Osborne v The Owners Strata Plan No 13516 (No 2)

[2023] NSWCATCD 188

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Osborne v The Owners - Strata Plan No 13516 (No 2) [2023] NSWCATCD 188

Hearing dates:

13 and 14 November 2023

Date of orders:

27 November 2023

Decision date:

27 November 2023

Jurisdiction:

Consumer and Commercial Division

Before:

G Blake AM SC, Senior Member

Decision:

1.   The respondent is to pay $4,752.00 to the applicant immediately.

2.   The respondent is to pay 50% of the costs of the applicant of the proceedings other than the costs of the application for miscellaneous matters of the applicant filed on 5 October 2023.

3.   The proceedings are otherwise dismissed.

4.   If any party wishes to make an application to vary order 2 above, the applicant (the costs applicant) is to file and serve a costs application, including submissions limited to three pages and any evidence in support, by 6 December 2023.

5.   The respondent to the costs application is to file and serve any submissions limited to three pages and any evidence in opposition by 15 December 2023.

6.   The costs applicant is to file any submissions limited to two pages in reply by 20 December 2023.

7.   The applicable parties are to indicate in their submissions whether they consent to an order dispensing with an oral hearing of the costs application, and if they do not consent, submissions of no more than one page as to why an oral hearing should be conducted rather than the application being determined on the papers. If a hearing is not dispensed with, the parties will be advised of a date for the hearing of the application.

Catchwords:

LAND LAW - Strata title – Whether the owners corporation breached the duties to properly maintain and keep in a state of good and serviceable repair the common property and to renew or replace any fixtures or fittings comprised in the common property - Whether the owners corporation is liable for damages for loss of rent and other expenses – Whether a successful lot owner should be excluded from the obligation to contribute to any levy in respect of damages and costs payable to successful lot owner by an unsuccessful owners corporation

Legislation Cited:

Civil and Administrative Tribunal Act 2013 (NSW), ss 28, 29, 60, Sch 4, cl 3

Civil and Administrative Tribunal Rules 2014 (NSW), r 38

Civil Liability Act 2002 (NSW), Pt 4

Residential Tenancies Act 2010 (NSW), s 52

Strata Schemes Management Act 2015 (NSW), ss 104, 106, 119, 122, 226, 232

Cases Cited:

Keith Bannister v David and Mariam Cheung [2014] NSWCATCD 105

Lane v Bloc Constructions (NSW) Pty Ltd [2021] NSWCATAP 114

Shum v Owners Corporation SP30621 [2017] NSWCATCD 68

Smith v Owners - Strata Plan No. 3004 [2022] NSWSC 1599

Szeto v The Owners - Strata Plan No 1418 [2023] NSWCATAP 105

The Owners – Strata Plan No 2341 v P & M Sachs Pty Ltd [2022] NSWCATAP 304

The Owners - Strata Plan No 33368 v Gittins [2022] NSWCATAP 130

The Owners - Strata Plan No. 36613 v Doherty; Doherty v The Owners - Strata Plan No. 36613 [2021] NSWCATAP 285

The Owners – Strata Plan No 62713 v Liberant [2022] NSWCATAP 80

The Owners – Strata Plan No 74232 v Tezel [2023] NSWCA 35; (2023) 20 BPR 43,119

Trevallyn-Jones v Owners Strata Plan No 50358 [2009] NSWSC 694

Vickery v The Owners Strata Plan 80412 (2020) 103 NSWLR 352; [2020] NSWCA 284

Texts Cited:

None cited

Category:

Principal judgment

Parties:

Virginia Louise Osborne (Applicant)
The Owners - Strata Plan No 13516 (Respondent)

Representation:

Counsel:
C Coventry (Applicant)
J Knackstredt (Respondent)

Solicitors:
Clear-Cut Law (Applicant)
Bugden Allen Graham Lawyers (Respondent)

File Number(s):

2023/ 00400210 (Previously SC 23/18411)

Publication restriction:

Nil

REASONS FOR DECISION

Overview

1. In these proceedings the applicant, Virginia Louise Osborne (Ms Osborne), seeks relief against the respondent, The Owners - Strata Plan No 13516 (OSP13516), under the Strata Schemes Management Act 2015 (NSW) (SSM Act).

2. The critical issues in the proceedings were whether OSP13516 breached its duties under s 106(1) and (2) of the SSM Act by reason of the presence of asbestos in the cabinet and the state of repair of the electrical infrastructure located within Ms Osborne’s lot, and if so whether Ms Osborne suffered loss.

3. I have found that OSP13516 breached these duties, but that Ms Osborne did not establish any entitlement to damages under s 106(5) of the SSM Act except for $4,752.00. I have ordered OSP13516 to pay 50% of Ms Osborne’s costs and otherwise dismissed the proceedings.

The factual background

4. The strata scheme relating to strata plan no 70316 (scheme 13516), which was registered on 11 October 1978, is a three and four storey residential building comprising seven lots and common property at Cremorne in New South Wales.

5. Until October 2022, the cabinet containing the electrical Infrastructure for scheme 13516 (the cabinet or the electrical Infrastructure according to the context) was located on the northern wall next to the ceiling in the entry porch of lot 1 which is situated on the lower ground floor and is secured from the adjoining car parking space adjacent to the street by a lockable metal security gate.

6. Since at least 2013, the strata managing agent for scheme 13516 has been Real Property Services Pty Ltd (RPS) with David Macheski (Mr Macheski) having day to day responsibility.

7. In 2022 prior to 6 June, Century 21 Living was the building manager for scheme 13516 and its staff included Suzi Zadel (Ms Zadel).

8. Since 12 January 2021, Ms Osborne has been the owner of lot 1 in scheme 13516 which is situated on the lower ground floor.

9. Prior to 15 July 2021, access to the electrical infrastructure by owners, occupiers and contractors had been undertaken on an informal basis with the consent of the owner or occupier of lot 1.

10. From 15 July 2021 to October 2022, there was a dispute between Ms Osborne and OSP13516 as to the right of access to the electrical infrastructure which was set out in the following correspondence between Ms Osborne or her then solicitors, Watson & Watson, and OSP13516’s lawyers:

1. Watson & Watson in their letter dated 15 July 2021 to OSP13516 (the 15 July 2021 W & W letter) requested OSP13516 at its cost to remove the electrical infrastructure from lot 1 forthwith, and refused access to any other owner or occupier to carry out works to the electrical Infrastructure without her prior agreement in accordance with a specified protocol;

2. OSP13516’s lawyers in their letter dated 6 October 2021 to Watson & Watson (the 6 October 2021 BAGL letter) asserted that OSP13516 had a right of access to the electrical infrastructure and to enter lot 1 for that purpose, refused to move it, and proposed an interim access arrangement;

3. Ms Osborne in her letter dated 3 December 2021 to OSP13516’s lawyers (the 3 December 2021 Osborne letter) advised that she did not agree with the proposed interim access arrangement and that any access to the electrical infrastructure would constitute a trespass unless carried out in accordance with s 122 of the SSM Act;

4. OSP13516’s lawyers in their letter dated 3 February 2022 to Ms Osborne (the 3 February 2022 BAGL letter) observed in relation to interim access that she had an obligation under s 122(5) of the SSM Act not to obstruct or hinder an owners corporation in the exercise of its functions and advised that to the extent OSP13516 suffered a loss because of her refusal to allow access, it would seek to recover that loss from her.

11. Between 2012 and 2022, services in relation to the inspection of the cabinet in relation to asbestos and the removal of asbestos from the cabinet were provided by the following persons or entities:

1. Dr J F Orr (Dr Orr) of Banksia EOHS Pty Limited;

2. Sydney City Asbestos Pty Ltd (SCA);

3. Airsafe Laboratories Pty Ltd (Airsafe);

4. Hunter West Services Pty Ltd (Hunter West);

5. Hazmat Contracting Pty Ltd (Hazmat);

6. Ascon Industries Pty Ltd (Ascon).

12. In 2021 and 2022, services in relation to the inspection of the electrical Infrastructure and their relocation were provided by the following persons or entities:

1. Scott Praine (Mr Praine) of Total Wire Electrical;

2. Blake Thomas (Mr Thomas) of Captain Cook Electrical;

3. James Ravesteyn (Mr Ravesteyn) of RAVS Electrical Pty Ltd (RAVS);

4. LME Electrical Contractors Pty Ltd (LME);

5. Luke Covey (Mr Covey) of Perfect Power Corp Co Pty Ltd (Perfect Power);

6. Frank Waldman (Mr Waldman) of Engineering Partners Pty Ltd;

7. M E Ward Pty Ltd (M E Ward).

13. During part of the period between May 2021 and 15 December 2022, the owner or an occupier of a lot in scheme 13516 included the following persons:

1. Mona Karam (Ms Karam) who was the owner of lot 6;

2. Jochen Deuse (Mr Deuse) who was the owner of lot 3;

3. Sarah Catherine Canavan (Ms Canavan) who was the occupier of lot 2;

4. Andrew James David Lee (Mr Lee) who was the owner of lot 2.

14. Since prior to 2021, Ms Osborne has owned a home at Culburra Beach in New South Wakes (the Culburra home).

15. In early 2023, a dispute arose between the parties as to whether OSP13516 was liable to pay compensation to Ms Osborne.

The history of the proceedings

16. On 16 April 2023, Ms Osborne as the applicant commenced proceedings SC 23/18411 against OSP13516 as the respondent by filing a strata and community schemes application and accompanying points of claim in which she:

1. alleged that she had suffered loss as a result of OSP13516’s breach of its duty under s 106(1) and (2) of the SSM Act in relation to the cabinet and the electrical infrastructure;

2. claimed the following relief:

“a. pursuant to sections 106(5), 122(6) and 232 of the Strata Schemes Management Act 2015 (SSMA), the respondent pay damages to the applicant for:

i. loss of rental income at the rate of $1,000 per week from 29 May 2021 to, and including, 15 December 2022, or such other amount as the Tribunal determines;

ii. costs incurred by the applicant travelling to, and from, alternate accommodation;

iii. costs incurred by the applicant in obtaining expert reports relating to the matters the subject of this Points of Claim;

iv. costs associated with replacing the applicant’s marble table, which was broken during works undertaken on the respondent’s behalf in or about mid-to-late October 2022; and

v. interest.

b. the respondent pay the applicant costs as agreed or assessed pursuant to regulation 38 of the Civil and Administrative Rules 2014 (NSW);

c. pursuant to sections 90, 104 and/or 232 of the SSMA, an order that the money payable to the applicant pursuant to orders 1(a) and (b), and the respondent’s costs of these proceedings, be paid from contributions levied only in relation to lots 2 to 7 of the Strata Scheme in equal proportions; and

d. such further or other orders as the Tribunal sees fit.”

17. On 15 May 2023, the Tribunal granted leave to both parties to be legally represented.

18. On 19 June 2023, OSP13516 filed its points of defence in which it:

1. substantially did not admit or denied the allegations in the points of claim;

2. in answer to the points of claim generally, alleged contributory negligence by Ms Osborne and that is a concurrent wrongdoer for the purposes of Pt 4 of the Civil Liability Act 2002 (NSW) (CL Act), and any damages awarded to her should be reduced accordingly.

19. On 13 October 2023, the Tribunal dismissed the application for miscellaneous matters of Ms Osborne filed on 5 October 2023 and made no order as to the costs of the application.

