– Fails to exercise power or make a decision to prevent a contravention by lot owners and occupiers of their obligations under the Act, including breaches of by-laws

107. Section 12 of the Act provides that an Owners Corporation has functions conferred or imposed on it by the Act. Relevant functions include:

– Serving notices and taking action in respect of breaches of by-laws

Luong v Owners Corporation SP 87671 and Telmet Ventures Pty Ltd [2015] NSWCATCD 105

NCAT Member Vrabac, who is actually one of the better strata matters Members, without qualification, puts forward, in paragraph 107, the idea by-laws must be, as a function, enforced.
Yet where do we find this alleged function?
In paragraphs 106 and  107 Member Vrabac, in the full text, outlines several functions and I believe all can be expressly found in the Act except the alleged by-law enforcement function.
The problem with Member Vrabac’s work here is that it does consider that s 146 (s 45 at the time) is discretionary. That is where the power to begin enforcement lies and the power is without question discretionary due to the language of the section.

[The Hood]

Not sure why one would take the committee (the OC in fact) to mediation or NCAT on this.

The OC’s ‘duty’ in this matter is where in the Act?
I think you might find there is no express obligation to act on this complaint.
Just as an aside: there is case law (Supreme Court) that says the OC is not mandated to Act on by-law breaches.

Noise nuisance by an animal is in Regulation 36A
36A Keeping of animals—circumstances of unreasonable interference

For the purposes of the Act, section 137B(3), the circumstances in which the keeping of an animal unreasonably interferes with another occupant’s use and enjoyment of the occupant’s lot or the common property are—

(a) the animal makes a noise that persistently occurs to the degree that the noise unreasonably interferes with the peace, comfort or convenience of another occupant, or
(b) ….

The problem here is what constitutes ‘persistent’ and at what point is the degree of unreasonableness a trigger to make an order.
Here we will see noise (member dependent deviation in judgement) as these things are not part of a clear objective test. Different Members would hold different views, i.e. set the bar at different points.

It seems to me to be that the issue for the owner is with the dogs owner, not the OC, as I think it is the case that it is discretionary for the OC to act in such matters. Take the legislation surrounding the breach of a by-law for example, even if the OC is satisfied there is a breach the OC “may” (a discretionary term) act by sending a NTC; there is no obligation to take action.

Jimmy says: “Having it on the agenda is essential so it can be discussed and voted on for the NTC to be legal.”
One would think so but that is not the case.

Many a NTC has been sent absent an agenda item and it has made no difference once the matter landed in NCAT.
In fact the absence of an agenda item for two NTCs was of no concern to a Member who was being asked to removed a few SC members for failure to follow the Act (s 238(2)) (Jones v SP36965 unreported).
The Tribunal’s best effort was to complain about  the size of the application which went to lengths to evidence the facts. The Member described the claims as narrative even though there were months of agendas (absent any item relating to the NTCs) and minutes.
It was easy enough to see the NTCs were issued but there was no agenda item for them.
Owners were effectively disenfranchised from Sch 2 cl 9(3) – another matter the judiciary seems to care little about.

[The Hood]

Jimmy-T wrote:

In other words, register as many invalid by-laws as you like but don’t be surprised if, when you try to enforce them, an owner or tenant challenges them, and the Tribunal bounces them, saying they don’t have any “force or effect”

Regardless of whether one agrees or disagrees with the legal reasoning behind the decision, I believe it comes up short with regards to public policy considerations. It essentially places the onus on occupants (and potential purchasers) to read through the by-laws which are ‘on the books’ and come to their own conclusions as to their validity under the SSMA.

If NCAT took a more proactive approach to invalidating those by-laws (a task which it is best placed to do), then there would be no ambiguity about whether or not they are enforceable and valid, as opposed to simply being ‘on the books’ despite an incompatibility with the relevant legislation.

 

[The Hood]

Just thought i should mention in the Roden case the by-law was invalidated where there was no pet in question at the time of the application.

The Tribunal was asked to invalidate the by-law under s 150
It is not relevant to s 150 if the applicant had or was seeking to get a dog.

The validity of a by law turns on the “inherent qualities” of the by-law.
This is well expressed in the Cooper case in a number of paragraphs.

