Hicks v The Owners – Unit Plan No 94 (Civil Dispute) - [2023] ACAT 78

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

HICKS v THE OWNERS – UNIT PLAN NO 94 (Civil Dispute) [2023] ACAT 78

XD 9/2023

Catchwords: CIVIL DISPUTE – statutory duty of owners corporation to maintain common property – duty to maintain common property includes taking steps to prevent common property from falling into disrepair, repairing common property when it is in disrepair, and carrying out repairs of any damage to other property occurring as a result of disrepair in the common property – statutory obligation to carry out repairs within a reasonable time – whether damage to the common property would cause real disruption to the tenant – whether unit owner is entitled to civil remedy where income is affected by damage to unit caused by disrepair of common property – whether a breach of a statutory duty gives rise to a civil remedy – evidence insufficient to found a claim of negligence – statutory remedy awarded pursuant to section 129(1)(d) of the Unit Titles (Management) Act 2011
Legislation cited: Unit Titles (Management) Act 2011 ss 19, 24, 125, 126, 127, 128, 129,
Strata Schemes Management Act 1996 (NSW) s 226
Strata Schemes (Freehold Development) Act 1973 (NSW) s 105

Cases cited:Bennettv Owners Unit Plan 932 [2016] ACAT 57
Castro v The Owners – Units Plan No 246 [2016] ACAT 111
Garcia v The Owners – Units Plan 10 [2017] ACAT 91
Kirk v The Owners – Units Plan No 2992 [2017] ACAT 102
McElwaine v Owners – Strata Plan 75975 [2017] NSWCA 239
The Owners Strata Plan 50726 v Thoo [2013] NSWCA 270
Sovar v Henry Lane Pty Limited [1967] HCA 31

Tribunal:Senior Member R Arthur

Date of Orders: 7 December 2023
Date of Reasons for Decision: 7 December 2023

AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) XD 9/2023

BETWEEN:

ALAN RICHARD HICKS
Applicant

AND:

THE OWNERS – UNITS PLAN NO 94
Respondent

TRIBUNAL:Senior Member R Arthur

DATE:7 December 2023

ORDER

The Tribunal orders that:

Pursuant to section 129(1)(d) of the Unit Titles (Management) Act 2011, the respondent is to pay the applicant the sum of $1,000.
………………………………..

Senior Member R Arthur

REASONS FOR DECISION

This is an application by a unit owner against an owners corporation in respect of damage done internally to the unit resulting in a loss of rent to the owner due to the time taken to repair the damage.

Parties

The applicant is Alan Hicks, who has been the owner of Unit 12 in Units Plan94 for many years. He lives interstate and his tenancy affairs are managed by his daughter, Rebecca Kneeshaw. The respondent is The Owners – Units Plan 94, (the OC). The executive committee of the OC is responsible for the management of units plan affairs, the actual management being carried out by a strata management company named Link.

Background

Units Plan 94, as indicated by its number, is one of the earliest created in the ACT. The premises of the units plan were constructed in the 1970s. They are located in Curtin. They consist of a two-storey block configured in an oblong shape. Unit 12 is on the upper floor.
Events similar to those the subject of these proceedings occurred some years ago. They were referred to in evidence, but they have no relevance to the determination of this application.
The claim concerns allegations that the roof of the building developed a leak with the result that water penetrated to the ceiling below, causing damage to Unit 12. By reason of delay in carrying out the repairs, the damage resulted in a period when Unit 12 was untenanted.
There is a question as to the appropriate basis of liability in support of the claim. Although Mr Hicks asserted negligence on the part of the OC, his evidence to support that claim was not nearly sufficient. The OC has assumed that the claim was in negligence and its response has been largely directed to denying liability on that basis. There is, however, a further and obvious basis for liability, arising from the obligation of an OC to maintain common property in the units plan under section 24 of the Unit Titles (Management) Act 2011 (the UTM Act).
The OC concedes that, if it is liable under that statutory duty, it is responsible for the cost of repairs that arise from such a breach.[1] The issue is whether it is responsible for any further loss, such as that of loss of rent.
[1] Exhibit R1 – ‘Response - Civil Dispute’ dated 17 March 2023, page 5
It was common ground between the parties (and I agree) that:
(a)The roof of the building constitutes common property.
(b)On 10 February 2020, the tenants of unit 12 took photos showing the effects of water in the form of mould and a slight break in the ceiling.
(c)On the 9 June 2020, Ms Kneeshaw, on behalf of the applicant, reported the leaking to Link and provided them with the photos.
(d)On 27 October 2020, a plumber arranged by the OC inspected the premises and provided a report. It also produced photos.
(e)On 28 February 2021, Ms Kneeshaw, having conducted an inspection following the departure of the tenant on expiry of the tenancy, reminded Link of the condition of the ceiling.
(f)On 4 May 2021, the work to repair the ceiling was completed.
The factual disputes concerned the time periods around and in between these events.