The hearing

20. At the commencement of the hearing:

1. counsel for Ms Osborne conceded that the claim for interest was not pressed;

2. counsel for OSP13516 conceded that:

1. the defences of contributory negligence by Ms Osborne and proportionate liability under Pt 4 of the CL Act were not pressed;

2. OSP13516 was liable to Ms Osborne for $2,937.00 for the damaged marble table.

21. Ms Osborne relied on the following documents which were admitted into evidence without objection except as specified and marked as follows:

1. the email of Mr Thomas to Ms Osborne sent on 1 November 2021 (the 1 November 2021 Thomas email) subject to weight (exhibit A1);

2. the report of Mr Ravesteyn dated 6 November 2021 (the 6 November 2021 Ravesteyn report) subject to weight (exhibit A2);

3. the tax invoice of LME dated 9 November 2021 (the 9 November 2021 LME invoice) subject to weight as far as the part under the subheading “Notes” (exhibit A3);

4. the undated report of Mr Covey (the undated Covey report) (exhibit A4);

5. the email of Liam Matthews to Ms Osborne sent on 1 March 2022 at 4.19pm (exhibit A5);

6. the report of Phillip Turner (Mr Turner) dated 12 May 2022 (the 12 May 2022 Turner report) (exhibit A6);

7. the report of Yorgo Kaporis (Mr Kaporis) dated 23 May 2022 (the 23 May 2022 Kaporis report) (exhibit A7);

8. the tax invoice of Endev Pty Ltd dated 1 November 2021 (exhibit A8);

9. the tax invoice of RAVS dated 8 November 2021 (exhibit A9);

10. the tax invoice of Perfect Power Corp dated 7 December 2021 (exhibit A10);

11. the tax invoice of Experts Direct Pty Ltd dated 9 May 2022 (exhibit A11);

12. the witness statement of Ms Osborne dated 10 July 2023 with the following paras admitted subject to weight (the 10 July 2023 Osborne statement) (exhibit A12):

1. [121] other than the first sentence;

2. [124] other than the first and second sentences;

3. [155] other than the first and second sentences and the words “took samples of dust and debris” in subpara (a) and “nail or screw holes, and nails” in subpara (c)(ii);

4. [202] other than the first and second sentences;

5. [222] other than the first sentence;

6. [322] other than the first sentence;

7. [352] other than the first sentence.

13. the witness statement of Ms Osborne dated 3 November 2023 (the 3 November 2023 Osborne statement) (exhibit A13).

22. OSP13516 relied on the following documents which were admitted into evidence without objection except as specified:

1. the witness statement of Ms Karam dated 18 October 2023 (the 18 October 2023 Karam statement) (exhibit R1);

2. the witness statement of Mr Deuse dated 20 October 2023 other than the third sentence of para [35] and with paras [11] and [23 to [33] admitted subject to weight (the 20 October 2023 Deuse statement) (exhibit R2);

3. the witness statement of Ms Canavan dated 20 October 2023 (the 20 October 2023 Canavan statement) (exhibit R3);

4. the witness statement of Mr Lee dated 20 October 2023 other than paras [14] and [15] (the 20 October 2023 Lee statement) (exhibit R4);

5. the email of Edward Osborne to Ms Osborne sent on 29 November 2023 at 11.23am subject to weight (exhibit R5);

6. Landlord Information Statement dated March 2020 of NSW Fair Trading (exhibit R6).

23. Ms Osborne, Mr Turner and Mr Kaporis gave oral evidence.

24. Each of the Ms Osborne and OSP13516 relied on their written submissions. Counsel for Ms Osborne and OSP13516 each made oral submissions.

25. At the conclusion of the hearing, I reserved my decision.

The issues for determination:

26. The following issues arise for determination:

1. issue 1: whether the Tribunal has jurisdiction to hear and determine the proceedings;

2. issue 2: whether OSP13516 breached its duties under s 106(1) and (2) of the SSM Act in relation to the cabinet and the electrical infrastructure;

3. issue 3: whether the loss claimed by Ms Osborne was reasonably foreseeable;

4. issue 4: whether any breach by OSP13516 of its duties under s 106(1) and (2) of the SSM Act caused the loss claimed by Ms Osborne;

5. issue 5: whether any, and if so what, damages under s 106(5) of the SSM Act are recoverable by Ms Osborne;

6. issue 6: the costs of the proceedings;

7. issue 7: whether Ms Osborne is entitled to any ancillary relief.

27. Before considering these issues, it is appropriate to set out the applicable provisions of the SSM Act.

The applicable provisions of the SSM Act

28. Part 5 Division 2 (ss 79-91) contains provisions dealing with contributions by owners. Section 90 deals with contributions for legal costs awarded in proceedings between owners and the owners corporation, and relevantly provides:

90 Contributions for legal costs awarded in proceedings between owners and owners corporation

(1) This section applies to proceedings brought by one or more owners of lots against an owners corporation or by an owners corporation against one or more owners of lots (including one or more owners joined in third party proceedings).

(2) The court may order in the proceedings that any money (including costs) payable by an owners corporation under an order made in the proceedings must be paid from contributions levied only in relation to the lots and in the proportions that are specified in the order.

…

29. Part 5 Division 5 (ss 100-105) contains general provisions dealing with the financial functions of an owners corporation. Section 104 deals with restrictions on payment of expenses incurred in Tribunal proceedings, and relevantly provides:

104 Restrictions on payment of expenses incurred in Tribunal proceedings

(1) An owners corporation cannot, in respect of its costs and expenses in proceedings brought by or against it for an order by the Tribunal, levy a contribution on another party who is successful in the proceedings.

…

30. Part 6 Division 1 (ss 106-108) contains provisions dealing with the management of common property. Section 106 deals with the duty of an owners corporation to maintain and repair property, and relevantly provides:

106 Duty of owners corporation to maintain and repair property

(1) An owners corporation for a strata scheme must properly maintain and keep in a state of good and serviceable repair the common property and any personal property vested in the owners corporation.

(2) An owners corporation must renew or replace any fixtures or fittings comprised in the common property and any personal property vested in the owners corporation.

…

(5) An owner of a lot in a strata scheme may recover from the owners corporation, as damages for breach of statutory duty, any reasonably foreseeable loss suffered by the owner as a result of a contravention of this section by the owners corporation.

…

31. Part 12 Division 3 (ss 226-228) contains provisions dealing with the procedures for the making of applications to the Tribunal. Section 226 specifies the category of “interested persons”, and relevantly provides:

226 Interested persons

(1) The following persons are interested persons for the purpose of making an application to the Tribunal under this Act—

…

(d) an owner of a lot in the scheme, a person having an estate or interest in a lot or an occupier of a lot,

…

32. Part 12 Division 4 (ss 229-238) contains provisions dealing with the orders that may be made by the Tribunal. Section 232 deals with orders to settle disputes or rectify complaints, and relevantly provides:

232 Orders to settle disputes or rectify complaints

(1) Orders relating to complaints and disputes The Tribunal may, on application by an interested person, original owner or building manager, make an order to settle a complaint or dispute about any of the following—

(a) the operation, administration or management of a strata scheme under this Act,

…

(e) an exercise of, or failure to exercise, a function conferred or imposed by or under this Act or the by-laws of a strata scheme,

…

Issue 1: whether the Tribunal has jurisdiction to hear and determine the proceedings

33. None of the parties addressed the issue of whether the Tribunal has jurisdiction to determine the proceedings.

34. I am satisfied that the Tribunal has jurisdiction to hear and determine the proceedings. Pursuant to s 226(1)(d) of the SSM Act Ms Osborne as the owner of a lot in strata scheme 13516 has standing to make an application for damages and ancillary relief under ss 106(5) and 232(1)(a) and (e) of the SSM Act. The source of the jurisdiction of the Tribunal to determine this application is ss 28(1) and (2)(a) and 29(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act). Pursuant to cl 3(1) and (2)(b) of Sch 4 of the NCAT Act this jurisdiction is allocated to the Consumer and Commercial Division.

Issue 2: whether OSP13516 breached its duties under s 106(1) and (2) of the SSM Act in relation to the cabinet and the electrical infrastructure

Introduction

35. The parties were agreed that the cabinet and the electrical infrastructure constituted common property.

36. Ms Osborne contended that OSP13516 breached its duties under s 106(1) and (2) of the SSM Act by reason of the presence of asbestos fibres in the cabinet and the state of disrepair of the electrical infrastructure. OSP13516 contended that the asbestos in the cabinet was not dangerous if left undisturbed, and any electrical outages in lot 1 were temporary in nature, and any extended periods in which electricity was unavailable were directly caused by Ms Osborne.

37. Before considering this issue, I have set out the applicable legal principles. As the relevant events and communications between the parties were not in dispute, I have then set out the chronology of events with respect to the presence of asbestos in the cabinet and the state of repair of the electrical infrastructure which directly relate to this issue. This chronology is derived from exhibit VLO-1 to the 10 July 2023 Osborne statement. I have not summarised the 12 May 2022 Turner report or the oral evidence of Mr Turner as I do not consider that this evidence is relevant to the determination of this issue for the reasons set out in [93] below. I have finally summarised the written submissions of the parties. I have not summarised the oral submissions of the parties as they substantially were repetitive and in reinforcement of their written submissions.

The applicable legal principles

38. The Appeal Panel recently referred to the authorities regarding the duties of an owners corporation under s 106(1) and (2) of the SSM Act and their statutory predecessors and summarised the legal principles derived from them in The Owners - Strata Plan No 33368 v Gittins [2022] NSWCATAP 130 (Gittins) at [57]-[58]:

“[57] The scope of the duty of an owners corporation to maintain and keep in a state of good repair common property has been the subject of extensive judicial consideration (e.g. Seiwa Australian Pty Ltd v Owners Strata Plan 25042 [2006] NSWSC 1157; Ridis v Strata Plan 10308 [2005] NSWCA 246; Stolfa v Owners Strata Plan 4366 & Ors [2009] NSWSC 589; Stolfa v Hempton [2010] NSWCA 218; The Owners Strata Plan No 50276 v Thoo [2013] NSWCA 270; and Glenquarry Park Investments Pty Ltd v Hegyesi [2019] NSWSC 425 (‘Hegyesi’)).

[58] In The Owners-Strata Plan SP 20211 v Rosenthal; Rosenthal v The Owners-Strata Plan No 20211 [2018] NSWCATAP 243 (“Rosenthal”) and Loneragan v The Owners-Strata Plan No 16519 [2020] NSWCATAP 177 (“Loneragan”), the Appeal Panel summarised the principles applicable to the duty of an owners corporation under s 106 (1) and (2) of the SSM Act as follows (Rosenthal at [35]-[36]; Loneragan at [29]-[41]). The pertinent principles (excluding authority references) are:

(1) The owners corporation has a strict duty under s 106 (1) of the SSM Act to maintain and keep in a state of good and serviceable repair the common property. That duty is not merely to take reasonable steps or use best endeavours.

(2) The duty under s 106 (1) of the SSM Act includes keeping common property in order by acts of maintenance before it falls out of condition. The duty includes taking preventative measures to ensure there is not a malfunction. The duty also includes remediation of defects in the original construction of the common property.

(3) As soon as something in the common property is no longer operating effectively or at all, or has fallen into disrepair, there has been a breach of the s 106 (1) duty.

(4) Breach of the duty under s 106 (1) of the SSM Act gives each Lot owner a statutory cause of action.

(5) Repairs to common property (including renewal or replacement of common property) that does not involve alteration or addition for the purpose of improving or enhancing the common property does not require a special resolution of the owners corporation under s 108 of the SSM Act.

(6) Renewal or replacement of common property under s 106 (2) of the SSM Act is only engaged when the item of common property is no longer operating effectively, or at all, or has fallen into a state of disrepair.

(7) Renewal or replacement of common property under s 106 (2) of the SSM Act is limited by a concept of reasonable necessity.”

39. The Appeal Panel more recently considered these principles in The Owners - Strata Plan No. 36613 v Doherty; Doherty v The Owners - Strata Plan No. 36613 [2021] NSWCATAP 285 (Doherty) at [175], [178] and [181]:

“[175] Alleged restriction of access to, or interference with or resistance to, remediation by a lot owner as a matter of law does not qualify the OC's performance of its strict duty: Seiwa at first instance at [21]-[23]; Carli v Owners SP 56120 [2018] NSWCATCD 55 at [101]-[103]. In accordance with SSMA as currently in force, as already canvassed, the OC can seek orders for access and non-interference: SSMA ss 122, 124. If faced with what it regarded as obstruction and interference it ought to seek orders for access and non-interference, which is a concomitant of performance of its strict duties under SSMA s 106.”

“[178] The observations and conclusions on application to the facts in Ridis were directed to the content of what was strictly liable to be done, particularly in relation to inspection for the purposes of pre-emptive discovery and degree of safety. Once discovered or able, acting reasonably, to be discovered, there was a strict obligation to act to maintain, repair, renew or replace, as appropriate, including to a standard of reasonable but not absolute safety. But, as Hodgson JA said at the passage already cited:

“this does not mean that the owners’ corporation must from time to time hire specialist experts to inspect every aspect of the common property that could possibly give rise to safety issues. Certainly, if it has reason to believe that any such aspect could be dangerous, such as electrical wiring, then it should engage the appropriate expert. But in the absence of any such reason, in my opinion an owners’ corporation, acting reasonably, would have in place a system of periodic inspection by someone with appropriate general skills, such as an experienced managing agent or a person with general building maintenance skills, and need not in that event have a system involving regular inspection by more specialised experts.””

