Gokani-Robins Pty Ltd v The Owners – Strata Plan No 77109 [2025] NSWCATAP 107
In a key ruling for strata law in New South Wales, the NCAT Appeal Panel has affirmed that owner’s corporations can lawfully include cost recovery provisions in their by-laws. The decision confirms that such clauses are valid and enforceable when they serve a legitimate purpose and are drafted in a reasonable and appropriate manner.
Key Features of the Fire Safety By-Law
The dispute centred on a fire safety by-law that contained the following elements:
- Restrictions and obligations imposed on owners and occupiers.
- An indemnity clause requiring owners and occupiers to cover claims, charges, and costs arising from false fire alarms due to negligence, denial of access, or breach of the by-law.
- A right for the owner’s corporation to recover costs through legal action in a competent Court or Tribunal.
- A default mechanism allowing the owners corporation to remedy breaches directly.
Legal Challenge by Lot Owners
Property owners contested several provisions of the by-law, arguing they were harsh, unconscionable, or oppressive. This challenge followed legal proceedings initiated by the owner’s corporation in the Local Court to recover costs related to false fire alarms, relying on the by-law.
In the initial Tribunal ruling, the following provisions were upheld as valid and not oppressive:
- Restrictions on conduct interfering with fire safety systems.
- Powers granted to the owner’s corporation to provide notice and access for fire safety inspections or repairs.
- Indemnities covering the owner’s corporation’s costs arising from negligent or wrongful acts.
- The owner’s corporation’s ability to investigate and attribute responsibility for false alarms.
- Rights to demand repayment and pursue recovery actions.
- Enforcement powers enabling the rectification of breaches by lot owners or directly by the owner’s corporation.
Appeal Panel Upholds Enforceability of By-Law
The Appeal Panel dismissed the appeal, reaffirming the decision in favour of the owner’s corporation. The Panel clarified several principles relevant to assessing by-laws under Section 150 of the Strata Schemes Management Act 2015 (NSW), particularly where allegations of harshness, unconscionably, or oppressiveness are raised.
The Panel confirmed that an owner’s corporation’s authority to make by-laws is broad and not restricted solely to matters outlined in the Act or the model by-laws. Moreover, courts should interpret by-laws in a way that supports their validity wherever possible.
Importance of Drafting Cost Recovery By-Laws Carefully
This case highlights both the practicality and enforceability of cost recovery by-laws when they are tailored to a scheme’s specific needs and drafted with precision. In contrast, generic or poorly adapted by-laws are more vulnerable to being struck down as invalid.
Implications for Strata Schemes Across NSW
The decision reinforces the authority of owner’s corporations to impose obligations and financial responsibilities on lot owners in the interest of building safety. At the same time, it underscores the necessity of incorporating clear drafting, procedural safeguards, and proportional enforcement mechanisms to ensure such by-laws can withstand legal scrutiny.