Conflict in Strata Development: The Need for Differentiated Dispute Resolution Rules

Conflict occurring in apartment buildings, medium-density housing and master planned estates, is an important issue as use of strata title in developments grows in Australia. Strata title developments consist of individual lots and are founded on a legal structure where some shared, or common, areas and services are jointly owned. In Victoria, the legal entity holding shared assets is known as the owners corporation and the legislation that regulates ownership of shared assets is the Owners Corporation Act 2006. This legislation provides a three tier or step dispute resolution scheme for conflict that arises in strata developments. In the first tier of internal dispute resolution the regulations provide model rules of dispute resolution. This article reports on research into dispute resolution under the Act, and in particular into the effectiveness of the model rules. The research was conducted in Victoria in 2011, gathering data from a range of key stakeholders in owners corporations, including 34 property managers of owners corporations (known commonly as 'strata managers'). This article reports on the range of conflict experienced by the property managers who participated in this study. Analysis of the data provided by the property managers shows that difficulties with conflict and the model rules for dispute resolution under the Act were most evident in small and high-rise apartment buildings. The most satisfied with the model rules were managers in medium sized owners corporations. Whilst a majority of managers used the model rules, over a third used their own informal rules. These findings lead the authors to argue that there is a need for differentiated rules for dispute resolution dependent upon size of the development. Additionally, there are a number of informal rules being used that it would be valuable to research to ascertain their effectiveness and to provide owners corporations with added choice in dispute resolution.