By Allison Benson -
Snapshot
- The power to make by-laws in strata and community title schemes is limited by s 136 and s 139(1) of the Strata Schemes Management Act 2015 and s 128 and 130 of the Community Lands Management Act 2021.
- A by-law must not be harsh, unconscionable or oppressive.
- Other limitations include whether a by-law is uncertain, inconsistent with legislation and whether it is made within power.
The Supreme Court handed down its decision in Walker Corporation Pty Ltd v The Owners – Strata Plan No. 61618 [2022] NSWSC 1246 (‘Walker 2022’) on 16 September 2022. On 5 June 2023, the Court of Appeal upheld the original decision and found that a clause in a strata management statement which required constituent owners corporations to appoint a particular strata managing agent was invalid (Walker Corporation Pty Ltd v The Owners – Strata Plan No. 61618 [2023] NSWCA 125) (‘Walker appeal 2023’). These decisions add to the existing case law on the interpretation of by-laws and management statements. The decisions also set out the limitations on the power of schemes to create by-laws to regulate themselves and their constituent strata schemes.
The Walker decisions relate to the Finger Wharf development at Woolloomooloo. The development consists of a complex strata title scheme with eight stratum lots, being three dimensional lots that comprise: either part of a building structure (including the wharf itself); part of the land; and the water and sea floor that comprise the fee simple. Only one stratum lot was not subdivided by a strata plan.
To manage the issues caused by part ownership of the buildings, land and water comprising the site, previous legislation (in similar terms to s 99 of the Strata Schemes Development Act 2015 (‘SSDA’)), required the registration of a strata management statement ‘for the building and its site’. Both cases were conducted on the basis that the current legislation applied.
The effect of the management statement was to bind the owner of the underlying fee simple, the seven constituent strata schemes, the lot owners and occupants of the strata schemes, the owner and occupants of the stratum lot and mortgagees in possession of lots in the scheme to the terms of the management statement as if it were an agreement under seal and they each had entered into the covenants contained in the statement (SSDA s 105). The key limitation was that the management statement had no effect if it was inconsistent with a condition imposed by a planning approval for the site, an order under part 12 of the Strata Schemes Management Act 2015 (‘SSMA’) or, as in Walker, another Act or law (SSDA s 105(5)).
