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  • #11474
    Jimmy-T
    Keymaster

      Bear with me folks, because the so-called strataguru is stumped. A couple of weeks ago my colleague and partner Sue Williams wrote this story that basically said the whole strata by-law breach fines system had a massive hole in it.

      Specifically, it claimed that an NCAT senior member had said the Tribunal did not have the power, under the new strata laws, to order financial penalties for failure to pay fines incurred by by-law breaches.

      Two highly experienced lawyers, Amanda Farmer and Adrian Mueller, both supported this view, based on a statement in the published findings on a case about a woman who lifted her carpet and polished her concrete floor in defiance of her by-laws and, let’s face it, basic common sense.

      But forget all that, the important hing is, in their findings, the Tribunal Appeal panel said that she could be fined under the old laws (under which the breach occurred) but not the new ones.

      This is what their findings say:

      ‘The 2015 Act does not contain any substantive provision that would allow the Tribunal to order the payment of pecuniary penalties for non-compliance with orders concerning the operation and management of a strata scheme.’ 

      Does that sound like the Tribunal is saying it can’t impose fines for failure to comply with orders concerning by-law breaches to you?  It does to me.

      So I go back to Fair Trading several times to ask if this is true and, if so, what are they going to do about it? And, if it’s not true,


      Here is the best of the worst of this week’s posts to the Forum:

      Owner has built a shed on their car space, now their neighbour can’t open their car door.  That’s HERE.

      How a rogue renovator scored a sweetheart deal on costs.  That’s HERE.

      Our strata manager is trying to get us to review the wrong set of by-laws.  That’s HERE.

      What do you do when four out of six owners vote to give themselves chunks of common property?  That’s HERE.

      Can I show my lawyers details of owners corp and strata committee failings or are they private? That’s HERE.


      why are Tribunal members making such crazy statements.

      This is what I got back today:

      “In response to your first query on the breach leading to a penalty – where there is a by-law breach, the order the Tribunal makes is for the payment of a monetary penalty; it is not for some other action to take place, which if a person fails to do would be grounds to make a second order requiring them to pay a monetary penalty. The latter scenario used to be the process under the 1996 Act.”

      Do you get it?  No, me neither.  But it goes on …

      “In other words, under the 1996 Act process, two orders would be made – the first would be to rectify the breach of the by-law, and the second would be to fine someone for not complying with the first order. 

      “Under the 2015 Act process, the first step is that a fine is simply imposed for not complying with the by-law. No first order needs to be made. There is simply a monetary penalty for breaching the by-law.

      “Regarding your query re the correctness of the Tribunal’s reasoning – in Fair Trading’s view, the Tribunal’s statement is correct and is consistent with the statement I provided on Friday.

      OK, flicking back through our notes, this is what Fair Trading said on Friday: “Under the Strata Schemes Management Act 2015 (the 2015 Act), the NCAT does have the power to impose monetary penalties on strata scheme owners and occupants who have failed to comply with Tribunal orders requiring them to comply with by-laws. This power is in section 147 of the 2015 Act.”

      OK, but isn’t that exactly the opposite of what the Tribunal Member said. Apparently not.

      “The statement [on Friday] explained that the 2015 Act confers on the Tribunal the power to require a person to pay a monetary penalty for breaching a by-law. The Tribunal’s statement does not contradict this, as the Tribunal’s reasoning says that the 2015 Act does not give it the power to require a person to pay a monetary penalty for breaches of orders.

      “The power for the Tribunal to impose penalties for breach of Tribunal orders still exists under provisions in the Civil and Administrative Tribunal Act 2013.”

      So the … wait a minute … the … umm … hang on … I think they are saying that since you no longer need an order before you impose a fine, then the Tribunal doesn’t need the power to impose a fine for ignoring an order because there is no order required.

      What? Who’s on first?

      OK, what that might mean is if you send a Notice To Comply to an owner and they fail to comply, and you apply to NCAT for a fine and the owner fails to pay the fine, NCAT can’t do anything about it because, when they made it a one-step process the new law removed the mechanism for an order requiring the miscreant to pay the fine.

      And there’s your loophole.  Just refuse to pay your strata fines and, theoretically, there’s nothing anyone can do (Irony Alert: this is not soundor reliable advice).

      But that’s what the member was saying. NCAT does not have the power to impose penalties for failure to pay fines for breaching by-laws.

      I think …

      The trouble is, on Friday, Fair Trading said the Tribunal did have the power to impose fines on strata residents for failure to comply with orders telling them to comply with by-laws.