Hearing

At the hearing of the matter, Mr Hicks and Ms Kneeshaw appeared by audiovisual link. The OC was represented by Mr John Demetriou and Mr John McKenzie, both members of the executive committee, who appeared in person.

Exhibits

The application and response were recorded as exhibits:
(a)Exhibit A1 – the original application dated 31 July 2022 (but not lodged until 4 January 2023);
(b)Exhibit A2 – an amended application dated 6 June 2023;
(c)Exhibit R1 – the response dated 17 March 2023;
(d)Exhibit R2 –Response ‘Part B’ dated 24 June 2023;
(e)Exhibit R3 –Response ‘Part C’ dated 24 June 2023;
(f)Exhibit R4 –Response ‘Part D’ dated 5 July 2023.
Mr McKenzie gave evidence and made submissions on behalf of the OC, supplemented by Mr Demetriou.
Ms Kneeshaw gave evidence and made submissions on behalf of Mr Hicks, supplemented by Mr Hicks.
There was no cross-examination as such, but there was a degree of interchange between the representatives which served that purpose.

Evidence

In October 2020, the plumber reported that the tenant had told him there had been no further rain damage in recent months. On 27 October, he had taken photos of the damage to the ceiling.
Apart from having taken photographs in February 2020 and given them to Ms Kneeshaw in June 2021, there is no evidence that the tenant was concerned about the state of the premises in terms of its habitability. Late in 2020, he asked for an extension of his lease until the end of February 2021.
The tenant vacated the premises late in February 2021. Ms Kneeshaw inspected the premises on 28 February 2021. She then notified Link that the damage remained.
Ms Kneeshaw described the areas affected as mould damage to the access panel in the hallway ceiling, and a section of the ceiling in the living room of about 6 square metres located in an area which was above a significant circulation space in the unit. As I understood the evidence of the respondent, this was an acceptably approximate description.
The repair work was completed on 4 May 2021.
The evidence extended well beyond these matters. To the extent that it is relevant to a specific issue, I will refer to it below.

