Silberstein v The Owners - Strata Plan No. 55468

[2024] NSWCATCD 66

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Silberstein v The Owners – Strata Plan No. 55468 & Ors [2024] NSWCATCD 66

Hearing dates:

6, 7 and 8 June 2023

Date of orders:

08 November 2024

Decision date:

08 November 2024

Jurisdiction:

Consumer and Commercial Division

Before:

D Goldstein. Senior Member

Decision:

(1)   The Owners – Strata Plan No. 55468 must carry out the work described in Schedule 1 with due care and skill by 14 February 2025.

(2) A hearing on Jessica Silberstein re-opening her case is dispensed with pursuant to section 50(2) of the Civil and Administrative Tribunal Act 2013.

(3)    Jessica Silberstein has leave to re-open her case to rely on her affidavit affirmed on 24 August 2023.

(4)    The Owners – Strata Plan No. 55468 must pay Jessica Silberstein $316,128.43 immediately.

(5)    Jessica Silberstein’s application against Strata Choice Pty Ltd is dismissed.

(6)    Jessica Silberstein’s application against Hecker Australia Pty Ltd is dismissed.

(7)    Jessica Silberstein’s case in negligence against

(8)    Michael Adamo, Michael Hans Engelbert, William Paul O’Brien and Terrance Matthew Gagen is dismissed.

(9)    Michael Adamo is removed from the strata committee of The Owners – Strata Plan No. 55468 and restrained from acting in the position of an office holder of The Owners – Strata Plan No. 55468 or as a strata committee member of The Owners – Strata Plan No. 55468 for a period of not less than one year from the date of making these orders.

(10)  Jessica Silberstein’s application to remove William Paul O’Brien from the strata committee of The Owners – Strata Plan No. 55468 is dismissed.

(11)  Jessica Silberstein’s application to remove Terrance Matthew Gagen from the strata committee of The Owners – Strata Plan No. 55468 is dismissed.

(12)  In the event that a party is minded to make an application for costs, such application must be lodged in the Tribunal and served on/given to the costs respondent(s) within 21 days of the date of the orders in these proceedings either attaching or referring to the documents relied upon in support of the application.

(13) The costs respondent(s) will have 21 days after the date it, she or he receives the application to lodge in the Tribunal and serve on/give to the costs applicant her, his or its submissions, if any, in response to the costs application, such submissions either attaching or referring to the documents relied upon.

(14) The parties must state in their submissions whether or not they consent to the costs application being determined on the basis of the parties written submissions and attached documents, if any, without the need for a hearing.

(15) Subject to the parties’ submissions, the Tribunal will determine any costs application made on the basis of the submissions and papers filed in the Tribunal.

Catchwords:

LAND LAW – Strata title – Owners corporation - Common Property – Repair and Maintenance – Adequacy of work under section 106 of the Strata Schemes Management Act 2015 - Section 260 of the Strata Schemes Management Act 2015 – Good Faith – Meaning of – Liability of strata committee members - Duty of care of strata managing agent and building manager – Damages – Loss of amenity – Aggravated damages – Removal of Strata committee member - Serious misconduct meaning of – Re-opening of the applicant’s case

Legislation Cited:

Bankruptcy Act 1966 (Cth)

Civil and Administrative Tribunal Act 2013

Design and Building Practitioners Act 2020

Environmental Planning and Assessment Act 1979

Home Building Act 1989

Local Government Act 1919

Strata Schemes Management Act 2015

Cases Cited:

Archibald v The Owners – Strata Plan No. 50441 [2023] NSWCATCD 111

Benjamin & Khoury Pty Ltd v Rahme (No 4) [2023] NSWSC 1162

Caltex Refineries (Qld) Pty Limited v Stavar [2009] NSWCA 258

Comcare v Martin (2016) 258 CLR 467

Coope v LCM Litigation Fund Pty Ltd [2016] NSWCA 37

Coscuez International Pty Ltd v The Owners-Strata Plan No 46433 [2022] NSWCATAP 147

D M Cannane v J Cannane Pty Ltd (in Liquidation) (1998) 192 CLR 557

EB v CT (No.2) [2008] QSC 306

Flitcroft v Cassidy Constructions Pty Ltd t/as Buildscene [2023] NSWCATCD 26

Geoffrey William Vines v Australian Securities And Investment Commission [2007] NSWCA 126

Glenquarry Park Investments Pty Ltd v Hegyesi [2019] NSWSC 425

James v Owners – Strata Plan NO 11478 [2016] NSWSC 1558

Jones v. Dunkel (1959) 101 CLR

Leeda Projects Pty Ltd v Zeng [2020] VSCA 192

Linney v The Owners – Strata Plan No. 11669 [2021] NSWCATCD

Lockrey v Rosewal [2022] NSWCATCD 27

Mabel Dorothea Fligg v The Owners Strata Plan 53457 [2012] NSWSC 230

Mid Density Developments Pty Limited v Rockdale Municipal Council [1993] FCA 408; (1993) 116 ALR 460

Seiwa PL v Owners Strata Plan 345042 [2006] NSWSC 1157

Selkirk v The Owners - Strata Plan No 2661 [2024] NSWCATAP 17

Shum v Owners Corporation SP30621 [2017] NSWCATCD 68

Silberstein v Strata Choice Pty Ltd & Hecker Australia Pty Ltd [2022] NSWCATAP 375

Silberstein v The Owners - Strata Plan No. 55468 [2022] NSWCATCD 114

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

Sydney Trains v Argo Syndicate AMA 1200 [2024] NSWCA 101

The Owners - SP 80881 v Gregg [2022] NSWCATAP 172

The Owners - Strata Plan No 2661 v Selkirk [2024] NSWSC 760

The Owners – Strata Plan No 74232 v Tezel [2023] NSWCA 35

Torpey v Stewart [2021] NSWCATAP 248

Uren v Bald Hills Wind Farm Pty Ltd [2022] VSC 145

Uren v John Fairfax & Sons Pty Ltd [1966] HCA 40; (1966) 117 CLR 118

Wassaf v Panagiotopoulos [(2018] NSWCATCD, unreported, (17 December 2018)

Wassef v Panagiotopoulos [2019] NSWCATAP 101

Wyong Shire Council v Shirt (1980) 146 CLR 40

Texts Cited:

None cited

Category:

Principal judgment

Parties:

Jessica Silberstein: applicant
The Owners – Strata Plan No 55468: first respondent
Michael Adamo: second respondent
Michael Hans Engelbert: third respondent
William Paul O’Brien: fourth respondent
Terrance Matthew Gagen: fifth respondent
Strata Choice Pty Ltd: sixth respondent
Hecker Australia Pty Ltd: seventh respondent

Representation:

Counsel:
Mr P. Afshar and Mr R. Clark for the applicant
Mr B. Ilkovski for the first respondent
Mr A. Guy for the seventh respondent
Solicitors:
Silberstein & Associated for the applicant
Gilchrest Connell for the first to fifth respondents
Bannermans for the sixth respondent
HBA Legal for the seventh respondent

File Number(s):

2022/442866 (formerly SC 22/05083)

Publication restriction:

Nil

REASONS FOR DECISION

1. This application concerns the responsibility of a strata scheme to maintain and repair common property and the rights of a lot owner to claim damages from an owners corporation for a failure on its part to comply with the relevant statutory provision which is section 106 of the Strata Schemes Management Act 2015. (‘SSMA’). There are numerous other issues which this core dispute has generated.

2. These proceedings were heard over 3 days in June 2023. Written submissions were provided after that time. The orders made at the conclusion of the hearing on 8 June 2023 at order 4 required the parties to file a Schedule of Agreed facts within 7 days.

3. In a letter dated 2 November 2023 to the Tribunal the solicitor for the sixth respondent enclosed for filing, in ‘mark up’:

‘The Sixth Respondent’s Statement of Agreed Facts.’

4. There is reason to believe that this document may be one which was drafted by counsel for the applicant and which is the result of input from all of the respondents. I will treat it in this way. If I may say, providing the Schedule of Agreed Facts in the way it was provided is unsatisfactory. The document was provided later than it was required. But more importantly, there was no explanation at all that the Schedule had been agreed by all parties and represented their agreements. Providing a document to the Tribunal in ‘mark up’ is not ideal. Finally, representing the document as The Sixth Respondent’s Statement of Agreed Facts, if it is in fact a Schedule which was agreed by all parties, which it seems to be, is not helpful.

5. The evidence in the proceedings was:

1. Exhibit A, five volume bundle of documents;

2. Exhibit B, residential tenancy agreement,

3. Exhibit C, email dated 25 June 2021 from M Adamo;

4. Exhibit D, MFIA – Commonwealth Bank Transaction documents;

5. Exhibit E, business Transaction Accounts GEBC Pty Limited;

6. Exhibit F, letter from McLachlan Thorpe to Mr Hecker;

7. Exhibit G, bundle of Zamoad Pty Ltd documents;

8. Exhibit H, documents relating to a conclave held on 7 June 2023; and

9. Exhibit 1, ASIC data regarding GEBC Pty Limited and associated documents.

6. The parties filed final written submissions as ordered. The time for filing submissions was extended on a number of occasions. The owner was given leave to file and serve submissions in Reply by 1 December 2023.

7. These proceedings concern a penthouse strata apartment in a strata building in Elizabeth Street Sydney opposite Hyde Park which was occupied by the applicant who I will call the ‘owner’, her husband (who is confined to using a wheelchair) and their four children.

8. The strata apartment to which I have referred is comprised in a number of lots in the strata scheme. It is situate on levels 22 and 23 of the strata building and has four balcony areas, two balcony areas on each of levels 22 and 23. I will refer to the owner’s strata apartment as her ‘unit’ which is made up of lot property and common property,

9. The four balconies which form part of the lot owner’s unit are stated to be common property and conceded as such by all of the respondents. In the Schedule of Agreed Facts to which I have referred it was admitted that other than airspace above the balconies, the balconies are the common property of the first respondent.