“[181] … The obligation under SSMA s 106 extends maintenance and repair and associated replacement and renewal beyond physical deterioration in condition or operation, if it is obvious, or becomes obvious on what would reasonably be investigated, that there is a safety risk in condition or operation.”

The chronology of events

The presence of asbestos in the cabinet

40. Dr Orr in his report dated 26 April 2012 (the 26 April 2012 Orr report) to OSP13516 relevantly expressed the following opinions and made the following recommendations:

“…

4. Methods Used To Identify Hazards At The Site.

The site was visited on Tuesday, 24th of April, 2012. All accessible areas of the building were inspected and an assessment of the presence of asbestos materials was made.

…

5. Results Of The Survey.

…

The electrical board was deemed to be asbestos containing.

…

6. Conclusions And Recommendations.

Asbestos containing materials were deemed to be present in the following locations:

…

• Electrical cabinet backing board.

…

Because these are bonded asbestos products, the health risk from them is low. Any fibre cement detected at the site should be regarded as asbestos containing and handled with appropriate care.

…

General Requirements For The Successful Operation Of An Asbestos Register.

The following simple rules should be followed to ensure the effective operation of this asbestos register and the protection of the health and wellbeing of residents and workers:

1. The asbestos identified in the survey is in a stable condition and does not present a danger to health or wellbeing unless it is disturbed by cutting, drilling, sanding or some activity which will result in the generation of asbestos fibre.

…

3. All asbestos should be reinspected “periodically” - our recommendation is each three years, to ensure that there has been no deterioration in it which would lead to the potential exposure of anyone to the material.

…”

41. On 27 June 2012, the executive committee of OSP13516 held a meeting and as recorded in the minutes relevantly decided to erect asbestos notices on the cabinet, and it would be the secretary’s role to keep the asbestos logs for OSP13516 (the 27 June 2012 EC minutes).

42. On 8 August 2013, in email correspondence between Mr Macheski and Dr Orr, Mr Macheski provided five coloured photographs of the interior of the cabinet and sought advice as to whether the asbestos should be removed, and Dr Orr recommended that it be removed.

43. SCA sent its tax invoice dated 9 September 2013 to RPS containing the following description of work:

“Safe removal and disposal of asbestos lining inside the electrical meter board”

44. When Ms Osborne purchased lot 1 there were no asbestos notices on the cabinet and no asbestos logs for OSP13516.

45. Watson & Watson in the 15 July 2021 W & W letter referred to “the likely presence of asbestos and asbestos dust” in the cabinet.

46. On 22 July 2021, Ms Osborne sent an email to the other owners in scheme 13516 (the 22 July 2021 Osborne email) in which relevantly stated:

“…

The switchboards are clearly in a hazardous state. …The switchboard area is full of asbestos dust; the old asbestos mounts have been drilled into, and the area clearly has not been cleaned for some time.

…”

47. On 4 August 2021, Ms Osborne sent an email to the members of the strata committee of OSP13516 in which she attached three coloured photographs of the interior of the cabinet which relevantly depicted drilled holes in the backing boards on which the electrical infrastructure was fixed and debris in the bottom of the cabinet (the 4 August 2021 Osborne email).

48. On 6 October 2021, the strata committee of OSP13516 held a meeting and as recorded in the minutes relevantly resolved that RPS should arrange for a contractor to undertake a precautionary asbestos inspection and clean of the cabinet (the 6 October 2021 SC minutes).

49. On 17 January 2022, Ms Zadel in her email sent to Airsafe requested a quotation for an inspection of the cabinet and potential asbestos (the 17 January 2022 Zadel email).

50. On 27 January 2022, Mr Macheski in his email sent to Ms Osborne attached the 26 April 2012 Orr report and advised that there had been no further inspection of the property since then (the 27 January 2022 Macheski email).

51. Airsafe in its report dated 28 January 2022 to RPS (the 28 January 2022 Airsafe report) stated that chrysolite asbestos had been detected in samples taken on that date from the following locations: the backing board; the insulation, dust and debris fragments at the bottom of the cabinet; the fuse and backing material.

52. On 3 February 2022, Simon Gorham of Airsafe in his email sent to Ms Zadel (the 3 February 2022 Gorham email) relevantly stated:

“…

In older electrical cabinet/boxes, quite often there is already asbestos -containing debris inside from previous drilling /installation work. This can be in the form of asbestos-resin board dust, asbestos miliboard debris, asbestos cement or asbestos insulation board debris. This can be particularly dangerous as opening the box or cabinet will be enough to cause asbestos fibres to become airborne.

It is recommended that no disturbance of ACM occurs, as far as reasonably practicable and the work area is isolated.

Airsafe recommends the following:

• Remove dirt, debris and dust, as far as practical.

• Remove ACM and ACD using antistatic cloths (tack -rags) or wet wiping techniques from all surfaces. Wiping and 1-IEPA vacuuming should start from the top and progress down to ground to avoid contamination of already cleaned areas and surfaces.

• Suitable task lighting should be provided (e.g. head torches,) to the removal operatives.

• Apply sealant existing EDS.

• Allow sealant to dry and inspect to ensure no areas have been overlooked.

• Inform LAA and proceed to clearance certificate.

…”

53. On 4 February 2022, RPS issued a work order to undertake the works recommended by Airsafe in the 3 February 2022 Gorham email.

54. On 22 February 2022, Hunter West sealed the cabinet and cleaned the areas within the immediate vicinity of the cabinet.

55. On 14 March 2022, Hunter West sent it email to Ms Zadel attaching the report of Airsafe dated 24 February 2022 to Hunter West which relevantly stated:

1. the following details with respect to its inspection on 24 February 2022:

“

… The subject area at the time of inspection was considered to have been made safe with regards to the asbestos hazard.

Any further works undertaken within the subject area must be undertaken under asbestos conditions as per the code of practice and the site specific asbestos management plan.

…”

2. the following limitations:

“…

The make safe’ works provide only a temporary clearance to the asbestos hazard and should not be relied on for long-term management of the subject area.

…”

56. On 2 May 2022, the strata committee of OSP13516 held a meeting and as recorded in the minutes relevantly resolved:

1. to approve the engagement of an asbestos hygienist, Zoric Group, to undertake the asbestos remediation of the cabinet and provide a clearance certificate on the completion of the works, and for RPS to issue a work order accordingly;

2. to approve the engagement of a level 2 electrician, M E Ward, to isolate the mains supply to the cabinet, supervise the cleaning of the cabinet by the asbestos hygienist, and reinstate mains power at the completion of the works, and for RPS to issue a work order accordingly;

3. to arrange to have the works undertaken on 16 May 2022 and in accordance with ss 119 and s122 of the SSM Act (2015) to request that access be provided by Ms Osborne to the cabinet to undertake the remedial works.

57. Between 10 and 12 May 2022, there was email correspondence between RPS and Ms Osborne is which she refused to provide access to Zoric Group as it did not hold the required licence for the removal of friable asbestos.

58. On 12 and 13 May 2022, there was email correspondence between Mr Lee and Ms Osborne in which he advised that Hazmat which held the required licence for the removal of friable asbestos had been engaged to undertake the asbestos remediation of the cabinet on 13 May 2022 and she refused access for various reasons including the inconvenience of the specified time.

59. On 16 May 2022, Ms Osborne sent an email to RPS in which she attached the 12 May 2022 Turner report.

60. On 17 May 2022, the strata committee of OSP13516 held a meeting and as recorded in the minutes relevantly had the following discussion and made the following decisions regarding access to the cabinet:

“…

2 ACCESS TO ELECTRICAL CABINET

Discussion Items:

• Access to the electrical cabinet was requested but not provided by Lot 1

• Andrew had spoken with both Virginia and her son. It is their position that the only resolution to the issue with the electrical cabinet is to move the cabinet and until such agreement is reached that access won’t be provided.

• Virginia has provide her final solution to relocating the electrical cabinet however there is no understanding or clarity on the steps the Owners Corporation or Strata Committee should undertake to reach this solution, despite the SC obtaining steps and having these disputed by Virginia.

• It is noted that quotes are being sought to upgrade the electrical services in situ or in an alternate location.

• The difficulty with the quotes is there will need to be an assessment of the current cabinet and electrical board as well as the condition of wiring throughout the building.

• Upgrading the electrical board in situ may not be possible because cloth cabling cannot be connected to current electrical meters.

• Upgrading the meters to smart meters would resolve the issue of accessing the cabinet, whatever the location may be.

• The SC are expecting the cost to relocate the cabinet and board, and upgrade the mains supply to the building, would be approximately $20,000 to $30,000. This doesn’t include any additional rewiring works or disposal of the current asbestos contaminated board which will be approximately $10,000.

Actions:

• Agreed that the SC will not engage legal services should they lodge an application to NCAT for access to the electrical cabinet.

• RPS is to include into the AGM agenda a special levy for the works to the electrical board

• RPS to request Virginia to obtain 3 quotes to relocate the electrical cabinet/board including all steps required so that the cabinet and board can be moved.

…”

61. On 9 August 2022, Hazmat removed the asbestos dust at the bottom of the cabinet and glued down the cabinet.

62. On 19 October 2022, Ascon removed the cabinet from the porch of lot 1.

63. Airsafe in its report dated 20 October 2022 to Ascon relevantly contained the following clearance inspection:

“…

The results of the clearance inspection indicate the asbestos removal area does not pose a risk to health and safety from exposure to asbestos and can be re-occupied.”

The state of repair of the electrical infrastructure

64. At various times between 30 May 2021 and 1 September 2022, the following parts of scheme 13516, owners and occupiers experienced power outages:

1. Ms Osborne on 30 May 2021, 18 or 19 June 2021, early to mid-March 2022, 8 April 2022, 6 July 2022, 29 August 2022, and 1 September 2022;

2. the tenants of lots 2 and 5 in or around June 2021;

3. the owner of lot 6 on 22 December 2021;

4. the lights for the stairs in the common property on or around 18 January 2022;

5. Mr Deuse in or about July 2022.

65. On 9 April 2014, OSP13516 held the annual general meeting and as recorded in the minutes relevantly resolved that the executive committee review the 10 year sinking fund plan during the year and RPS was to reissue the sinking fund plan spreadsheet containing a handwritten entry “electrical board” to the executive committee (the 9 April 2014 AGM minutes).

66. On 14 March 2019, Mr Macheski sent an email to Harrold’s Electrical Service attaching a work order of the same date requesting “a quote and method to relocate the electrical switch board” for scheme 13516 (the 14 March 2019 RPS work order).

67. The strata insurance policy for scheme 13516 for the period from 6 December 2020 to 6 December 2021 (the 6 December 2020 insurance policy) relevantly contained the following condition:

“1 Electrical Wiring

Electrical switchboards and/or wiring failures can be catastrophic and costly and often occur without warning, particularly in older properties. It is vital that the electrical wiring and switchboards are of a condition that minimise any potential risk to both property damage and/or personal injury.

This policy is issued on the condition that all switchboards and associated wiring within the insured property have undergone a physical safety inspection by a qualified and licensed electrical professional within the last 10 years and that any recommended repairs or upgrades have been attended to.”

68. Ms Osborne in the 22 July 2021 Osborne email relevantly stated:

“…

The switchboards are clearly in a hazardous state. There is a maze of tangled and exposed wires that anyone could inadvertently touch and electrocute themselves. They present a serious fire hazard. …

…”

69. Ms Osborne in the 4 August 2021 Osborne email attached three coloured photographs of the interior of the cabinet which relevantly depicted tangled and exposed electrical wires behind a backing board.

70. On 5 August 2021, Scott Praine of Total Wire Electrical carried out an inspection of the electrics. Subsequently, he provided an undated report (the Praine report) which relevantly provided:

“I have visited the property of [address omitted] and briefly looked over the main switch board which is accessed via unit 1’s Enclosed Porch. The gate locking in this enclosure would likely not have existed when the building was built. The main switch board Is enclosed in a single cabinet fixed to the Northern wall of the Enclosed Porch in Unit 1.

