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Jennifer Elizabeth James v The Owners Strata Plan No. SP 11478 (No 4) [2012] NSWSC 590 (4 June 2012)

The strata scheme was subject to the appointment of a compulsory strata managing agent under section 162 of the Strata Schemes Management Act 1996 (“SSMA”).

One of the issues for consideration before the Supreme Court of NSW was whether a compulsory strata managing agent could give consent under section 52 of the SSMA to the making of such a by-law on behalf of a lot owner concerned. The Supreme Court of NSW held that a compulsory strata manager could not and also held the by-laws to be invalid. The relevant sections of the judgement are reproduced below:

Ball J stated at paragraphs 93 to 95 of his judgement:

93. When a lot owner gives consent under s 52, the lot owner is not giving that consent as an organ of the owners corporation. Rather, the lot owner is giving that consent in a personal capacity. The requirement of consent is necessary because that owner’s personal rights will be affected by the by-law. Under s 162 of the SSM Act, Mr Anderson is given the powers of the owners corporation, the executive committee and office bearers of the executive committee. He is not given any of the powers given to an individual lot owner under the Act. Consequently, his purported consent on behalf of individual lot owners is ineffective.

94. Section 52 of the SSM Act provides that the owners corporation may “make” a by-law under that section “but only” with the written consent of the owner or owners of the lot or lots concerned. The by-law is made by the owners corporation, but a pre-condition to making the by-law is the required consent. In my opinion, the owners corporation “makes” a by-law when it passes a valid resolution adopting the by-law in accordance with the relevant requirements of the SSM Act. That conclusion is supported by s 52(3) which provides for a conclusive presumption that “all conditions and preliminary steps precedent to the making of the by-law” were complied with after two years. Section 52(3) draws a distinction between the making of the by-law and the conditions and preliminary steps precedent to the making of the by-law. The use of the words “preliminary” and “precedent” indicate that those steps are steps to be taken before the making of the by-law. One such step must be the obtaining of written consent. Section 52(3) is saying (among other things) that that condition or preliminary step precedent is conclusively presumed to have taken place if no challenge is made to the by-law within two years.

95. In my opinion, there is also a practical reason for interpreting s 52 as requiring written consent before a resolution is passed. That reason is that lot owners may well want to know whether written consent is forthcoming before voting on the resolution. The powers conferred by s 52 cannot operate any differently because they are being exercised by Mr Anderson under s 162 rather than by the owners corporation.”