The applicant’s claim

10. The lot owner brought the following claims against The Owners – Strata Plan No 55468 (the ‘OC’) which are stated in her Further Amended Points of Claim:

1. Orders for the rectification of building defects in common property;

2. Orders for rectification of work or compensation for damage to the lot property which has been caused by the building defects in common property;

3. Damages arising out of the OC’s breaches of s106 of the SSMA;

4. Costs arising out of the adverse health consequences of the lot owner and her family caused by the OC’s breaches of the SSMA;

5. Costs of temporary accommodation;

6. Damages arising from loss of amenity in the lot property; and

7. Aggravated damages

11. As against the second to fifth respondents the lot owner makes the following claims:

1. Damages arising from the OC’s breach of s106 of the SSMA, including damages arising from adverse health consequences and the costs of temporary accommodation;

2. Damages for negligence a general law;

3. Damages for loss of amenity in the lot property;

4. Aggravated damages;

5. On order removing them from the strata committee pursuant to s238 of the SSMA; and

6. An order restraining them from acting as an office holder of a strata committee for not less than five (5) years.

12. The lot owner’s claim against the sixth respondent is for:

1. Damages arising from the OC’s breach of s106 of the SSMA, including damages arising from adverse health consequences and the costs of temporary accommodation;

2. Damages for negligence at general law;

3. Damages for loss of amenity in the lot property; and

4. Aggravated damages.

13. The claim against the seventh respondent is for:

1. Damages arising from the OC’s breach of s106 of the SSMA, including damages arising from adverse health consequences and the costs of temporary accommodation;

2. Damages for negligence at general law;

3. Damages for loss of amenity in the lot property; and

4. Aggravated damages.

14. The first to fifth respondents’ pleaded position is that they deny that the applicant is entitled to the relief that she claims in her Further Amended Points of Claim.

15. The sixth respondent for a variety of reasons, set out in its pleading, denies that it is liable to the lot owner in connection with the claims that are made against it.

16. Similarly, the seventh respondent denies that the lot owner is entitled to the relief claimed against it in the Further Amended Points of Claim providing various grounds for maintaining that position.

17. The parties’ pleadings occupy 61 Pages in the Bundle of documents. I do not intend to consider every paragraph in the Further Amended Points of Claim and the responses of each of the respondents. To do that would involve a vast amount of work to conclude what is immediately apparent, namely that the parties are in an intractable dispute.

18. In determining the lot owner’s application and claim for relief I will deal with the major issues that are brought up in the parties closing submissions.

19. It has been brought to my attention that the owner has served an affidavit sworn on 24 August 2023. The affidavit was filed electronically in the Tribunal. In email correspondence relating to extensions of the time for serving final submissions, on 12 October 2023 the solicitor for the owner stated:

‘The applicant seeks leave in her written closing submissions to file the further evidence to which the email belle refers. The further evidence merely sets out some of her ongoing losses and damages since trial, which the Tribunal and the respondents knew were ongoing’

20. This was in effect an application by the owner to re-open her case. This was not the appropriate way in which to make such an application.

21. Counsel for the owner’s final written submissions are curiously dated 24 August 2021. The amounts claimed by the owner are compiled in Annexure B to the submissions. At [131] of the submissions counsel for the owner states:

‘She seeks to rely on an affidavit served alongside these submissions in support of a claim that the Respondents pay her relocation costs.’

22. At [162] of the submissions counsel states:

‘The items of loss and damage claimed as set out in Annexure B to these submissions, which will be supplemented with the costs of Ms Silverstein recently moving back home based on the content of the short further affidavit filed and served together with these submissions (reference is made above in paragraph 131).’

23. The first to fifth respondents object to this affidavit being accepted into evidence after the finalisation of the hearing, when expenditure of this nature was not disclosed at the hearing and the owner did not foreshadow re - opening her case to introduce expenditure of this nature. The position of the sixth respondent is that on the grounds of procedural fairness leave should be denied to the owner to rely on the affidavit. The seventh respondent submissions do not address this new affidavit in any meaningful way.

S106 of the SSMA

24. In Selkirk v The Owners - Strata Plan No 2661 [2024] NSWCATAP 17 an appeal panel discussed the nature of an OC’s obligation under s106 of the SSMA. It was stated at [31] – [33]:

‘It is trite law, and was uncontroversial in these proceedings, that the OC owed and owes lot owners a strict duty to maintain and repair, including as required to renew or replace, common property under s 106(1) and (2) of the Strata Schemes Management Act 2015 (NSW) (SSMA) as interpreted in well-established authority: Seiwa PL v Owners SP 345042 [2006] NSWSC 1157 at [3]-[7], [21]-[23]; Trevallyn-Jones v Owners SP 50358 [2009] NSWSC 694 at [128] et seq, esp at [154]-[156]; Riley v Owners SP 73817 [2012] NSWCA 410 at [75]-[76], referring to the same content of duty in the predecessor to SSMA s 106, being s 62 of the 1996 Act. There was no qualification on appeal to what was said in Seiwa at first instance in relation to the strict nature of the duty: Owners SP 345042 v Seiwa Australia PL [2007] NSWCA 272 - Hodgson JA at [5] referred to the strict nature of the duty in similar terms to Brereton J in Seiwa, as did Tobias JA at [54] with an acknowledgement of what is now s106(3) that is not presently relevant. The same approach on the present provision was endorsed by reference to the earlier authority in Smith v Owners SP 3004 [2022] NSWSC 1599 at [30]-[31].

The duty extends to remediation of defects in the construction of the common property, because repair means making something good even if it was not originally good: Proprietors SP 6522 v Furney [1976] 1 NSWLR 412 at 416.

Brereton J in Seiwa [2006] NSWSC 1157 at [4] expressly referred to the duty as including keeping the premises "in proper order by acts of maintenance before it falls out of condition, in a state which enable it to serve the purpose for which it exists". This encompasses preventative maintenance and repair and financial provision for such preventative work. Reasonable steps is not a defence, nor is contributory negligence a consideration: Owners SP 345042 v Seiwa Australia PL [2007] NSWCA 272 at [46]. The statutory provision is not cast in the form of a duty on an owners corporation to take reasonable care. It does not embody a range of reasonable excuses for inaction. The common property is out of the state of repair and maintenance in breach of duty until the repair or maintenance occurs: Owners SP 80412 v Vickery [2021] NSWCATAP 98 at [36], [63]; Owners SP 36613 v Doherty [2021] NSWCATAP 285 at [84], [93]-[94].’

25. I will have regard to the principles set out in the above extract in considering the s106 issues that have arisen in these proceedings. I find that the principles stated are not in doubt despite the fact that the Appeal Panel’s decision in Selkirk v The Owners - Strata Plan No 2661 was partially disturbed in The Owners - Strata Plan No 2661 v Selkirk [2024] NSWSC 760.

Water ingress

26. The lot owner’s case is based on her position that the OC failed to repair or remediate defects in common property that caused water ingress to the interior of her unit. Put in another and perhaps more direct way, the lot owner’s case from a causation view is that there were a number of failures of common property, including failures of common property waterproof membranes in the balcony areas of her unit which resulted in water ingress to the internal areas of the unit causing damage and an inability to occupy the unit. The lot owner further submits that the OC failed to repair the common property damage with the result that this litigation was born, which has taken years to be finalised and which has touched a large number of parties.

27. The lot owner’s submissions state that there is no dispute that the balconies to the owner’s unit are common property. This is agreed by the first to seventh respondents.

28. Based on the agreements of the parties, I find that the 4 balconies to the owner’s unit are common property and that the first respondent was obliged to comply with the requirements of s106 of the SSMA in connection with that common property.

Historic water ingress into the unit

29. The owner submits that there was historic water ingress through all of the balconies of the unit. Exhibit C was relied upon, in error. Refer [13] of the owner’s final written submissions. Exhibit C is an email dated email dated 25 June 2021 from M Adamo to Strata Committee members. I find that it does not relate to historic water ingress issues. The cross examination of Mr Hecker the director of the seventh respondent was also relied upon. Mr Hecker agreed that a previous owner had reported water ingress from one of the unit’s balconies, although he couldn’t say when because of a loss of electronic files. The cross examination of Mr Hecker on Day 3, T68 – 83 and the content of exhibit G provides an evidentiary basis for me to find that there was historic remedial work to the balconies of the unit from February 2005 and evidence of recurring water ingress into the unit from that time. The remedial work that was carried out included rectifying water leaks from the balcony into the unit. I further find that at the relevant time, Mr Hecker in his role as a director of the building manager was personally involved in arranging for rectification work to the unit to be carried out.

30. Mr Hecker was taken to exhibit G when he was being cross examined. The exhibit consisted of a bundle of invoices, purchase orders, a building manager’s report, minutes of an executive committee meeting and an insurance claim form in the period February 2005 to July 2007. These documents relate to the unit and record rain water seeping through a sliding door, sealing a cement joint between floor tiles to prevent rainwater seeping through to indoor areas, investigation and rectification of water leak from a balcony into the unit. The building manager’s report in the period January/February 2016 stated that there was water penetrating into the master bedroom adjacent to the balcony door hob and as a recurring issue, moisture was penetrating into the east facing bedroom adjacent to the balcony door hob. In the minutes of the executive committee of the OC which was held on 14 September 2006, the building manager's report was taken as read. The minutes at item 4 recorded that there was water penetration into the unit in heavy rain which was discussed and that it was agreed to accept a quotation from Laby Building to make good the problem. In 2007 the OC made an insurance claim and as part of the documentation, Mr Hecker referred to the Laby building quote to investigate and repair. He stated that the opinion of the waterproofer’s was that the waterproof membrane under the balcony tiles of the unit had failed and that a repair carried out by Layby building had worked. I find that exhibit G is evidence that the OC had knowledge of water ingress into the unit in the period 2005 – 2007.

Water ingress into the unit in 2020

31. The first to fifth respondents agree that the lot owner alerted the seventh respondent who is the OC’s building manager of water ingress into the lot property in February, October, November and December 2020. The sixth respondent also agrees these facts. The seventh respondent also agrees that there was a water ingress issue in February 2020 and that it inspected the owner’s lot.

32. The owner’s written submissions at [15] – [27] sets out a series of events referring to relevant documents that list in a chronological way the facts that owner asserts in connection with water ingress to the unit. The first to fifth respondents’ submissions contain the admissions referred to above and address the advice Mr Hecker and Mr Wigley of Zamoad Pty Ltd gave to the owner as referred to below. Otherwise these submissions refer to the renovation work to the unit that the owner arranged with P&S Design and Construction Pty Ltd, her builder.

33. When being cross examined Mr Hecker agreed that there was water flowing into the unit from one particular balcony, on level 22 east in what looked like large quantities. I infer that this was in 2020.

