Supreme Court Declares By-Laws To Be Invalid

Noon v The Owners – Strata Plan No. 22422 [2014] NSWSC 1260 (16 September 2014)

A recent Supreme Court of NSW decision is an important warning for owners corporations not to take short cuts when making by-laws otherwise they run the risk of court proceedings by future lot owners.

The Supreme Court’s decision serves as a timely reminder that:

• by-laws cannot be repugnant to or inconsistent with the provisions of the Strata Schemes Management Act 1996 (“SSMA”) and the law;

• to be valid, by-laws must specify and define the section(s) of common property over which exclusive use rights are granted;

• the granting of exclusive use rights to non-lot owners in the scheme should be avoided, as it is not consistent with the provisions of the SSMA; and

• the Supreme Court has jurisdiction to make declarations to invalidate by-laws in circumstances where the application of section 159 of the SSMA cannot be invoked (e.g. section 159 may be made only by a person entitled to vote on the motion to make the by-law or the lessor of a leasehold strata scheme). In this case, the plaintiffs were future lot owners who did not vote on the motion to make the by-laws the subject of the court proceedings.

If you have any queries about the implications of the above decision on the validity of any of your scheme’s by-laws, please contact Michael Pobi on (02) 8710 3430.

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