Legal issues

The statutory duty

The tribunal has considered the operation of section 24 of the UTM Act on several occasions.
In Castro v The Owners – Units Plan No 246, the Tribunal said:
Section 24 of the UTM Act imposes a duty on an owners corporation to maintain the common property. This is a ‘statutory duty’.
However, in order to make a claim for damages for breach of statutory duty, the applicant must show that a breach of section 24 of the UTM Act gives rise to a private right to claim damages, either in addition to, or as an alternative to, the other remedies that are expressly available in section 129 of the UTM Act.
As far as I am aware, the issue of the availability of private damages for a breach of statutory duty has not been considered in the context of section 24 of the UTM Act. A similar question was considered by the NSW Court of Appeal, in the context of the equivalent NSW legislation, in The Owners Strata Plan 50726 v Thoo [2013] NSWCA 270 (Thoo). In that case, the NSW Court of Appeal determined that, having regard to the other remedies available under the Act, a breach of the duty to maintain common property did not sound in damages. The provision in question in Thoo is not identically worded to section 24 of the UTM Act, but it is similar, and the reasoning of the Court of Appeal is persuasive.[2]
[2] [2016] ACAT 111 at [39]-[41]
The reasoning in The Owners Strata Plan 50726 v Thoo (Thoo)[3] was based on a consideration of the scheme of the Strata Schemes Management Act 1996 (NSW), then in operation, which prohibited the payment of damages, and otherwise led to the conclusion that an action could be brought to enforce the duties of an owners corporation. It was noted that under the former Strata Schemes (Freehold Development) Act 1973 (NSW), there had been a provision permitting the ordering of payments not exceeding $500.[4]
[3] The Owners Strata Plan 50726 v Thoo [2013] NSWCA 270
[4] Thoo at [218], citing Strata Schemes (Freehold Development) Act 1973 (NSW) s 105(1A)
Before considering the question of compensation, it is necessary to establish what the duty requires and what constitutes a breach of it.
Whether a breach of a statutory duty gives rise to a civil remedy is a question of ascertaining the legislature’s intention as a matter of construction of the relevant legislative language. It is not a question of the actual intention of the legislators, but of the proper inference to be perceived upon a consideration of the document in the light of surrounding circumstances.[5]
[5] Thoo at [207] citing Sovar v Henry Lane Pty Limited [1967] HCA 31 at [4] (per Kitto J)
The similarity of the regimes in NSW and in the ACT makes the NSW decisions a good guide to the appropriate position in the ACT. I have also considered what has been said in earlier decisions of the ACAT.[6] In my view, the ACAT was intended to have powers appropriate to enforcing the statutory duties of the owners corporation, in circumstances where that body was comprised of, but also served the interests of, the owners of the units. That factor is important to the understanding of limitations that may be imposed by legislative intention.
[6] See Bennettv Owners Unit Plan 932 [2016] ACAT 57, Castro v The Owners – Units Plan No 246 [2016] ACAT 111, Garcia v The Owners – Units Plan 10 [2017] ACAT 91, Kirk v The Owners – Units Plan No 2992 [2017] ACAT 102, McElwaine v Owners – Strata Plan 75975 [2017] NSWCA 239, The Owners Strata Plan 50726 v Thoo [2013] NSWCA 270
A duty to maintain the common property includes taking steps to prevent the common property from falling into disrepair (acknowledging that disrepair may occur despite an adequate preventative regime), repairing the common property when it is in disrepair, and carrying out repairs of any damage to other property occurring as a result of disrepair in the common property. I think the latter logically follows from the obligation to repair within an overall obligation imposed with strict liability. Accordingly, it is proper for a unit owner to ask for any damage to a unit to be repaired and the owners corporation must do so (if necessary, in accordance with an order of the tribunal to that effect under section 129(1)(a), (b), or (c) of the UTM Act).
Clearly, it is not possible for repairs to be carried out instantly. The statutory obligation of the owners corporation, therefore, is to do so within a reasonable time (that being determined in accordance with general law principles and the particular circumstances). If it fails to do so, then it is equally responsible to make good any loss, including economic loss, suffered as a result. I will come back to this question of compensation later.

Factual Issues

Significance of the lapses of time between 20 February 2020 and 9 June 2020 and 27 October 2020