The board has a 3-phase supply with service fuses that supply meters for each unit, each unit has its own switch board complete with fuses/circuit breakers (some with safety switches) also in this location. Electrical equipment contained within the cabinet which service all units include metering and circuit control for common areas, including:

• Common area lighting

• Common area power

• Emergency lighting

• Garage lighting

• Garbage area lighting

• Garbage area power

Wiring has been upgraded from original and carried out over different periods. There is also evidence certain individual switch boards have been upgraded more recently than others. It also appears some units may have had complete rewires.

Some of the electrical infrastructure is dated. Based on my inspection, the buildings electrical system is safe and complies with the current codes and also has a fire protection system and emergency lighting system with a test box. This test box is also located in the main switch board area also.

The electrical infrastructure for the building could be upgraded but this is not required for safety or compliance at present. If an upgrade was carried out, this could involve a complete re-wire including metering upgrades, new switchboards for each unit and could possibly involve complete unit re-wires.

…”

71. OSP13516’s lawyers in the 6 October 2021 BAGL letter relevantly attached the Praine report and stated:

“…

Safety of the Electrical Infrastructure

24. Despite assertions by your client that the Electrical Infrastructure is unsafe, the Total Report makes it clear this is not the case.

…”

72. Ms Osborne in the 3 December 2021 Osborne letter relevantly:

1. attached the following documents:

1. three coloured photographs of the electrical infrastructure taken in 2021 with the following captions:

1. photograph 1: “Fire risk: burn marks likely from arcing”; “Electrocution risk: degraded and exposed original wiring”;

2. photograph 2: “Electrocution and fire risk: live, degraded and exposed original wiring”;

3. photograph 3: “Electrocution and fire risk: live, degraded and exposed and updated original wiring”;

2. the 1 November 2021 Thomas email which relevantly provided:

“After attending the property [address omitted], Cremorne Point NSW 2090 on 29t October 2021, and completing a safety audit on the wiring and switchboard of the overall building it’s evident that the original wiring when the building was built is still in use. The cabling is cloth wiring (VIR cable) which can cause a fire risk and possible electrocution. Also, the cabling is very unreliable and intermittent creating faults on the circuit creating loss of power.

Regards to the switchboard, multiple circuits are not on safety switches and the panels that these devices are sitting on are asbestos panels. The mains coming into the building have been replaced over 5 years ago but have only allowed 100 Amp for a building with 7 units.

It’s my recommendation to start planning the update of cabling inside the building, relocation of panels to an accessible location/height and updating the switchboard to safety switches in a controlled setting. This will help to avoid disruption to other units, minimise services run on external of building, reducing cost due to emergency work or after-hours work, getting the job done once avoiding bandage fixes and removing the overall safety risk. I would also limit access to the switchboard due to the poor condition of wiring inside the cabinet.

…”

3. the 6 November 2021 Ravesteyn report which relevantly provided:

“…

In regard to the works inspected at [address omitted], Cremorne Point, New South Wales, 2090, Australia there are multiple issues and areas for concern in regard to the existing switchboard location, installation and existing electrical apparatus and hardware.

Incoming Service Mains and Consumer mains down to the main switchboard:

The first point of potential upgrade is the incoming service mains to the building and consumer mains running down to the switchboard. The incoming service mains are very aged and have not been altered or changed since its original installation (service mains are the aerial cables from the distribution pole to the point of attachment on the building). …

General Switchboard wiring, location and accessibility:

A significant amount of circuit breakers and unit final sub-circuits installed on the main switchboard are either ceramic fuses or old circuit breakers without any current Australian standard Earth leakage protection. This means those circuits have no earth fault protection to defend against electric shock, just over current. This can be incredibly unsafe as Earth leakage protection is a minimum Australian standard to ensure the safety of residents who live in the property. Depending on the length and severity of a shock, residents are at risk of serious bodily harm or fatality. Without RCD protection, if the tenants /owners were to have an appliance fail or some wiring damaged while working, there would be a potential of an electric shock to occur as the circuit protection would not trip off (or would trip much slower) in the case of an incident. …

The general state of the final sub-circuits wiring could never be described as something that is safe and secure. It appears large portions of individual units final sub-circuits are wired in old cloth cabling and vulcanized Indian rubber cabling which has all been decommissioned and requires replacement where discovered. The existing cabling is a wide variety of mixed cable across different ages, and it appears that some of the apartments have had wiring upgrades. As a result, the general connection wiring, terminations, extra enclosures, emergency lighting apparatus etc is just a “bird’s nest” of old and more recent connections. Although it is functioning there is no way installation apply for current Australian standards.

The general location and accessibility of the main switchboard is a significant issue for new wiring and maintenance. The switchboard location and the accessibility do not comply with any current Australian safety standards including the AS3000 wiring rules or the New South Wales service rules. The board fail to comply with AS/NZ 3000 2.10.2.5 with clearly outlines restricted switchboard locations and Service equipment, Service Protection Devices (SPD) and Meter Protection Devices (MPD’s) cannot be installed in a location over 2.0m (NSW Service Rules 4.7.1). All Service Equipment is required to be installed on hinge panels that provide accessibility for future maintenance and replacement. These specific requirements of these are outlined in 4.5.1 of the New South Wales service rules.

In addition, the current cabinetry would not comply with any of the current Wiring Rules or Service Rules. These would fail around the Service Rules requirements for accessibility. The height of the cabinetry, the small sliding doors and windows, the non-fireproof cabinetry as well as the old asbestos panels housing the load centres and ceramic fuses, all would incur defects if inspected by the supply authority. The Service Equipment (service fuses, load limiting Circuit Breakers, service neutral links and meters) are required to be installed on a bakelite or similar fire rated material with an appropriate enclosure to ensure the electrical components are safe in the case of melting, fire, explosion (blast rating) etc. There are multiple connections containing exposed copper, enclosures that are broken and damaged, old fuse enclosures that have had the sidewalls snapped with exposing electrical terminations within etc. Not only would this current board and enclosure not pass any work or alteration done by an Authorised Service provider if work was required, but it is also quite simply unsafe even for a member of the general public / unit owners to access. It should not be accessed by anyone that is not a qualified and licenced electrician with appropriate gear like insulated tools and fibreglass ladders.

…

Cabling currently being energised that requires urgent attention:

As previously mentioned, on further investigation of the final sub-circuits at the main switchboard majority of the cloth and rubber cabling has been identified as “live”. This cabling is all exposed and incredibly fragile and dangerous. The fact that the exposed wiring is open to the general public who could be coming in and resetting internal circuit breakers is a high potential for injury or further electrical damage to the cabling. If any of this age of cabling is disturbed the outer sheath or layer protecting the conductors is guaranteed to break and crumble away exposing live conductors behind. The chance for this to cause injury or potential short /fire increases the longer this cabling is left installed and energised. It is a “time-bomb” and we strongly recommend that this be removed as soon as possible. VIR and Cloth Cabling was cable installed between the 1910 and the 1960s. They are cables either wrapped in a cloth or rubber coating, are tinned to avoid the conductor not sticking to the insulation and then wrapped in the outer insulation to prevent the conductor from being affected by moisture. The major threat from the VIR cabling is after a period of time, the cabling drive out and the insulation becomes extremely brittle. This means the conductors can be left exposed result in further damage, electrical faults and potential hazard of electric shock

…”

4. the 9 November 2021 LME invoice which relevantly provided:

“Specifications : As per site inspection 8/11/21

Scope of works

- Visually inspect MSB without removing any covers.

Notes

- I recommend upgrading the mains and relocating the MSB to the stairwell to allow it to comply with AS3000:2018.

- I recommend to rectify the below issues as soon as possible as there is a potential fire risk and/or safety risk.

- Potentially 100 year old cable, new cabling has a life expectancy of 70 years.

- Circuits without safety switches installed.

- Single insulated cables behind the sliding doors.

- Single insulated cloth cables not properly terminated above Left hand side.

- Damaged fuse holders.

- Cloth cabling present throughout MSB.

- Incorrectly taped up joins and connectors exposed.

- Cables not secured properly near switchboards.

…”

5. the undated Covey report which relevantly provided:

“…

On inspection of the main switchboard, we would like to outline the following compliance

issues as per the service and installation rules of NSW and the AS/NZS 3000:2007 Wiring rules

Please find attached bullet points of main compliance issues, and sections of the rule book outlined for your own review. There are many that apply to this installation as it is very dated, but these are the main safety and constructions issues we would like to outline.

In Addition, there are fire compliance issues related to the equipment, due to materials used and not having the adequate circuit breaker and residual current device (safety switches) installed as protection. The main switchboard isn’t mounted in a fire rated enclosure and has flammable materials the equipment is mounted on.

…

In Summary,

There are many defective issues regarding the current switchboard and its location and condition.

From a fire audit perspective, this would fail due to the high risk of ignition sources present and minimal protection against overcurrent.

From a location perspective, as stated above, there is an abundance of issues relating to its location. The main being its located on a customer’s property instead of a common area. This then leads into a lot of issues regarding safety and liability if someone was to get injured whilst working on their property. It also has substantial issues regarding access for testing and emergency disconnections required to be done by domestic electricians working at the unit block and also the supply Authority which is Ausgrid when working on faults in the street.

As stated in the rules above, the service equipment needs to be readily accessible in a common area for both the customers and Ausgrid. This also includes it not being over 2m high, so persons are not having to work off a ladder which is deemed unsafe.

Finally, there was voltage recorded on disconnected copper cables which are deemed live and provide a safety issue to anyone working on the board that needs to be rectified.”

6. asserted that the Praine report so far as the safety of the electrical infrastructure was deficient.

73. OSP13516’s lawyers in the 3 February 2022 BAGL letter rejected the allegations of Ms Osborne in the 3 December 2021 Osborne letter as they were inconsistent with the Praine report and advised that nonetheless OSP13516 was arranging for an electrical engineer to review the electrical infrastructure.

74. OSP13516’s lawyers in their letter dated 6 March 2022 to Ms Osborne relevantly advised that OSP13516 was engaging Mr Waldman who considered that works may be required from his review of the documents provided by her, and he would identify the exact scope and cost of those works after a full inspection which would take place after the cabinet was cleaned of asbestos dust by the qualified contractor engaged by OSP13516.

75. Mr Wardman in his electrical services brief to advise dated 4 April 2022 (the 4 April 2022 Wardman brief) relevantly expressed the following opinions:

“The existing main switchboard and associated equipment in the switchboard cupboard is non-compliant with current codes and standards and is in very poor condition and considered dangerous and in our view needs to be urgently attended.”

“It is clear that the existing electrical services require a significant upgrade.”

“The current main switchboard together with the associated metering and cabling is in extremely poor condition ...”

“It is considered necessary to replace the existing switchboard with a compliant new main switchboard together with associated metering and controls ...”

“A significant area of concern is the amount of asbestos dust present in the main switchboard which needs to be removed ...”

76. Sinem Aksoy of OSP13516’s lawyers in his email to a members of the strata committee sent on 13 April 2022 relevantly stated:

“…

In response to your email transmitted at 8:58am, during our video conference with Frank, Frank stated that even though he had not undertaken an inspection, from the photographs provided to him, it was very clear to him that the switchboard and associated equipment in the switchboard cupboard were non-compliant with current codes and in a dire state.

…”

77. Mr Wardman in his electrical services brief to advise dated 19 April 2022 (the 19 April 2022 Wardman brief) relevantly:

1. expressed the following opinions in the executive summary:

“There have been allegations made that the main switchboard and associated equipment in the switchboard cupboard are non-compliant with current codes and standards and that they are in poor condition and are dangerous.

The purpose of this brief is to undertake a detailed inspection of the entire electrical services power reticulation system in the residential building at [address omitted] Cremorne NSW and to advise the Owners Corporation the works required to make the electrical infrastructure compliant and safe.”

2. attached nine coloured photographs on two of which it marked the caption “untapped BB connector”.

78. Between mid-May 2022 and mid-July 2022, quotations were obtained from electricians to replace the electrical infrastructure to current standards both in its current location and in a new location.

79. On 7 June 2022, OSP13516 held the annual general meeting and as recorded in the minutes (the 7 June 2022 AGM minutes) relevantly resolved:

1. to authorise the strata committee to confirm the location of the electrical meter board should it be relocated;

2. to finalise additional quotes for the electrical board works;

3. to convene a meeting of the strata committee in two weeks to review and identify a preferred quote;

4. to consider the special levy to cover associated cost of remediation at the next general meeting.

5. there would be no works or actions on the current electrical board until the strata committee had met.