It is interesting that it is rather true a SP can have a raft of unenforceable by-laws on their books when we often see in NCAT matters applicant’s claiming they bought in because of some particular by-law.
People rely on the integrity of by-laws but it seems there is no obligation for those by-laws to have any integrity.
Strata is a wonderful place.

[The Hood]

The response is a little ideal world and, yes, in an ideal world it is a great response.
But; the OC in question has been to mediation before over this and is aware of a current mediation application. They will fight it.

The OC since 2017 has been kept abreast of everything, the initial first instance NCAT matters (Yardy, Roden McCormick and so on), the SC was kept abreast of the NCAT Appeal outcomes in some of those matters and was given the NSWCA Cooper decision the day of the decision.  The SC was also aware of the Bill that led to s 137B, the passing of that Bill and the date on which 137B commenced.
The SC (OC) stands firm, with the backing of the majority, that the by-law is still valid.

There was even an NCAT Appeal matter over an assistance dog on the 23^rd Sept and it seems the OC will lose that matter, potential costs in excess of $10k. The Member (Dept Pres) even said s 137B meant the OC could not remove the dog simply because it was a dog; i.e. the no dogs by-law was not enforceable. The dogs assistance animal status not relevant anymore.
The OC’s representative even denied knowing about the Cooper case.

Yet the OC’s position as expressed at the Appeal Panel hearing was one of every avenue will be explored and scuttlebutt is that no expense will be spared. The OC even threatened, in their submission, to go to the Federal Court over the assistance animal status of the dog in question; not that it matters anymore due to s 137B.

The SC knows everything and willfully ignores it all because they have majority backing and the majority wants no cats or dogs. You can have a goat or a pig or horses, those silly looking llama things, it is a rural strata plan, anything except a cat or dog.

Nothing ‘ideal world’ about a lot of SPs and their SC members, especially here.

[The Hood]

This is the type of ones and zeros behaviour that we are seeing from Government. Yes, it would be hard to make the PHO customized to suit every configuration of strata but as a potential victim of ones and zeros I will just say my strata plan is almost 800 acres, it is the size of a suburb. There are around 12km of internal roads. There is no building per se. It is large rural lots within an area larger than some LGA’s.
This PHO if applied here is equivalent to locking down a whole suburb, in hard lock down, because one resident in one street has a positive test.
Not impressed.
Trust the experts – a nice cliché line for those who have no understanding of the statistical fact the medical profession is rife with error and that experts when scrutinized are often far from expert.

[The Hood]

The PEXA thing has been around for a few months now.
Just makes things hard for self managed SPs and adds costs to SPs who like to be hands on to keep costs down.
Sure it is great for cashed up eastern suburbs types who just shell out whatever to the agent so they can sleep at night without having to worry about what ‘strata’ is doing but if you live in the west where the difference between a $150 process executed by the secretary and a $500 process executed by some third party (because you don’t have a choice) actual means something then PEXA is just rude.

Wouldn’t block chain be nice for this type of thing.

[The Hood]

Just to wrap this topic up.
The OC in question got taken to NCAT over the motions and now there is an order from Member Vrabac that says the donation motions are what is termed ultra vires, i.e. beyond the capacity of the OC to make.

The order says:
That pursuant to s 24 of the Strata Schemes Management Act 2015 the resolution of motions 16, 17 and 18 of the AGM of 30th of January 2021 are invalidated as the motions are ultra vires.

Motions 16, 17 and 18 were all to raise money to donate to various organisations.

Over the last 10 years the OC in question had raised over $8000 to donate.
If you want to donate money, pass a hat around.
It is not for a general meeting to ‘dictate’ to owners who the owners will donate money to or how much.

[The Hood]

Unless the law has changed you can take the following to the bank if the work is wholly within the lot.

In Owners Strata Plan No 50411 & v Cameron North Sydney Investments Pty Ltd [2003] NSWCA 5 Heydon JA at para 163.
163 On the true construction of the Environmental Planning and Assessment Act 1979 s 78A and the Environmental Planning Assessment Regulation 2000 clause 49, the owner of a lot in a registered strata plan who applies to a consent authority for consent to carry out development wholly within the boundaries of that lot is not obliged to obtain and evidence the consent of the body corporate to the lodging of that application.

