The purpose of this article is to raise public awareness about a significant loophole in the strata legislation namely, the right of an owners corporation to repeal a common property rights by-law granting exclusive use or special privileges over common property to a lot owner without obtaining the written consent of that owner.
Common Property Rights Bylaws – What Are They?
Before we examine the owners corporation’s power to repeal a common property rights by-law without the owner’s written consent, we first need to know what is a common property rights by-law. Some examples of common property rights bylaws include, but are not limited to, exclusive use car parking on common property, exclusive use or special privilege to keep grease trap on common property, exclusive use of a common property garden area, exclusive use of common property attics spaces, etc.
Section 142 of the Strata Schemes Management Act 2015 (“SSMA”) states:
“142 Common property rights by-laws
For the purposes of this Act, a common property rights by-law is a by-law that confers on the owner or owners of a specified lot or lots in the strata scheme—
(a) a right of exclusive use and enjoyment of the whole or any specified part of the common property, or
(b) special privileges in respect of the whole or any specified part of the common property (including, for example, a licence to use the whole or any specified part of the common property in a particular manner or for particular purposes),
or that changes such a by-law.”
At this point, I want you to keep the words “or that changes such a by-law” in the back of your mind as we will revisit some of these words further down under the section “The Procedure to Change By-laws”.
The Power to Make Common Property Rights By-laws – Lot Owner’s Written Consent is Required
Section 143 of the SSMA gives the owners corporation the power to make a common property rights by-law.
Section 143(1) of the SSMA states:
“143 Requirements and effect of common property rights by-laws
(1) An owners corporation may make a common property rights by-law only with the written consent of each owner on whom the by-law confers rights or special privileges.
Note. Any addition to the by-laws will require a special resolution (see section 141).”
The section makes it clear that such a by-law requires the written consent of each owner on whom the by-law confers the rights or special privileges. For example, if lot 1 is going to receive exclusive use of a car parking space on common property under the common property rights by-law, it is the owner of lot 1 that must provide their written consent to the making of the by-law.
Procedure to Change By-laws
Now that we know what a common property rights by-law is and how they are made i.e. the need to pass a special resolution passed at a general meeting + they require the written consent of the lot owner conferred with its benefit, it’s time to dive into section 141 of the SSMA which provides the owners corporation the power to change by-laws (which, as will be explained below, includes the power to repeal a common property rights by-law).
Section 141(1) of the SSMA states:
“(1) An owners corporation may, in accordance with a special resolution of the owners corporation, change the by-laws of the strata scheme.”
It is interesting to note the words “change the by-laws” in section 141(1). If you recall, section 142(1) also used the words “or that changes such a by-law”. What does the word”change” mean? Well, the definition is mysteriously hidden in section 133 Definitions of the SSMA.
Section 133 Definitions states:
“In this Part— change the by-laws for a strata scheme means amend or repeal the by-laws or add to the by-laws.
What Does this All Mean?
In the author’s opinion, the effect of sections 133, 141(1), 142 and 143 of the SSMA leads to the unintended consequence that an owners corporation has the power to repeal a common property rights by-law by special resolution in general meeting without the written consent of the lot owner who is benefitted by the by-law for the following reasons:
- Section 141(1) of the SSMA does not provide that consent of a lot owner must be sought to change a bylaw;
- The definition of “change” in section 133 includes repeal;
- Section 143 clearly refers to “make” a by-law and not “change”; and
- “Make does not include “repeal”.
Until such time as this loophole in the strata legislation is fixed, it seems that owners corporations can repeal the valuable rights of a lot owner under a common property rights by-law without obtaining that lot owner’s written consent. If you have any queries in relation to this article, please contact our specialist strata lawyer, Michael Pobi.
Disclaimer: Please note that the information contained in this article is not legal advice and should not be relied upon. You should obtain legal advice specific to your circumstances before you take any action or otherwise rely upon the contents of this article.