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That is good news about the storm water pipe being removed from your Lot.
The other conditions are not good news. YES, I believe you should seek Mediation through the Office of Fair Trading as soon as possible and be prepared to take this matter to the Tribunal if necessary.
I also believe that the conditions being imposed upon your renovation are unreasonable and oppressive. These extra conditions appear to be almost vindictive …though vindictiveness would be difficult to prove.
There are also several issues where your OC may have breached the Act:
1. Authorisation to seek legal advice. Was it correctly obtained? Excluding an emergency situation, the SC generally cannot seek legal advice and use OC funds in this manner without obtaining consent via a Motion at a General Meeting. Was this consent obtained? See SSMA 2015 [s103(1)]
https://posh.austlii.edu.au/cgi-bin/viewdoc/au/legis/nsw/consol_act/ssma2015242/s103.html
2. By-law changes. Was it correctly obtained and changed? By-law changes require a Motion to be put to a General Meeting and approved by the OC by Special Resolution. The SC does not have the authority to make changes to by-laws. See SSMA 2015 [s141(1)] https://posh.austlii.edu.au/cgi-bin/viewdoc/au/legis/nsw/consol_act/ssma2015242/s141.html
3. Reasonableness of the by-law. Is the by-law reasonable? All by-laws must be reasonable. A by-law must not be harsh, unconscionable or oppressive.Clearly the by-law stating that work must be completed within 5 months is not reasonable. You have expert opinion to back you up.
4. Renovation bonds. Is it reasonable? Is the penalty too harsh? In my opinion the penalty is too harsh. The renovation bond should only be imposed on damage to common property. This requires proof of damage.
5. Authority of the SC to impose the penalty of $5000 per week. The Act does not permit the SC to directly impose such a financial penalty on an Owner. Any by-law breaches fines and penalties must be go through the Tribunal, and only after the proper Notice to Comply has been correctly issued. There appears to be few if any restraints within the by-law on the SC’s arbitrary and capricious authority regarding the imposition of the penalty.
6. Strata Committee’s authority. The Strata Committee must not make decisions that are not in accordance with the Act. The Committee does not have the power to make rules to bind owners. Only the OC has this power. To purport to delegate rule-making power to a committee is inconsistent with the Act and, quite probably, invalid.
In summary … I would get this matter sorted out prior to the renovations commencing. Hopefully Mediation will be speedy and successful.