NSW Civil and Administrative Tribunal (NCAT) confirms our view it does not have jurisdiction for damages claims under s.106(5) of the Strata Schemes Management Act

10/02/2020

Our advice to clients last year to avoid commencing damages claims in the Tribunal for breach of duty by Owners Corporations has been shown to be wise, with a further Decision of the Appeal Panel on 15 January 2020, following on from the Decision in October 2019 that we reported in our article published earlier this month.

If you have commenced proceedings in NCAT for such order, contact us and seek our advice so we can advise you of your best option to achieve a satisfactory outcome.

In the Decision of 15 January 2020, the Appeal Panel (constituted by Armstrong J, President Hennessy ADCJ, Deputy President and T Simon, Principal Member), considered 2 appeals from orders of the Tribunal awarding damages for breach of statutory duty and in particular, the issue of whether section 232 of the Strata Schemes Management Act 2005 conferred order enabling the Tribunal to order damages under section 106(5).  Both appeals were heard at the same time and concerned water penetration into apartments from common property outside.

In one case, the Tribunal had ordered the Owners Corporation to pay $73,744.76 in damages for breach of its statutory duty “to properly maintain and keep in a state of good and serviceable repair the common property.”  

In the other case, the Tribunal had found that the Owners Corporation had breached its statutory duty and ordered it to pay $97,000.

As our earlier article had indicated, there were two different strands of authority in the Appeal Panel – a 2018 Decision, which supported the availability of damages in the Tribunal, and Decision[1] in 2019 which did not.

In the Decision on 15 January 2020, the Appeal Panel essentially followed the 2019 Decision.

Even in the 2019 Decision, the Appeal Panel had expressed the tentative view, that, even though the Tribunal cannot order damages, it may have power to order compensation for the same kinds of losses. In the case in which $97,000 was ordered to be paid, this is the way in which the amount ordered was characterised by the Tribunal at first instance.

In determining that the Tribunal does not have power to order damages or compensation for failure to comply with the duty in section 106(1), the Appeal Panel has now essentially confirmed the good sense in our advice provided last year to our clients to commence a damages claim in the District Court.

Doing so has effectively saved our client tens of thousands of dollars in wasted legal expense, on both its own lawyers, and exposure to paying costs of the Owners Corporation for commencing proceedings in the wrong jurisdiction.

This is because in strata matters in Tribunal proceedings, where the amount in issue exceeds $30,000 (which was the case in both of the judgments under appeal), rule 38 of the Civil and Administrative Tribunal Rules 2014 applies, and generally, the successful party will obtain an order for their cost to be paid by the losing party.  Cost orders can be ordered in certain circumstances, even if the issues relates to amounts less than $30,000.

In both of the claims the subject of the appeals, the Appeal Panel proposed that the costs orders in the Tribunal below be set aside and that the lot owners be ordered to pay the costs of the Owners Corporation in the proceedings below and pay the Owners Corporation costs of the appeal, albeit permitting either side to file and serve submissions in relation to those proposed costs orders if there was any issue about them.

While there are now three partially inconsistent Appeal Panel Decisions about the same issue, as noted at [9] in the Decision on 15 January 2020:

“…None takes precedence. However, the current Appeal Panel is constituted by three members including two presidential members who are judicial officers. We agree with the observation of Bell J in Director of Liquor Licensing v Kordister Pty Ltd [2011] VSC 207 at [107] in relation to the Victorian Civil and Administrative Tribunal, that “... where there is a properly considered Decision on point, especially on a legal question and by a presidential member, considerations of consistency and predictability of Decision-making and maintaining public confidence in the legal process come into play.”

Watson & Watson have extensive experience in Strata law and are happy to advise on all aspects relating to Strata Title (and related building) issues. If you have commenced proceedings for damages in NCAT do not delay in obtaining advice in light of the current position that NCAT does not have jurisdiction or power to award damages in such cases. Please call Richard Watson Senior Strata Solicitor or Shereen Da Gloria his Personal Assistant to discuss your concerns and seek timely advice.