The extent of the NSW Civil and Administrative Tribunal’s (NCAT) authority in resolving strata-related disagreements has become a topic of significant discussion lately. A key point of contention centres on whether NCAT’s jurisdiction encompasses every type of strata dispute or if it’s restricted to particular cases. This article seeks to clarify for Owners Corporations, strata managers, and individual lot owners the specific circumstances under which NCAT can intervene in a dispute, providing crucial insights before any decision is made to initiate proceedings in this tribunal.
The Source of NCAT’s Power to Make Orders in Strata Conflict Resolution
The Strata Schemes Management Act 2015 empowers the NSW Civil and Administrative Tribunal (NCAT) to issue directives for settling disagreements or complaints concerning the functioning, administration, oversight, or execution of duties within strata schemes and Owners Corporations. Section 232 of this legislation specifically authorises NCAT to “make an order to settle a complaint or dispute” across a broad spectrum of issues.
However, the exact scope of this authority remains a subject of debate. A key question arises: Is NCAT empowered to intervene and issue orders in absolutely any strata-related conflict?
The Basis for NCAT’s Jurisdiction in Strata Matters
The legal foundation for an NCAT case can stem from diverse sources, including:
- principles of common law (such as cases involving negligence);
- the by-laws specific to a strata scheme; and
- statutory provisions, like those found in the Strata Schemes Management Act 2015 (for instance, allegations of an Owners Corporation breaching its statutory obligation to maintain common property).
As a general rule, if a petitioner fails to demonstrate a valid legal basis for resolving their strata dispute through NCAT, the tribunal lacks the jurisdiction to issue orders addressing that conflict. This critical distinction means that, for example, NCAT cannot intervene to stop an Owners Corporation’s lawful decision to alter the building’s exterior colour or install a particular type of tiling in a communal outdoor space, merely because a minority of owners disapprove of the new colour scheme or tile selection. In essence, NCAT does not have the authority to evaluate the merits of decisions made by Owners Corporations when the cause of action stems from a fundamental legal right or duty.
Case Analysis: Quo Warranto Pty Ltd v Goodman [2022] NSWCATAP 315
A recent ruling by NCAT’s Appeal Panel in the Quo Warranto case has shed light on these jurisdictional questions. The dispute centred on whether the Strata Schemes Management Act 2015 authorises NCAT to mandate the redistribution of ‘unit entitlements’ among lot owners in a strata scheme. Initially, NCAT had reallocated the ‘unit entitlements’ following an application from two lot owners who contended that their share of a $950,000 special levy was disproportionately and unfairly high. This reallocation reduced these two owners’ contribution to the special levy while increasing that of another lot owner (the “appellant”).
Specifically, the reallocation increased the appellant’s ‘unit entitlement’ from 25% to 33%, raising their required contribution to the special levy from $237,500 to $313,500 – an increase of $76,000.
The appellant challenged NCAT’s decision in the New South Wales Civil and Administrative Tribunal’s Appeal Division, arguing that NCAT lacked the authority to issue such orders. The Appeals Panel concurred with the appellant, ruling that while NCAT’s power to resolve strata disputes is extensive, it is not unlimited. Crucially, the panel determined that NCAT could not issue an order to settle a strata dispute by reallocating unit entitlements when the party seeking the order failed to establish a legally recognized cause of action.
Consequences and Advantages for Owners Corporations and Individual Lot Owners
The decision in this case has established that NCAT lacks the authority to issue orders resolving a strata dispute if the applicant cannot demonstrate a valid legal claim or cause. This clarification is significant as it indicates that, for example, if an Owners Corporation lawfully decides to change a strata building’s colour scheme or install specific tiles in a shared outdoor area, NCAT cannot intervene merely because a minority of lot owners disagree with the decision.
In essence, this ruling provides Owners Corporations with the assurance that they can continue to make decisions in line with their responsibilities without fear of legitimate exercises of their authority being challenged on non-legally recognizable grounds. For lot owners, it’s crucial to understand that NCAT’s power to resolve strata disputes is not all-encompassing, particularly in cases where the dispute doesn’t stem from a fundamental legal right or obligation.
Strata committee members or lot owners seeking guidance on strata-related legal matters should consider consulting with experienced strata lawyers who can offer reliable and impartial legal advice to help navigate and resolve these complex disputes. Whether you’re dealing with tenancy disputes, home building issues, or other strata-related matters in Sydney or across NSW, understanding NCAT’s jurisdiction and limitations is crucial for effectively managing your strata scheme.
