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Recently the Court of Appeal in NSW considered the scope of the power to create by-laws in regards to owners corporations in Casuarina Rec Club Pty Limited v The Owners – Strata Plan 77971.
The Court of Appeal overturned a Supreme Court decision which disallowed an agreement allowing the owners of strata lots to use the facilities of a resort located 15 minutes from the property was beyond the powers of the owners corporation. This agreement arose out of a by-law which was registered on the original strata plan. In their decision the Court of Appeal noted that the power to create by-laws should be generously construed and that there needed to be a nexus [connection] between the subject matter of the by-law and the use or occupation of the subject property. This was said to be a question of fact and degree and the Court of Appeal resisted the opportunity to formulate more precise rules to determine whether such a nexus existed.
In their decision and on the facts of the Casuarina Rec Club case, the Court noted that the by-law was an original by-law of the strata plan and as such all owners of lots within the strata plan had been aware, or should have been aware, of the arrangement at the time they had purchased their property.