[The Hood]

I get the impression the following case law is a big no to donations.

The donation motions I refer to are on the agenda for AGMs, have been for over 10 years, always passed close to unanimously by the 33% of owners who attend such meetings and the interesting part is because the donation is to be paid from a trust fund the money is often never expended because the organizations involved will (rightly) not invoice the OC for a donation.

Anyway the Courts and Tribunal have said the following:

In Humphries v Proprietors Surfers Palms North Group Titles Plan 1955 (1994) 179 CLR 597 at 613 (McHugh J):
“Section 32 authorizes the body corporate to levy contributions from the proprietors. They are to be paid into an administrative fund and a sinking fund (s. 38). Moneys are not to be disbursed from those funds except to meet the liabilities incurred by the body corporate in performing its duties and functions or exercising its powers and authorities under the Act (ss. 38, 38A).”
A Qld matter but the sections are equivalent to those found in NSW’s SSM Act.

In Lawson & Clarke v Owners Corporation SP 61788 (Strata & Community Schemes) [2011] NSWCTTT 270 (27 June 2011):
“77. The payment of money by the Owners Corporation to a third party in circumstances where the Owners Corporation has not received any benefit in return cannot be regarded as being in the interests of all of the lot owners.
80. I am not satisfied that the Owners Corporation in general meeting had any power to agree to pay a very large sum of money to a third party in respect of a matter that was not of the making nor for the benefit of the Owners Corporation. Resolution 3 passed at general meeting on 12 March 2010 is therefore ultra vires the powers of the Owners Corporation.”

In APX Projects Pty Limited v The Owners – Strata Plan No. 64025 [2015] NSWSC 1250, (Slattery J):
16. “Part 3 of the Management Act requires that owners corporations generally must establish two types of funds: an administrative fund: s 66; and a sinking fund: s 69. The purpose of the administrative fund is for the owners corporation to make certain payments that are administrative and recurrent in nature. Examples of such payments are those made for recurrent expenditure as insurance, water charges and electricity charges; payments to members of the corporation’s executive committee in accordance with the Management Act; and payments in connection with carrying out the owners corporation’s functions under this Act or the by-laws: ss 66, 75(1). In contrast the purpose of the sinking fund is for the owners corporation to make payment of expenses that are capital in nature. For example, for painting or repairing the common property, to acquire personal property, or to renew or replace fixtures that are part of the common property: s 75(2).”

Does the management of the OC extend to levying money for donations? An NCAT application has been lodged so we will see what they say.

Personally I think who people donate money to and how much has nothing to do with the management of a strata scheme. It is not a function or duty of the OC to control and when there is no direct, or even indirect benefit, then the concept really struggles to have validity.
I will post the outcome once the matter is decided.

[The Hood]

Interesting reply because a lot of SPs have an SC that is for the sake of compliance with the requirement to elect an SC. The SC is in effect window dressing, hold no meeting and do nothing but maybe get ‘polled’ by the agent who is trusted and tasked with acting as the SC.
In the case in question the agent is known to the compliance officers down at FT as a ‘my way or the highway’ type agent who has had FT’s ‘flying squad”, for want of a better name, raid the agents offices. The agent is not a big fan of what does not suit the agent.
The issue of compliance came up at mediation so it was highlighted that the SC, who are an active SC in the SP in question, never had the matter of the mediation on the agenda and never made a formal decision on it. Just to demonstrate the compliance level is not that great.
The agent quickly stated that the agent made the decision under the delegation. I have no doubt it was an absolute lie.
In the past the SP in question has issued NTCs without a decision and when quizzed the SC claimed they made the decision, even though no record of it existed AND the agent claimed the agent made the decision under the delegation in the agreement.
Seems they both wanted to claim the decision, and no s 55 record of those matters ever surfaced from the agent.

At mediation when the agent was then pressed over whether or not the agent had recorded the exercise of function (s 55) to attend the mediation the agent ultimately said the applicant could come and inspect the records. The agent’s office is 130km away and it is not hard to make an entry in a record after the fact.
Anyway the point was “is there a conflict when such occurs”, i.e. when the agent decides the agent will take the gig.

