Key Points

The Strata Company applied for various Declarations and Orders that the Occupier of a Lot contravened Scheme By-laws by storing a mass amount of items including furniture, vehicles and "rubbish":

(a) on Common Property;

(b) in front of a fire exit; and

(c) on other Owners' Lots,

which impeded other Owners' use and enjoyment of their Lots.

Despite the Tribunal finding in the Strata Company's favour and making the Declarations sought and ordering the offending Owner to remove his property from the Common Property and other Owners' Lots within 14 days, the Tribunal refused to impose a monetary penalty as sought by the Strata Company because:

(a) whilst the Tribunal was satisfied that the offending Owners' conduct had: "seriously inconvenienced" other Owners, the Strata Company failed to adduce any objective evidence that the Owners' conduct had caused: "serious adverse consequences" to any other Owner; and

(b) the Act allows the Tribunal to make an Order that the offending Owner compensate the Strata Company if they fail to comply with the Tribunal's orders.

The legislation

If the Tribunal is satisfied that a person has breached the Scheme By-laws, it can order that person to pay a specified amount of money to a Strata Company by way of penalty for their contravention of the Scheme By-laws.

However, the Tribunal cannot impose a penalty on the Strata Company.

The Tribunal can only impose a penalty if it is satisfied that:

(a) the contravention has had serious adverse consequences for a person;

(b) the person has contravened the Scheme By-laws on at least 3 separate occasions; and

(c) the person has been given a notice under section 47 of the Act and contravened that notice.

Any penalty cannot exceed the amount fixed in the Regulations (currently AU$2,000).

A daily penalty can only be imposed for a continuing contravention of the Scheme By-laws if authorised by the Regulations but the Regulations do not currently include such an authorisation.

Discussion

The Strata Company had not issued any notice to the Owner under section 47 of the Act and did not rely on any such notice in the proceedings.

The Strata Company alleged that the evidence from its 11 witnesses demonstrated that the offending Owners' conduct had: "severe and adverse consequences" on them collectively and individually including:

(a) "poor aesthetics";

(b) diminishing amenity;

(c) health hazards including an increase in rats and other vermin; and

(d) fire, obstruction and safety hazards.

Outcome

The Tribunal held that:

(a) the Act and the Regulations did not allow the AU$5,000 penalty and AU$500 a day daily penalty for any continuing breaches as sought by the Strata Company;

(b) the phrase: "severe and adverse consequences" means a serious unfavourable effect or result;

(c) it was not satisfied that the Owners' conduct diminished the value of the Lots in the Scheme or caused a health hazard because the Strata Company did not adduce any expert evidence to that effect and the 11 witnesses' evidence to that effect was unqualified and without any objective foundation;

(d) the offending Owners' conduct only amounted to a: "significant inconvenience" to other Owners (without explaining why a "significant inconvenience" is not a "serious unfavourable effect"); and

(e) whilst breaches of the By-laws cannot be condoned, it was not an appropriate case to award a monetary penalty.

Key takeaways

The decision in The Owners of Matilda Units, Strata Scheme 33443 v Metzger demonstrates that the Tribunal will be reluctant to order Owners to pay a monetary penalty to a Strata Company on the grounds of: "severe and adverse consequences" unless the Strata Company can provide objective, qualified evidence that Owners have suffered such consequences.

Strata Companies that are considering applying to the Tribunal for the imposition of monetary penalties against Owners should consider:

(a) whether they have or can obtain evidence of: "severe and adverse consequences" including obtaining any relevant expert reports; or

(b) whether it would be more appropriate to issue the offending Owner with a notice under section 47 of the Act and then apply for the imposition of a monetary penalty based on any contravention of that notice.

Strata Companies seeking the imposition of a monetary penalty do not need to prove: "serious adverse consequences" if they can otherwise show that they issued a notice under section 47 of the Act and the Owner contravened that notice.

From a time, cost and evidentiary perspective, it is likely much easier for Strata Companies to prove the issuing and breach of a "section 47 notice" compared with proving "serious adverse consequences".

For guidance on Strata Titles issues, or any related concerns, feel free to contact John Park or Abbi Beckwith.