34. Mr Hecker also stated that he attended at the unit when the owner complained about water ingress which involved one balcony. He agreed that there was a fixed timber decking on the balcony and that he said to the owner that investigations could not occur until the decking was removed. Mr Hecker agreed that he most probably told the owner that it was her responsibility to remove the decking. The owner did remove the decking. Mr Hecker sates that an investigation was carried out by himself and Mr Wigley of Zamoad Pty Ltd, a tiling and waterproof membrane contractor. Mr Hecker’s evidence at Day 3 T91 was that the cause of the water ingress was new doors to the unit which had been installed by the previous owner of the unit. The evidence indicates that the event referred to above was in February 2020.

35. I find that the evidence establishes that in 2020 the owner made numerous complaints of water ingress into her unit to Mr Hecker and that the seventh respondent was aware of the matters she was raising. I find that there is no direct evidence that the matters raised by the owner in 2020 with Mr Hecker were conveyed to the OC.

Water ingress 2021

36. The first to the seventh respondents admit that in the period 18 to 21 March 2021, there was water ingress into the unit at the following locations:

1. in the Sunroom and Living/Dining Area, and out of the front door of the Unit into the common property hallway, from the L22E balcony;

2. in the L22 Master Bedroom from the L22W balcony;

3. in the L23 First Bedroom from the L22SE balcony; and

4. in the L23 Bathroom from the curved window.

37. I find that the owner informed the sixth and seventh respondents of water ingress at the same time as the water ingress referred to above, as admitted. In particular the sixth respondent was informed of the water ingress in an email dated 19 March 2021. [HB 663]. The owner continued to notify Mr Hecker of the seventh respondent of water ingress in text messages from 20 to 25 March 2021.

38. The first to the seventh respondents also admit that on 21 March 2021 the owner and her family left the unit and moved to the Meriton Suites. It is admitted by the sixth and seventh respondents that the owner informed them of the fact that she and her family left the unit on 21 March 2021.

39. The owner’s evidence was that she and her family left the unit because water ingress was making it impossible to continue to reside there.

40. I accept the owner’s evidence that on 18 October 2020 she signed a contract with P&S Design and Construction Pty Ltd. I find that the contract was dated 3 November 2020. I do not intend to traverse the historical processes by which the owner obtained the council and OC approval for this work unless it becomes necessary.

41. The owner’s evidence is that it was her intention to reside in the unit while the renovation works were being caried out. She states that the building contract was drafted in a way which made this clear. I have had regard to the building contract and in particular the Special Conditions which, among other things, amended clause 13 which deals with Site Possession and Access. Special Condition 13 added clause 13.0 to clause 13. It was therefore the first sub-clause of clause 13. It stated:

‘The parties have agreed that the owner will continue to remain living on the site, with all her family members comprising 5 people. (meaning the family of 6 people will remain living on the site) for the duration of the building works. The builder has determined all suitable arrangements to enable the owner, with her all her family members to remain living on the site for the duration of the building works, and warrants that such suitable arrangements will be safe (subject to the owner following the builder’s safety instructions) and appropriate.’

42. I accept the owner’s evidence that she intended to live in the unit with her family during the renovation works. I find that special condition 13 to be contemporaneous evidence which supports her evidence. I also accept the owner’s evidence that she and her family resided in the unit while renovation work was being carried out in the period between 9 November 2020 and 21 March 2021.

43. I also accept the owner’s evidence that she and her family left the unit because water ingress made the unit uninhabitable. During the course of cross examination the owner was adamant that she and her family left the unit because of water ingress. Water ingress which the first to seventh respondents have admitted. The owner’s evidence about leaving the unit is at [137] – [144] of her 12 October 2022 affidavit. This evidence in my view provides an adequate account of what occurred, particularly [143] and [144]. I also find during cross examination the owner’s evidence was not put into any doubt.

The expert reports

44. On 30 April 2021 Mr Hecker sent to the Strata Committee of the OC a report from SH Engineering Consultants (‘SH’) and a report from Access Property Services Pty Ltd (‘APS’). The SH report stated in an Executive Summary:

‘Investigations confirm the inadequacy of stormwater surface drainage and overflow provisions of the balcony area provisions of unit 2202 (levels 22 and 23) of 281 Elizabeth St Sydney.

The existing provisions provide non compliance to A53500.3 (Stormwater drainage) as detailed below

Insufficient freeboard and overflow provision for internal area protection

Existing falls are inadequate.

Existing drainage provisions contain debris, restricting design capacity.

Unit 2201 is noted as having a timber deking provision installed, providing potential restriction to discharge.

Existing balcony surface inlet drains are recommended to be modified to incorporate lineal drainage provisions including complete water jet cleaning of existing drainage provisions.

Overflow provisions are required to be provide within the existing balcony edge hob / upturn.

Existing tiling and associated sub structure shall be removed and replaced as required to ensure / permit installation of compliant overflow and water proofing provisions.

Water proofing membrane provisions shall be installed to a min height of 100mm above the calculated 1:100-year overflow top water level as detailed within section 5.4.’

45. The APS report which was a building inspection report summarised the recommended repairs/issues as follows:

‘2   Unit 2202: Recommend removal and reinstatement of existing tiles/beds and membranes (of all roof terraces) in accordance with both structural and hydraulic engineers calculations and all associated works including emergency overflows and interconnected 65mm x 25mm full length strip drains and vertically terminating membranes up a minimum of 40mm behind sliding doors.

NB* In order to achieve the maximum freeboard (hob) height at doors and mm 1:100 tile falls to the strip drains, I would recommend installation of new sheet membrane overlaid with say 6mm Regupol' (acoustic matting) then installing strip drains followed by tile beds with falls to drains. I would further suggest application of 2 coats of hydro epoxy over the tile beds to prevent moisture gain and efflorescence

2.   Unit 2201; Recommend removal of all existing timber decking and installation of full length strip drains and emergency overflows as per hydraulic engineers calculated recommendations.’

46. The APS report at exhibit A, 3526 stated:

‘For these reasons I strongly recommend a 24-hour flood test of this roof terrace, (I’m advised same has not been undertaken) and further there have been prior leaks internally at this level.’

47. The first to the seventh respondents admit that they received the above reports. They also admit the content of the reports.

48. On 3 May 2021 Mr Hecker made a recommendation to the Strata Committee for the appointment of a contractor to carry out the flood test. The next day Mr Hecker wrote to the Strata Committee members informing them that approval had been given for the contractor to proceed with the flood test and that would take place on 6 May. Importantly, he informed them that:

‘The three original lvl 22 west balcony doors (off this balcony) were tested this morning for subsill leaks, two of the doors leaked. One of them being the larger balcony door which is the area where the moisture affected the carpet (black mould). This confirms that the balcony door is contributing to the water ingress in this area.

Please see attached plan showing the three doors and the image taken this morning after the water test (Lvl 22 West Balcony Door after water test).

Please note that the OC is responsible for the rectification of the two leaking doors.’

49. On 7 May 2021 Mr Hecker wrote to the Strata Committee members in connection with the level 22 west balcony. He stated that he stopped the flood testing which has been referred to. Mr Hecker stated:

‘I stopped the contractors from continuing the works for the flood test because it was not necessary. It was clearly visible to me and the builder (Peter Fuchs) that there are two general areas where water is getting under the membrane and into the lot.

1.   There are 10 post fixings from the 2012 conservatorium installation (lot owners works) that clearly penetrate through the waterproof membrane into the slab below. These fixings are not waterproofed enabling water to get underneath the waterproof membrane.

2.   The waterproof membrane on the sides and top of the original 1997 balcony post bases was delaminated. This would also enable water to get under the waterproof membrane.

Please see attached pictures which I have marked up.’

I believe the OC is liable for the rectification of the level 22 West balcony as the membrane is not sound (based on original 1997 waterproofing works).

I have already requested a quotation for the rectification based on the consultants' specifications.’

50. The first to seventh respondents admit the contents of Mr Hecker’s email of 7 May which is at page 3568 of exhibit A.

51. I find that at 30 April 2021 the OC was on notice that its obligations under s106 of the SSMA were enlivened in connection with the unit’s balconies. I find that the information in the SH and APS reports referred to above made it clear that the maintenance and repair work referred to was required to the balconies. The reason for this is that the SH report stated that there was an inadequacy of stormwater surface drainage and overflow provisions of the balcony areas of the unit, that overflow provisions were required to be provided within the existing balcony edge hob/upturn and that water proofing membrane provisions should be installed to a min height of 100mm above the calculated 1:100-year overflow top water level. The APS report recommended removal and reinstatement of existing tiles/beds and membranes (of all roof terraces) in accordance with both structural and hydraulic engineer’s calculations and all associated works including emergency overflows and interconnected 65mm x 25mm full length strip drains and vertically terminating membranes up a minimum of 40mm behind sliding doors. In connection with the unit specifically, the APS report recommended installation of full length strip drains and emergency overflows as per hydraulic engineers calculated recommendations. All of these observations and recommendations related to the balconies of the unit. As stated, the respondents have admitted that the balconies were common property.

52. The finding referred to in the preceding paragraph is reinforced by the fact that subsequently, on 3 May 2021 the OC had received the opinion of its building manager that it was responsible for the rectification of two leaking doors on the level 22 west balcony. The OC was also provided with the information that one of the leaking balcony doors was in an area of the unit where moisture was causing black mould. I find that by 7 May 2021 the OC had been provided with its building manager’s opinion, which was based on an inspection, that the level 22 west balcony membrane was not sound. He also gave the OC his opinion that it was liable for the rectification work.

53. As a result of the findings I have made, at 30 April 2021 the OC was on notice that it was in breach of its strict duty to maintain and repair, including as required to renew or replace the balcony common property, which it owed under s 106(1) and (2) of the SSMA to the owner in these proceedings.

54. There are additional expert reports which address the work carried out by the OC and whether it was adequate. I will deal with those reports and the issues which they raise later in these reasons.

55. The process which the OC engaged in to repair common property has features which require an understanding and which to my mind are not fully explained by the OC. First, by 30 April 2021 the Strata Committee of the OC had reports from SH Engineering Consultants and Access Property Services Pty Ltd. Next it is admitted by the first to seventh respondents that in June 2021 Integrated Asset Solutions was involved in providing a quote based on the SHA report. Next it is admitted that Mr Hecker produced a scope of work and Integrated Asset Solutions provided a quote on that scope which was dated 28 June 2021. On the same day Mr Hecker wrote to the owner and her husband stating that Integrated Asset Solutions had been issued a work order from the OC to undertake remedial work to common property areas within the unit. The remedial works were to be carried out to the level 23 east/south ‘L’ shaped balcony for the rectification of failed balcony waterproofing. Also to the level 22 east balcony for the rectification of failed balcony waterproofing. And also to the level 22 west balcony for the rectification of failed balcony waterproofing, and to the level 22 west balcony doors being for the rectification of two leaking balcony doors.