80. On 26 July 2022, OSP13516 held a general meeting and as recorded in the minutes relevantly resolved:

1. to agree to complete the upgrade and relocation works of the electrical infrastructure, cabinet and metering on the south boundary face of the building and approve the engagement of ME Ward for the quoted amount of $39,380 inclusive of GST;

2. to raise a special levy $58,000 in one instalment which would be due on 1 August 2022.

81. On 8 August 2022, RPS issued a work order to M E Ward for the upgrade and relocation works of the electrical infrastructure.

82. On 29 August 2022, a member of the staff of North Sydney Council sent an email to Ms Karam in which he advised that electrical works did not require Council approval.

83. Between 1 and 2 September 2022, the members of the strata committee of OSP13516 agreed to change the location for the relocated electrical infrastructure to the foyer of the building.

84. On 12 September 2022, OSP13516 at a general meeting relevantly resolved to proceed with an underground connection for the relocation of the electrical infrastructure to the foyer of the building.

85. Between 30 September and 9 November 2022, M E Ward carried out the electrical works associated with the relocation of the electrical infrastructure to the foyer of the building.

The submissions of the parties

Ms Osborne

The presence of asbestos in the cabinet

86. In her written submissions, Ms Osborne made the following submissions:

1. OSP13516 knew that the cabinet contained asbestos as recorded in the 27 June 2012 EC minutes;

2. in light of the specialist advice of Dr Orr in the 26 April 2012 Orr report to inspect the cabinet every three years to ensure that the asbestos had not deteriorated, OSP13516’s duty to maintain extended to carrying out these three yearly inspections as a preventative measure to ensure there was no malfunction or deterioration of the asbestos in the cabinet. As conceded by Mr Macheski in the 27 January 2022 Macheski email, there had been no further inspection of the cabinet since then;

3. notwithstanding the 15 July 2021 W & W letter, the 22 July 2021 Osborne email and the 4 August 2021 Osborne email, OSP13516 was extremely dilatory in responding as recorded in the 6 October 2021 SC minutes, and the 17 January 2022 Zadel email;

4. OSP13516 knew from the 28 January 2022 Airsafe report that there was chrysolite asbestos in the samples taken from three locations in the cabinet;

5. the lengthy process which followed the sealing the cabinet and cleaning of the areas within the immediate vicinity of the cabinet by Hunter West on 22 February 2022 whereby OSP13516 sought to address the issues with the electrical infrastructure so that the asbestos cleaning could be carried out was entirely misplaced;

6. OSP13516 was in breach of its duty to maintain the asbestos in the cabinet for the entire period of her claim up to 20 October 2022.

The state of repair of the electrical infrastructure

87. In her written submissions, Ms Osborne made the following submissions:

1. OSP13516 did not comply with the condition in the 6 December 2020 insurance policy until September 2021. It, acting reasonably, ought to have arranged a safety inspection of the cabinet in or around December 2020 as it was on notice of both the seriousness of the risk that the cabinet and electrical infrastructure might pose and in order to comply with the conditions of its insurance;

2. OSP13516 has not called any direct evidence that it relied on the Praine report and this should not be inferred given the photographs supplied to it by her and the fact that it has not adduced evidence of the reasons for its planning to do works on the cabinet and the electrical infrastructure from as recorded in the sinking fund plan 2012 or the quote it obtained from Harrold’s Electrical Service in response to the 14 March 2019 RPS work order.

OSP13516

The presence of asbestos in the cabinet

88. In its written submissions, OSP13516 made the following submissions:

1. when Ms Osborne sent the 22 July 2021 Osborne email all that could be said of the electrical infrastructure and the cabinet were that they were old, and contained asbestos. The same may be said of the electrical infrastructure in countless other apartment buildings in Sydney and elsewhere. As Ms Osborne does not hold herself out as having any qualifications in relation to asbestos or electrical work, her statements as to the state of the cabinet and electrical infrastructure must be understood as being unqualified lay opinion only, of limited weight;

2. OSP13516 was entitled to rely upon the Praine report in which Mr Praine expressed the opinions that that some of the electrical infrastructure was dated, but were nonetheless safe, that while upgrade works were possible, they were not at that time required for compliance or safety;

3. OSP13516 was entitled to rely upon the 4 April 2022 Wardman brief;

4. s 106(2) and not s 106(1) of the SSM Act applied to the renewal or replacement of the electrical infrastructure.

Consideration

The presence of asbestos in the cabinet

89. I am satisfied in the light of the 27 January 2022 Macheski email that OSP13516 did not follow the recommendation of Dr Orr in the 26 April 2012 Orr report to inspect the cabinet every three years to ensure that the asbestos had not deteriorated. Having regard to the principles in Gittins at [57]-[58] and Doherty at [178] and [181], I am satisfied that OSP13516 breached its duty under s 106(1) of the SSM Act by failing to have in place a system of triennial inspections of the cabinet.

90. In the light of the Praine report and the three coloured photographs attached to the 4 August 2021 Osborne email, I am satisfied that the inference should be drawn that the asbestos backing boards had been drilled into and the cabinet contained dust and debris from various electrical upgrades when Ms Osborne became the owner of lot 1 in January 2021. I am also satisfied from the 28 January 2022 Airsafe report that the backing board; the insulation, dust and debris fragments at the bottom of the cabinet, and the fuse and backing material in the cabinet all contained chrysolite asbestos. I am further satisfied from the 3 February 2022 Gorham email that the cabinet was dangerous by reason of the presence of asbestos fibres. If OSP13516 had a system of triennial inspections of the cabinet, it would have discovered these asbestos fibres prior to January 2021 and thereby come under a duty to replace the electrical infrastructure and remove all asbestos from the cabinet.

91. OSP13516 became aware of the presence of asbestos fibres in the electrical infrastructure and the cabinet on its receipt of the 28 January 2022 Airsafe report. While the 15 July 2021 W & W letter, the 22 July 2021 Osborne email and the 4 August 2021 Osborne email contained allegations of the presence of asbestos, as Ms Osborne did not have any relevant qualifications, OSP13516 acted reasonably in obtaining from Airsafe an analysis of samples of the electrical infrastructure and the dust and debris in the cabinet.

92. I am satisfied that OSP13516 acted with reasonable expedition in arranging for the sealing of the cabinet and cleaning of the areas within the immediate vicinity of the cabinet by Hunter West on 22 February 2022, and the removal of the cabinet from the porch of lot 1 by Ascon on 19 October 2022. The sealing of the cabinet occurred within three weeks of receipt by Ms Zadel of the 3 February 2022 Gorham email. The delay between 22 February 2022 and 19 October 2022 was reasonable in the light of the investigations about the state of the electrical infrastructure, and the decision-making process for its upgrade and relocation.

93. Mr Turner in the 12 May 2022 Turner report expressed opinions on four questions relating to the presence of asbestos on the surface of the cabinet, the likely disturbance of asbestos by the opening of the cabinet doors and working on the electrical infrastructure, and the removal of the cabinet and/or the electrical infrastructure to eliminate the asbestos. These opinions of Mr Turner were challenged in cross-examination. As I have found that OSP13516 was in breach of its duties under ss 106(1) and (2) of the SSM Act by reason of the presence of asbestos fibres in the cabinet from prior to January 2021, it has been unnecessary to have regard to the 12 May 2022 Turner report or the oral evidence of Mr Turner and make findings in regard to the opinions of Mr Turner.

The state of repair of the electrical infrastructure

94. I am not satisfied that an inference should be drawn from the 10-year sinking fund plan referred to in the 9 April 2014 AGM minutes and the 14 March 2019 RPS work order that the electrical infrastructure was in a state of disrepair as at 9 April 2014 or 14 March 2019.

95. In the light of the condition relating to in electrical wiring in the 6 December 2020 insurance policy and the absence of any evidence by OSP13516 as to a physical safety inspection of the electrical infrastructure within the previous 10 years, then having regard to the principles in Gittins at [57]-[58] and Doherty at [178] and [181], I am satisfied that OSP13516 breached its duty under s 106(1) of the SSM Act by failing to promptly undertake a physical safety inspection of the electrical infrastructure.

96. However, this breach of duty was rectified by obtaining the Praine report. I am satisfied that OSP13516 was entitled to rely on this report from the time of its receipt on or shortly after 5 August 2021. While the 15 July 2021 W & W letter, the 22 July 2021 Osborne email and the 4 August 2021 Osborne email contained allegations of the disrepair of the electrical infrastructure, as Ms Osborne did not have any relevant qualifications, OSP13516 acted reasonably in relying on the Praine report as stated in it’s lawyers in the 6 October 2021 BAGL letter.

97. I am also not satisfied that an inference should be drawn from the experience of power outages in the common property and by Ms Osborne and other owners and occupiers between on or shortly after 5 August 2021 and 4 April 2022 that the electrical infrastructure was in a state of disrepair.

98. I am also satisfied that OSP13516 in the face of evidence in the 3 December 2021 Osborne letter contrary to the Praine report acted with reasonable expedition and reasonably in arranging for an electrical engineer to review the electrical infrastructure.

99. OSP13516 became aware of the state of repair of the electrical infrastructure on its receipt of the 4 April 2022 Wardman brief. I am satisfied that OSP13516 acted with reasonable expedition in arranging for the relocation of the electrical infrastructure from its receipt of the 19 April 2022 Wardman brief. The delay between 19 April 2022 and 9 November 2022 was reasonable in the light of the decision-making process for the upgrade and relocation of the electrical infrastructure.

Issue 3: whether the loss claimed by Ms Osborne was reasonably foreseeable

Introduction

100. Both parties accepted that the cause of action of an owner under s 106(5) of the SSM Act for damages for breach of ss 106(1) and (2) is limited to “any reasonably foreseeable loss suffered by the owner”.

101. Before considering this issue, I have set out the applicable legal principles. As the events and communications between the parties were not in dispute, I have then set out the chronology of events which Ms Osborne relate to the reasonable foreseeability of the loss she suffered. As only Ms Osborne made submissions on this issue, I have finally summarised the written submissions of Ms Osborne.

The applicable legal principles

102. The New South Wales Court of Appeal in The Owners – Strata Plan No 74232 v Tezel [2023] NSWCA 35; (2023) 20 BPR 43,119 said that the requirement in s 106(5) of the SSM Act that the loss be reasonably foreseeable is a form of remoteness limitation on what damages may be recovered: at [42] (Mitchelmore JA with Gleeson JA at [1] and Kirk JA at [58] agreeing).

103. In Smith v Owners - Strata Plan No. 3004 [2022] NSWSC 1599 (Smith), Mitchelmore J considered an appeal from the Local Court in which the issue was whether the Magistrate erroneously construed the words “reasonably foreseeable loss” in s 106(5) of the SSM Act. Her Honour at [34] and [41] relevantly held:

“[34] In its terms, the right of recovery in s 106(5) of the SSM Act is dependent upon characterisation of the loss as “reasonably foreseeable” and “suffered by the owner as a result of a contravention of this section”. The terminology is consistent with the approach to assessing damages in tort, consistently with the cases before Thoo which had approached damages on that basis. There is no suggestion in the text of s 106(5) that the enactment of a statutory right to damages which the Supreme Court had previously considered to be available was intended to depart from the basis on which damages had previously been assessed.”

“[41] In the present case, it was common ground between the parties, consistently with settled principle, that damages in negligence are available for loss or injury of a kind that is reasonably foreseeable as a possible result of the breach of duty, citing Overseas Tankships (UK) Ltd v Morts Dock & Engineering Co Ltd (The Wagon Mound No 1) [1961] AC 388 (see at 423, 426). As summarised in McGregor on Damages (21st ed, Thomson Reuters, 2021) at [8-065], “… the bar is only to recovery for unforeseeable types of damage: if the damage is of a type that is foreseeable, then recovery is still available even if the degree of damage is unforeseeable or if the precise manner in which the damage occurs is unforeseeable”. …”

104. In Shum v Owners Corporation SP30621 [2017] NSWCATCD 68 (Shum), the Tribunal determined a claim for loss of rent as a result of water leaks and a delay on the part of the owners corporation in approving repairs. The Tribunal at [60] considered the time of assessment of foreseeability of loss:

“[60] The foreseeability of the loss is to be assessed at the date of the breach of statutory duty, namely in about January 2016 at the earliest or any time thereafter until rectification of the breach in May 2017: Overseas Tankship UK Limited v Mort’s Dock & Engineering Co Limited (The Wagon Mound [No 1]) [1961] AC 388. The test is satisfied provided that the risk of damage occurring is not so slight as to be dismissed as a mere far-fetched or fanciful possibility: Wyong SC v Shirt (1980) 146 CLR 40. Australian courts have adopted the observation of Lord Reid in Koufos v C Czarnikow Limited (The Heron II) [1969] 1 AC 350 that:

The defendant will be liable for any type of damage which is reasonably foreseeable as liable to happen even in the most unusual case, unless the risk is so small that a reasonable man would in the whole circumstances feel justified in neglecting it.”

