If you have ever experienced loss or damage at the hands of faulty common property in your strata scheme, you will appreciate that seeking compensation can be a difficult and complex process. To add to this scenario, there has long been confusion regarding the appropriate legal body to seek adequate relief from, whether it be through a tribunal or a relevant court. From the extensive costs of repairing the property, to the loss of tenants and rental income, it is clear to us that people require accurate and timely legal advice in reaching a remedy to this strata breach.
In a recent appeals decision, it was clarified that the New South Wales Civil and Administrative Tribunal (‘NCAT’) does not have the power to award damages to people who have suffered damage due to a breach of certain provisions of the Strata Schemes Management Act 2015 (NSW)(the ‘Act’).
Background: The Owners v Pullicin and Vickery [2020]
The Owners – Strata Plan No 74835 v Pullicin; The Owners – Strata Plan No 80412 v Vickery [2020] NSWCATAP 5 are decisions thatinvolved owners of two separate strata properties who both experienced water damage caused by faulty common property which formed part of their respective strata scheme. From this damage, the tenants of the properties complained of serious mould infestations and terminated their tenancies. Consequently, the owners sought damages from the owners corporation at NCAT for the cost of the damages to the property, along with a loss of rental income suffered.
The owners of each property relied on section 106(5) of the Act which grants an owner the right to recover damages from an owners corporation for the loss suffered as a result of a breach of duty, in this case the failure to maintain the common property. The owners argued that sections 232(1)(a) and (e) of the Act enabled NCAT the power to award damages for the accused breach of section 106(1).
On original hearing, each owner was successful in their claims, with NCAT ordering the owners corporation pay $73,744.76 in damages to Mr. and Mrs. Pullicin and $97,000.00 to Mr. Vickery respectively due to their failure ‘to properly maintain and keep in a state of good and serviceable repair the common property’.
Appeal
Following this decision, both respective owner’s corporations appealed the decisions on the grounds that NCAT did not have the power or jurisdiction to award damages under section 106 of the Act. On appeal, a three member panel ruled that NCAT did not have the power to order damages or compensation relating to a claim made under section 106(5) of the Act. The original orders were overturned in favour of the owner’s corporation.
Where does that leave property owners who wish to seek compensation from their owner’s corporation?
The importance of these decisions are two-fold:
1. they clarified a number of previous contradictory decisions made by NCAT, including The Owners Strata Plan No 30621 v Shum [2018] NSWCATAP 15, where it was ruled that NCAT did have jurisdiction to award damages in a similar case. The position is now clear; and
2. they outlined that all claims for damages made under section 106 of the Act can only be made through an appropriate court with relevant jurisdiction, being the Local, District or Supreme Courts of New South Wales. The difficulty with this process is that strata owners are now faced with the reality of having to run simultaneous matters through different bodies, for example bringing proceedings which seek the repair of common property are still heard by NCAT whereas damages must not be heard by an appropriate court.
The position is now clear that you should take your claims to court for damages caused by an owner’s corporation under the Act, rather than NCAT.
Conclusion
Should you currently own, or are looking to acquire a property which is part of a strata scheme, please contact our Property Law Department on bwong@marsdens.net.au or by phoning 02 4626 5077 to ensure your rights and obligations are being protected and upheld. In particular, if you have suffered damage due to damaged common property, and are facing significant financial loss from repairs and rental incomes, we are equipped to provide appropriate advice to assist you, particularly in the wake of legal reform.
The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.