Chronology and relevant facts relating to repair of common property

56. There was a deal of discussion between the parties and also within the OC and the building manager regarding the work that was to be undertaken to repair and or replace defective common property on the balconies of the unit. I do not propose to go into every detail unless it is absolutely necessary. In making this observation it is important to re-iterate the finding that at 30 April 2021 the OC was on notice that its obligations under s106 of the SSMA were enlivened in connection with the unit’s balconies. And later in connection with the level 22 balcony doors. I find that with that knowledge the OC was obliged to proceed without delay and with diligence. It is apposite to repeat what was quoted earlier in Selkirk v The Owners - Strata Plan No 2661, namely:

‘The statutory provision is not cast in the form of a duty on an owners corporation to take reasonable care. It does not embody a range of reasonable excuses for inaction. The common property is out of the state of repair and maintenance in breach of duty until the repair or maintenance occurs: Owners SP 80412 v Vickery [2021] NSWCATAP 98 at [36], [63]; Owners SP 36613 v Doherty [2021] NSWCATAP 285 at [84], [93]-[94].’(emphasis added)

57. In compiling this chronology and making findings of material facts, I will where possible refer to the parties’ Statement of Agreed Facts.

58. A strata committee meeting occurred on 11 May 2021 in which the owner’s husband outlined the history of water ingress into the unit and the difficulties that the owner and her family were encountering. The minutes of the meeting are admitted by the 1st to 7th respondents and state so far as relevant:

‘Apt 2202 – Insurance claim /Water ingress: Reports from the consultants have been received where further investigations are being carried out to determine the exact cause of each leak. The Strata Manager will seek advice from the insurance broker on how to move forward with the claim for temporary accommodation.’

59. It is admitted by the first to seventh respondents that on 28 June 2021 Integrated Asset Solutions (‘IAS’) issued an updated quote for rectification work on the L22 and L23 balconies, excluding the L23E balcony based in part on a scope of works prepared by Mr Hecker. It is also admitted by those respondents that Mr Hecker issued a work order to IAS dated 28 June 2021. I find that Mr Hecker issued the work order on behalf of the OC.

60. On the same day, Mr Hecker informed the owner and her husband that a work order had been issued to IAS to undertake remedial work to the level 23 East/ South balcony for the rectification of failed balcony waterproofing, to the level 22 East balcony for the rectification of failed balcony waterproofing, to the level 22 West balcony for the rectification of failed balcony waterproofing and to the level 22 West balcony doors for the rectification of two leaking balcony doors.

61. However the work referred to in the work order was not carried out. The first to seventh respondents admit that on 13 July 2021, there was a strata committee meeting at which it was decided that the OC would:

1. not proceed with works based on Mr Hecker's scope of works;

2. engage a consultant to review all reports received to date;

3. conduct an investigation of the balconies of the Unit; and

4. have the consultant prepare a scope of works for rectification and to supervise the works to be conducted by the contractor engaged to undertake those works.

62. The minutes of the meeting stated that the strata committee requested that Apex Diagnostics be engaged to prove a quote for the service referred to at (d) above. The following day 14 July, Mr Hecker of the building manager advised the strata committee, but not the owner that Apex had advised that they were unable to assist because they were not registered under the Design and Building Practitioners Act 2020.

63. There is no explanation why it was the OC decided not to proceed with the 28 June work order that Mr Hecker had issued to IAS.

64. The first to seventh respondents also admit that on 9 August 2021, the OC entered into an agreement with Landlay Pty Ltd regarding:

1. the production of a scope of rectification works; and

2. supervision of the construction company engaged by the OC to undertake those works.

65. It is also admitted by the first to seventh respondents that the scope of works ultimately prepared by Landlay Pty Ltd which was dated 9 August 2021 (the ‘Landlay scope of works’) incorporated the SHA Report which the incumbent contractor was required to comply with. The Landlay scope of works did not include rectification works for the L23E balcony.

66. The first to seventh respondents admit that on 21 October 2021 the OC entered into a building agreement with IAS to commence work in accordance with the Landlay scope of works. It is also admitted by those respondents that IAS commenced work under the building agreement around the end of November 2021. Mr Rigney who is a director of IAS provided an affidavit in these proceedings. He states that IAS was engaged to undertake rectification work to the balconies to the unit. I accept this evidence.

65. The first to seventh respondents also admit that on 26 November 2021 Landlay conducted a flood test of the L23E balcony and concluded that:

1. water testing of the door frame and sill showed that it leaked and was not weatherproof

2. the door drainage provisions were not adequate;

3. the water proofing and flashing detail was not compliant with AS4654.2; and

4. it was necessary to install new doors and sills, which required a new waterproof membrane to be installed, which in turn required the replacement of existing tile bed and waterproof membrane on the balcony.

68. The respondents admit that on 1 December 2021 the OC informed the owner that the L23E balcony would be included in the rectification works being undertaken by IAS.

69. The respondents also admit that the IAS rectification works were stated by Landlay to have reached practical completion on 25 August 2022.

70. In his affidavit dated 17 October 2022 Mr Fuchs, the director of P&S Design and Construction Pty Ltd the company undertaking the owner’s renovation work, stated at [84] that as that date there were some outstanding items that had not been satisfactorily been completed, most crucially ongoing water ingress into the L23 guest bedroom. He states that further investigative work was carried out on 13 October 2022, namely creating a hole in the L23 guest bedroom wall so that the OC could undertake further investigations.

71. In his affidavit of 5 April 2023 Mr Hecker stated that on 13 February 2023 the OC engaged Strata Building Management (SBM) to undertake work referred to in the Landlay report of 5 December 2022, p1459 exhibit 1, such work relating to the external flashing on the southern facade and a control joint underneath the Conservatorium on the level 22 W. balcony. He further states that the SBM works were scheduled to commence on 14 March 2023, but were, he understands, delayed.

72. Counsel for the owner at [127] of his submissions refers to the Level 22 Guest Bedroom leaking. Mr Fuchs refers to the L23 guest bedroom as I have referred to above. I will assume that this is an error on Mr Fuch’s part. Counsel refers to the Landlay report of 5 December 2022 which he states indicates that the cause of leaking was common property, the subject of the OC’s obligation to repair. As counsel points out, on 8 June 2023 I made the following notation:

‘The Tribunal notes that the first respondent (the OC) shall procure and provide to the Tribunal and to the applicant's solicitors, as soon as practicable and no later than 23 June 2023, written confirmation by Landlay Consulting Group (Landlay) that all of the works in the scope of works set out in Landlay's report dated 5 December 2022 (at pages HB01459 to HB01468 of the Hearing Bundle) (December Landlay Report), in particular the works set out in sections 5.1 to 5.3 of the December Landlay Report have been completed.’

73. On 21 June 2023 the solicitors for the first to fifth respondents provided documents from Landlay and Facade Concept which certify that the work referred in section 5.1 of the Landlay 5 December 2022 report had been completed on 20 June 2023 and the work referred in sections 5.2 and 5.3 of the Landlay 5 December 2022 report had been completed on 9 June 2023.

74. So far as the renovation work carried out by the owner is concerned, the respondents admit that on 9 May 2023 the owner’s private certifier issued her with a letter which stated that before an occupation certificate could be issued in respect of her renovation work he required;

‘a written report from a suitably qualified person that the weatherproofing issues have been resolved by the owners corporation.’

75. The chronology that I have set out above includes my finding that it was at 30 April 2021 that the OC was on notice that its obligations under s106 of the SSMA were enlivened. I find that the information that the OC received on 30 April was reinforced by Mr Hecker’s communications to the strata committee on 3 and 7 May 2021. I find that what followed then was a protracted process by which the OC’s obligation to carry out and complete the repairs to the common property of the unit was completed on 9 June 2023. In other words the work was carried out and completed in approximately 26 months.

Further rectification work required

76. Despite the work carried out by the OC there remains disputes and differences between the owner and the OC regarding the adequacy of the work carried out and whether additional work is required to balcony and associated common property for the purposes of a more effective waterproofing of common property.

77. This is subject is dealt with by the parties’ experts who have prepared reports in these proceedings which are contained in exhibit 1. The relevant experts are Mr D Coombes who prepared reports dated 4 July and 21 September 2022 and 17 February and 25 May 2023 for the owner. Mr M Bournelis prepared two reports dated 19 and 26 April 2023 for the first to the sixth respondents. Mr D Wood prepared a report dated 8 May 2023 for the OC. On 31 May 2023 Mr R. Brown prepared a report for owner.

78. There was no objection to the qualifications, experience or expertise of these witnesses. I therefore accept them as appropriately qualified witnesses able to give opinion evidence in the Tribunal.

79. A conclave was conducted between the expert witnesses and a conclave report was prepared which has been signed by them. A copy of their report is in evidence as exhibit H.

80. The following matters were relevantly agreed between the experts:

1. The Hydraulics Consultants agreed that the location of the linear drains as installed do not affect the operation of the drains and deem the drains locations as fit for purpose;

2. All Consultants agreed that the plumbing codes remain silent on falls to linear drains;

3. All Consultants agreed that the tiles to the balconies on Level 22 and Level 23 East Side do not require removal, as the falls are adequate;

4. All consultants agreed that the spigot adaptor(s) outlets to the drains require a 50mm pipe spigot adaptor welded to the bottom of the linear drain, so no lipping exists and no water escapes to the tile bed screed;

5. All consultants agreed that the existing drainage lines should be pressure cleaned at least at the completion of the works;

6. The overflows do not comply with the contract documents. This is agreed by all consultants. However, the Hydraulic Consultants agree that no further remedial action is required;

7. The Building Consultants, Mr Coombes and Mr Bournelis agree there is ingress of water to Bedroom 3 (Guest Bedroom) west elevation. The source of the penetration has not been determined and further investigation is required to both the window and the cavity external wall in the courtyard separating the 2 apartments;

8. The Building Consultants agree the base columns of the balcony balustrades to the East remain incomplete and have not carried out make good completion works. See City Wide Report dated 26 April 2023 page 14 of 201, paragraph 9.4.1 and photograph 9. Experts agree as a solution to supply and install a "U" channel prefabricated powder coat finish to match existing and install from the balcony side to cover all previous holes.

9. The Building Consultants agree the alleged rising damp is not rising damp but could be the effects of the waterproof membrane showing through or it could be brush marks from paint touch ups to the walls. Experts agree this is not a defect.