105. On 11 November 2020, the majority of the New South Wales Court of Appeal in Vickery v The Owners Strata Plan 80412 (2020) 103 NSWLR 352; [2020] NSWCA 284 (Vickery) (Basten JA and White JA; Leeming JA dissenting) determined that the owner was entitled to damages of $97,000.00 for loss of rent under s 106(5) of the SSM Act caused by the breach of s 106(1) by the owners corporation by reason of water ingress. White JA at [161] observed that a claim for compensation for the damage suffered to the lot as a result of an alleged failure to repair the common property might include a claim for economic loss, such as the loss of rent as a result of damage to the lot.

106. Since Vickery, there have been several decisions of the Tribunal in which damages have been awarded to an owner under s 106(5) of the SSM Act for loss of rent caused by the breach of s 106(1) by the owners corporation. In The Owners – Strata Plan No 2341 v P & M Sachs Pty Ltd [2022] NSWCATAP 304 the Appeal Panel dismissed an appeal from the decision of the Tribunal whereby an owner had been awarded damages under s 106(5) of the SSM Act for loss of rent caused by the breach of s 106(1) by the owners corporation by the reason the presence of presence of asbestos which could or did enter the lot. The Appeal Panel at [23] noted that the Tribunal had found that the inability to earn rental income was a “reasonably foreseeable loss suffered” by the owner.

107. In Trevallyn-Jones, Ward J allowed the owner’s claim for damages set out at [125]-[127] which included loss of rent and the cost of two experts reports.

The chronology of events

108. On 30 March 2021, Ms Osborne sent an email to Mr Macheski (the 30 March 2021 Osborne email) in which she relevantly stated:

“…

I’ll need to get renovated pretty quickly as if I can’t have a dog, I’ll be moving, and renting the apartment out. That kitchen really needs to be more user friendly. Hopefully that will be able to be done.

…”

109. On 19 April 2021, the strata committee of OSP13516 held a meeting and as recorded in the minutes relevantly refused the request of Ms Osborne to keep a dog (the 19 April 2021 SC minutes).

110. On 19 April 2021, Ms Osborne sent an email to the secretary of scheme 13516 (the 19 April 2021 Osborne email) in which she relevantly stated:

“…

I was aware my dog application was on the agenda at the meeting this evening.

…

For me I cannot see a problem with a dog. I realise many people do not understand them, however. If I am disallowed it, I will rent the apartment out and move elsewhere until it is timely to sell. A dog is more important to me than living here.

…

That on top of wanting to do the alteration at the back, it is all a bit too hard. I’ve dealt with council with DA’s many times, but strata is just not my thing.

…”

111. On 20 April 2021, Ms Osborne sent an email to two members of the strata committee of OSP13516 (the 20 April 2021 Osborne email) in which she relevantly stated:

“…

After having been advised that there are concerns of my getting a dog, and no resolution appears to have been made, I have decided to move to my house on the South Coast and get a puppy there. My son will at first be living in the apartment and after that I will probably rent it out formally.

…”

112. On 22 April 2021, Ms Osborne sent an email to Mr Macheski (the 22 April 2021 Osborne email) in which she relevantly stated:

“…

Well I think I’ve been pretty patient with this pet application. My son’s took a couple of days. Anyway there appears to be no resolution, and concerns, so I’ve told them I’m moving to my place on the south coast and my son will be living there, until I rent it out formally.

I’m sending the information, however, for the alteration at the back to the lawyer today. I hope not in vain. I think the improvement will add value.

…”

113. On 6 May 2021, Ms Osborne sent an email to Mr Macheski (the 6 May 2021 Osborne email) in which she relevantly stated:

“…

... On another note, I have finally instructed the lawyers to draft the by-law for the kitchen/laundry improvements. I held off as I was trying to work out what to do as I cannot live here if I cannot have a dog. However, I think the improvements will be better for renting or selling. I am not hopeful of an approval from the body corporate, sadly but I need to try.

…”

114. On 18 May 2021, Ms Osborne sent an email to Mr Macheski and the members of the strata committee of OSP13516 (the 18 May 2021 Osborne email) in which she relevantly stated:

“…’

So, could you please allow me to have my by-law proposal, prepared by the lawyer, placed on next week’s agenda. it you agree, I will hasten the lawyers to get it done in time, at least a few days before the meeting. I think that is only fair as owners are expected to get their items ready in one day. If this is not possible, however, could I please be advised of the date of the next meeting. I have to now organise the rental of my property and schedule some planning.

…”

115. On 29 May 2021, Ms Osborne sent an email to the members of the strata committee (the 29 May 2021 Osborne email) in which she relevantly stated:

“…

As my aim is to rent this apartment out in the near future, and then sell it on further down the track, I do need to understand this better. I also need to know if it is worth doing improvements on the property. …

…”

The submissions of Ms Osborne

116. In her written submissions, Ms Osborne made the following submissions:

1. it was reasonably foreseeable that she would suffer a loss of rental income, and referred to the 30 March 2021 Osborne email, the 19 April 2021 SC minutes, the 19 April 2021 Osborne email, the 20 April 2021 Osborne email, the 22 April 2021 Osborne email, the 6 May 2021 Osborne email, the 18 May 2021 Osborne email and the 29 May 2021 Osborne email;

2. it was reasonably foreseeable that she would suffer financial losses in using alternate accommodation;

3. it was reasonably foreseeable that she would engage her own electricians and an occupational hygienist asbestos expert at her own cost to assess matters, and she referred to Trevallyn-Jones v Owners Strata Plan No 50358 [2009] NSWSC 694 (Trevallyn-Jones) at [9] and [126].

Consideration

117. Having regard to the principles in Smith at [41] and Shum at [60], I am satisfied that loss of rent by Ms Osborne by reason of her inability to rent lot 1, the cost of alternative accommodation by Ms Osborne by reason of her inability to occupy lot 1 and the cost of engaging an occupational hygienist asbestos expert by Ms Osborne was each a loss of a kind that is reasonably foreseeable as a possible result of the breach of duty under s 106(1) and (2) of the SSM Act by OSP13516 by reason of the presence of asbestos fibres in the cabinet and the electrical infrastructure.

118. In making this finding so far as loss of rent by Ms Osborne, then, having regard to the principles in Smith at [41], I have excluded from my consideration the expression of intention of Ms Osborne to rent lot 1 and the surrounding circumstances in March 2021 to May 2021 recorded in the 30 March 2021 Osborne email, the 19 April 2021 SC minutes, the 19 April 2021 Osborne email, the 20 April 2021 Osborne email, the 22 April 2021 Osborne email, the 6 May 2021 Osborne email, the 18 May 2021 Osborne email and the 29 May 2021 Osborne email.

119. As I have found that OSP13516 rectified its breach of duty under s 106(1) of the SSM Act by obtaining the Praine report, the issue of the reasonable foreseeability of the cost of engaging electricians by Ms Osborne after 5 August 2021 does not arise for determination.

120. If I am later found to be in error in finding that OSP13516 rectified its breach of duty under s 106(1) of the SSM Act by obtaining the Praine report, then I would have found that the cost of engaging electricians by Ms Osborne after 5 August 2021 was a loss of a kind that is reasonably foreseeable as a possible result of this ongoing breach of duty Act by OSP13516.

Issue 4: whether any breach by OSP13516 of its duties under s 106(1) and (2) of the SSM Act caused the loss claimed by Ms Osborne

Introduction

121. The main contest between the parties was in relation to this issue. Ms Osborne contended that lot 1 was uninhabitable and that she intended to rent lot 1. OSP13516 contended that Ms Osborne had not established that lot 1 was uninhabitable and that she had a real and immediate intention to rent lot 1.

122. Before considering this issue, I have set out the applicable legal principles. I have then summarised the applicable evidence of the Ms Osborne with respect to the causation of any loss suffered by Ms Osborne. The events set out in the chronology for issue 3 are also relevant to this issue. I have not summarised the 10 July 2023 Osborne statement other than the recorded events, the 3 November 2023 Osborne statement, and the oral evidence of Ms Osborne so far as they relate to her habitation of lot 1, the 23 May 2022 Kaporis report and the oral evidence of Mr Kaporis, the 18 October 2023 Karam statement, the 20 October 2023 Deuse statement, the 20 October 2023 Canavan statement and the 20 October 2023 Lee statement as I do not consider that this evidence is relevant to the determination of this issue for the reasons set out in [145] and [146] below. I have finally summarised the written submissions of the parties. I have not summarised the oral submissions of the parties as they substantially were repetitive and in reinforcement of their written submissions.

The applicable legal principles

Causation under s 106(5) of the SSM Act

123. In Szeto v The Owners - Strata Plan No 1418 [2023] NSWCATAP 105 (Szeto) at [44]-[47] the Appeal Panel recently referred to the authorities regarding causation under s 106(5) of the SSM Act:

“[44] In March at 515-516 Mason CJ said (Toohey J at 524 and Gaudron J at 525 agreeing):

“The common law tradition is that what was the cause of a particular occurrence is a question of fact which “must be determined by applying common sense to the facts of each particular case” …

Commentators subdivide the issue of causation in a given case into two questions: the question of causation in fact - to be determined by the application of the “but for” test - and the further question whether a defendant is in law responsible for damage which his or her negligence has played some part in producing … However, this approach to the issue of causation (a) places rather too much weight on the “but for” test to the exclusion of the “common sense” approach which the common law has always favoured; and (b) implies, or seems to imply, that value judgment has, or should have, no part to play in resolving causation as an issue of fact. …

That said, the “but for” test, applied as a negative criterion of causation, has an important role to play in the resolution of the question. …

…

The “but for” test gives rise to a well-known difficulty in cases where there are two or more acts or events which would each be sufficient to bring about the plaintiff’s injury. The application of the test “gives the result, contrary to common sense, that neither is a cause” …”

[45] In The Owners Strata Plan No 30621 v Shum [2018] NSWCATAP 15 (Shum) at [132]-[134] the Appeal Panel identified the following principles for causation to be established under s 106(5) of the SSM Act:

132 First, causation is a question of fact to be answered by common sense and experience: March v Stramare (E & MH) Pty Ltd [1991] HCA 12; (1991) 171 CLR 506 per Mason CJ at [17].

133 Secondly, as long as a cause of the loss is the breach about which complaint is made, the fact there are multiple causes for the loss will not prevent a claimant recovering damage.

134 In Simonius Vischer & Co v Holt and Thompson [1979] 2 NSWLR 322 the Court said:

It was, of course sufficient for the plaintiffs to establish that the defendants’ breaches were a cause of the loss notwithstanding that there may have been other concurrent causes. Hence, the defendants’ argument must show that the plaintiffs’ lack of care was the sole cause of the loss, to the exclusion of any causative influence exerted by the defendants’ breaches. I take the correct principle to be that stated in Chitty on Contracts, General Principles, 23rd ed.; p. 670, par. 1448:

“If a breach of contract is one of two causes, both cooperating and both of equal efficacy in causing loss to the plaintiff, the party responsible for the breach is liable to the plaintiff for that loss.”

This statement is supported by the authority of Devlin J., as he then was, in Heskell v Continental Express Ltd [1950] 1 All ER 1033 at 1046-1048, and the cases there cited. In particular, I refer to what was said by Lord Wright with whom Lord Atkin agreed, in Smith Hogg & Co Ltd v Black Sea and Baltic General Insurance Co. Ltd [1940] AC 997 at 1007. His Lordship’s remarks, although delivered in a context different from that which obtains here, are of undoubted application. Lord Wright said:

“The sole question apart from express exception, must then be: ‘Was that breach of contract “a” cause of damage.”

[46] In Vickery v The Owners Strata Plan 80412 (2020) 103 NSWLR 352; [2020] NSWCA 284 Leeming JA said at [82] noted that s 5D of the CL Act had modified the test of causation stated in March.

