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Strata lot owner wins Court case BUT penalised for commencing proceedings in the Supreme Court

Despite a plaintiff lot owner being successful in proceedings brought against an Owners Corporation in the NSW Supreme Court, the Supreme Court in a subsequent decision found that the lot owner should pay the Owners Corporation’s legal costs. This was because the lot owner’s lawyer should have commenced the proceedings in the NSW Civil and Administrative Tribunal (“NCAT”) and not the Supreme Court!

Facts of this recent case

The lot owner, being the owner of a car spot in a strata title apartment complex, was successful before the NSW Supreme Court in obtaining Declarations that the Owners Corporation could not develop the common property in such a way that would impede reasonable access to the car spot (see EB 9 & 10 Pty Ltd v The Owners SP 934 [2018] NSWSC 464). The car space was too “tight” to drive a standard sized car in and out of without passing over part of an area of common property.

In the subsequent decision of EB 9 & 10 Pty Ltd v The Owners SP 934 (No 2) [2018] NSWSC 546 concerning legal costs, the lot owner asserted that costs should be paid by the Owners Corporation. However, the Supreme Court held that the lot owner should have commenced proceedings in, and sought the relief from, NCAT and not the Supreme Court. Consequently, the lot owner was ordered to pay the Owners Corporation’s legal costs.

Reasons for the decision

The Supreme Court reached this decision due to Section 253(2) of the Strata Schemes Management Act 2015. Section 253(1) provides that nothing in the Management Act derogates from any rights or remedies that a lot owner/Owners Corporation may have in relation to any lot or common property apart from the Management Act. This effectively means that a lot owner/Owners Corporation may approach the Supreme Court instead of NCAT to resolve such a dispute. However, as per Section 253(2), if the Court is of the opinion that the taking of the proceedings in the Supreme Court was not justified because NCAT could have dealt with the dispute, the Court must order the plaintiff to pay the defendant’s costs (regardless of the outcome of the dispute).

While it was noted that NCAT does not have the power to make a Declaration, NCAT could have enforced the lot owner’s rights by, for example, making an Order binding the Owners Corporation not to alter the common property and using (in the Order) the same words as the Declaration granted by the Supreme Court.

My thoughts

This decision reinforces the “clear policy of the strata scheme legislation that, wherever possible, strata title disputes should be resolved in NCAT”.

The law is vast and always changing.  The lot owner would not have incurred the “legal costs penalty” had his lawyer commenced the proceedings in the correct forum!

If you have any questions relating to the above, or need to talk to an expert, please do not hesitate to contact myself or the Turnbull Hill team us on 1800 994 279 or via email.


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