Unreasonable refusal of by-law in NSW Strata: when section 149 may assist Lot Owners. 

If your owners corporation has refused a by-law required for renovations affecting common property, that refusal may not in itself be the resolution. Under section 149 of the Strata Schemes Management Act 2015, NCAT has the power to make a common property rights by-law if an owners corporation has unreasonably refused to do so. For lot owners confronting blocked renovation proposals, roof terraces, courtyards, car spaces or other changes to common property, section 149 can be a great remedy when opposition does not rely on good reasoning or appropriate proof. 

What actually does section 149 address? 

Section 149 is not a general right to nullify every unsuccessful motion. It goes to common property rights by-laws. The Tribunal can intervene in cases where an owners corporation has unreasonably refused to make such a by-law, where an owner unreasonably refused consent to a by-law, or where maintenance conditions in an existing common property rights by-law are unjust. The section also imposes an obligation of the Tribunal at the discretionary level to account for the interests of all owners of their lots and common property in relation to the enjoyment and usage of theirs and the rights and reasonable expectations of the owner applying for the benefit.

The issue here is not whether the proposal in question was reasonable. The case law provides a few key principles, and the most important one is that it is not simply one of whether the proposed by-law or works seems reasonable. 

In Capcelea and subsequent decisions, the question becomes whether the refusal was unreasonable. That distinction matters. A lot owner does not win just on the basis that the proposal had merit. The owner must also show that the owners corporation’s refusal lacked any rational basis. Drewe is frequently cited for the said refusal being objectively unreasonable if non-rational judgment or sense is not the basis for it. Mantell’s same principle is repeated and established as the correct approach in section 149 cases. 

The legal authorities are also clear that section 149 requires a two-step analysis. Initially, NCAT enquires whether this refusal was unreasonable. It is only once this challenge is crossed that the Tribunal enters the second phase, assessing whether it should exercise its discretion to enact the by-law, with respect to the matters specified in section 149(2). In Mantell the Tribunal was clear that this two-step approach is already established, and Kaye warned against relying too early on section 149(2) discretionary factors, at the first stage. That’s a crucial forensic point in by-law disputes. 

What evidence can NCAT consider?

A further legal principle can be gleaned from Bruce v Knight and Donaldson. The Tribunal is not confined to the material physically before the meeting when the motion failed. Later evidence may be admitted if it relates to what was going on at or prior to resolution passing. That means a lot owner may be able to strengthen a statement under section 149 or any other claim they may make with later structural, acoustic, engineering or plumbing evidence that addresses concerns expressed at the meeting. But it still matters if preparation in advance of the meeting is thoughtful, because a poorly prepared motion gives opponents more opportunity to argue that refusal was justified.

Why Kaye makes these claims much more complicated

The Supreme Court ruling here is Kaye v The Owners – Strata Plan No 4350. That case has proved that there is no requirement of an owners corporation to ratify all proposals that look logically reasonable. The Court held that privacy, noise, compensation and precedent concerns may reasonably justify opposing a proposition in an appropriate context. It further warned against considering section 149 a mere balancing act. For lot owners, that means section 149 claims require careful framing. You must prove more than that your proposal is appealing. You are required to demonstrate that the actual refusal did not have a sound rational basis. 

The practical takeaway for lot owners

So the foundation of a solid section 149 application is typically up to solid preparation. The strata by laws sydney should set out the works to be carried out, address the responsibility of repair and maintenance and be based on other relevant expert evidence. If an owners corporation will resist against the by-law for unsupported assumptions or broad statements as to “precedent” (without a factual basis), that may open the window to NCAT remedy. Conversely, where there are valid concerns of privacy, noise, structural integrity or unfair compensation or some other scheme consequences, refusal will likely be accepted. 

Any information on an unreasonable refusal of a by-law? 

If your by-law has been rejected and it looks unreasonable, you should get advice early on if section 149 is going to apply and how the evidence is to be produced. Pobi Lawyers provide advice for unreasonable refusal of by-law claims, common property rights by-laws and NSW strata renovation disputes.