10. The Building Consultants agree that one source of water penetration that has not been investigated is the top of the blade dividing wall between apartment balconies on Level 22 West Side which both Consultants agree should have a continuous capping to the top of wall.

81. The matter on which the experts were unable to agree was that:

1. Mr Ross Brown and Mr Doug Coombes (experts for the owner) were of the opinion that the balcony drains should be lifted to gain a fall of 1:200. Mr Mario Bournelis and Mr David Wood (experts for the respondents) were of the opinion that the drains do not need to be lifted;

2. Mr Ross Brown and Mr Doug Coombes were of the opinion that the tiles to the Level 22 West Balcony need to be completely removed to obtain adequate falls of 1% to the whole balcony, and to be compliant with Australian Standards which specifies falls of 1%.

3. Mr David Wood and Mr Mario Bournelis are of the opinion that the Level 22 West Balcony has adequate falls albeit 0.5% not 1% and this is enough to direct water to the linear strip drains.

82. It was agreed on an ‘if found’ basis to remove the drains would involve the following work :

1. Lift up existing drains;

2. Lift up tiles on either side of linear drains;

3. Remove tile screed and patch membrane if required;

4. Supply and install new fabricated drains with a fall to the bottom tray;

5. Membrane remains as per existing;

6. Reinstate screed; and

7. Reinstate tiles and grout.

83. It was agreed on an ‘if found’ basis to the following scope of works for Level 22 West Balcony:

1. Remove all tiles;

2. Remove all tile screed;

3. Existing membrane can remain, patch if required;

4. Reinstate screed with falls;

5. Reinstate tiles with grout;

84. I find that I have power to order the OC to have remedial or additional work carried out to the common property under s241 of the SSMA which states:

‘The Tribunal may order any person the subject of an application for an order to do or refrain from doing a specified act in relation to a strata scheme.’

85. In Glenquarry Park Investments Pty Ltd v Hegyesi [2019] NSWSC 425, Parker J stated at [111] that the Tribunal “is not entitled to order an owners corporation to do things just because it considers it desirable to do so”. That comment was made in the context of considering the ambit of the Tribunal’s power to order an owners corporation to take measures to comply with its duty to keep and maintain common property in a state of good repair. Parker J held that the Tribunal’s remedial orders “could go no further than the minimum necessary to comply with that obligation”. At [112] Parker J stated:

‘In the present case, the Tribunal did not ask itself what needed to be done so as to order to achieve a minimal compliance with s 62(1) and then frame orders accordingly. In my view this means that there was no proper statutory foundation for the orders.’

86. Section 62(1) of the SSMA 1996 was in identical terms to s106 of the SSMA 2015 making Glenquarry Park Investments Pty Ltd v Hegyesi relevant to these proceedings. On that basis I should ask myself what is needed to be done in order to achieve minimal compliance with s106 of the SSMA.

87. Glenquarry Park Investments Pty Ltd v Hegyesi was referred to in Selkirk v The Owners – Strata Plan No 2661 where the Appeal Panel stated at [38] – [49]:

‘In Glenquarry Park there were jurisdictional deficiencies in formulation of the orders for remediation, because the formulation potentially imposed on the owners corporation in that case, without basis in the findings, a scope of works which went beyond the owners corporation's strict duty. It was not a dispensation from the strict duty. There was recognised a degree of flexibility in the form of compliance by the owners corporation with the strict duty, which, on the authorities canvassed extensively by Parker J (Ridis v Owners SP 10308 (2005) 63 NSWLR 449, [2005] NSWCA 246, Owners SP 50276 v Thoo [2013] NSWCA 270 and Stolfa) includes replacement if that is reasonably necessary because the item has come to the end of its serviceable operating life and can no longer be kept in a state of good and serviceable repair. The same must be true if the state of the item is so damaged or deteriorated that it cannot be repaired but must be replaced.

The requirements in Glenquarry find complementary support in the requirements for work orders under the Home Building Act 1989 (NSW) (HBA). Under HBA s 48O(1)(c) an owner is required to specify action by the builder that is grounded in proof by the owner of, not only the defect, but also the manner of remediation and a work order must focus on the particular defect to be rectified and must be certain, practical and enforceable: Catapult Constructions PL v Denison [2018] NSWCATAP 158 at [46]- [61] and the authority there cited. The evidentiary onus is on the homeowner to set out the appropriate method of rectification: ibid, at [59]. In Bellgrove v Eldridge (1954) 90 CLR 613, [1954] HCA 36, the High Court saidthat the scope of remedial works must not be disproportionate to the defect. The High Court has also stated that there is a high bar for unreasonableness or disproportion once a breach is established: Tabcorp Holdings Ltd v Bowen Investments PL (2009) 236 CLR 272, [2009] HCA 8 at [13]- [20]; see also Walker Group Constructions PL v Tzaneros Investments PL [2017] NSWCA 27 at [186]; Barwick v Shetab [2017] NSWCATAP 127 at [87]- [88]. The analysis in the paragraphs in the Tabcorp decision, and the authority there reviewed, also makes it clear in these passages that reinstatement, provided it is not extravagantly disproportionate, is the appropriate measure of relief. Reinstatement means works with a certain standard of amenity and presentation which includes not being at risk of emergent problems returning or growing which in form and finish produces an outcome that matches other components in form and finish and makes the works of the originally-intended quality and integrity.’

88. What is to be understood from the passages quoted is, in my view, that the statement that the Tribunal’s remedial orders “could go no further than the minimum necessary to comply with that obligation’ (the s106 obligation) is to be understood as meaning that the repair, maintenance or reinstatement work the subject of the order now sought should be sufficient to ensure that the problems which were the cause of the need for the remedial work to be carried out by the OC do not return or get worse. The relevance of the Home Building Act 1989 becomes apparent if one bears in mind that when an OC is undertaking work in connection with its s106 obligations relating to ‘residential building work’ as defined in the Home Building Act, the warranties referred to in s18B of the Home Building Act will be implied into contracts that the OC enters into for the carrying out of such work. That for the main part goes to the quality of the work carried out, rather than to its scope. I would also add that considerations of quality of work are not in themselves absolute determinators of whether the work undertaken achieved minimal compliance with s106 of the SSMA. An important issue will be whether the scope of work was sufficient. Each case will depend on its own particular facts.

89. I find that the experts’ agreement on the various matters referred to above indicate their consensus that the work that they have agreed upon is sufficient to ensure that the issues that they were considering do not get worse or return.

90. In connection with the items of proposed remedial work that the experts have not agreed upon and which I must determine, the matters in dispute are:

1. Should the drains should be lifted to gain a fall of 1:200 ?; and

2. Should the tiles on the Level 22 West Balcony be completely removed to obtain adequate falls of 1% to the whole balcony ?

Fall in drains

91. The Landlay scope of works at HB 3740 of exhibit A dealt with installation of strip drains at 5.2.9.4 which were to be installed in accordance with the Stormwater design which had been prepared by SH Engineering Consultants. The SH Engineering design of the proposed overflow and lineal drains is at page 3479 – 80 of exhibit A for the level 22 eastern and western balconies and the level 23 eastern balcony. The plans which depict the lineal drains on these balconies do not specify a fall in the drains themselves, although they do indicate that there should be a fall in the balcony surface to direct water toward the drain.

92. In his report dated 21 September 2022, Mr D Coombes at par 27 P.3049. Exhibit A states that paragraph 5. 2.14 of the Landlay scope of works deals with the installation of screed and specifies a minimum fall of 1:100. He states that the fall is necessary to ensure that the water drains towards the outlets. This is in conformity with the SH Engineering Design.

93. Mr Coombes also refers to the Landlay project site Report 2 which is dated 21 December 2021 and which at 1.2.7 states in connection with the level 22 western balcony that in the circumstances which were encountered, it was not possible to achieve a fully compliant fall (1:100) in the tiled surface.

94. Also at par 27 of his report, Mr Coombes stated that he carried out measurements and the fall within the drain itself on the east side of the level 23 SE balcony was 0°, which meant that there was nil fall within the drain and that the drain was holding water. At 56c) of his report Mr Coombes stated that rectification of the inadequate falls in the linear drains was required.

95. Mr Ross Brown in his report dated 31 May 2023 stated at 6.1 by way of a summary, that grated drains to all areas had not been provided with adequate or any grade to the outlet, resulting in extending extended ponding of water both during and post a rainfall event. He stated that the length of the drains prevented effective operation and drainage of rainwater in the most minor of rainfall events. Mr. Brown agreed that there was an absence of a prescriptive requirement within Australian Standards for a grade to be provided to linear grated drains. Nonetheless he provided a photograph referred to at 7.12 of his report which showed water ponding above a linear drain. He stated that the photograph was taken during a light rainfall event and it showed ponding of water over the linear drains which demonstrated the ineffectiveness of the drains to dispose of stormwater runoff in an adequate and timely manner.

96. Mr Wood in his report dated 8 May 2023 stated in response to Mr Coombes observations regarding the linear drains, that he agreed that the drains were laid with a minimal fall if any, but he did not agree that the drains should be rectified. He stated that there was no regulatory requirements for a fall or grade in drains and stated that the drains appeared to be operating correctly when he visited the site and he did not believe this item to be a defect and that he did not believe that the grated/ linear drains required replacement.

97. Mr Bournelis in his report dated 26 April 2023 stated at 9.3.1 e) that with regard to the level 22 western balcony, he observed the falls to the linear drain were not as specified in the Landlay scope of works in that a 1:100 fall was nominated. He stated that at the time of his inspection he observed a 0.50° fall which he measured with an electronic spirit level. At paragraph 9.3.1 i) of his report Mr Bournelis also stated that he agreed with Mr Coombes report that the linear drains internally had 0° fall on the external side of the level 23 SE balcony and that the drain could hold water. He stated that being an external drain, the amount of water that could be held would be minimal with no impact or loss of amenity to the owner.

98. I have had regard to the opinions of the experts. I acknowledge that there is consensus that Australian Standards and other sources of building regulation do not address the issue of whether there should be a fall in the drains. I also find that the SH Engineering design of the proposed lineal drains for the level 22 eastern and western balconies and the level 23 eastern balcony does not specify a fall in the drains themselves, although they do indicate that there should be a fall in the balcony surface to direct water toward the drain. I infer that the hydraulic engineer’s design was considered to be adequate with a fall in the balcony surface toward the drains. This I find was given effect by the Landlay specification of a minimum fall of 1:100 for the installation of screed which results in a minimum fall of 1:100 for the level 22 and 23 balconies. So far as the tiling of the balconies is concerned, I have had regard to the agreement of the experts that the tiles to the balconies on level 22 and 23 east side do not require removal as the falls are adequate. I infer from this agreement that the falls are adequate to direct water to the drains.