[47] We are satisfied that the Tribunal in the Tribunal Decision at [74]-[76] correctly identified the test for causation under s 106(5) of the SSM Act in referring to the statement of principles of Mason CJ in March at 515-516. This statement of principles has been applied to s 106(5) of the SSM Act in Shum at [132].”

Fitness for habitation under s 52 of the RT Act

124. Section 52 of the Residential Tenancies Act 2010 (NSW) (RT Act) relevantly provides:

52 Landlord’s general obligations for residential premises

(1) A landlord must provide the residential premises in a reasonable state of cleanliness and fit for habitation by the tenant.

…

125. The principles as the scope and content of the obligation imposed upon a landlord by s 52(1) of the RT Act were summarised by the Tribunal in Keith Bannister v David and Mariam Cheung [2014] NSWCATCD 105 (Bannister) at [16]-[20]:

“[16] In respect of “fit for habitation”, Aitken L.J. stated in Summers v Salford Corporation [1943] AC 283:

“If the state of the repair of the house is such that by ordinary use damage may naturally be caused to the occupier either in respect of personal injury to life or limb or injury to health, then the house is not in all respects fit for habitation...it is clear that premises may be unfit for human habitation even though it is physically possible for a tenant to reside in the premises”.

[17] In Gray v Queensland Housing Commission [2004] QSC 276, Chesterman J reviewed the authorities regarding whether premises were reasonably fit for habitation, and stated as follows (at [11]):

“The test approved by the House of Lords may be paraphrased: if the state of repair is such that injury is to be expected, or will naturally occur, from the ordinary use of the premises they cannot be regarded as fit for human habitation”.

[18] In Hampel v South Australian Housing Trust [2007] SADC 64, Milsteed J stated (at [63]):

“In my opinion, a house is unfit for human habitation if an occupier could be expected to suffer physical injury or injury to health from the ordinary use of the premises. It may be so unfit for any reason. The risk to health or safety may arise because the premises are in a state of disrepair or dilapidation or because of a lack of facilities such as the provision of adequate water, light, ventilation, and so on.”

[19] In McLeish v FT Eastment & Sons Pty Limited [1970] 2 NSWR 282, 91WN (NSW) 268, the New South Wales Court of Appeal described the terms “reasonable state of repair” and “fit for habitation” in the following manner (citing Proudfoot v Hart (1890) 25 QBD 42):-

“Must import such a state as to repair that the premises might be used and dwelt in, not only for safety, but for reasonable comfort, by the class of persons by whom and for the sort of premises for which, they were to be occupied...The conclusion I draw...is that the landlord is obliged to hand the premises over to the tenant, at the commencement of the lease, in a reasonable state of repair having regard to its age, rent payable and prospective life of the premises, and the state of repair must at least meet the minimum standard inherit in the contemporary understanding of the term “fit for habitation”.”

[20] The test of “fit for habitation” is objective, rather than subjective. Residential premises may be unfit for habitation, even if the landlord is unaware of the defect. However, in De Solei v Palmhide Pty Limited [2010] NSWCTTT 464, the Tribunal noted that the test of proving that premises were not fit for habitation was a difficult one for a tenant to satisfy and a finding that premises are not fit for habitation is not to be lightly made. …”

The applicable evidence of the Ms Osborne

The 10 July 2023 Osborne statement

126. On 26 June 2021, Ms Osborne sent an email to Mr Macheski (the 26 June 2021 Osborne email) in which she:

1. relevantly stated:

“…

Hope you are well. After deliberating over my alterations to the apartment, I have decided to go back to my original idea of relocating the kitchen to the sunroom at the front of the apartment. I do not think this will alter the by-law but I have attached the new application and new plans.

…”

2. attached an application for a by-law for works to the existing kitchen area, laundry area, bathroom and existing dining/sunroom area, and a sketch plan of the works. The application relevantly provided:

“…

5. Installation and timing of the proposed works

• Existing kitchen/laundry

… The commencement of these works are to take place as soon as possible, considering time taken to get approval from the committee, the council, (A DA is required to alter the exterior door. I have been informed this is very likely to be approved), getting the by-law registered and consolidated into the other by-laws.

…

• Bathroom area

I do not propose to carry out these alterations until 2023. The whole process including plumbing, tiling should only take two weeks

…”

127. On 30 June 2021, the strata committee of OSP13516 held a meeting and as recorded in the minutes relevantly noted that Ms Osborne’s proposed renovation and by-law would need to be further discussed after additional information was provided by her including engineering drawings for the structural work.

128. On 6 October 2021, the strata committee held a meeting and as recorded in the minutes relevantly noted that Ms Osborne had provided some additional information and would provide an amended application for her proposed renovation, and that it wanted her to address the questions raised in an email sent on 1 August 2021.

129. On 6 May 2022, Ms Osborne sent an email to Mr Macheski (the 6 May 2022 Osborne email) with the subject heading “SCOPE OF WORKS AND CURRENT STATUS to restore electrical power to Unit 1” in which she relevantly stated:

“…

Related issues aside, my current circumstances are untenable, and have been for a considerable period. For all intents and purposes, my apartment is uninhabitable. …

…”

130. On 12 May 2022, Ms Osborne sent an email to Mr Lee (the 12 May 2022 Osborne email) in which she relevantly stated:

“…

My apartment is, for all intents and purposes, uninhabitable. The circuits running my kitchen, laundry, lounge room, second bedroom, hallway, bathroom and hot water are not functioning. My family and I have otherwise been needlessly exposed to asbestos over a considerable period, notwithstanding the OC was aware of the presence of asbestos for a long time, but neglected to tell me (the cabinet does not seal and has holes in its base). …

…”

131. On 7 June 2022, OSP13516 held the annual general meeting and as recorded in the 7 June 2022 AGM minutes relevantly resolved to defeat a by-law to authorise the owner of lot 1 to add to, alter and erect new structures on the common property and to provide for exclusive use of these structures.

132. On 24, 26 and 27 October 2022, a builder carried out renovation works to lot 1.

133. On 19 November 2022, Ms Osborne opened lot 1 for a rental inspection.

134. Between around 29 November 2022 and 13 December 2022, renovation works comprising rewiring, plastering and painting were carried out to lot 1.

135. On 15 December 2022, Ms Osborne and a tenant executed a residential tenancy agreement for lot 1 for 52 weeks commencing on 16 December 2022 at a rental of $2,000.00 per fortnight.

The 3 November 2023 Osborne statement

136. In the 3 November 2023 Osborne statement, Ms Osborne relevantly gave evidence that since 26 November 2022 she has rented an apartment at Kirribilli in New South Wales at a rent of $525 per week (at [34]).

The oral evidence of Ms Osborne

137. In cross-examination, Ms Osborne relevantly gave the following evidence:

1. she did not attempt to rent lot 1 before November 2022 because she knew it was not safe to do so;

2. she did not consider renting lot 1 without the porch.

The submissions of the parties

Ms Osborne

138. In her written submissions, Ms Osborne made the following submissions:

1. on, and from at least, 29 May 2021, lot 1 was unfit for habitation and, otherwise, unable to be rented out due to the breach by OSP13516 of its duties under s 106(1) and (2) of the SSM Act. Here, the electrical infrastructure and the cabinet were, plainly, capable of causing injury from lot 1's ordinary use;

2. the expert evidence is overwhelmingly to the effect that, until the clearance certificate was issued in October 2022, opening the cabinet was dangerous and could make asbestos fibres in the cabinet airborne; and there was a serious risk posed by the asbestos dust and debris in the cabinet whilst the cabinet was not professionally sealed (which occurred on 22 February 2022). Further, the electrical infrastructure constituted a very real fire and electrocution hazard;

3. even if parts of lot 1 were less likely to present health and safety issues than those proximate to the cabinet and the electrical infrastructure, tenants would be largely without, or have no guarantee of, power and, accordingly, unable to perform even the most basic activities of daily living like having a hot shower, watching television, listening to music, heating, using the refrigerator and cooking meals. Ms Osborne’s evidence demonstrates that she was unable to do these things;

4. her occupation of lot 1 does not mean that it was fit to be leased out;

5. her occupation of lot 1 does not mean that her intention to rent it out changed. There are numerous statements made by her in the 10 July 2023 Osborne statement of her continuing intention to rent out lot 1;

6. the refusal of the strata committee of OSP13516 to approve her proposed renovations on 30 June 2021 does not mean that her intention to rent out lot 1 changed.

OSP13516

139. In its written submissions, OSP13516 made the following submissions:

1. there is no evidence that lot 1 was uninhabitable. To establish this, evidence would have been required from an expert qualified to opine on whether or not the electrical infrastructure or the asbestos in the cabinet, left undisturbed, posed a relevant risk to occupants of the lot. Ms Osborne has not adduced such evidence; and such a proposition is highly unlikely;

2. apart from the evidence that Ms Osborne lived in lot 1, the building was occupied by many other residents (including tenants) during this period. Further, the impact to the lot of the replacement works was limited, and confined to the porch area. The lot was accessible from outside through both the porch and a different entry way to the rear of the building; if the porch contents did pose a risk, it could have been completely sealed from a tenant of the lot;

3. Ms Osborne did not in fact attempt to rent lot 1 until November 2022. She apparently lived in the lot either full-time or part-time until about December 2022, referring to it as her home, and maintained two residences for reasons of convenience;

4. the evidence is that Ms Osborne wanted to renovate lot 1 before seeking to rent it out. None of that happened until November 2022;

5. the proximate cause of the electrical outages was the Ms Osborne’s unilateral decision to restrict access to the cabinet, including to reset tripped switches (which were the actual cause of her lack of electricity on the several occasions that occurred). As for the asbestos, it was sealed and made safe in February 2022, a short time after she requested this to be done;

6. it follows that there is no basis for any claim for lost rent from 29 May 2021 or, indeed, any other date. There is no evidence establishing that renting out lot 1 prior to November 2022 would not have been possible - or would have been possible only at a lower rental, for example because the porch might have been sealed off and therefore not accessible. This possibility was referred to in Lane v Bloc Constructions (NSW) Pty Ltd [2021] NSWCATAP 114 (Lane) at [32]-[34]. There were very limited periods of time in which there was limited electricity inside the lot, which was caused by Ms Osborne refusing to let anyone (including willing electricians) reset the switches. There was also a very limited period during which the replacement works were conducted;

7. simply put, Ms Osborne has not discharged her evidentiary onus of proving her s 106(5) claim: she has not proved that lot 1 was uninhabitable for the period claimed, unrentable at all or, unrentable at the market price of $1,000 per week but rentable at some lower price. Critically, she has failed to establish that any lost rent was caused by the asbestos and electrical issues at all;

8. for the same reasons, there is no basis for her travelling expenses claim.

Consideration

140. Having regard to the principles in Bannister at [16]-[20], I am satisfied that lot 1 was not fit for habitation within s 52(1) of the RT Act for the following reasons:

1. it was not safe by reason of the risk of injury from the presence of asbestos fibres in the cabinet and the electrical infrastructure between 29 May 2021 and 22 February 2022 when Hunter West sealed the cabinet and cleaned the areas within the immediate vicinity of the cabinet;

2. it was not suitable for use for the reasonable comfort of a tenant between 22 February 2022 and 9 November 2022 because of the inability to access the electrical infrastructure to undertake any maintenance such as resetting a tripped switch without the intervention of qualified person or persons to prevent the escape of asbestos fibres;

3. the extent to which Ms Osborne resided in lot 1 for substantial periods between 29 May 2021 and 9 November 2022 did not prevent lot 1 from being not fit for habitation.

141. In making this finding, I have excluded from my consideration the 6 May 2022 Osborne email and the 12 May 2022 Osborne email which contain the subjective belief of Ms Osborne as to the unfitness of lot 1 for habitation.

142. In Lane at [32]-[34], the Appeal Panel considered the absence of evidence that defects in an apartment were the cause of the loss of rent claimed by the owner, and at [35] observed that the defects were not serious or significant and could not reasonably be thought to have had the effect that no person would have rented the apartment at any price.

143. The situation referred to in Lane at [35] is readily distinguishable from the situation with respect to lot 1 between 29 May 2021 and 9 November 2022. The reasons for lot 1 not being fit for habitation within s 52(1) of the RT Act were sufficiently serious and significant and could reasonably be thought to have had the effect that no person would have rented it at any price. Between 29 May 2021 and 22 February 2022, there was the risk of injury from the presence of asbestos fibres in the cabinet and the electrical infrastructure. Between 22 February 2022 and 9 November 2022, there was risk of loss of use of the electricity supply and the delay and expense of establishing its reconnection. For the same reasons, it was unrealistic for Ms Osborne to have attempted to rent lot 1 without the porch between 29 May 2021 and 22 February 2022.

