Australia: Residential Focus - NCAT-related changes to the Strata Schemes Management Act 2015 (NSW)

NCAT-related changes to the Strata Schemes Management Act 2015 take effect

On 24 February 2021, the Strata Schemes Management Amendment (Sustainability Infrastructure) Act 2021 (NSW) (Amendment Act) commenced. The Amendment Act received assent on 24 February 2021 and amends the Strata Schemes Management Act 2015 (NSW).

As suggested by the title, the main focus of the Amendment Act relates to sustainable infrastructure. However, the amendments also make changes to the existing section 228 and introduce a new section 247A. This article focuses on these two specific amendments, commencing 1 July 2021, and how they directly impact owners corporations in NSW Civil and Administrative Tribunal (NCAT) proceedings.

Section 228(2)(c) – notice of applications

Under the Amendment Act, section 228(2) (of Division 3 – Procedures for applications to Tribunal) regarding notice of applications to Tribunals was amended to include a new subsection (c) which requires an owners corporation to immediately serve a copy of any NCAT application to all lot owners of that strata scheme.

The amendments are shown in subsection (c) below:

"228 Notice of applications to Tribunal

(1) The registrar must give the named parties to the application, and the owners corporation, a copy of an application for an order (other than an order imposing a monetary penalty).

(2) On receipt of an application, an owners corporation given notice of an application for an order must—

(a) immediately cause a copy of the application to be prominently displayed on any notice board required to be maintained by or under the by-laws on some part of the common property, and

(b) so display the copy for the period specified in the notice for the making of submissions, and

(c) immediately serve a copy of the application on each owner of a lot in the strata scheme except an owner who is a named party to the application."

Everyone deserves notice

Before this amendment, an owners corporation was only required to display any notice of an NCAT application on a notice board in the common property area for a specified period of time. In effect, many lot owners who do not inspect notices regularly may not be aware of the commencement of NCAT applications, particularly larger strata schemes. The onus on the owners corporation to keep each lot owner (who is not a named applicant in the NCAT application) informed on such applications have now increased and will need to be considered as part of its ordinary business.

This amendment does not operate retrospectively and does not apply to NCAT applications served on the Owners Corporation before 1 July 2021.

Section 247A

Under the Amendment Act, section 247A titled "Civil penalties for contravention of orders" was inserted as a new provision under Division 5 – General provisions relating to Tribunal powers and orders. Under section 247A, parties can make an application to the Tribunal for a monetary penalty of an amount up to 50 penalty units (the equivalent of $5,500) for contravention of an order.

An application of this kind is not limited to the parties in which the original order relates, but also extends to lot owner(s) or person(s) having an interest in that order, regardless of whether they are a party. Further, if the original orders give effect to an agreement arising out of a mediation, the parties to that mediation may also make an application for a contravention of that order.

Notably, a person cannot be punished twice for contravention of the section, a contravention for a civil penalty provision of the Civil and Administrative Tribunal Act 2013, or a contempt of the Tribunal.

Section 247A is set out as follows:

"247A Civil penalties for contravention of orders

(1) The Tribunal may, by order, require a person to pay a pecuniary penalty of an amount of up to 50 penalty units for contravention of an order under this Act (the original order).

(2) An application for the order may be made—

(a) by the applicant for the original order, or

(b) by the owners corporation, owner or other person having or acquiring an estate or interest in a lot in the strata scheme to which the order relates, or

(c) in the case of an order that gives effect to any agreement or arrangement arising out of a mediation session, by either party to the mediation.

(3) A person is not liable to be punished twice if the person's act or omission constitutes both a contravention for the purposes of this section and—

(a) a contravention for the purposes of a civil penalty provision of the Civil and Administrative Tribunal Act 2013, or

(b) a contempt of the Tribunal."

Importantly, the new section 247A links to the existing section 248 regarding the recovery of unpaid civil penalties which states that "any civil penalty imposed by the Tribunal as a result of a contravention of an order under this Act that is to be paid by an owner of a lot to the owners corporation may be recovered under this Act as if it were an amount of unpaid contributions".

Don't take orders too lightly, you might face a fine

This amendment enables all parties to proceedings, including interested parties, to enforce orders made in NCAT against contravening parties by way of a monetary penalty. This avenue of relief was not previously available. Before this amendment, NCAT could issue orders and fines for non-compliance with by-laws, but could not make orders for the contravention of such orders.

In addition, monetary penalties for contravention of orders could only be imposed via Section 77 of the Civil and Administrative Tribunal Act 2013 (NSW), which only allows an authorised official (being the Minister or a person with the Minister's written consent or authority) to make such an application.

This was considered a loophole that allowed owners and owners corporations to essentially ignore orders made by NCAT as there was little or no immediate consequence for doing so. Section 247A now puts pressure on parties to comply with NCAT orders, on the threat that a monetary penalty can now be imposed, on application by various interested parties. The section will operate retrospectively, applying to all NCAT orders made before 1 July 2021, but only where the contravention occurs after 1 July 2021.

What do these changes mean for owners corporations?

If your scheme, or a lot owner(s), has become a party to NCAT proceedings, notification of applications needs to go to every lot owner. Your strata committee or managing agent (particularly in larger schemes) should discuss and arrange processes and protocols on getting these notices out expeditiously.

Where orders are made in NCAT, it would serve the scheme well to note all important dates, terms of the order and when compliance expires, whether the order is made for or against the scheme. The scheme may also want to inform interested parties if the orders favour the scheme. If a scheme is unsure of its rights and obligations, we recommend that the scheme seeks appropriate legal advice when dealing with issues of compliance with NCAT orders.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.