91. I have taken into account the matters referred to in the preceding paragraph. I have also had regard to what was stated in Glenquarry Park Investments Pty Ltd v Hegyesi regarding the minimum necessary to comply with the s106 obligation. I find that the OC’s action in engaging Landlay to act on its behalf to contract the balcony rectification work and to have the work carried out in accordance with the hydraulic design and specification of SH Engineering, and the action of Landlay in specifying a 1:100 fall in the screed toward the strip/linear drains, ensured that it comfortably did the minimum necessary to re-waterproof the level 22 and 23 balconies in circumstances where there is no regulatory requirement for there to be a fall in the drains themselves. I reject the owner’s case that remedial work is necessary to ensure that there is a fall in the linear drains on the balconies of level 22 and 23.

Falls on level 22 West balcony

100. At 4e) of the record of conclave which is in exhibit H, the consultants stated that they agreed that the tiles to the balconies of level 22 and level 23 east side did not require removal as falls were adequate.

101. Having regard to that agreement, I find it somewhat surprising that Mr. Brown and Mr Coombes for the owner are of the opinion that the tiles to the level 22 west balcony need to be completely removed to obtain adequate falls of 1% to the whole balcony, and to be compliant with Australian Standards, which specifies falls of 1%.

102. The experts representing the OC were of the opinion that the level 22 West balcony had adequate falls of 0.5%, not 1% and this was sufficient to direct water to the linear strip drains.

103. Mr Wood for the OC in his report dated 8 May 2023 addresses the falls on the tiling. At [52] of his report Mr Wood states that required fall for the tiling in the RMH report was a grade of 1:100. The RHM report is not defined by Mr Wood. He states that on the level 22 western balcony he measured the fall in four locations and found falls of 0.5% and 0.1%. Mr Wood stated that in his opinion the fall on the level 22 western balcony did not comply with the RHM report. However, Mr Wood stated that despite the falls not achieving the specified 1:100 ratio, on a visit to site he found that after rain, water was not ponding on the tiling and there were no ponding marks on the tiling which he would expect to see if water had not drained away. He says based on the Guide to Standards and Tolerances 2017 which states that waterproof decks and balconies are defective if water ponds, the falls on the balcony are not a defect.

104. In his report dated 31 May 2023 Mr. Brown for the owner stated by way of a summary at 6.1 [d] that surface falls/grades provided to the tiled areas of the L 22 W balcony were inadequate to dispose of water runoff in this area effectively and in a timely manner. At 7.6 of his report Mr. Brown stated that it was universally acknowledged that the minimum required grade for water to effectively drain from a tiled surface was 1% - 1:100 and that this was reflected in relevant guidance referenced in NCC, Australian Standards documents and others. In that part of his report Mr. Brown referred to AS 3958.1.2007 Ceramic Tiles, Part 1: Guide to the Installation of Ceramic Tiles. That Australian Standard stated that the recommended ratio of falls in other wet areas was between 1.80 and 1.100. It is notable that in the Landlay Scope of Works which was the basis for the rectification work carried out by the OC, the specification stated at 5.2 16 in connection with the installation of new tiling, that the supply and installation of new floor tiles was to be in accordance with AS 3958, the standard referred to by Mr Brown

105. Mr Bournelis for the OC in his report of 26 April 2023 at 9.3.1 f) refers to a project site report dated 21 December 2021, page 3946 exhibit A. This document was based on a discussion at a site meeting between Landlay Consulting Group and IAS, the contractor undertaking the work. At 1.27 of the project site report the following was recorded:

‘With regard to Level 22 - Western Balcony, we note that based on the distance between the proposed new strip drain and below-cover doors, it will not be possible to achieve fully compliant falls (1:100) in the tiled surface without compromising on achieving a compliant waterproofing upturn and door opening clearance. It has been determined that achieving a compliant waterproof upturn and opening clearance takes precedence, particularly in light of the fact these doors are located under cover (conservatorium), and therefore lAS will install falls slightly less than the compliant 1:100 grade.’

106. At 9.3.1 g) of his report Mr Bournelis stated:

‘In my experience as a Licenced Builder, it is common practice on occasions where codes cannot be met that tiling works may need to proceed in a reduced fall in order that upturns and door opening clearance takes priority over falls as has occurred on this occasion. I am of the opinion that the balcony tiled deck whilst may not have the required falls is still acting as intended and the falls are adequate to deem the works as fit for purpose.’

107. Mr Coombes commented on the above paragraph in his report dated 25 May 2023. He referred to clause 2.5.2 of AS 4654.2 which related to waterproofing membranes for external above ground use which stated that falls should be no flatter than 1:100. He then stated at 2.9.2 and 2.9.3 of his report:

‘In my experience, it is not common practice for upturns and/or opening clearances to take priority over specified falls. Indeed, I have never encountered such a situation. I do not know of any person with specialised skills that would be routinely consulted in cases where falls do not meet the specified requirements, although a hydro engineer ought to be able to provide guidance.’

108. I find that the evidence referred to above establishes that a 1:100 fall was specified for the tiling on the L 22 west balcony, but that fall was not achieved. That fact was not seriously disputed by the OC’s experts. Mr Wood stated that rectification work is not required on the basis that after rain, water does not pond on the tiled surface and that he did not see ponding marks. Mr Bournelis has referred to the evidence which establishes that when the work was being carried out it was recognised that a 1:100 fall on the L22 west balcony could not be achieved for the reasons stated in the extract above. In addition Mr Bournelis has stated that in his opinion the approach agreed upon by Landlay Consulting Group and IAS is common practice in the circumstances that they found themselves in as regards this particular balcony. Mr Coombes stated that in his experience it is not common practice for upturns and/or opening clearances to take priority over specified falls, although he does state that he has never encountered such a situation.

109. The question that I must ask and answer is, what is needed to be done so as to achieve minimal compliance with s106 of the SSMA. Or as I have stated above, was the reinstatement work that has been carried out sufficient to ensure that the problems that were the cause of the reinstatement work have not returned or gotten worse.

110. The evidence does not disclose that the L22 western balcony remedial work that has been carried out is not effective, with the result that water from the balcony finds its way into the interior of the unit. On that basis I find that the remedial work that has been carried out has achieved a state where it can be found that that the problems that were the cause of the reinstatement work have not returned or gotten worse.

111. Addressing the evidence to which I have referred, I find the following facts lead to a conclusion that the work which was carried out to the L22 west balcony achieved minimal compliance with s106 of the SSMA:

1. Despite the failure to achieve a 1:100 fall, after rain water was not ponding on the surface and there were no ponding marks on the tiling surface which might be expected if there had been ponding; and

2. The consultant who prepared the scope of work to be carried out to rectify common property failures on the L22 west balcony and the contractor undertaking such work both agreed that in the context of all of the work that had to be undertaken, it was acceptable to dispense with the compliant 1:100 grade falls, particularly since the doors to the western balcony on L 22 were located under cover, the inference being that there would be less rainfall near the doors such that the need for a compliant fall from the doors to the lineal drains would not be as critical as if there was no cover. I also find that the inference to be obtained from 1.2.7 of the Landlay Project Site Report of 21 December 2021 is that there would be a fall in this area, but it would not be 1:100.

112. I therefore reject the owner’s case that additional rectification work must be carried out on the L22 west balcony.

113. I will make an order under s241 of the SSMA that if the OC has not already done so it must cause the following work to the unit to be carried out immediately:

1. the spigot adaptor(s) outlets to the drains require a 50mm pipe spigot adaptor welded to the bottom of the linear drain, so no lipping exists and no water escapes to the tile bed screed;

2. the existing drainage lines should be pressure cleaned at least at the completion of the works;

3. As regards ingress of water to bedroom 3 (guest bedroom) west elevation, the source of the penetration has not been determined and further investigation is required to both the window and the cavity external wall in the courtyard;

4. In accordance with agreement of the building consultants that the balcony balustrades to the East remain incomplete by reason of a failure to carry out make good completion works, supply and install a "U" channel prefabricated powder coat finish to match existing and install from the balcony side to cover all previous holes; and

5. Provide a continuous capping to the top of the blade dividing wall between apartment balconies on level 22 west side.

Section 106(5) of the SSMA

114. Section 106(5) of the SSMA stated:

‘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.’

115. The measure of damages is a tort measure of damages. Refer, Smith v Owners – Strata Plan No. 3004 [2022] NSWSC 1599 where Mitchelmore J stated at [36] - [37]:

‘Even if s106(5) of the SSM Act is characterised as conferring a purely statutory right of action, it does not follow that the assessment of the damages which the provision confers was intended to be different to that in tort. The present parties were agreed that whether or not s 106 gives rise to a statutory cause of action or an action under the general law, the cause of action is analogous to a claim in negligence or nuisance. Counsel for the Smiths, Mr Davie, relied on what he described as an analogous observation of the cause of action in relation to s 82 of the Trade Practices Act 1974 (Cth) in Kizbeau Pty Ltd v W G & B Pty Ltd (1995) 184 CLR 281; [1995] HCA 4. Counsel for the owners corporation, Mr Elliott, endorsed that submission.

I note for completeness that while not binding on this Court, there are a number of cases in the Tribunal which, in considering damages under s 106(5) of the SSM Act, have applied the assessment approach for which both parties in this case contended: see, eg, Shum v Owners Corporation SP30621 [2017] NSWCATCD 68 at [60]-[61]; Owners - SP 80881 v Gregg [2022] NSWCATAP 172 (“Gregg”) at [39]-[41].’

116. So far as reasonably foreseeable loss is concerned as referred to in s106 of the SSMA, in Shum v Owners Corporation SP30621 [2017] NSWCATCD 68 Member Thew explained foreseeability as follows at [60] and [61]:

‘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.

The expression often adopted is whether the risk was ‘on the cards.’