      Clearly, the fault is mine.  I had forgotten the basic principles of strata reporting in NSW:

      1. Fair Trading is never wrong.
      2. Tribunal members are never wrong.
      3. When they contradict each other, both of them are right.
      4. Logically, the only person who can ever be wrong is me.

      And, anyway, it doesn’t matter because we live in strata and, really, nobody cares!

      You can find the earlier episode in this sorry saga HERE.

       

      The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
    Viewing 6 replies - 1 through 6 (of 6 total)
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    • #28756
      Sir Humphrey
      Strataguru

        I don’t think I find the Tribunal reasoning unclear. 

        I think they are saying:

        The OC can seek an order for a person to rectify some by-law breach and/or pay a fine for that breach. 

        The authority for the Tribunal to make the first order comes from the Strata Act.

        If the order is made but the lot owner does not comply with the order, then the OC can apply for a further order that the lot owner be fined for failing to comply with a Tribunal order. 

        The authority for the Tribunal to make this second order comes from the Tribunal Act. It is not needed specifically in the Strata Act, since it could be applied to any instance of failure to comply with a Tribunal order, not just in Strata matters. 

        I assume that the penalties are specified in ‘penalty points’ whose value is adjusted occasionally to keep up with inflation. 

        Is your issue, Jimmy, that the financial penalties go to general govt. revenue rather than to the OC? If so, this does not strike me as odd from familiarity with the ACT situation. Here, a penalty for committing the offence of failing to comply with a valid ‘rules infringement notice’ goes to general revenue, just like the fine for an offence against any other Act would. Ditto for any further penalty that might be applied for for a failure to comply with a Tribunal order. 

        Our committee chose to not apply for such penalties in a recent matter. First we got orders that the unit owner must remove the structure and reimburse the OC’s Tribunal application fee but we didn’t ask for the penalty (up to $750, from memory). Then, when the unit owner reimbursed our application fee but still did not remove the structure, we applied for an enforcement order that would have let the committee appoint a representative to enter the unit area and remove the structure, but again, we refrained from also applying for the financial penalty for failing to comply with the Tribunal order. We only applied to be reimbursed for the cost of our court application fee.

        In communication about the matter with owners, we made it clear that we could have applied for both fines to also be applied. This was about being seen to be focussed on the outcome rather than being punitive. Nonetheless, we did emphasise that this matter illustrated that the OC rules were enforceable through the courts if necessary. 

        #28757
        Sir Humphrey
        Strataguru

          PS. In the matter I referred to, right at the start during the directions hearing, the unit owner was concerned about the penalty provision in the Unit Titles (Management) Act 2011. She asked “Can I just pay the fine and keep ‘the structure’?” The Tribunal member may have raised one eyebrow slightly and she said deadpan: “But then the Infringement Notices will keep coming.” IE. The committee could keep issuing new Infringement Notices because the unit owner would be continuing to infringe the rules. Each time OC could apply for the fine to be applied. 

          Instead we did not apply for the fine but we just applied for orders that the unit owner remove the structure by such a date as the Tribunal considered reasonable. Still, we then had to follow up with seeking an ‘enforcement order’ from the Magistrates Court to appoint the OC (‘another person’) to do that which the unit owner had been ordered to do but failed to do. 

          I am not sure whether the ACT Tribunal can impose a fine for failing to comply with a Tribunal order. I suspect, like the enforcement orders we sought, that might have to go to the Magistrates Court. 

          #28762
          Jimmy-T
          Keymaster
          Chat-starter

            Here’s a response from Adrian Mueller, the strata lawyer from JS Mueller who first brought this to our attention:

            There is a loophole in the legislation. The loophole was accurately exposed by NCAT and reported in the press.

            The loophole is quite simple. If a person is breaching a by-law, an owners corporation can apply to NCAT for an order to require the person to stop breaching the by-law.

            If NCAT makes an order to require the person to stop breaching the by-law, and the person ignores the order, an owners corporation is not able to ask NCAT to impose a monetary penalty on the person for breaching its order (whereas previously, under the old strata laws, the owners corporation could do so).

            As Fair Trading has stated, an owners corporation can apply to NCAT to impose a monetary penalty on a person for breaching a notice to comply with a by-law issued by the owners corporation.

            However the penalties that can be imposed by NCAT in those circumstances are modest, and those penalties do not require the person to stop breaching the by-law.

            To conclude, the loophole does exist and it should be closed by legislative amendment. I hope that my explanation of the loophole has been helpful.

