A recent decision of the Appeal Panel of the NSW Civil and Administrative Tribunal (“NCAT”) indicates NCAT may have a wide power to order the making of a by-law different to that which the owners corporation rejected. The case dealt with when NCAT will make a common property rights by-law at the request of a lot owner when an owners corporation has unreasonably refused to make the by-law.
Facts and outcome
In The Owners – Strata Plan No 83678 v Khatib [2026] NSWCATAP 153 (decided on 18 May 2026) (Khatib), a lot owner in a 16 lot commercial strata scheme had installed an awning over the driveway entry to his lot to keep out rain. However, the lot owner did not get the owners corporation’s approval before installing the awning so it was unauthorised works. The lot owner subsequently submitted a retrospective common property rights by-law to authorise the awning installation and allow them to keep it. However, at a general meeting, the owners corporation refused to make the by-law. The lot owner applied to NCAT for an order to authorise the works and an order making the by-law. These orders were sought pursuant to sections 126 and 149 of the Strata Schemes Management Act 2015 respectively. At first instance, NCAT ruled in favour of the lot owner and made a works authorisation order under section 126 and an order prescribing the making of a by-law under section 149: Michael Khatib v The Owners – Strata Plan 83678 [2005] NSWCATCD unreported 19 June 2025. The owners corporation appealed but lost the appeal with the Appeal Panel finding in favour of the lot owner.
NCAT’s limited power to write a by-law
One interesting aspect of the case was that the text of the by-law NCAT ordered be made was slightly different to the text of the by-law that had been submitted to the owners corporation and rejected by it at the general meeting.
Up to this point, it had been thought that in cases like Khatib, NCAT’s power to make a by-law under section 149 was limited to making the by-law that was rejected by the owners corporation, that is the terms of the by-law NCAT orders to be made have to be identical to the terms of the by-law the owners corporation rejected. However, the Khatib decision indicates this limitation does not apply, at least if only minor differences exist between the two. To understand why the Appeal Panel reached this decision, the words of section 149(1)(a) need to be considered.
Section 149(1)(a) provides:
The Tribunal may make an order prescribing a change to a by-law if the Tribunal finds—
- on application made by an owner of a lot in a strata scheme, that the owners corporation has unreasonably refused to make a common property rights by-law …
[emphasis added]
The highlighted words in section 149(1)(a) above indicate that the by-law referred in the opening words of section 149 does not have to be the same by-law referred to paragraph (a). At paragraph 138 of the Appeal Panel’s decision, it is indicated that use of the indefinite article “a” immediately before “common property rights by-law” instead of the definite article “the” leads to this conclusion. In other words, once NCAT finds there has been an unreasonable refusal to make a common property rights by-law, NCAT’s power to make an order prescribing a change to a by-law (which includes making a by-law: section 133) is enlivened and it is not limited to the text of the rejected common property rights by-law.
Both NCAT at first instance and the Appeal Panel said that the differences in the text between the by-law the owners corporation rejected and the by-law that was ordered be made were minor. At paragraph 140 of its decision, the Appeal Panel said it was not necessary for it to determine the extent to which the Tribunal may depart from the text of the by-law rejected by an owners corporation when it makes an order prescribing the making of a by-law. So, it remains to be seen how far NCAT will take its new ability to write a by-law. It would be a significant advance in NCAT’s jurisdiction and powers and possibly lead to more cases if NCAT could order a by-law that was in substance different to that rejected by an owners corporation.
What else did NCAT decide?
Both NCAT and the Appeal Panel dealt with the owners corporation’s objections to the by-law to determine whether the objections meant there was an unreasonable refusal. Some of those objections and the findings by the Appeal Panel rejecting them in Khatib were:
- Objection: The proposed by-law would conflict with the owners corporation’s existing by-laws. This was rejected because as indicated by the Appeal Panel at paragraph 45, when a new by-law is made and it is inconsistent with an existing by-law, then to the extent of that inconsistency, the new by-law repeals or amends by implication the existing by-law.
- Objection: The new awning did not comply with the Building Code of Australia. However, the lot owner had a structural engineer’s report stating to the effect that there was compliance. The owners corporation had not served any evidence of non-compliance, so the Appeal Panel rejected this argument. This highlights that if an owners corporation is going to refuse to make a by-law on a ground such as non-compliance with the Building Code of Australia, it may need evidence at an NCAT hearing of that non-compliance to avoid NCAT finding that its refusal was unreasonable.
- Objection: The lot owner had not obtained development approval before installing the awning. However, the lot owner had obtained a building information certificate (BIC) from the local council under the Environmental Planning and Assessment Act 1979. A council typically issues a BIC when it does not have a concern (such as a concern about safety or a non-compliance) that justifies it making or seeking orders such as for demolition. The Appeal Panel said that the existence of the BIC meant the objection based on a lack of development approval was unreasonable.
A take away point here may be that planning law can be difficult for lay people such as owners corporations, strata managers and lot owners to understand and therefore there is always the risk that work that requires development approval is carried out without that approval. A BIC represents a pathway to address and cure this non-compliance.
- Objection: The awning would obstruct common property maintenance. The Appeal Panel rejected this because there was no evidence of it at first instance in NCAT. An attempt by the owners corporation on appeal to introduce new evidence to establish this was rejected.
This ruling re-enforces a long applied legal principle strongly adhered to by courts and NCAT: an appeal is not the opportunity for an appellant to re-run the case they just lost and is not an opportunity to adduce new evidence in the appeal that could have been given during the first instance hearing but was not. In short, courts and NCAT expect parties to put their best case at the first instance hearing and to bring all the available evidence to that hearing. There are no second chances.
- Objection: The awning represented an insurance risk. There was no evidence of this at first instance before NCAT and the attempt in the appeal by the owners corporation to introduce evidence on this point was rejected by the Appeal Panel.
A claim often seen in strata disputes is that some proposed or unauthorised works affect an owners corporation’s insurance position such as by increasing the premium. Such a claim can be difficult to prove without evidence and sometimes an insurance expert may be needed to provide that evidence.
In addition to the above, the owners corporation did not have any lot owner as a witness to give evidence about the adverse impact of the awning on the use and enjoyment of their lot or the common property. In most cases under sections 126 and 149, for an owners corporation to be successful, it will need to call lot owners as witnesses so that they can give evidence about the impact on them of the works in question and why they voted to reject approval of works or a common property rights by-law.
This is general information and should not be considered to be legal advice. You should obtain legal advice specific to your individual situation.
Author: Carlo Fini & Allison Benson