Court approves first collective sale using new strata renewal process
On 8 August 2019, the Land and Environment Court approved a strata renewal plan for the collective sale of a 159 lot strata scheme where not all, but at least 75% of lot owners, supported the plan. The decision in Application by the Owners – Strata Plan No 61299 [2019] NSWLEC 111 is the first time that the Court has been asked to consider a strata renewal plan developed under Part 10 of the Strata Schemes Development Act 2015, which was introduced on 30 November 2016.
The application involved a large strata scheme in the Sydney CBD, which included 119 serviced apartments over 19 floors, a café and four levels of basement parking. The lot owners were investors, many living outside Australia. Although not all owners agreed to the strata renewal plan, the plan for a collective sale was supported by the owners of at least 75% of lots, satisfying the required level of support provisions of the legislation.
Even though none of the non-consenting owners sought to appear in proceedings, the Court was still required to examine each step in the renewal process to ensure compliance with the strict legislative regime, and the judgment considered the procedural steps at length.
The application overcame logistical difficulties involved in serving documentation on more than 100 owners, many of whom were overseas. The Court made ancillary orders relating to the reallocation of unit entitlements and was satisfied that the proposed distribution of sale proceeds under the renewal plan was not less than the compensation value of each lot. In approving the plan, the Court found that the terms of settlement were just and equitable in the circumstances.
This decision sets an important precedent for strata owners, demonstrating the ability of the strata renewal regime to balance the interests of both supporting and dissenting owners in achieving a positive outcome.