🚗💸 Can a Strata Company Fine Owners for Illegal Parking? A Tribunal Decision Says Not So Fast!

Parking disputes are one of the most common frustrations in strata communities. But can a strata company simply issue fines to owners who repeatedly ignore the parking by-laws?

A NSW Tribunal decision provides an important reminder that having a by-law doesn't necessarily mean it's legally enforceable — even if it has been registered!

⚖️ Case: Neri v The Owners – Strata Plan No. 91204 [2021] NSWCATCD 164📅 Decision: 29 April 2021🏛️ Tribunal: NSW Civil and Administrative Tribunal (NCAT)📌 Outcome: Parking penalty by-law declared invalid and charges ordered to be removed or refunded.

🚘 The Problem: Residents Parking Where They Shouldn't

The Owners Corporation of SP 91204 had a problem that will sound familiar to many strata managers.

Residents were repeatedly parking in visitor bays and leaving vehicles on common property, despite by-laws prohibiting this behaviour.

One owner, Mr Neri, had been identified as having vehicles associated with his lot parked in visitor spaces and a motorcycle parked on common property.

The Owners Corporation decided to take action.

Rather than relying solely on the statutory by-law enforcement process, the scheme introduced a system of financial penalties.

💰 The charges escalated over time:

• First breach: $50

• Second breach: $100

• Third breach: $150

• Fourth breach: $500

Subsequent decisions introduced a $100 charge per parking event, which was later increased to $165.

The strata manager issued invoices for illegal parking and added the charges directly to the owner's levy ledger.

And that's where things became particularly interesting!

💳 When Parking Fines Become Levy Arrears

Mr Neri disputed the charges.

However, the strata manager advised that the penalties would not be removed and that payments received were allocated to the oldest outstanding amounts first.

This meant that money intended to pay ordinary strata levies was instead being allocated against parking charges.

The result?

⚠️ The owner was treated as being in arrears on his levies.

⚠️ Interest was charged on those arrears.

⚠️ The disputed parking penalties remained on his account.

Mr Neri took the matter to NCAT, seeking to have the penalties removed and payments refunded.

He challenged approximately $1,550 in charges.

⚖️ What Did the Tribunal Decide?

The Tribunal considered several important questions.

1. 🚫 Can an Owners Corporation Create Its Own Financial Penalties?

No — not under the NSW legislation considered in this case.

The Tribunal found that the power to make by-laws did not extend to creating an independent system of monetary penalties for breaches.

NSW legislation already established a process for enforcing by-laws, including issuing notices to comply and applying to NCAT for penalties where the statutory requirements were met.

An Owners Corporation could not bypass that process by creating its own penalty system.

Importantly, the strata manager argued that the charges were administrative fees associated with issuing parking notices.

However, the Tribunal examined how the charges actually operated.

They were described as illegal parking fees, increased according to the number of breaches, and were intended to penalise non-compliance.

Calling something an administration fee doesn't necessarily stop it from being a penalty!

2. 📜 Just Because a By-Law Is Registered Doesn't Mean It's Valid

This was another significant finding.

The parking penalty provisions were included in by-laws registered in 2016.

However, the Tribunal determined that the relevant provision exceeded the Owners Corporation's statutory powers.

It was therefore declared invalid from the date of registration.

The Tribunal also found that later purported amendments to the parking by-laws had not been shown to have been properly approved and registered.

💡 The lesson? A by-law must be both properly made and legally permissible. Registration alone does not guarantee validity.

3. 💰 Can Parking Charges Be Added to an Owner's Levy Ledger?

This is perhaps the most interesting part of the decision from a strata management perspective.

The Tribunal found that the parking charges should never have been imposed as debts because the by-law authorising them was invalid.

It went further, explaining that the NSW legislation did not permit an Owners Corporation to apply separate purported debts against an owner's levy ledger or redirect levy contributions to pay those debts.

This was particularly important because the owner had been treated as being in levy arrears after his payments were allocated against the parking charges.

The Tribunal ordered that the relevant charges be removed and, if already paid, refunded together with associated interest.

4. ⚠️ Procedural Fairness Matters

The Tribunal was also concerned about how the penalty system operated.

There was no proper process allowing an owner or occupier to respond to an allegation before being penalised.

Charges were imposed based on reports from residents and the strata manager.

The by-law also contained drafting errors, including references to a non-existent by-law numbered "0".

The Tribunal considered these issues additional reasons supporting its decision to declare the provision invalid.

🏛️ What Does This Mean for Strata Schemes in Western Australia?

Although this is a NSW decision and is not binding on WA strata schemes, it raises some very relevant issues for strata managers and Councils of Owners in Western Australia.

Under the Strata Titles Act 1985 (WA), strata companies have powers to make and enforce by-laws, but those powers are subject to legislative limitations.

In WA, the State Administrative Tribunal (SAT) has a role in dealing with alleged by-law breaches and may impose statutory penalties where the relevant requirements are satisfied.

A strata company cannot simply assume it has the power to issue its own fines because owners have voted in favour of a penalty by-law.

There are several important lessons.

🚗 Parking restrictions can still be enforced.

A strata company can have valid by-laws regulating parking on common property and the use of visitor bays.

However, enforcement needs to follow the appropriate legal process.

💸 Be careful with administration fees.

Charging an owner for issuing a breach notice, particularly where the charge is designed to punish non-compliance, raises questions about whether the strata company has the legal authority to impose it.

📋 Keep levy accounts accurate.

Disputed charges should not automatically be treated as ordinary levy contributions or used to manufacture levy arrears.

⚖️ Review your by-laws.

A by-law that has been registered for years may still be legally problematic. By-laws should be reviewed against the legislation and, where necessary, by a suitably qualified strata lawyer.

💭 Our Thoughts at XO Strata

Parking issues can be incredibly frustrating, particularly when residents repeatedly ignore the rules and prevent genuine visitors from using designated bays.

It's understandable that Councils of Owners want an effective deterrent.

But there is an important distinction between managing behaviour and imposing punishment.

A strata company is responsible for administering its scheme in accordance with the legislation. It is not a court or tribunal, and it cannot simply create powers that the legislation does not give it.

This decision also reinforces something we feel strongly about at XO Strata — transparency in financial management.

An owner's levy ledger should accurately reflect their financial obligations. Adding questionable charges and then allocating levy payments against those charges can create unnecessary disputes and potentially serious consequences for owners.

A by-law should never be used as a shortcut around proper governance.

✅ The Takeaway

The Tribunal declared the parking penalty by-law invalid, ordered the disputed charges removed from the owner's account, and required any amounts already paid, together with associated interest, to be refunded.

The message is simple:

📌 A strata company may have the authority to regulate parking, but that doesn't automatically give it the authority to issue fines.

Before introducing financial penalties or charging owners for alleged breaches, strata companies should ensure they have a clear legal basis for doing so.

Because sometimes the cost of enforcing an invalid by-law can be greater than the original parking problem!

📖 Read the full decision: Neri v The Owners – Strata Plan No. 91204 [2021] NSWCATCD 164

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Disclaimer: This article discusses a decision under NSW strata legislation. Western Australian strata legislation differs, and the decision should not be treated as a definitive statement of WA law. Strata companies should obtain appropriate legal advice before introducing or enforcing penalty provisions.