ROUNDUP: Tying myself in knots over NCAT loophole


Bear with me folks, because the so-called strataguru is stumped. A couple of weeks ago my colleague and partner Sue Williams wrote this story that basically said the whole strata by-law breach fines system had a massive hole in it.

Specifically, it claimed that an NCAT senior member had said the Tribunal did not have the power, under the new strata laws, to order financial penalties for failure to pay fines incurred by by-law breaches.

Two highly experienced lawyers, Amanda Farmer and Adrian Mueller, both supported this view, based on a statement in the published findings on a case about a woman who lifted her carpet and polished her concrete floor in defiance of her by-laws and, let’s face it, basic common sense.

But forget all that, the important hing is, in their findings, the Tribunal Appeal panel said that she could be fined under the old laws (under which the breach occurred) but not the new ones.

This is what their findings say:

‘The 2015 Act does not contain any substantive provision that would allow the Tribunal to order the payment of pecuniary penalties for non-compliance with orders concerning the operation and management of a strata scheme.’ 

Does that sound like the Tribunal is saying it can’t impose fines for failure to comply with orders concerning by-law breaches to you?  It does to me.

So I go back to Fair Trading several times to ask if this is true and, if so, what are they going to do about it? And, if it’s not true,

Here is the best of the worst of this week’s posts to the Forum:

Owner has built a shed on their car space, now their neighbour can’t open their car door.  That’s HERE.
How a rogue renovator scored a sweetheart deal on costs.  That’s HERE.
Our strata manager is trying to get us to review the wrong set of by-laws.  That’s HERE.
What do you do when four out of six owners vote to give themselves chunks of common property?  That’s HERE.
Can I show my lawyers details of owners corp and strata committee failings or are they private? That’s HERE.

why are Tribunal members making such crazy statements.

This is what I got back today:

“In response to your first query on the breach leading to a penalty – where there is a by-law breach, the order the Tribunal makes is for the payment of a monetary penalty; it is not for some other action to take place, which if a person fails to do would be grounds to make a second order requiring them to pay a monetary penalty. The latter scenario used to be the process under the 1996 Act.”

Do you get it?  No, me neither.  But it goes on …

“In other words, under the 1996 Act process, two orders would be made – the first would be to rectify the breach of the by-law, and the second would be to fine someone for not complying with the first order. 

“Under the 2015 Act process, the first step is that a fine is simply imposed for not complying with the by-law. No first order needs to be made. There is simply a monetary penalty for breaching the by-law.

“Regarding your query re the correctness of the Tribunal’s reasoning – in Fair Trading’s view, the Tribunal’s statement is correct and is consistent with the statement I provided on Friday.

OK, flicking back through our notes, this is what Fair Trading said on Friday: “Under the Strata Schemes Management Act 2015 (the 2015 Act), the NCAT does have the power to impose monetary penalties on strata scheme owners and occupants who have failed to comply with Tribunal orders requiring them to comply with by-laws. This power is in section 147 of the 2015 Act.”

OK, but isn’t that exactly the opposite of what the Tribunal Member said. Apparently not.

“The statement [on Friday] explained that the 2015 Act confers on the Tribunal the power to require a person to pay a monetary penalty for breaching a by-law. The Tribunal’s statement does not contradict this, as the Tribunal’s reasoning says that the 2015 Act does not give it the power to require a person to pay a monetary penalty for breaches of orders.

“The power for the Tribunal to impose penalties for breach of Tribunal orders still exists under provisions in the Civil and Administrative Tribunal Act 2013.”

So the … wait a minute … the … umm … hang on … I think they are saying that since you no longer need an order before you impose a fine, then the Tribunal doesn’t need the power to impose a fine for ignoring an order because there is no order required.

What? Who’s on first?

OK, what that might mean is if you send a Notice To Comply to an owner and they fail to comply, and you apply to NCAT for a fine and the owner fails to pay the fine, NCAT can’t do anything about it because, when they made it a one-step process the new law removed the mechanism for an order requiring the miscreant to pay the fine.

And there’s your loophole.  Just refuse to pay your strata fines and, theoretically, there’s nothing anyone can do (Irony Alert: this is not soundor reliable advice).

But that’s what the member was saying. NCAT does not have the power to impose penalties for failure to pay fines for breaching by-laws.

I think …

The trouble is, on Friday, Fair Trading said the Tribunal did have the power to impose fines on strata residents for failure to comply with orders telling them to comply with by-laws.

Clearly, the fault is mine.  I had forgotten the basic principles of strata reporting in NSW:

  1. Fair Trading is never wrong.
  2. Tribunal members are never wrong.
  3. When they contradict each other, both of them are right.
  4. Logically, the only person who can ever be wrong is me.

And, anyway, it doesn’t matter because we live in strata and, really, nobody cares!

You can find the earlier episode in this sorry saga HERE.


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