This article, supplied by Allison Benson from Kerin Benson Lawyers, is about the resolution of an unfair utility billing situation within a strata scheme, where townhouse owners were subsidising the utility costs of apartment owners, and how a by-law was implemented to rectify the issue.
I was recently given a scenario where there was a scheme with a mix of townhouses (let’s call them the five Townhouse lots) and a typical apartment building containing 10 lots (let’s call them Lots 6 – 15). The townhouse lots were separately metered for electricity and gas but the other 10 lots were all on one common property meter. The scheme’s common area electricity and gas supply was on another common property meter.
Due to Lots 6 to 15 being on a common property meter, the five townhouse lots were paying for their lot’s electrical and gas use and contributing to both the electrical and gas use of each of Lots 6 – 15 and for the owners corporation’s use in the scheme’s common areas. Lots 6 – 15 were effectively getting their electricity and gas use subsidised by the five townhouse lots. Given the cost of living crisis this was becoming an increasingly sore point for the five townhouse lots.
How to fix this? As you know in strata there can be more than one way to tackle an issue. The scheme could have:
- Decided to effectively sever the five townhouse lots and to create two new strata schemes, one for the five townhouse lots and one for (former) Lots 6 – 15; or
- Resolved to offer services (being electricity and gas as provided by the meter shared by Lots 6 – 15) to the lot owners on conditions requiring payment, with the owners and occupants of lots 6 – 15 agreeing to accept these services; or
- Resolved to create a by-law providing Lots 6 – 15 with the exclusive use of the gas and electricity meters and supply provided by those meters, on the condition that they pay for the supply; or
- Resolved to alter the common property to install separate meters for Lots 6 – 15 and if needed to upgrade the switchboards.
Each option has its benefits and drawbacks. Some of the solutions above require special resolutions and consent of all lot owners (and their mortgagees for option 1). This may not be possible in all cases. Some of the solutions may not be technically or financially suitable for instance, a switchboard upgrade may be required or a re-wiring of the whole building required. Every scheme will have different circumstances that need to be considered. In this case the scheme went with a common property rights by-law for the electricity and gas meters and service.
This is general information only. As every scheme has different characteristics and considerations if this issue affects your scheme please obtain legal advice specific to your scheme.
Allison Benson
Kerin Benson Lawyers
E: [email protected]
P: 02 4032 7990
This post appears in Strata News #736.
Disclaimer: This is general information and should not be considered to be legal advice. If you are affected you should obtain legal advice specific to your individual situation.
Have a question or something to add to the article? Leave a comment below.
Read next:
- NSW: Owners Corporations, Common Property Repairs and Insurance – A Tricky Relationship
- NSW: Q&A Common Property Defects and Reimbursement for Repairs
This article has been republished with permission from the author and first appeared on the Thoughts From A Strata Lawyer… website.
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