Why Can’t I Have a Bigger Slice of the Unit Entitlement Pie
Sahade v The Owners - Strata Plan 62022 [2014] NSWCA 208
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.
Quick Read
This 2014 decision by the NSW Court of Appeal is over a dispute about changing unit entitlements in a 3 lot Point Piper strata building with 30/30/40 unit entitlements even though one strata lot was worth as much as the other two lots combined. Despite that clear difference between values and unit entitlements, the CTTT did not change them. The key issue for the NSW Court of Appeal was whether other considerations, like the impact on voting control, was relevant to unit entitlement cases. After considering s 183 and the earlier NSW Supreme Court decision in Anderson Stuart & Ors v Treleaven & Ors, the Court decided that although the market values of the strata lots was the primary consideration, good strata building governance considerations could legitimately impact Tribunal decisions about the original unreasonableness of unit entitlement allocations and its discretion to change them or not. The NSW Court of Appeal also summarised the range of impacts that unit entitlements have on strata building operations. So, it sent the case back to the CTTT to reconsider it on those matters only. The decision is an important development in how Tribunals can decide unit entitlement cases by opening things up and It also confirms the principles applied in the earlier on unit entitlements.
Implications
The key implications of this strata case are as follows.
Unit entitlements can only be changed under an ‘only if’ test in two situations under s 183.
First, if unit entitlements were unreasonably allocated when the strata scheme lot configuration was settled [the first or later subdivision plans].
Second, if unit entitlements became unreasonable when a change in use of the lots occurred.
Unless there is a strata development contract, only the respective values of strata lots is relevant to a Tribunal.
Value means market value as decided in Anderson Stuart & Ors v Treleaven & Ors on the principles in Spencer v The Commonwealth.