NSW: Absolute prohibitions in by-laws

This article is about how absolute prohibitions in strata by-laws may be deemed harsh, unconscionable, or oppressive if they fail to consider individual circumstances.

I am talking to you today about by-laws and particularly the harsh, unconscionable and oppressive or oppressive restriction on our strata by-laws. It’s something I’ve been fascinated with for a while. If you’ve been following the blog, you will have realised this by now.

But effectively, I’m talking about it because we’ve had a new case that came out on the second of September this year. It’s Shah v The Owners Strata Plan No. 7655. It’s interesting because of the circumstances, but also because of the facts required. It is squarely focussed on whether an absolute prohibition in a by-law makes a byelaw harsh unconscionable and oppressive.

CLICK HERE TO BE NOTIFIED WHEN WE PUBLISH CONTENT TO THE SITE

Let’s dig down a little bit. So what happened?

The facts. The applicants or appellants, the Shahs, purchased their lot. It was a three bedroom, one bathroom lot. They wanted to make it into a two bedroom, two bathroom lo and in doing so what they were going to do was to put a bathroom where the existing kitchen was, and then put the second bathroom in an existing bedroom with the effect that if that was approved, the lot below would have a bathroom above one of its bedrooms.

The common property by-law (which would have authorised this work) was by law was refused by the owners corporation. The owners corporation shortly thereafter passed a special by-law 19.

And special by-law 19 is interesting in its terms, two reasons.

I have seen this first part of special by-law 19 in other schemes by-laws, and this part of special by-law 19 is to the effect that a lot owner cannot install a bathroom toilet or laundry over the bedroom or a lounge room living area of another lot. So you can’t put a bathroom, toilet or laundry above a bedroom or living area of another lot below. That I’ve seen in other schemes.

The atypical part of it was, the by-law effectively said, we are doing this for the peaceful enjoyment of occupants and other lot owners and typically sound mitigation measures do not prevent noise. They don’t remove it, they just reduce it, or mitigate it. That’s the unusual part of this particular by-law.

What happened? The Shah’s appealed, sorry, the Shah’s, I should say, didn’t appeal. They ultimately did. First, they put an application for the Tribunal to determine that their common property rights by law, for their proposed work, was unreasonably refused. They amended their application so that they would also have an order to declare special by-law19, the by-law about installing bathrooms, toilets, and laundries over living areas of another lot, to have that declared invalid.

The Tribunal dismissed the application by the Shahs and the Shah’s appealed. This is where it gets interesting.

So there was a couple of reasons why they appealed and it boiled down to the Shah’s grounds of appeal.

And those grounds could really be (summarized as):

that the by-law was harsh unconscionable and oppressive because of its timing, that it was done to prevent the Shah from completing their proposed work. Now, spoiler alert, because this wasn’t the whole basis of the case and it was obiter, the Tribunal found that this wasn’t a relevant fact, as towards a by-law was harsh, unconscionable, and oppressive.

They argued that it (the by-law) had a retrospective application. This was actually conceded during the course of the hearing and was not pressed, and

that the by-law itself infringed a fundamental property right and that fundamental property right was the right of a lot owner to determine how the internal configuration of their lot should be, to be able to move its bedrooms, bathrooms around. Now, that was also found by the Tribunal again in obiter, but it was found not to infringe a fundamental property right. Why? Because a lot of owner just doesn’t have the right to do that. A lot owner is constrained by planning laws and building legislation. So it wasn’t a fundamental property right.

The main focus of the case was all about whether the absolute prohibition, a lot owner, must not install a toilet, laundry, or bathroom over the bedroom or living area of another lot.

That absolute prohibition, was it harsh, unconscionable, or oppressive because of the fact it was absolute, and there was no discretion? Well, ultimately, the Tribunal, you know, gave us a little bit more. The Tribunal found that it was harsh, unconscionable, and oppressive, but it wasn’t just, it wasn’t on the basis that the by-law had an absolute prohibition. It was because the, and they went back to Cooper, I should say, on this, so the original Court of Appeal decision, which is where, you know, a lot of our case law has come from, they went back to the original Cooper decision in the Court of Appeal and they said, well, in our view , the judges of the Court of Appeal, although they stated it differently, their core reason for finding the prohibition on animals by law in Cooper as harsh, unconscionable and oppressive, it was essentially the same. And that reason was because it was not an absolute prohibition that was necessarily harsh, unconscionable or oppressive, but because the by-law in question was an absolute prohibition, despite the fact that some of the conduct, in the Cooper case it was keeping an animal, would not adversely affect any other lot owner.

So, the Court of Appeal, the Appeal Panel in the Shahcase, took that, and then they rationalised that a little bit more for us. And I’ve got to read out there all the key paragraph, because it’s quite interesting .

“In our view, the correct legal principle to be derived from Cooper is that a by-law imposing and absolute prohibition, and which does not permit consideration of individual circumstances will be harsh unconscionable, or oppressive, if in certain circumstances, the prohibited conduct would not adversely affect other lot owners in their use or enjoyment of their lots or the common property. If such circumstances do exist, then the by-law needs to accommodate that by requiring the owners corporation to consider if the prohibition is necessary in the particular circumstances in question.”

That’s the quote. What does it mean?

It means absolute prohibitions aren’t by themselves a bad thing, but the by-law needs to have some mechanism in it that allows for the consideration of atypical circumstances or individual circumstances because in need atypical cases, the behaviour that’s being prohibited might not actually affect anybody else.

In this case, it said, well, it didn’t allow the Shahs to provide evidence that installing their bathroom over the bedroom of the lock below, would not cause a noisy shift .

So we need to be very, very careful about how we’re drafting our “absolute” prohibitions. We can put them in, but we do need to prevent them from being an absolute. In the sense that we need an a caveat that the owners corporation has to consider the individual circumstances and allow lot owners to show in their proposal about the prohibited conduct, that it actually, or their behaviour that is sought to be prohibited, wouldn’t materially affect anybody else, wouldn’t adversely affect them. So we need to be a bit careful. Another thing to consider when we’re drafting our strata by-laws, are also another thing to consider when we’re applying our and reviewing our strata by-laws.

Hopefully that’s helpful.

As always, please seek legal advice that is tailored to your particular circumstances.

Talk to you later.

Allison Benson
Kerin Benson Lawyers
E: [email protected]
P: 02 4032 7990

This post appears in Strata News #766.

Have a question or something to add to the article? Leave a comment below.

Read next:

This article has been republished with permission from the author and first appeared on the Kerin Benson Lawyers website.

Visit our Strata By-Laws and Legislation OR NSW Strata Legislation.

Are you not sure about some of the strata terms used in this article? Take a look at our NSW Strata Glossary to help with your understanding.

After a free PDF of this article? Log into your existing LookUpStrata Account to download the printable file. Not a member? Simple – join for free on our Registration page.