144. I do not accept that the refusal of Ms Osborne to permit access to the cabinet and the electrical infrastructure broke the chain of causation. Her concern about qualified persons undertaking the sealing of the cabinet and the subsequent removal of the cabinet and the electrical infrastructure was not unreasonable.

145. Mr Kaporis in the 23 May 2022 Kaporis report expressed opinions on five questions relating to rentability of lot 1 before the removal of the cabinet and the electrical infrastructure and its market rent. These opinions of Mr Kaporis were challenged in cross-examination. As I have found that lot 1 was not fit for habitation within s 52(1) of the RT Act, it has been unnecessary to have regard to the 23 May 2022 Kaporis report or the oral evidence of Mr Kaporis and make findings in regard to the opinions of Mr Kaporis.

146. Ms Osborne in the 10 July 2023 Osborne statement, the 3 November 2023 Osborne statement, and her oral evidence, gave evidence as to her habitation of lot 1. Ms Karam in the 18 October 2023 Karam statement, Mr Deuse in the 20 October 2023 Deuse statement, Ms Canavan in the 20 October 2023 Canavan statement and Mr Lee in the 20 October 2023 Lee statement gave evidence as to habitation of lot 1 by Ms Osborne. As I have found that the extent to which Ms Osborne resided in lot 1 for substantial periods between 29 May 2021 and 9 November 2022 did not prevent lot 1 from being not fit for habitation, it has been unnecessary to have regard to this evidence and make findings as to the extent of her habitation between 29 May 2021 and 15 December 2022.

141. I am not satisfied that Ms Osborne she had a real and immediate intention to rent lot 1 between 29 May 2021 and 19 November 2022 for the following reasons:

1. in each of the 30 March 2021 Osborne email, the 19 April 2021 Osborne email, the 20 April 2021 Osborne email, the 22 April 2021 Osborne email, the 6 May 2021 Osborne email, the 18 May 2021 Osborne email, the 29 May 2021 Osborne email, and the 26 June 2021 Osborne email she did not express any such intention. She was proposing to renovate lot 1 before renting it;

2. between 30 June 2021 and 6 October 2021, she continued with her proposal to renovate lot 1;

3. there is no evidence as to her intention between 6 October 2021 and 7 June 2022;

4. as at 7 June 2022 she was proposing to renovate lot 1;

5. there is no evidence as to her intention between 7 June 2022 and 19 November 2022.

148. I am not satisfied that Ms Osborne has established that the breach by OSP13516 of its duty under s 106(1) and (2) of the SSM Act caused her to travel to the Culburra home. She had two homes and for lifestyle reasons spent time in each of these homes.

149. Having regard to the approach in Trevallyn-Jones at [125]-[127], I am satisfied that Ms Osborne has established that she is entitled to recover the cost of obtaining the 12 May 2022 Turner report. Appendix 2 to this report contains her letter of instructions dated 22 April 2022 to Mr Turner. At that time the parties were in dispute as to the long-term management of the asbestos in the cabinet and the electrical infrastructure.

Issue 5: whether any, and if so what, damages s 106(5) of the SSM Act are recoverable by Ms Osborne

150. In the light of my findings for issue 4, this issue only arises in relation to the claim of Ms Osborne to recover the costs of the 12 May 2022 Turner report.

151. I am satisfied that Ms Osborne expended $1,815.00 in obtaining the 12 May 2022 Turner report.

152. In the light of this finding and the concession of OSP13516 that it is liable for $2,937.00 for the damaged marble table, OSP13516 is liable to pay damages of $4,752.00 (being the total of $1,815.00 and $2,937.00) to Ms Osborne pursuant to s 106(5) of the SSM Act.

153. If it had been necessary to determine the quantum of loss of rent by Ms Osborne, I would have found that her weekly loss was $300.00 calculated as follows:

1. $950.00 per week rent for lot 1, as I would have accepted that this amount was its market rent in the light of the email of Alex Sullivan of Belle Property sent to Ms Osborne on 20 April 2021 that lot 1 had been rented for $950.00 per week prior to its purchase by her;

2. less $62.70 for the agent’s management of 6.6% (being the median between 5.5% inclusive of GST and 7.7% inclusive of GST as stated by Mr Kaporis in his oral evidence);

3. less $546.25 (being 95% of $575.00 which Ms Osborne was paying for rent on a one bedroom apartment at Kirribilli from 26 November 2022as recorded in the 3 November 2023 Osborne statement at [34]);

4. less $41.05 for contingencies such as landlord’s insurance, repairs and maintenance of fixtures and the change of loss of rent through default by the tenant.

Issue 6: the costs of the proceedings

154. Rule 38 of the Civil and Administrative Tribunal Rules 2014 (NSW) (NCAT Rules) deals with costs in costs in Consumer and Commercial Division of the Tribunal, and relevantly provides:

38 Costs in Consumer and Commercial Division of the Tribunal

(1) This rule applies to proceedings for the exercise of functions of the Tribunal that are allocated to the Consumer and Commercial Division of the Tribunal.

(2) Despite section 60 of the Act, the Tribunal may award costs in proceedings to which this rule applies even in the absence of special circumstances warranting such an award if—

…

(b) the amount claimed or in dispute in the proceedings is more than $30,000.

155. The general principles concerning the awarding of costs were considered by the Appeal Panel in Vella v Mir (No 3) [2020] NSWCATAP 17 (Vella (No 3)) at [28]-[33]:

“[28] Clause 38 gives the Tribunal a wide discretion to make an order for costs. It does not specify the factors the Tribunal must take into account in exercising the discretion, although the discretion to make such an order must be exercised judicially: see, for example, Ruddock v Vadarlis [2001] FCA 1865 at [9].

[29] Where an application has been heard and determined on the merits and Clause 38 applies, the appropriate starting point for the exercise of the discretion is not that the parties are to pay their own costs. Rather, it is the well-established position at common law; that is, that the purpose of making a costs order is to provide compensation to the party in whose favour the order is made for the expense the party has been put to in prosecuting or defending legal proceedings. In general terms, this means that a party who is successful is entitled to an order for costs in its favour, subject to exceptions generally involving misconduct on the part of that party: Latoudis v Casey [1990] 170 CLR 534; Oshlak v Richmond River Council [1998] HCA 11.

[30] In BNT Constructions Pty Ltd v Allen [2017] NSWCATAP 186 the Appeal Panel, having set aside a costs order made in the Consumer and Commercial Division, decided to re-exercise the costs discretion. Clause 38 was the applicable costs provision in that case. At [67] the Appeal Panel noted the following principles relevant to the exercise of the discretion:

(1) the starting point is that a successful party should be entitled to an order for costs in his favour;

(2) an award of costs is by way of an indemnity and not as punishment;

(3) there is no absolute rule that, absent disentitling conduct, a successful party is to be compensated by the unsuccessful party;

(4) the factors to be considered are not to be confined as to do so would constrain the general discretion;

(5) the relative success of the parties on different issues and the time taken to determine them may be relevant;

(6) the nature of the proceedings is relevant;

(7) the proper exercise of the discretion requires a decision maker to do justice between the parties and to exercise the discretion having regard to relevant considerations and in a manner which is not arbitrary and capricious.

[31] Generally, costs are awarded in favour of the successful party based on the outcome of the proceedings as a whole, without differentiating between particular issues on which the party may not have been successful. That said, a different costs order may be made if the losing party succeeds on significant issues: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [31]–[36]; Sydney Ferries v Morton (No 2) [2010] NSWCA 238 at [10]–[12]. The dollar amount of a particular claim does not determine its dominance in the proceedings. Rather, regard must be had to all of the work involved in prosecuting and defending the parties’ various claims, including but not limited to the time taken up at the hearing.

[32] In Tomanovic v Global Mortgage Equity Corporation Pty Ltd (No 2) (2011) 288 ALR 385, Campbell JA (with Macfarlan JA and Young JA agreeing) held at [107] that an issue or group of issues is “clearly dominant” when it is clearly dominant in the proceedings as a whole. In that case, the approach by counsel to analysing the percentage of costs between the parties - counting the proportion of paragraphs and pages devoted to each factual topic - was held at [84] to be “a highly artificial way of proceeding” which gave “a false air of mathematical precision”.

[33] In relation to separable issues, a successful party’s entitlement to the whole of the costs of the proceedings should not be discounted to allow for another party’s success in a separate issue that played a very minor part in the proceedings as a whole: Macourt v Clark (No 2) [2012] NSWCA 411 at [7]. Further, in Hawkesbury District Health Service Ltd v Chaker (No 2) [2011] NSWCA 30 at [14], the Court of Appeal held that the severability of one issue on which the successful party failed is not, without more, sufficient to warrant departure from the general approach. The exercise of discretion will often depend upon matters of impression and evaluation: Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 at [11].”

156. I am satisfied that r 38(2)(b) of the NCAT Rules is applicable to the proceedings because the amount claimed by Ms Osborne is more than $30,000. It follows that the position of each party paying their own costs specified in s 60(1) of the NCAT Act does not apply to the proceedings.

157. Having regard to the principles in Vella (No 3) at [28]-[33], OSP13516 should pay 50% of the costs of Ms Osborne for the following reasons:

1. her claim for damages for the damage to the marble table played a very minor part of the proceedings;

2. her claim to recover the costs of the 12 May 2022 Turner report involved consideration of the issue of whether OSP13516 breached its duties under s 106(1) and (2) in relation to the presence of asbestos in the cabinet in which she was successful.

158. However, if some different order is sought by a party, then application may be made to vary the applicable costs order.

Issue 7: whether Ms Osborne is entitled to any ancillary relief

159. In The Owners – Strata Plan No 62713 v Liberant [2022] NSWCATAP 80 (Liberant):

1. at [99]-[110] the Appeal Panel determined that the Tribunal is not a “court” for the purpose of s 90(2) of the SSM Act;

2. at [111]-[113] the Appeal Panel dealt with the effect of s 104 of the SSM Act:

“[111] As to s 104, this section only operates in respect of proceedings in the Tribunal. So much is clear from the language of the section.

[112] It is not a section conferring an order making power on the Tribunal. Rather, it is a prohibition on an owners corporation levying a successful lot owner in respect of the owners corporation own costs. Section 104 says nothing in respect of levying a successful lot owner in connection with monies payable by an owners corporation to that lot owner.

[113] While the Tribunal may, as permitted by s 232(1) of the SSMA, make orders in connection with any dispute arising in the event an owners corporation contravenes this section, section 104 does not provide an independent order making power in connection with proceedings before the Tribunal.”

160. Having regard to the principles in Liberant at [99]-[113], Ms Osborne is not entitled to an order under s 90(2) of the SSM Act. Further, while the Tribunal has power under s 232(1)(a) and (e) of the SSM Act to make an order quarantining a lot owner from paying a proportionate of costs of the owners corporation in proceedings before the Tribunal where the circumstances in s 104(1) exist, there is no evidence of any complaint or dispute between the parties on this question requiring settlement. It follows that there are no grounds for the exercise of the power to settle any such complaint or dispute under s 232(1)(a) and (e) of the SSM Act.

Orders

161. I make the following orders:

1. the respondent is to pay $4,752.00 to the applicant immediately;

2. the respondent is to pay 50% of the costs of the applicant of the proceedings other than the costs of the application for miscellaneous matters of the applicant filed on 5 October 2023;

3. the proceedings are otherwise dismissed;

4. if any party wishes to make an application to vary order (2) above, the applicant (the costs applicant) is to file and serve a costs application, including submissions limited to three pages and any evidence in support, by 6 December 2023;

5. the respondent to the costs application is to file and serve any submissions limited to three pages and any evidence in reply by 15 December 2023;

6. the costs applicant is to file any submissions limited to two pages in reply by 20 December 2023;

7. the applicable parties are to indicate in their submissions whether they consent to an order dispensing with an oral hearing of the costs application, and if they do not consent, submissions of no more than one page as to why an oral hearing should be conducted rather than the application being determined on the papers. If a hearing is not dispensed with, the parties will be advised of a date for the hearing of the application.

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 13 August 2024