What Are Unit Entitlements and Why Do They Matter?
The unit entitlements of the lots in a strata building determine the amount of levies that are payable by owners and the owners’ interests in the common property. The unit entitlements are meant to reflect the market values of the lots at the time the strata plan for the building was registered. Occasionally they do not. In those circumstances, does the owners corporation of the building owe a duty to owners to change the unit entitlements? A recent NCAT case provides the answer to that question.
NCAT Decision: No Duty to Change Unit Entitlements
In Sydney Gold Bullion Exchange Pty Ltd v The Owners – Strata Plan 34794 [2026] NSWCATAP 75, NCAT’s Appeal Panel upheld an earlier decision of NCAT in finding that an owners corporation does not owe a duty to change the unit entitlements of the lots in the building. This is the case even where the owners corporation had previously passed resolutions to change the unit entitlements or some of them.
The Appeal Panel confirmed that there is nothing in the Strata Schemes Management Act 2015 or the general law that requires an owners corporation to apply to NCAT for an order to change the unit entitlement and that would be the case even if the owners corporation considers that the unit entitlements are wrong. This is partly because individual owners are entitled to apply to NCAT for an order to change the unit entitlements themselves.
No Duty of Care and No Right to Compensation
It is also because there is no recognised duty of care at law that requires an owners corporation to take reasonable steps to ensure that the unit entitlements of the lots in its building are correct and to reallocate those unit entitlements if they are wrong.
The Appeal Panel also concluded that this meant that an owner was not entitled to be awarded compensation against the owners corporation owing to the owners corporation’s failure to change the unit entitlements or apply to NCAT for an order that would have that effect. So this means that an owner who claims that he or she has overpaid levies due to excessive unit entitlements cannot recover the overpayments from the owners corporation on the basis that the owners corporation did nothing to change the unit entitlements.
Key Takeaway
The Gold Bullion case confirms that even where the unit entitlements of lots in a strata building are wrong, the owners corporation of the building does not owe a duty to the owners to apply to NCAT to change the unit entitlements and cannot be held liable in damages to owners for failing to do so. The Gold Bullion case followed the earlier decision of the Appeal Panel in Trentelman v The Owners – Strata Plan 76700 [2021] NSWCATAP 222.
Adrian Mueller JS Mueller & Co Lawyers E: adrianmueller@muellers.com.au P: 02 9562 1266
This post appears in Strata News #786.
This article has been republished with permission from the author and first appeared on the JS Mueller & Co Lawyers website.
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.