117. A consideration of section 106(5) also involves issues of causation. Recently Leeming JA in The Owners - Strata Plan No 2661 v Selkirk [2024] NSWSC 760 considered, among numerous other things, the issue of causation arising from s106(5). At [138] his honour refers to s106(5) introducing the words ‘as a result of’ as an element of the statutory claim. Reference is then made to the decision in Comcare v Martin (2016) 258 CLR 467 where the following passage was said to be apposite:

‘Causation in a legal context is always purposive. The application of a causal term in a statutory provision is always to be determined by reference to the statutory text construed and applied in its statutory context in a manner which best effects its statutory purpose. It has been said more than once in this Court that it is doubtful whether there is any “common sense” approach to causation which can provide a useful, still less universal, legal norm.’

118. At [176] of the decision his Honour stated:

‘(1) The duties imposed on an owners corporation by s 106(1) and (2) are not discharged by the exercise of reasonable care, nor by establishing that a lot owner has contributed to the defective condition of the property.

(2) The duties imposed on an owners corporation by s 106(1) and (2) are not invariably applicable; they may be rendered inapplicable pursuant to s 106(3) or (7), and compliance may be deferred pursuant to s 106(4).

(3) In all save exceptional cases, a breach of the duties in s 106(1) or (2) will make it appropriate for an order rectifying those breaches pursuant to s 232 to be made, including to the extent necessary an order authorising investigative works.

(4) The existence of a breach of duty is an element of the statutory right to damages conferred by s 106(5). Such a breach is a necessary but not a sufficient condition. In order to obtain an order for damages, it remains necessary for a lot owner to demonstrate that the claimed damages answer the description of “reasonably foreseeable loss suffered by the owner as a result of” that breach.

(5) It is open to an owners corporation to contend in response to a claim for damages pursuant to s 106(5) that the claimed loss is not reasonably foreseeable, or is not “as a result of” the breach.

(6) Whether or not a claimed loss is “as a result of” the breach is to be determined in a practical way.

(7) In determining whether a claimed loss is or is not “as a result of” the breach, it is open to an owners corporation to contend that the sole cause of the loss is conduct by the lot owner, or something other than the owners corporation’s breach (such as an intervening act), or that the lot owner’s own unreasonable conduct is the cause of the claimed loss. Rather than asking whether there has been a “break in the chain of causation”, or whether the “true cause” of the loss is the lot owner’s own conduct, or whether the lot owner has unreasonably failed to mitigate the lot owner’s loss, it is better to attend to the statutory language and ask whether and if so to what extent the claimed damage answers the description of loss suffered “as a result of” the owners corporation’s breach.’

119. The categories of loss which the owner seeks to recover in these proceedings are as follows:

1. Costs of internal rectification works - $118,757.32;

2. Temporary accommodation costs - $403,730.87;

3. Loss of amenity damages - $69,166.67; and

4. Aggravated damages - $69,166.67.

Cost of internal rectification works

120. So far as the cost of internal rectification works are concerned, these costs are collected in items 1 – 22 of Annexure B to counsel’s final written submission. Items 3 – 18 are stated to relate to costs incurred by the owner associated with the removal of existing timber platforms, planter boxes, glass sliding doors and the purchase of tiles for the balcony. Items 19 – 22 are for amounts claimed by the owner’s renovation contractor, Mr Fuchs in connection with services he states he provided for the benefit of the OC’s contractors.

121. Counsel for the owner has made submissions on items 3 – 22.

122. I infer that items 1 and 2 are not pressed, no doubt at least in connection with item 1, where the expense claimed was incurred in 2018. There are no submissions in support of these items. I accept counsel for the first to fifth respondent’s submissions that the work in item 2 had been planned since 2019 and had no connection to the water ingress the subject of these proceedings. On that basis the amounts claimed in items 1 and 2 of Annexure B which total $16,637.50 are rejected.

Removal of existing timber platforms, planter boxes, glass sliding doors

123. The owner’s evidence regarding these items is at [317] of her first affidavit, where at (c) she refers to the removal of timber platforms, planter boxes and glass sliding doors from all the balconies at a cost of $9,900.00 and reinstatement of them at a cost of $58,041.50, making a total of $67,941.50 claimed in connection with items 3, 4 and 5 of Annexure B. (emphasis added).

124. The owner also deals with this issue in more detail at [70], [72] and [81] of her affidavit. The owner states that in February 2020 following heavy rainfall there was water ingress into the unit and the carpet adjacent to the level 22 east balcony was soaked with foul water. Other instances of the effect of the water ingress are provided by the owner. She states that this led to Mr Hecker inspecting the unit to investigate and when he did so she had a conversation with him in which, among other things, he told her to remove a timber platform which I will assume was on the level 22 east balcony. The reason for this assumption is the owner’s evidence that the carpet adjacent to the level 22 east balcony was soaked with foul water.

125. The owner states at [72] that in February 2020 Mr Hecker stated to her:

‘You are going to need to remove the timber platform because it is preventing water from properly flowing to the drains, and then you will need to get someone to assess the damage that the new windows and doors have caused to the waterproofing membrane. This is not an Owners Corporation issue because the previous owners consented to a by-law that makes any damage to the balcony the Lot owner’s responsibility.’

126. Mr Hecker responds to this evidence in his 5 April 2023 affidavit. He states at [48] that he said to the owner:

‘The installation of the new windows and doors are a potential cause of the water ingress because the internal windowsills were wet during my inspection. Also the battens underneath the timber platform might be preventing the large volumes of rainwater from making its way to the drains and the drains are not visible beneath the decking and therefore cannot be assessed to check if they are clear.

I recommend that you remove the timber decking to allow the drains to be checked and allow unrestricted water flow to the drains.’

127. Mr Hecker at [50] confirms that he did recommend to the owner that the decking should be removed if she wanted to further investigate water ingress.

128. Counsel for the owner has referred me to day 3 of the transcript, page 93 when Mr Hecker agreed that the decking would have to have been removed to investigate. Mr Hecker also agreed that whatever was removed would have to be replaced. The evidence was that a previous owner of the unit had placed the decking on the east balcony. Counsel for the owner submits that on day 3 Mr Hecker accepted that if the OC had to damage lot property in order to investigate and then rectify common property, the OC was responsible for the cost of removing and replacing that lot property. I have had regard to the transcript reference referred to, page 93 as referred to above. I find that the evidence does not refer to cost as counsel for the owner has submitted.

Removal from the strata committee

453. The owner seeks orders removing the second, third, fourth and fifth respondents from the strata committee.

454. It is relevant to note that s37 of the SSMA requires a strata committee member to:

‘carry out his or her functions for the benefit, so far as practicable, of the owners corporation and with due care and diligence.’

455. The owner relies on section 238(1)(a) of the SSMA which states as follows:

‘The Tribunal may, on its own motion or on application by an interested person, make any of the following orders—

(a)  an order removing a person from a strata committee,’

456. The grounds for making such an order are stated in s238(2) of the SSMA to be:

‘Without limiting the grounds on which the Tribunal may order the removal from office of a person, the Tribunal may remove a person if it is satisfied that the person has—

(a)  failed to comply with this Act or the regulations or the by-laws of the strata scheme, or

(b)  failed to exercise due care and diligence, or engaged in serious misconduct, while holding the office.’

457. In connection with s238(2)(a) of the SSMA, a failure of the type referred to would include a failure by a strata committee member to carry out his or her functions with due care and diligence.

458. Section 238 of the SSMA commences with the wide words ‘Without limiting the grounds on which the Tribunal may order the removal from office of a person’. In addition to the grounds referred to in s238(2) (a) and (b) that may justify a removal from office, the Tribunal has a wide discretion whether an order will be made to remove a person from office. There has been no case law of which I am aware that refers to the scope of the Tribunal’s discretion to order removal of a person from the strata committee when the grounds referred to in s238(2) (a) and (b) have not been engaged.

459. There needs to be compelling circumstances to justify the Tribunal’s intervention in the democratic processes of an Owners Corporation to remove an officer of a Strata Committee elected by lot owners: Lockrey v Rosewal [2022] NSWCATCD 27 at [15]; Linney v The Owners – Strata Plan No. 11669 [2021] NSWCATCD 123 at [94]. In Lockrey v Rosewal Senior Member D Moujalli stated at [15]:

‘It necessarily follows that the approach identified in Velastegui v Chan to an application for an order under s 237 should also be taken in respect of an application for an order removing a person from a strata committee under s 238 of the SSMA. Section 9 of the SSMA provides that the owners corporation for a strata scheme has the principal responsibility for the management of the scheme. The regime for self-management of strata schemes established by the SSMA involves the ability of an owners corporation to elect the members of its strata committee: see ss29(1) and 30(4) of the SSMA. Compelling circumstances would need to be demonstrated to justify the intervention of the Tribunal to override the democratic wishes of the owners corporation by making an order under s 238 of the SSMA. The decisions of the Tribunal establish that such an order should only be made in the clearest of cases.’

460. In Linney v The Owners – Strata Plan No. 11669 Senior Member Sarginson stated at [94]:

‘Further, even if any of the matters set out in s 238(2) are established, the applicant must additionally satisfy the Tribunal that the matters are of sufficient magnitude to justify exercising its discretion in favour of removing the strata committee member from office.’

461. I am not aware of cases in the Tribunal which seek to address what factors should be identified in order to make a finding of ‘serious misconduct, while holding office.’ In Coope v LCM Litigation Fund Pty Ltd [2016] NSWCA 37, a case which concerned an employment dispute and an employment contract, Payne JA at [139 - 140] stated:

‘There was no dispute on the appeal that the primary judge had correctly identified the correct legal principles in addressing the question of whether “serious misconduct” had been proved. It is clear that conduct which is repugnant to the employer/employee relationship and which destroys the mutual trust and confidence between employee and employer will, generally, be a ground for summary dismissal: Blyth Chemicals Ltd v Bushnell[1933] HCA 8; (1933) 49 CLR 66 at 81; Concut Pty Ltd v Worrell [2000] HCA 64 at [51]; [2000] HCA 64; 176 ALR 693 at 707.

It is equally clear that a breach of contract and a failure to give full and frank disclosure and thereby avoid a conflict of interest and duty may each justify summary dismissal for “serious misconduct”: Buitendag v Ravensthorpe Nickel Operations Pty Ltd [2014] WASCA 29 at [143]; Buitendag v Ravensthorpe Nickel Operations Pty Ltd [2012] WASC 425 at [68]’

462. At [147] Payne JA added:

‘Whilst it may be accepted that isolated conduct by an employee would not suffice to warrant the description “serious misconduct” in some cases, each case turns on its own facts.’

