Knight v SP 208: When NCAT Overrides an Unreasonable Refusal

Sometimes an owners corporation just digs in. The owner wants a renovation, the committee says no, and the reasons given don't really hold up. NCAT has the power to step in — but only if the refusal was unreasonable. Knight v The Owners SP 208 [2022] NSWCATCD 170 is a useful recent example of how that test works, applying the principles set by the High Court in Ainsworth v Albrecht.

The starting principle — Ainsworth v Albrecht

The High Court decision in Ainsworth (2016) set out the framework. If an owners corporation refuses a proposed by-law for works on or exclusive use of common property, NCAT can override that refusal — but only where the refusal is "unreasonable." The High Court gave an extensive list of factors that go into the assessment.

The Knight decision in 2022 confirmed Ainsworth still applies and applied it to a renovation by-law dispute.

What the Knight owner wanted

The Knight by-law was a full-package renovation including:

• Renovating an existing bathroom and constructing a new ensuite
• Relocating the laundry and re-opening an existing doorway
• Renovating the kitchen
• Installing new external timber steps
• Replacing plantation shutters
• Removing an internal door and installing a new one
• Installing new lighting and ceiling fans
• Repairing and replacing the timber-framed glass roof in a light atrium

The owner provided a five-page by-law, six A3 pages of plans, a five-page heritage report, and a fifteen-page valuation report. The owners corporation refused to pass it.

What the OC's objections were — and how NCAT dealt with them

The Tribunal worked through every reason the OC gave. Some highlights, paraphrased:

• "The words used to describe exclusive use are too broad" — Rejected. The definition was clearly tied to a $14,500 compensation amount and a specific area marked on the valuation plan. Anyone in doubt could have asked at the meeting.
• "Exclusive use was sought for too many areas" — Rejected. Exclusive use was only sought for the area defined in clause 3.
• "Ambiguity in the valuation" — Rejected. There was no ambiguity.
• "Existing cabling is unauthorised and unsightly" — Rejected. That related to existing work, not the proposed work.
• "The plans were inaccurate and misleading" — Rejected. Plans were on 1:50 scale and included measurements.
• "The French doors would let people look into Lot 1" — Rejected as irrelevant.
• "Construction noise will be a problem" — Rejected. Noise during construction is "for a limited time" and not significantly different to noise from work on a neighbouring property.

NCAT ultimately found the refusal was not based on reasonable good sense or sound judgment, and overrode it.

The construction noise point — useful for many disputes

One of the most quoted parts of Knight is the construction noise reasoning. Many owners corporations object to renovations because of noise to neighbours. NCAT made clear: time-limited construction noise is not generally a reasonable ground to refuse a by-law. It's no different from work that might be done on a neighbouring property at any time.

What this means in practice

To override a refusal under Section 149 of the Strata Schemes Management Act 2015 (NSW), the owner needs to show:

1. The proposed by-law has been put to a general meeting and not passed
2. The refusal was unreasonable
3. There's no good substantive reason why the works shouldn't proceed

The Knight case shows the Tribunal will scrutinise each stated reason carefully. Vague objections, aesthetic preferences and irrelevant complaints won't carry weight. Real, substantive reasons — risk to common property, genuine safety concerns, breach of council approval — will.