When a Three Way Split of Unit Entitlements Isn’t Enough

Anderson Stuart & Ors v Treleaven & Ors [2000] NSW Titles Cases ¶80-053

GoStrata’s CaseWatch is a short, sharp and easy-to-understand review of important and interesting Court and Tribunal decisions affecting Australian strata title stakeholders.

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Quick Read

This 2000 decision by the NSW Supreme Court is about a dispute over unit entitlements in a 3 lot waterfront Double Bay strata building. The 3 lots had equal unit entitlements but were different sizes with different views and features.  Because 2 of the strata owners were connected the other strata owner were always outvoted even though they owned the larger strata lot. So, in an unexpected twist in this dispute about reallocating the unit entitlements, both parties argued to have higher unit entitlements to give them voting control. The Strata Title Board [which decided strata disputes at the time] also took a strange approach by rejecting both valuer’s opinions but then averaging them and cross checking or verifying the averages against strata lot floor areas to order new unit entitlements in a 51/28/21 ratio. When the NSW Supreme Court considered the appeal, it had to decide on the correct approach in unit entitlement allocation cases and decided that there was a two step requiring decisions about the value of each strata lot before assessing whether than meant the unit entitlements were unreasonably allocated and then deciding if and how to reallocate them. The NSW Supreme Court decided that had not occurred at the Strata Title Board and that other valuation mistakes had been made so sent it back to the Strata Title Board to re decide it.  But, in a bizarre twist of fate, by that time the Strata Titles Act 1973 under which this case had started had been repealed, the Strata Titles Board had disappeared, and there was no place to hear the case; so, nothing happened. Despite that, this is the first and one of the only NSW Supreme Court decisions about strata unit entitlements and so it provides the most comprehensive summary of how to approach unit entitlement reallocations.

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Implications

The key implications of this strata case are as follows.

• The primary consideration in a unit entitlement reallocation case is the value of the strata lots.

• The ‘respective’ values of strata lots in section 119(2) means as the value applies individual or severally to each lot and not the relative values of the strata lots against each other.

• In an appeal, whether a Tribunal’s conclusions on facts was supported by evidence or not is a legal or mixed law issue [and not a fact issue], so can be considered.

• two step process is required to change unit entitlements in a strata building

• The floor area of strata lots isn’t determinative of value, especially when there isn’t evidence to support the prominence of that factor. 

• The principles in the High Court decision of Spencer v The Commonwealth apply to strata lot values.