Access to Records, By-Law Enforcement & Section 238: What Rao v SP39988 Teaches Strata Owners

The NSW Civil and Administrative Tribunal (NCAT) has dismissed an application brought by a lot owner against his strata scheme and strata committee members in Rao Nallamouthou v The Owners – Strata Plan No 39988 [2024] NSWCATCD 73. The case recognises the evidentiary burden on applicants who allege strata governance failures and seek serious remedies such as the removal of strata committee members and enforcement of by-laws.  Pobi Lawyers acted for the successful Owners Corporation in defending the NCAT proceedings. 

Background

The Applicant was a lot owner in a large 129-lot strata scheme and commenced NCAT proceedings seeking many orders under the Strata Schemes Management Act 2015 (NSW) (SSM Act). His allegations included complaints about parking on common property, breaches of by-laws, access to owners corporation’s records,  the handling of repairs, insurance issues,   and the conduct of strata committee members.

Key Issues and Findings

• Parking on Common Property

The Applicant alleged that lot owners were regularly parking business-related vehicles on common property, contrary to the scheme’s by-laws. He sought orders directing the owners corporation to enforce compliance of the scheme’s by-laws.

The Tribunal held that vague or subjective complaints were insufficient to support the order sought. It found that the evidence, comprising a few colour photographs and email complaints, did not establish systemic misconduct or inaction by the Owners Corporation.

The Tribunal noted that enforcement of by-laws is discretionary, and NCAT will not grant vague orders. The Applicant had not pursued enforcement against specific offenders under sections 232 and 241 of the SSM Act.  In other words, it may have been better for the Applicant to seek to enforce the scheme’s by-laws against the owners or occupiers allegedly in breach, as opposed to seeking an order requiring the Owners Corporation to enforce its by-laws against them.

• Removal of Strata Committee Members (Section 238 of the SSM Act)

The Applicant sought to remove multiple strata committee members under section 238 of the SSM Act. The Tribunal emphasised that such orders are serious and require evidence of serious misconduct in office, breach of the SSM Act, or failure to act with due care and diligence.

The Tribunal held that the Applicant’s complaints amounted to dissatisfaction with management decisions and were not misconduct. The Applicant failed to provide any evidence of the strata committee’s non-compliance with the SSM Act or any other breaches of legislative obligations.  Therefore, this order requested by the Applicant was dismissed.

• Complaints About Fire Safety Repairs and Charges

The Applicant disputed certain charges imposed on lot owners following annual fire safety inspections in 2020. He claimed the charges were excessive and sought reimbursement. The Tribunal accepted the Owners Corporation’s evidence that the repairs were necessary for fire safety compliance under section 106 of the SSM Act. It held that the Applicant failed to quantify the alleged overcharges or identify any breach of legal obligations. Therefore, this requested order was dismissed. 

4. Alleged Irregularities in Insurance Repairs (Hailstorm Damage)

The Applicant also raised concerns about the allocation of insurance proceeds and expenditures relating to hailstorm damage repairs in 2018–2019. He argued that the insurer should have covered more of the cost. The Tribunal held that the Applicant’s submissions were speculative and lacked evidentiary support. It reaffirmed that the Owners Corporation had complied with its obligations under section 106 of the SSM Act. 

This aspect of the Applicant’s claim was dismissed.

• Access to Documents

It is important to note that the Owners Corporation had changed strata management companies a number of times prior to these proceedings being commenced. The Applicant’s grievance over the alleged failure of the  Owners Corporation to provide access to the Owners Corporation’s various financial and related records pre-dated the most recent change in strata manager.  The Applicant alleged the Owners Corporation failed to provide access to financial and governance records, in breach of sections 182, 183, and 188 of the SSM Act.

The Tribunal found that the Applicant had been given electronic access and had inspected a substantial volume of records. The current strata manager testified to difficulties arising from past strata managers record keeping and confirmed that reasonable efforts had been made to locate any missing documents.

The Tribunal held that the Applicant failed to establish that records were wrongfully withheld under section 188 of the SSM Act and dismissed this aspect of his claim.

Key Takeaways for Lot Owners and Strata Committees

• NCAT requires clear and persuasive evidence of serious misconduct in office or breach of strata committee’s duties before removing strata committee members from office under section 238 of the SSM Act. 
• It does not appear that NCAT is willing to make an order on behalf of an owner or occupier that an owners corporation take action to enforce its by-laws.  However, there have been cases where NCAT may order an owners corporation to convene a strata committee meeting or general meeting to issue notices to comply against the breaching owner or occupier, but that seems to be as far as it can be taken.
• An owners corporation cannot be ordered to provide documents which do not exist.  If the documents have been lost or destroyed, that does not equate to a wrongful withholding of documents. 

Get Expert Strata Law Advice

At Pobi Lawyers, we are specialists in strata law and have extensive experience representing clients in NCAT proceedings involving a wide range of strata disputes. If you’re facing a strata dispute, we invite you to contact us to discuss how we can assist. 

Contact Pobi Lawyers – Sydney’s Strata Law Specialists.

Disclaimer: This article was published by Pobi Lawyers and the material in it is intended only as general information. This does not constitute legal advice, nor create any solicitor-client relationship. We recommend that you seek your own independent legal advice in relation to your own individual circumstances, before acting or relying on the contents of this article. Pobi Lawyers shall not be responsible for any reliance placed on this information, and its contents are liable to change at any time without notice.