This article is about how the rule of law applies to strata title schemes in NSW, exploring whether these communities are overregulated or effectively self-regulated under existing legislation.
Hi, everyone, it’s Allison Benson here from Thoughts of a Strata Lawyer, or from a Strata Lawyer, I really should be able to remember that by now.
But today, what I want to talk to you about is it’s a little bit more theoretical than what I normally talk about. It’s about regulations in our strata schemes. Why? Because I was asked to talk at the Strata Impact conference as part of a panel on whether our community title and our strata title schemes are overregulated and which regulations we would drop or cut out.
That got me thinking about the rule of law, which is a really important principle in our legal system.
What is it? Good question. It’s essentially, it’s a a requirement effectively that everybody is accountable under law. So there’s no person stands above another. Everybody’s going to be held accountable by the law. It is a system of having a clear set of laws. So they’re clear, they’re published , and they were applied equitably, or fairly, I should say. So no applying it to one instance and not applying it in the exact same instance to another person. But it’s really, really important because it means that we achieve through our laws our desired equitable, economic, social, environmental, and social social practices, basically. And it’s what our system is founded upon. So we’ve got clear published laws that are replied fairly.
Coming back to Australia schemes, and how does that apply, well, strata schemes are creatures of statute, and when I say strata schemes, I also mean our community associations. They are created by statute is what I mean, and for them to have a power to do something, then you need to find that power in the relevant statute. Most of the time it’s going to be in the Community Land Management, the Community Land Development Act, the Strata Schemes Management Act, all the Strata Schemes Development Act.
The Management Act has a really broad authorizing provision. Both of them do, the Community Land Management Act & the Strata Schemes Management Act and effectively, it gives the owners corporation or the association, the power to manage , control, administer, the common property or association property, as the case may be. And that’s been interpreted really, really broadly. It gives owners corporations and associations some fairly broad powers, but they are limited by the fact that they have to relate to the association or to the owners’ corporation.
Now, what’s really interesting and in my experience as a practicing strata lawyer, for god, too many years to count, is that there is the ability for our owners corporations and our community associations to set out dispute resolution procedures. And they are set out in the Acts as something that the schemes can do. But in my experience, it’s really, really uncommon for schemes to do that. And it got me thinking, why don’t we do that? Or why don’t our schemes or our developers when they’re setting up these schemes? And then our schemes, our owners corporations, and our associations after they have been registered, can decide how they’re going to do regulate their dispute resolution procedures. I think some of it comes down to nobody knows, or very few people know that they have the power to do that.
Few people would probably be willing, or know how, to create a dispute resolution process because it is quite a unique thing to be drafting, a provision that sets out a dispute resolution process. It’s going to be binding on owners and occupants. And then even if one is drafted, it would still have to be registered. It should be passed as a by-law and put into the community management statement or the association management statements so it’s binding upon owners, occupants, and the association or the owners corporation themselves.
But that’s one clear way that owners corporations could themselves and community associations could themselves create more regulation. But it is something that I have just not seen in practice. There’s less than a handful, so less than five schemes that I can think of, that have written their own dispute resolution procedures.
What does that tell me? It tells me people aren’t aware that they can do it, as I’ve said before, but it may go deeper than that. Maybe people don’t want more regulation at their strata schemes.
What happens, though, if we don’t have regulations setting out processes for our strata schemes?
On one hand, you could say, well, maybe it’s going to be chaotic and it’s going to lead to more disputes because there is no procedure that is well known. And this is the rule of law. If it’s (the by-law is) set out, it’s clear, it’s applied fairly. Everybody knows the process , then it’s a fair and equitable system or at least it’s a system that everybody knows and it’s underpinned by our democratic society. If people don’t set out a procedures or add to the procedures for their schemes, well, maybe people are just sick of being overregulated.
But what would happen if we took away, for instance, the procedures on how to, you know, use our corporate governance, they would need, if we decided to repeal our schedules one and two of our Management Acts, to set out how committee meetings and how general meetings are to be called and held and how votes going to happen. We’d need to replace it with something. It would make very, very little sense in my mind to take away that type of regulation because it is actually useful. It may not be particularly well known by owner members, but it is there. It’s accessible. It’s reasonably clear and there’s a fair bit of case law that follows it.
So on the whole are we overregulated or are we underregulated? I think we’re actually going to say, my my overall view is we’re actually doing okay. We’ve been giving our owners corporations and community associations power to regulate themselves. The key (example) provision is to start or to regulate and put in place a dispute resolution process and very, very few schemes have done it. Whether this is because they don’t know they’ve got the power to do that, whether they don’t have the expertise to either write the dispute resolution process or the expertise to run it or whether they just do not want to and they’re quite happy with the universal provisions that they’ve got to now, I think it’s probably going to be more of the latter. They probably quite happy to rely upon the universal provisions that there is some case law around that sets out or all tries to determine any ambiguities.
So there’s just a little precis of my thought process on regulations within our strata schemes. Thank you.
Allison Benson
Kerin Benson Lawyers
E: [email protected]
P: 02 4032 7990
This post appears in Strata News #770.
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This article has been republished with permission from the author and first appeared on the Kerin Benson Lawyers website.
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