A comparison of reforms to terminating a strata in British Columbia and New South Wales
January 11, 2016
BY Kevin Zakreski
This post is a follow up on a topic noted in an earlier post, discussing reforms to New South Wales’s strata-property legislation that are expected to come into force later this year. The sweeping reforms contained in this legislation include a fundamental revision of how the Australian state approaches terminating a strata.
In addressing this topic, New South Wales has something in common with British Columbia, which also passed reforms to terminating a strata last year—and which are also not yet in force.
British Columbia’s original strata-property legislation, dating from 1966, was modeled on New South Wales’s first-generation act. Both jurisdictions took an approach to termination that emphasized obtaining unanimous consent to a decision to terminate. In addition, in both British Columbia and New South Wales legislation was preceded by multi-year law reform studies.
British Columbia and New South Wales each passed legislation late last year that will fundamentally change termination of a strata. The jurisdictions took different approaches: British Columbia’s legislation amends existing procedures for cancelling a strata plan and winding up a strata corporation with or without a liquidator; New South Wales creates a new part in its legislation, called a “strata renewal process,” which is intended “to facilitate the collective sale or redevelopment of freehold strata schemes in accordance with the process set out” in the act. As a skeletal outline of the main points for each statute shows, this difference in approach leads to an interesting study in contrasts.
What is the threshold of eligible voters in the strata that must be reached to authorize termination?
- BC: 80 percent
- NSW: 75 percent
What action or document sets the process in motion?
- BC: resolution
- NSW: strata renewal proposal
Is a special committee required by the legislation?
- BC: no
- NSW: yes—a strata renewal committee must be established to create a strata renewal plan
Is approval of an oversight body required?
- BC: yes—BC Supreme Court
- NSW: yes—NSW Land and Environment Court
Does the legislation set out criteria to guide the court’s decision?
- BC: yes
- NSW: yes
Does the legislation encourage or require mediation or alternative dispute resolution for claims of dissenting owners?
- BC: no
- NSW: yes
Does anyone other than strata-lot owners have standing in the court proceedings?
- BC: yes—registered chargeholders
- NSW: yes—(a) each registered mortgagee or covenant chargee of a dissenting owner’s lot, (b) if the strata renewal plan is for a collective sale of a strata scheme—the proposed purchaser (if known), (c) if the strata renewal plan is for a redevelopment of a strata scheme—the local council and the proposed developer (if known), and (d) any other person directed by the court
Does the legislation have special rules for small strata corporations?
- BC: yes—strata corporation consisting of fewer than five strata lots may decide not to apply to court for approval
- NSW: no
Does the legislation exclude certain kinds of stratas from its scope?
- BC: no
- NSW: yes—legislation only applying to “freehold strata schemes,” with the exception of “(a) a scheme relating to a parcel that is the subject of a development contract, and (b) a scheme in which one or more of the lots in the scheme are, or form part of, a retirement village within the meaning of the Retirement Villages Act 1999.”
Even though it conveys some of the scope of the reforms, this outline only gives a sense of how the two acts will operate. The New South Wales act, in particular, is highly detailed and directory, particularly in relation to the proceedings of the strata renewal committee and the contents of the strata renewal plan.