            The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
            #28763
            Jimmy-T
            Keymaster
            Chat-starter

              @Sir Humphrey said:
              I don’t think I find the Tribunal reasoning unclear. I think they are saying:

              The OC can seek an order for a person to rectify some by-law breach and/or pay a fine for that breach. The authority for the Tribunal to make the first order comes from the Strata Act.

              If the order is made but the lot owner does not comply with the order, then the OC can apply for a further order that the lot owner be fined for failing to comply with a Tribunal order. 

              The authority for the Tribunal to make this second order comes from the Tribunal Act. It is not needed specifically in the Strata Act, since it could be applied to any instance of failure to comply with a Tribunal order …

              Good shot, sir!  But according to Adrian Mueller, above, that’s not quite it.

              I’ll let him speak for himself but it seems that it works (or doesn’t) something like this:

              Joe Bloggs builds himself a pergola on common property, in breach of by-laws, and eventually gets a Notice to Comply.

              He ignores it so the committee seeks a fine at NCAT, which can fine up to 10 penalty points (currently $110) but usually starts off at a much lower rate, let’s say $250.

              The miscreant pays the fine … but the pergola remains.  The committee goes back to NCAT and this time, for a subsequent offence, he can be fined up to 20 penalty points, but for the sake of argument, let’s say he gets hit for $500.

              He refuses to shift it.

              Now, under the previous laws, the next step would be to seek orders from NCAT. If the miscreant ignored them, he was in for a big fine for breaching a Tribunal order.

              What Adrian Mueller and the Tribunal member were saying was that the capacity to fine the miscreant for breaching a Tribunal order relating to a by-law breach, no longer exists.

              If the lady who had polished her concrete floor had been pinged six months later, she could have kept things exactly the way they were, paying the occasional by-law breach fine when it came up, until the committee gave up.

              And that’s the problem – when it’s worth the miscreant paying modest fines (for instance, if we are eventually allowed to ban or restrict Airbnb) then we will be unable to prevent by-law breaches by seeking penalties through Tribunal orders.

              Does that make sense?

              The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
              #28764
              Sir Humphrey
              Strataguru

                It makes sense. I wonder if the NSW has been brought into line with the ACT law, or, more likely, both have been brought into line with somewhere else.

                Here in the ACT the Tribunal also does not do the enforcing of its orders. That goes to the Magistrates Court which has the power to make enforcement orders for both Tribunal and Magistrates Court orders. 

                Our recent matter described above is similar to your pergola on common property example. Rather than just seeking a fine, we sought an order that the unit owner must remove her unapproved structure. We could have also sought a fine but the committee decided that we would look better for focussing just on the end-game, which was to remove a frankly ridiculous, unapproved and unapprovable structure that demonstrably failed to serve the purpose that it was purported to have. 

                Our Tribunal member did suggest that if we just applied for a fine and the fine was paid but the structure was not removed, we could just keep issuing infringement notices and the owner could keep paying the fines. The clear suggestion being made to the owner was that this would get expensive for her before the EC gave up. 

                Later in the process, we asked, ‘What if we get the orders we are seeking but the unit owner does not remove the structure? Could we also have an order that the OC is authorised to enter the unit and remove the structure and bill the unit owner?’ The Tribunal’s Decision and Reasons document set out a legal argument for why it would be within the Tribunal’s powers to give such an order but also why she declined to do so. Her reason was that it was not necessary when a process for enforcing orders already exists. She then set out very clearly and helpfully what the process would be to obtain an enforcement order of the Tribunal’s orders from the Magistrates Court. 

                In your pergola example, since it is on common property, the OC has no access restriction. In that case, I would apply for:

                1) an order that the lot owner remove the pergola from the common property and restore the common property to its original condition by some reasonable date,

                2) if order one is not complied with, an order that the fine for the by-law breach be imposed,

                3) if order one is not complied with, an order that the Owners Corporation may remove and dispose of the pergola as it sees fit,

                4) if the Owners Corporation removes and disposes of the pergola in accordance with order three, an order that the unit owner must reimburse the OC’s reasonable costs not exceeding $X00* and its Tribunal application fee ($XXX). 

                *Include a quote from a tradesperson for removal and disposal of the pergola in the application and round it up to get $X00. 

                #28766
                Sir Humphrey
                Strataguru

                  And perhaps I’ll try a briefer answer: I think the advice from the various Tribunal people is consistent. They can order a fine in accordance with the Strata Act for a by-law breach. If the Tribunal’s order is not complied with, it is different offence. It is no longer a strata by-law breach but an offence against whatever legislation says you must comply with Tribunal orders. For that, I suspect, based on the ACT’s approach, you can seek a punitive order and/or an enforcement order from the next court up. 

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