Yes we are talking about protocol issues to some degree but if we care to give credence to the PSA Regs and the rules an agent is supposed to act under then we have an agent acting with no regard for fiduciary obligation.
We have no regard for the formalities of the SSM Act.

I always bring SC decisions that are made without notice or due regard for protocol (a formal decision) back to a denial of the right to veto (sch 2 cl 9(3)).
I feel cl 9(3) of Sch 2 is the most compromised owners right in the Act. Can’t veto what one does not know about.
I would have without hesitation signed a notice not to engage the (useless) agent and I am aware of other owners who would also have.
The idea that failing to comply with requirements of the Act and fiduciary obligation is no big deal is a highly subjective comment.

At what point do such failures become a big deal?
I am sure we could talk about that without resolution forever.

Yes this is an agent with ‘not much respect’ for a lot of thing.

Thanks for your comments JT.

[The Hood]

My point was more that the agent and SC both seem to have a rather limited and incorrect understanding of the Act so does one wish to buy into that?

Today I enjoyed Happy Hour with Amanda Farmer who had Jo Cooper and Sharon Levy on the pod cast and no one was being ‘alarmist’ discussing the legal option for the OC who can apply for special leave to the High Court.
The dust has not quite settled, but it is close.
Tell ’em what you like Jimmy.

[The Hood]

flossyb wrote:

Should I have more confidence now that this ruling has been overturned?

What a circus.

First thing I would say is that if there is a blanket ban pet by law then the SC has no authority to make any approvals.

”I have spoken with the committee and they are happy to allow the pets and have the pet by-law adopted and the decision ratified at the next Annual general meeting.
Could you please complete the attached pet application form and send it back for consideration asap.”

There is so much wrong about that email.
The SC can’t over ride the by-law even if the by-law is now arguably of no force.

The SC can’t guarantee the by-law will be repealed or changed at the AGM.
The AGM would need to repeal or change the by-law; not ratify the SC decision.
I think that agent and SC both have a poor working knowledge of the Act.
That seems clear.

Changing a by-law is relatively simple and it should not cost you. If an annual general meeting, by special resolution, decides to change, amend, repeal a by-law then it is typically a function of the OC to register it.

There is a period in which the OC in the Cooper case can seek leave to appeal the matter to the High Court. If the OC from Cooper decides not to do that then you can  have a good degree of confidence that if necessary you will prevail at NCAT if the OC wants to try to apply their blanket ban.

I’d be more concerned about what conditions the OC might place on an approval if they do change the by-law.
I think we will see some pretty stiff criteria from some OC’s who really do not want dogs.

Note to The Hood:  Please use “Quote” properly.  It’s only the relevant part of the post that should be in quote format … not the whole post.

[The Hood]

Luke wrote:

Hi Jimmy, Could strata plans restrict the type of pets? Allow gold fish or birds but not dogs or cats for example.

I feel you need to appreciate that everyone of these cases over the last year or so has been about a dog.
If you read the Cooper decision then it seems the reasons of the Court are just as applicable to a partially prohibitive by law as much as to a blanket ban.

Take paragraph 81 from the Cooper decision for example:
“It is sufficient that the subject by-law is readily capable of operating in a manner that is “harsh, unconscionable or oppressive”. That it may in some circumstances operate fairly cannot save it from invalidity.”

So if you have a partially prohibitive by law then you tell me;
is it “readily capable of operating in a manner that is harsh, unconscionable or oppressive….”. Of course it could.

You mean a by law like at SP36965 (http://www.billencliffs.org.au/bylaws.html)

• Keeping of animals

The owners or occupiers of the lot shall be entitled to keep any animal upon their lot provided that:

• no dogs or cats, other than assistance animals as prescribed by legislation, shall be allowed upon any lot or the common property;

Interesting this by law ‘applies’ to owners of 2 acre rural lots in a 750 acre SP that is zoned RU1 (primary production).
The by law has no hope if challenge but it will remain on the books until it is invalidated by NCAT because the OC will never vote to repeal it.

You never know, the OC in Cooper might seek leave to have the matter heard in the High Court. So the dust hasn’t fully settled yet.

[Author]

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