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This article explains the interpretation of the expression “the owner or owners of the lot or lots concerned” by reference to recent case law.

Section 52 of the Strata Schemes Management Act 1996 (“SSMA”) applies where a by-law confers a right of exclusive use and enjoyment of the whole or any specified part of the common property on one or more owners or special privileges in respect of common property on one or more owners.

To be valid, the by-law must be passed by a special resolution at a general meeting of the owners corporation and with the written consent of the owner or owners of the lot or lots concerned.

Since Young v Owners Strata Plan 3529 [2001] NSWSC 1135, the view has been that it was a reference to each lot owner affected by the grant of the right of exclusive possession i.e. the lot owner who obtained the right of exclusive possession and each lot owner could be said to have a right of possession as a consequence of the exclusive grant. However, in Chauhan v Jaynrees Services Pty Ltd [2008] NSWSC, Young CJ in Eq (as he then was) took the view that “lots concerned” were “the lots in which special privileges relate to under the by-law”.

If we fast forward to the present day, you will find that within the Supreme Court of NSW decision of Jennifer Elizabeth James v The Owners Strata Plan No. SP 11478 (No 4) [2012] NSWSC 590 (4 June 2012) the Court held that:

(a) the owners of the lots concerned are those owners on whom the rights and privileges are conferred pursuant to the proposed resolution as they are affected by the proposed resolution;

(b) lot owners may be indirectly affected by a by-law made under section 52 of the SSMA but that is not sufficient to make them persons concerned in the by-law (see section 54(1)(b) of the SSMA); and

(c) it difficult to see why, if the consent of all lot owners who have an indirect interest in the by- law is required, section 52 also requires a special resolution of the owners corporation… it is difficult to see why the legislature would not simply have required the consent of all lot owners and have dispensed with the requirement of a special resolution.

In view of the current state of the law, it appears that a “lot owner concerned” is a lot owner that is conferred the right of exclusive possession or special privilege under the by-law. However, it is the author’s personal view that until the issue is either determined by the NSW Supreme Court, Court of Appeal, or a definition of “lot owner concerned” is inserted in the strata legislation, the meaning of “lot owner concerned” remains unsettled.

Therefore, when preparing exclusive use or special privilege by-laws, owners corporations, lot owners and strata managers should err on the side of caution when considering who is a “lot owner concerned”.

Please note that the information contained in this article is not legal advice and should not be relied upon. You should obtain legal advice before you take any action or otherwise rely on the content of this article.