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Say what you mean! A cautionary tale to drafters of strata by-laws

22 April 2020

#Property & Real Estate

Elly Ashley

Published by Elly Ashley, Bribie Stansfield

Say what you mean! A cautionary tale to drafters of strata by-laws

The appeals panel of the NSW Civil and Administrative Tribunal (NCAT) has considered the interpretation of a by-law in the recent decision of The Owners – Strata Plan No 91157 v Yoolee Holdings Pty Limited; Yoolee Holdings Pty Limited v The Owners – Strata Plan No 91157 [2020] NSWCATAP 6 (Yoolee Decision)

The Yoolee Decision provides a timely reminder that a by-law will be interpreted based on the four corners of the document. The decision should serve as a cautionary tale to drafters of strata by-laws to be clear and concise drafting by-laws.

The facts

Yoolee Holdings Pty Limited (Yoolee) owned all of the retail lots and three of the four commercial lots in a mixed use strata scheme at Milsons Point.

Yoolee sought to lodge a development application with North Sydney Council to undertake building works to the lots it owned and to change the lots’ use to a college (Development Application).

North Sydney Council required a letter from the Owners Corporation confirming that they consented to Yoolee’s Development Application before the Development Application could be accepted by the Council.

Relevantly, By-law 37.1 of the strata by-laws provided that:       

37.1 Approval by a Government Agency

An Owner or Occupier of a Retail Lot or a Commercial Lot may use their Retail Lot or Commercial Lot for any purpose, and during the hours, approved by a Government Agency. The Owners Corporation must without delay give its consent to the lodgement of an application to a Government Agency (as owner for the purposes of the Planning Act) for a particular use, or for specified hours, if requested by an Owner or Occupier of a Retail Lot or Commercial Lot.

Yoolee tried a number of times to obtain the Owners Corporation’s consent to the Development Application, including by referring the Owners Corporation to By-law 37.1. 

Frustrated by the process and unable to progress its Development Application, Yoolee commenced proceedings at NCAT seeking an order that the Owners Corporation consent to the application.

Decision at first instance

At first instance, NCAT ruled in favour of Yoolee and held that:

  • ordinarily, s 49(1)(a) of the Environmental Planning and Assessment Regulation 2000, which required consent from the owner to the making of a development application, can be characterised as conferring on the owners corporation a power to “veto” the making of an application;
  • By-law 37.1 deliberately changed this position and was registered in order to advise the world that the Owners Corporation would not exercise its veto right in respect to applications made by the retail and commercial lots;
  • whilst By-law 37.1 only referred to applications for “a particular use or for specified hours”, the phrasing of By-law 37.1 should be interpreted broadly;
  • Yoolee’s proposed physical works arose wholly from the proposed “use” of the lot and was therefore included within the parameters of By-law 37.1; and
  • accordingly, the Owners Corporation was required to without delay, give their consent to the Development Application.

The Owners Corporation subsequently appealed NCAT's decision, arguing that NCAT was mistaken in its interpretation of By-law 37.1.

Decision on appeal

When considering the correct interpretation of By-law 37.1, the Appeal Panel of NCAT found that:

  • when interpreting a by-law, the starting point is to consider the language of the By-law in the context of the relevant legislation;
  • plainly in its terms, By-law 37.1 referred only to an approval for an application for the use of a retail lot or a commercial lot and the hours of that use. By-law 37.1 did not expressly refer to an approval for, or an application for, any other kind of development in relation to a retail lot or a commercial lot, such as the carrying out of works;
  • the original decision overlooked the fact that the planning system set up under the Environmental Planning and Assessment Act 1979 (EP&A Act), treats ‘the use of land’ and ‘the carrying out of a work’ as separate kinds of developments, each of which may require consent under the EP&A Act;
  • there was no indication on the facts that By-law 37.1 was intended to deal with proposed physical works, or with a proposed change of use to the property; and 
  • there was no basis for the original members to infer that it dealt with either of those things in the absence of express reference to them.

Given the above, the Appeal Panel ruled that the order made by NCAT at the first instance should be quashed and the matter should be remitted back to the relevant panel for reconsideration.

Takeaways

The Yoolee Decision highlights the importance of drafting clear and concise by-laws.

If the intention of a by-law is to allow retail and commercial lots owners flexibility to lodge any development application, then the drafting of the by-law needs to be wide enough to allow for this.

Authors: Elly Ashley & Bribie Stansfield

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.

Elly Ashley

Published by Elly Ashley, Bribie Stansfield

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