Another Costs Recovery By Law Goes Up in Smoke

The Owners – Strata Plan No. 77109 v Gokani-Robins Pty Ltd [2023] NSWCATAP 82

Quick Read

This 2023 decision by the NCAT Appeal Panel is about a dispute in a Bella Vista strata title building about attempts to recover fire callout charges from a strata owner under a by law. The strata building made a costs recovery by law that allowed it do things and charge strata owners if they didn’t comply with strata laws and its by laws. The by law also allowed the strata building to recover the charges as if they were strata levies. When the strata building sued a strata owner for $19,740 in fire callout charges and other costs, the strata owner said the costs recovery by law was invalid. The key issues in the case were about how s 136(2) about inconsistency and s 139(1) about harshness, unconscionability or oppressiveness operated in relation to the costs recovery by law. After considering the by law and the key decisions in Coopers Case, White’s Case and the B&G Trading Case the NCAT Appeal Panel decided that the by law was not inconsistent with strata and other laws, but that it was harsh, unconscionable or oppressive under s 139(1) because it allowed the strata building to create strata owner debts for things and amounts without reasonable controls and because characterising the debt as if it was a strata levy diminished strata owners’ voting rights. The NCAT Appeal Panel also confirmed that a by law can be invalidated as at an earlier date, effectively backdating things. The decision is another example of costs recovery by laws in NSW strata buildings being invalidated, effectively making them unreliable ways to pass costs onto strata owners.

Implications

There are 2 bases for NCAT to invalidate by laws under s 150: it is outside by law making powers; and/or; it is harsh, unconscionable or oppressive.
If parts of a by law are inconsistent with another law under s 136, they are non operative but the by law is not automatically invalid.
A costs recovery by law is not inconsistent with other laws about debt recovery litigation like the Civil Procedure Act 2005 and the Local Court Act 2007.
The lack of processes to ensure liabilities under a costs recovery by law are fairly created make the by law harsh, unconscionable or oppressive under s 139(1).

For the all the implications of this strata case [and all the other Strata Case Watch] become a paid subscriber to GoStrata Stak

Full Report & Case Details

This 2023 decision by the NCAT Appeal Panel is about a dispute in a Bella Vista strata title building about attempts to recover fire callout charges from a strata owner under a by law.

The strata building had created an extra by law [Special By Law 17] that made strata owners and residents that did not comply with the strata laws and the strata building by laws liable to pay all the strata building’s costs of enforcing those obligations or rectifying non compliance. The recoverable costs included many kinds of expenditures including legal costs. And it characterised the strata owner’s liability as a debt and replicated the strata building’s rights to recover strata levies for that debt.

The strata building incurred fire service call out costs which it alleged were caused by the strata owner and started Local Court legal action to recover them and its other costs totalling $19,740.08 relying on its by laws about fire safety matters and Special By law 17 for recovery rights.

The strata owner applied to NCAT for orders to declare that Special By Law 17 was invalid in relation to the costs recovery provisions which, if correct, undermined the Local Court action.

Section 136(2) of the Strata Schemes Management Act 2015 says that a by law has no force or effect to the extent that it is inconsistent with the strata laws or any other laws.

Section 139(1) of the Strata Schemes Management Act 2015 says that a by law cannot be harsh, unconscionable or oppressive.

The primary issues for the NCAT Appeal Panel were whether the costs recovery provisions in Special By Law 17 were inconsistent with other laws and/or whether they were harsh, unconscionable or oppressive and, as a result, were invalid.

In making its decision the NCAT Appeal Panel, reviewed Special By Law 17 and the decisions in Cooper v The Owners – Strata Plan No 58068 [2020] NSWCA 250, The Owners of Strata Plan 63731 v B&G Trading Pty Ltd [2020] NSWCATAP 202 and White v Betalli (2006) 66 NSWLR 690; [2006] NSWSC 537 and concluded …

For the full report on & details of this strata case [and all the other Strata Case Watch] become a paid subscriber to GoStrata Stak

Keywords

#NSW #NCATAppealPanel #byaws #costsrecovery #invalidity #harsh #oppressive #unconscionable #backdated #2023 #SSMA2015 #s136(2) #s139(1) #s150