The plumber’s photos taken on 27 October 2020 are better in quality than the photos taken by the tenant but are similar in what they show. The ceiling was described in the evidence as “bowing”. In the plumber’s photos there is a clear misalignment of part of one ceiling panel relative to the panel adjacent to it.[7] It presents as a dark line against the white ceiling. The tenant’s photo is of lower quality and makes it harder to discern the bowing, but the black line is apparent and seems to be of a similar length as is shown in the plumber’s photo.[8] What appears in the photos is sufficiently similar such that I infer that bowing had occurred by February 2020.
[7] Exhibit R1, page 53
[8] Exhibit R1, page 77
The respondent’s representatives were critical of Mr Hicks for not having reported the problem, evident in February 2020, until four months later. I accept that criticism may be justified, but there is no evidence to suggest (the plumber’s report included) that there was any significant leaking in that period. My impression is that, if any, little deterioration in the ceiling occurred in that period of delay. Similarly, I doubt that there was any significant deterioration from June to October.
At what point should the OC have recognised the need for repairs to the ceiling
The respondent was critical of the applicant for not having notified the actual condition of the ceiling until, it said, early March in 2021. In my view, the evidence of damage, if not discernible from the tenant’s photos, became clear from the plumber’s photos. Those photos were seen by the executive committee at the end of October. What can be seen in the photos ought to have been recognised as damage which required more than painting, but at the least it should have alerted a viewer to the need for an inspection to confirm the situation. That did not happen.
Significance of the lapses of time between 27 October 2020 and 28 February 2021 and 4 May 2021
I accept that the OC and Link were not inactive in this period, but none of their activities were directed towards arranging any repair of the ceiling which went beyond mere painting. As I have indicated earlier, once an OC is aware that damage has occurred as a result of a breach of its duty to maintain common property, it is required to repair that damage within a reasonable time.
Given the nature of the repair work required, it is likely that it would cause some real disruption for the tenant. For that reason, it would be necessary to find a suitable time in which the work could be done. This would necessarily entail consultation with the applicant. In the absence of any indication that the tenant was troubled by any inhabitability of the premises (noting that Ms Kneeshaw did not raise any concerns of the tenant when inquiring about the repair of leaks), I think it was appropriate for the OC to take some time. Each of the applicant and the respondent had reasons for not contacting each other in this period of time. I consider that both were acting reasonably in the circumstances and that is not appropriate to apportion blame.
However, it was in the interests of the applicant that his tenant is not to be disrupted, and accordingly, Ms Kneeshaw as tenancy manager, needed to assist the OC to ensure that the tenant was not disrupted. Plainly, it was in the interests of both the respondent and the applicant for the work to be done in the absence of a tenant.
I appreciate that Ms Kneeshaw may have been waiting on confirmation that roof leak repairs had been completed, but equally, it was necessary for her to keep the OC informed when an opportunity to do the work in the absence of the tenant arose. That opportunity arose when the tenant notified his intention to vacate the premises. At that point, Ms Kneeshaw ought to have notified Link that there would be a suitable opportunity when the tenant vacated the premises and before a new tenant came in.

Compensation

The claim

Although the premises were unoccupied for longer, Mr Hicks sought to recover lost rent only for the period from when the tenant departed – 29 February – to when the repairs were complete – 4 May – a period of 65 days. Basing the claim on the previous rental paid being $400/wk or $57.14/day, the claim is for $3,714.28.
The OC argued that, if the existing tenant had not been concerned about the state of the premises, then it would have been possible to let the premises before the repairs were done. I do not think that is right. A tenant who is accustomed to premises and observes damage as it occurs and is thus able to assess what level of concern is warranted, is different from a prospective tenant who is confronted with a situation of unknown significance and is consequently hesitant to commit to living in it. I think that it may well have taken longer than normal to lease the premises, likely until the repairs were done.
I would, however, reduce the number of days by 21 for the reason that I consider that the OC should have been notified a sufficient amount of time in advance of the tenant’s departure so as to be in a position to do the work at the earliest possible moment. This reduces the potential compensation to $2,514.34, which represents the lost rent as the result of the failure of the OC to do the repairs within a reasonable time.
The Tribunal’s power to award compensation
Part 8 of the UTM Act is headed “Dispute Resolution”.
Section 125 applies to disputes between the owners corporation and an owner or occupier of a unit, as well as other entities.
Sections 126, 127, and 128 apply to disputes in particular circumstances or between particular entities.
In relation to all of the above provisions, section 126(2) provides that:
A party to the dispute may apply to the ACAT for an order in relation to the other party if the application relates to the dispute.
“Dispute” is not a defined term. It has its ordinary meaning. It thus encompasses all manner of disagreements and grievances that may arise between the parties mentioned in sections 125-128, all of whom are within what might be termed the ‘units plan family’.
Various other provisions deal with the roles and relationships between the members of that ‘family’. In relation to the common property, section 19 provides that the OC holds the common property as agent for the unit owners. In earlier versions of the unit titles legislation, that capacity was termed “trustee”. In NSW, where the comparable provision is in terms of ‘agent’, the courts have regarded the role as incorporating trust elements.
This emphasises the degree of common interest that exists in the operations of the owners corporation on behalf of the owners.
Section 129 sets out the kinds of orders that the tribunal “may make” on an application for an order under sections 125-128. It is an empowering provision enabling the tribunal to make orders it would not otherwise have power to make. Among them is section 129(1)(d), which gives power to order payment to the Territory or to “someone” of a limited sum of money. “Someone” is a reference to a member of the ‘family’.
Sections 129 (2) and (5) provide that the tribunal:
(a)may make any other order it sees a necessary or convenient being an order other than those expressly given by S 129(1)
(b)is not limited in the orders it may make.
That an express specific provision generally prevails over an inconsistent general provision in the same piece of legislation is an established principle of statutory construction. I do not see subsections (2) and (3) as overriding the express provision of section 12(9)(d). Rather, I think that the purpose of the general provisions is to make clear that the kinds of orders that the tribunal may make, and the way in which the tribunal expresses itself, are not limited.

