Emil Ford Lawyers

More Issues with Strata Management Statements

Following a hearing which took up approximately twenty days, the Supreme Court of NSW was recently forced to refer to an outside decision-maker the question of whether the costs allocated between different parts of a Strata scheme were properly calculated.

The case related to a large mixed residential, commercial retail and car parking development.  The Owners' Corporation (representing the residential part of the dvelopments) brought proceedings in the Supreme Court arguing, amongst other things, that the original Strata Management Statement which had been entered into for the development was now an "unjust contract" for the purposes of the Contract Review Act.  The Owners Corporation also argued that the Strata Management Statement should be rewritten retrospectively to reflect the true allocation of costs within the strata scheme.

  "The Owners' Corporation ... brought proceedings in the Supreme Court arguing that the original Strata Management Statement was now an "unjust contract" ..."

Whilst previous decisions of the Supreme Court had contemplated that a strata scheme was "Stuck with" its SMS, (subject to the provisions of the SMS itself dealing with amendment), the Supreme Court in this decision considered that it was in fact possible for a Strata Management Statement to be re-written, although in this instance the court found the task too difficult itself, and referred the matter to an external expert.

This case highlights the need to be as accurate as possible in the initial drafting of an SMS.

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