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Owners Corporations and owners consent to Development Applications - Work on common property

Newsletter 22 April 2014

Section 78A of the Environmental Planning and Assessment Act 1979 (NSW) provides for the making of a development application (DA) subject to compliance with the requirements of the regulation. Clause 49 of the Environmental Planning and Assessment Regulation 2000 (NSW) (regulation) mandates that a DA needs to be either made by the ‘owner’ of the land affected by the DA or any other person so long as the owner has provided consent in writing.

In a recent unreported Land and Environment Court case in which TressCox were acting that involved the modification to the fit out and use of a licensed restaurant in a strata scheme, the Court was faced with the issue of the uncertainty of not knowing whether the DA (and subsequent development consent) were valid due the fact that the DA when made was signed and sealed by the managing agent of the strata scheme.

The DA contemplated works to be carried out on common property, namely the construction of an exhaust duct from the kitchen which went through the wall and was affixed to the exterior of the building which constituted an encroachment onto common property.

When the council accepted the DA (and granted development consent) it did so on the basis that the DA was duly authorised by the owners corporation of the strata scheme. The Council did not go behind the application to verify the authority vested in the strata managing agent.

One of the unit owners within the strata scheme objected to the section 96 modifications proposed by the restaurant operator. The Council rejected the modification on merit grounds and the operator appealed to the Court. During the proceedings the objecting unit owner (who was also a member of the Executive Committee of the strata scheme) raised the issue about not ever seeing the DA and never consenting to the application being made. This fact raised some difficulties for the Court standing in the shoes of the Council in determining the section 96 modification.

It would seem that it is often the case that local councils merely accept DA’s without questioning the validity of the owner’s consent.

In the case of Owners-Strata Plan 37762 v Pham and Others [2005] NSWLEC 500 which related to a development application for a spray booth in a lot of a strata scheme that also required a ventilation system that encroached into the common property (i.e. beyond the boundaries of the strata scheme lot where the spray booth was to be erected), the Court said that the determination of the development application by the Council was ultra vires (i.e. beyond its statutory power) because the granting of development consent for the spray booth was without proper owners’ authorisation as the ventilation works were on common property.

As with all strata schemes which have a strata managing agent, that person normally performs a number of duties on behalf of the owners corporation. Part 4, Divisions 1 & 2 of the Strata Schemes Management Act 1996 (NSW) (SSMA) provides for the appointment of a strata managing agent and also provides for the range of functions the agent may perform. This may include all of the powers of the owners corporation and its executive committee which would include the signing and sealing of DA’s.

Whilst an owners corporation has the ability to delegate all of its functions to a strata managing agent, this delegation of powers does not extend to the making of a decision required to be made by the owners corporation such as the passing of a ‘special resolution’ for the purposes of section 65A of the SSMA when the works proposed by the DA are to be carried out on common property.

Simply because a strata managing agent signs and seals a DA and the Council grants a development consent to works on common property that is not the ‘green light’ for a lot owner to perform those works without a ‘special resolution’. A ‘special resolution’ passed by the owners corporation is still required regardless of the fact that a development consent has been granted.

In the present unreported case the strata managing agent did not have the power to sign a DA nor had there been any ‘special resolution’ made by the owners corporation at a general meeting consenting to the alteration to the common property.

Hence it is vitally important for strata managing agents to be aware of the scope of their respective delegated functions when dealing with development applications particularly where they propose any work on common property. Failure to provide the proper owners’ consent to a DA may lead to any development consent (irrespective that the council has not checked the application and consequently granted approval) declared invalid and void ab initio (i.e. void from the beginning).


Christopher Conolly, Partner
Sydney

Newsletter 22 April 2014
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