In Thoo, it was held that a breach by an owners corporation of its statutory duty did not result in damages. That was a necessary consequence of the inclusion in the Strata Schemes Management Act 1996 (NSW) of a prohibition on the award of damages. This tribunal, on the other hand, is empowered under section 129(1)(d) to order a payment to “someone”, not exceeding $1,000. In my view, the tribunal has power to award damages to that extent, but not more. I think this reflects a legislative intention that, as a units plan houses a community of common interests, there is benefit in providing a disincentive to it becoming a litigious battleground.
Consequences of the limitation on power toward damages
Although I understand the likely disappointment of Mr Hicks in this case, that limitation does not necessarily leave an owner at the mercy of an owners corporation. It is always open to an owner wanting to avoid loss of rent to carry out necessary work themselves and then seek reimbursement from the owners corporation. In my view, a payment by way of reimbursement for work done on behalf of the owners corporation (it being an expense that the owners corporation had an obligation to incur) is not a payment to a person that is prohibited by the UTM Act.

Related issues

I earlier referred to other cases in which the operation of section 24 of the UTM Act had been considered.
The tribunal has, in earlier cases, considered the question of compensation for the breach by an owners corporation of its obligations under the UTM Act, including four cases involving the obligation to maintain common property.
In Bennettv Owners Unit Plan 932 (Bennett), the tribunal held that the owners corporation had been negligent and awarded $3,367 to a unit owner as compensation for expenses and lost rent.[9] The OC was ordered to make necessary repairs at its cost.
[9] Bennett v Owners Unit Plan 932 [2016] ACAT 57
In Castro v The Owners Unit Plan No 246 (Castro), the tribunal treated the potential liability of the OC as being for a breach of statutory duty.[10] It observed that there was no authority for the granting of private damages for such a breach in the context of section 24 of the UTM Act. It noted that a similar question had been considered by the NSWCA in Thoo:
[T]he NSW Court of Appeal determined that, having regard to the other remedies available under the Act, a breach of the duty to maintain common property did not sound in damages. The provision in question in Thoo is not identically worded to section 24 of the UTM Act, but it is similar, and the reasoning of the Court of Appeal is persuasive.[11]
[10] Castro v The Owners Unit Plan No 246 [2016] ACAT 111
[11] Casto at [41]
As the Tribunal found that there had been no breach of the duty, it did not need to consider the availability of damages and did not do so in that case.
In Garcia v The Owners – Units Plan 10 (Garcia), The tribunal considered the kinds of awards that the tribunal may make under section 129(1) of the UTM Act:
Section 129(1) deals with the kinds of orders ACAT may make, which includes “(d) an order requiring a person to pay to the Territory or someone else an amount of not more than $1,000”. There was no argument in these proceedings as to whether this is a limitation on money claims. However, subsection (2) provides that: “The ACAT may make any other order it considers reasonably necessary or convenient to resolve a dispute under this part.” And subsection (3) that: “This section does not limit the orders the ACAT may make in relation to a dispute under this part.” This suggests that section 129(1)(d) may not be a limitation on money claims, but given the outcome of these proceedings it is not necessary to resolve this issue.
Generally a money claim under section 125 needs to be based on an existing legal liability. Some of the paragraphs in section 129(1) indicate that in relation to them the Tribunal has a broad power to make orders based on “a merits review of” a resolution (section 129(1)(f) and (g)). However there is no indication in the provisions that otherwise the Tribunal is able to bring about a financial liability. Rather generally its role is to determine whether a liability exists.[12]
[12] Garcia v The Owners – Units Plan 10 [2017] ACAT 91 at [7]-[8]
Garcia referred to Castro, but only in the context of the liability of the owners corporation in relation to its negligence.
