Lot Owners within a Strata Scheme claims for Damages (sometimes substantial) as a result of Failure in particular by the Owners Corporation to maintain the Common Property – Ongoing Problems – Urgent Consideration Required

16/08/2024

Watson & Watson Lawyers for many years have advised and acted for Lot Owners and Owners Corporations in relation to most aspects that arise from Strata Schemes and Strata Living.

Owners Corporations’ Obligations to Maintain Common Property

One major change introduced in the Strata Schemes Management Act 2015 was the right for a Lot Owner to claim damages suffered by the Lot Owner as a result or consequence of the Owners Corporation’s failure to properly maintain the common property.  Section 106(5) and (6) of the Strata Schemes Management Act 2015 (“SSM Act 2015”) allows a claim to be made in certain circumstances. 

Since the introduction of Section 106 (5) and (6) of the SSM Act 2015, there have been many successful claims some of which are for substantial amounts, due to the Owners Corporation’s failure in their duty to maintain the common property.

It is now more important than ever for an Owners Corporation and Strata Committee to understand their obligations and engage and communicate with Lot Owners, so as to properly maintain the building and to protect the building and the Owners Corporation.

Time Limits Appy

There are time limits for claims to be made by a Lot Owner against the Owners Corporation for damages, arising as a result of the Owners Corporation’s failure to maintain and repair the common property. 

One needs to consider how one determines the time in which a claim can be made under Section 106 (5) and (6) of the SSM Act 2015.

We refer to our Article 7 September 2023 in relation to the Decision on 6 March 2023 by the Court of Appeal of the Supreme Court of New South Wales in The Owners – Strata Plan 74232 v Tezel.  

One needs to consider when the Lot Owner first became aware of the loss having regard to the Decision in Tezel’s case.

Possible damages claimable by Lot Owner from Owners Corporation

The areas of damages that a Lot Owner may suffer are wide and varied and include amongst other things, loss of ability to utilise the Unit either wholly or in part, damages to fixtures and fittings within the Unit and damage to personal property. 

Delay by the Owners Corporation/Strata Committee in rectifying the damage often results in the damage becoming more severe and may lead to long periods that the Lot Owner cannot occupy the Unit or lease out the Unit. 

Losses in the extreme case, may require the removal of many of the fixtures and fittings in the Unit and also losses as a consequence of the Unit becoming uninhabitable.  We act for Lot Owners who have suffered severe losses.  In some cases, there has been losses of rent when the Lot Owner was unable to continue to rent the Unit until the rectification works had been completed and the condition of fixtures and structures that had deteriorated, due to delay by the Owners Corporation.

There has been a significant number of cases over the last 3 years having regard to the extreme weather events, and the effect of those weather events. 

There have been significant issues in both old and new Strata Unit buildings as to the failure of the Owners Corporation to maintain common property. 

Early Advice to be Considered

In the last few years, we have found that there are many more claims in relation to older buildings which have not been properly maintained or repaired or replacement for example, of windows which has allowed water ingress into the Unit which has caused losses to the Lot Owner. 

If for example, the damage is due to water ingress to the Lot, it is critical for the Owners Corporation and the Owner affected to properly investigate the cause of the water ingress and the effect of the water ingress. It is critical there be proper consideration of the factual matters and legal consequences at an early stage. 

There is an opportunity for the Owners Corporation to pass a Motion by Special Resolution under the Strata Schemes Management Act 2015 resolving not to maintain some common property under Section 106 however, this is a very limited right. 

There are also other examples of the Owners Corporation’s failure to maintain and repair the common property for example, we have recently acted for the Lot Owner of a Unit in which the balconies attached to some Lots within a small old strata block of Units, were unsafe and the balconies were unusable.  The Lot Owner was leasing out the Unit and had given a reduced rent to the existing tenants.  The claim against the Owners Corporation included repayment of lost rent by the Lot Owner.

There are steps that can and should be taken by the Lot Owner to protect their legal position. 

It is important that the Strata Committee and Owners Corporation take an active part in maintaining the common property and deal expeditiously with any failure and losses.  In recent years more than 80% of the matters in which we have been advising, have been resolved within a relatively short period. 

Preparation/Evidence Required

There is a need in all cases to have the appropriate evidence available in relation to the circumstances that occurred at particular dates, to allow one to make a claim or defend a claim.  In those circumstances, it is critical that there is an initial review and inspection by the appropriate person including appropriate Consultants, Experts in their field so as to consider the circumstances and a course of preparation to be adopted.

We recommend that at an early stage after the first conference, an inspection with the appropriate Expert(s) and our client on site (usually for a set fee) is undertaken for a preliminary discussion and an understanding and feedback to the clients.

Appropriate Expert(s) Required

It is appropriate and critical to consider who are the appropriate Experts who can give evidence firstly, to enable engagement with the other party (and hopefully settlement) and if not settled, to provide appropriate evidence and if required, to appear in proceedings.

Over many years we have engaged with a whole range of Experts who can assist and we have come across many who we would not recommend.  Critically you need to obtain the advice as so the cause and effect in a timely manner, to allow the appropriate Experts to provide Expert opinions with reasons for their opinions as part of the process.  Without the appropriate and experienced Experts skilled in giving Expert evidence acceptable by the Courts and Tribunal, your prospects of success are substantially reduced. The appropriate Expert to prove what you need to prove is essential. 

Who is responsible for the Damage and Losses

Another critical issue that needs to be considered at an early stage is who is responsible for the events that caused losses that have occurred.  It usually but not always includes the Owners Corporation however may in some circumstances, include others for example, the Lot Owner.

Early discussion between all relevant parties

We like to engage in correspondence and discussions with the responsible parties at an early stage, in an effort to resolve the matter without the need to fully litigate the matter.  The cost for the litigation is high.  Resolution is preferred so as to save the associated costs in relation to proceedings and other incidentals and sometimes, unintended consequences.

Contact Us

At Watson & Watson we almost always, offer and have an initial conference at a fixed fee, for the Lot Owner or the Owners Corporation to discuss the issues and we suggest a way forward to resolve the matter.  Initially we seek from you a brief note of factual matters to enable us to have a first conference for a fixed fee, at which time the issues can be discussed and a plan can be put in place to progress the matter.

If you are affected in any way by any issues relating to building works, defective building works, failures of others to properly undertake their duties, please contact the experienced building and construction lawyers at Watson & Watson by contacting Richard Watson, Accredited Specialist Commercial Litigation Building and Construction Stream by contacting his Personal Assistant Shereen Da Gloria to discuss the matter.

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 9221 6011.