The issue in Garcia concerned the liability of the owners corporation in respect of substantial flooding damage done to a unit as the result of a plumbing leak within the common property. The tribunal was somewhat hampered in that the applicant unit owner, who was unrepresented, did not identify a cause of action that lead to recovery for the damage at all. The tribunal considered liability in contract, negligence, and the duty of the owners corporation to insure against damage to the building. As there was no evidence on which it could found liability, the tribunal was left to hold that no case could be made out. It did not address the duty of the owners corporation to maintain common property.
In Kirk v The Owners – Units Plan No 2992 (Kirk), the tribunal noted that the NSW Court of Appeal in McElwaine v Owners – Strata Plan 75975 had found that (in NSW) an owners corporation had general law duties in addition to statutory duties, and that Thoo had not ousted the ability of a lot owner to make a common law claim against the Owners Corporation.[13]
[13] Kirk v The Owners – Units Plan No 2992 [2017] ACAT 102 at [104]-[109], citing McElwaine v The Owners Strata Plan Number 75975 [2017] NSWCA 239
It was submitted to the tribunal in Kirk that:
(a)a guiding factor in McElwaine v Owners – Strata Plan 75975 was section 226 of the Strata Schemes Management Act 1996 (NSW), which expressly preserved a lot owner’s right to recover damages at common law for breach by an owners corporation of a common law duty; and that
(b)there is no such express preservation of the right to sue or seek a remedy at common law under the UTM Act. In the absence of such a provision, the question is whether the legislative intent in the UTM Act is that a unit owner may or may not sue the owners corporation and seek a remedy external to the UTM Act. If the legislative intent was such, a provision similar to section 226 of the Strata Schemes Management Act 1996 (NSW) would have been enacted in the UTMA.
The tribunal reframed the issue for its determination as whether the applicant, as an owner of a unit titled property, can bring a claim in tort (nuisance or negligence) in relation to a property that is a creature of statute.
The tribunal surveyed previous decisions noting that:
(a)In Castro, it had been observed that “there is no apparent reason why an owners corporation could not be liable for damage caused to an owner’s property under the usual principles of common law negligence.”[14]
(b)In Garcia, it had been observed “it is possible that [a claim in negligence] could be made against the owners corporation”,[15] and that in relation to section 129(3), “This suggests that section 129(1)(d) may not be a limitation on money claims …”[16]
[14] Kirk at [110], quoting Castro at [44]
[15] Kirk at [114], quoting Garcia at [22]
[16] Kirk at [116], quoting Garcia at [7]
The tribunal further noted the decision in Bennett to award compensation for lost rent of $3,135, in addition to ordering the owners corporation to carry out necessary repairs of an air-conditioning system at its cost.[17]
[17] Kirk at [117], citing Bennett
In the end, the tribunal in Kirk found that the owners corporation had been negligent and ordered it to undertake substantial repairs at its cost but did not order it to pay anything to the owner.
The discussion in the tribunal cases thus far has concerned the ability of the tribunal to entertain applications in relation to common law liability (as opposed to statutory liability) of the owners corporation, as well as its ability to make orders for the payment of money in excess of $1,000.

66.It was necessary for me to consider the issue of the monetary limitation in relation to compensation for a breach of statutory duty and I have done so. But given my findings in relation to a claim of negligence, it was not necessary for me to consider whether I had power to entertain such a claim, or whether it too would be subject to the limitation. Had it been necessary to do so, I would have had to consider Thoo,[18] together with the submission put to the tribunal in Kirk, to determine whether disputes referred to in sections 125-128 of UTM Act can be determined only under Part 8 of UTM Act, and not otherwise.
[18] Thoo at [204]-[222]
………………………………

Senior Member R Arthur

Date(s) of hearing:	19 July 2023
Applicant:	In-person, with Ms R Kneeshaw, authorised representative
Respondent:	Mr J Demitriov and Mr J McKenzie, authorised representatives