463. In Geoffrey William Vines v Australian Securities And Investment Commission [2007] NSWCA 126, a case concerning s232(4) of the Corporations Laws Santow JA referred to the following authorities which addressed the meaning of ‘serious misconduct’ at [162] – [164] :

‘Some limited guidance can be found in authorities on the expression “serious misconduct” or “serious and wilful misconduct“. Johnson v Marshall Sons & Co Limited [1906] AC 409 was a case concerning whether the deceased was owed compensation by his employer under the Workers Compensation Act or was disqualified by reason of his own “ serious misconduct ”. Lord James observed (at 414) “that serious misconduct  cannot be construed by the consequences of any act. A man may be told not to walk on the grass. He does so, slips up and breaks his leg. The consequences are serious, but the misconduct is not so”. There however, the consequences were essentially for the person who slipped.

More relevant is the observation of Lord Loreburn LC at 411-12L “Further, the Act says it [the misconduct] must be ‘serious’ meaning not that the actual consequences were serious, but that the misconduct itself was so”.

Likewise relevant is the observation of Lord James at 412-3 who emphasised that  serious misconduct  would be made out if one acted with absolute disregard of the lives and safety of many’

464. At [165] – [166] in Geoffrey William Vines v Australian Securities And Investment Commission Santow JA referred to Boral Resources (Queensland) Pty Ltd v Pyke (1989) 93 ALR 89, where the Court was dealing with recovery by an employee who had been injured while drink-driving. His honour stated:

‘That invoked s66 of the Insurance Contracts Act 1984 (Cth) where sub-para (b) qualifies the right of recovery in these terms:

“the conduct of the employee that gave rise to the loss occurred in the course of or arose out of the employment as was not serious or wilful misconduct.” [emphasis added]

Thomas J declined (at 97) to purport to paraphrase or explain the term “serious misconduct” considering it a classical jury question. However, consistent with that he invoked what he called “a wider community viewpoint” whereby the conduct (the drink-driving) was conduct which he said was “seriously regarded”.’

465. At [167] in Geoffrey William Vines v Australian Securities And Investment Commission, it was stated that serious misconduct is judged on an objective level.

466. The above passages and citations indicate that it is not possible to provide a definition of ‘serious misconduct’. However the following criteria may be identified for the purposes of ascertaining by reference to them, whether a party has made out an allegation of ‘serious misconduct’:

1. The allegation must be judged on an objective basis;

2. Each case turns on its own facts;

3. As a general proposition, but subject to (2), isolated conduct would not be sufficient to constitute serious misconduct;

4. Serious misconduct is not to be judged by consequences,

5. The nature of the misconduct must be identified;

6. The Tribunal member must identify what is misconduct based on the evidence in the proceedings without a formula as a guide;

7. Once the misconduct has been identified it is necessary to form an opinion based on the facts as to how serious it is, or was;

8. Serious misconduct requires the ‘clearest of cases’; and

9. A complaint of ‘serious misconduct’ must be of a sufficient magnitude.

467. The third respondent Mr Engelbert has resigned from the strata committee. In those circumstances I do not propose to speculate about whether he should have been removed from the Strata Committee from an earlier point in time.

468. In the section of these reasons titled ‘Duties of Care – Negligence – against strata committee members’ I referred to s260 of the SSMA in context of ascertaining whether a strata committee member could be sued personally for breach of a duty of care. As stated in that section of the reasons, if a strata committee member acted in good faith, the effect of s260 was that he or she could not be subject to any action, claim, liability or demand.

469. In the reasons that followed, I found that the owner had not established that Mr O’Brien did not exercise the caution and diligence to be expected of an honest person of ordinary prudence, or failed to act with reasonable caution and diligence.

470. In connection with Mr Engelbrecht, I found that he failed to act with reasonable caution and diligence in connection with a particular matter, which led to a finding that in the particular instance referred to, he did not act in good faith.

471. In connection with Mr Adamo, I found that he did not act in good faith in connection with the recommendations he made in his email of 24 June 2021.

Mr Adamo

472. I have found that Mr Adamo did not act in good faith in connection with his 24 June 2021 email. In my view a finding that a strata committee member did not act in good faith is sufficient to establish that he has not carried out his functions with due care and diligence, in breach of s37 of the SSMA and as a consequence is in breach of s238(2) of the SSMA. As a result, I will make an order removing Mr Adamo from the strata committee.

Mr O’Brien

473. Counsel for the owner submits that Mr O’Brien who was the chairperson of the strata committee should be removed as a member of that committee for the following reasons:

1. He fundamentally misunderstood the obligations of the OC pursuant to S106 of the SSMA;

2. he appeared concerned primarily about minimising the impact of repairs on the budget of the strata scheme rather than being concerned about the OC's obligations under the SSMA;

3. he failed to read or consider important information placed before him regarding the owners unit and the rectification of the common property balconies;

4. He was the chairman of the strata committee which sought to delay rectifying water ingress and attempted to shift the costs of rectification to the owner; and

5. he was the chairman of the strata committee which unnecessarily delayed rectification works and engaged the unnecessary service of additional consultants.

474. I reject the owners submission that Mr O’Brien fundamentally misunderstood the obligations of the OC pursuant to S106 of the SSMA. No evidence has been cited to sustain the submission. Reference is made to day 3 of the transcript at ‘T21. 9 – 22.20’. The accuracy of the transcript reference is not apparent to me. However there was a discussion at pages 21 and 22 of day 3 of the transcript regarding the obligations of the strata committee. I find that the questions asked of Mr O’Brien in that part of his cross examination and his answers to them did not establish that Mr O’Brien had a primary concern about minimising the impact of repairs on the budget of the strata scheme.

475. Reference is also made to page 27 of the transcript on day 3 when he was being asked about Mr Hecker’s 7 May 2021 email referred to in these reasons. There is a long passage of the transcript involved which it is necessary to set out. The passage is commencing at T27 and omitting unnecessary parts:

‘MR AFSHAR: You were told on the 7th of May by the Owners Corporation 10 Building Manager, that that particular balcony was also a responsibility of the Owners Corporation?

MR O'BRIEN: Yes.

MR AFSHAR: Is that right?

MR O'BRIEN: Yes.

MR AFSHAR: And you accepted that advice?

MR O'BRIEN: The OC was responsible for rectifying it, who was going to pay for it was another issue. It was a common area. It had to be repaired.

MR AFSHAR: Sorry, what you are saying is that, let me just get this right, that it could be a common area. It could be that the Owners Corporation is responsible, but then you think that the Owners Corporation should not be responsible for paying for it. Is that what you're saying?

MR O'BRIEN: If there is some contractual arrangement, some (51:16)

MR AFSHAR: Sorry, go on.

SENIOR MEMBER: Mr O'Brien, ………….You said, you accepted that the OC was responsible, but there was an issue about who would pay for this work. Is that correct?

MR O'BRIEN: Liability? Yes.

MR AFSHAR: You understood, you thought that there was a distinction between the Owners Corporation being responsible to carry out works and who should pay for it?

MR O'BRIEN: Correct.

MR AFSHAR: Did you come to this view yourself?

MR O'BRIEN: If – yes I was – I made that - I came to that view based on the fact that there was a bylaw which delegated to the owner of the lot, the liability for work that was not done properly.

MR AFSHAR: You read that bylaw, and you said that on your own, you came to that view yourself, that because of that bylaw then, and notwithstanding what Mr Hecker was saying about the membrane not being sound, that the owner should pay for the rectification works. Is that what you came up with?

MR O'BRIEN: No. There are a number of propositions there that I don't agree with.

MR AFSHAR: Can you tell us which proposition you don't agree?

MR O'BRIEN: I didn't read the bylaw. I was told that was the situation.

MR AFSHAR: You didn't even read the bylaw to come to this view? Is that what you're saying to the Tribunal?

MR O'BRIEN: (53:09) I did not read the bylaw.

SENIOR MEMBER: You said that you were told, correct?

MR O'BRIEN: I was told, yes.

SENIOR MEMBER: Thank you.

MR AFSHAR: Who told you that? Who told you about the bylaw?

MR O'BRIEN: I can't recall now.

MR AFSHAR: And what did they tell you about the bylaw?

MR O'BRIEN: The bylaw passed the responsibility for that work to the lot owner.

MR AFSHAR: For what work?

MR O'BRIEN: Sorry? For the work that had been undertaken by the previous owner of 2202, for any defect effects in that work, then it passed to the following owner to pay for the rectification.

MR AFSHAR: When did they tell you about this bylaw, whoever it was?

MR O'BRIEN: When the issue arose around this time, I suspect.

MR AFSHAR: Right. Around this time, someone told you that there was a bylaw that (54:03) responsibility for those works to the owner. Is that what-----

MR O'BRIEN: Correct.

MR AFSHAR: Yes. Now, but then you got this email?

MR O'BRIEN: Yes.

MR AFSHAR: And this email said that there were a few piercings of the membrane below by the posts.

MR O’BRIEN: Yep. Yep.

MR AFSHAR: But Mr Hecker was saying that the membrane is not sound in any event.

MR O’BRIEN: Correct.

MR AFSHAR: Yes. You understood that the Owners Corporation had to replace that membrane and the tiles in any event, regardless of whether or not it had been pierced by the posts. That was your understanding after you read this email, wasn't it?

MR O'BRIEN: Correct.

MR AFSHAR: And you understood that when the Owners Corporation is responsible to do that work, it’s responsible for paying for it?

MR O'BRIEN: No, not necessarily.

MR AFSHAR: Did you ever talk to anyone or seek any advice about this interesting point of view that you had?

MR O'BRIEN: Probably this was a topic of conversation at the time, and it was probably with the strata manager and building manager.

MR AFSHAR: Was the strata manager of the same view? Is that what he thought too?

MR O'BRIEN: I can't recall now.

MR AFSHAR: What about Mr Hecker, was he of the same view?

MR O'BRIEN: Can't recall.

MR AFSHAR: Did you talk to Mr Adamo about it? Was he of the same view? Sorry. Did you just talk to Mr Adamo about it?

MR O'BRIEN: I think Mr Adamo had a view.

MR AFSHAR: What was his view

MR O'BRIEN: I cannot recall now.

MR AFSHAR: How do you know if he had a view, if you can't recall what it was?

MR O'BRIEN: I remember him - maybe he didn't. I think he had a view on the bylaw. 5

MR AFSHAR: Was it the same as yours?

MR O'BRIEN: Well, my view was based on, I don't know if I actually formed a view on that. I was very keen as we all were to get the work done.

MR AFSHAR: If you didn't form a view about it at all, and if you didn't have a view that the bylaw somehow (56:13 sheeted) responsibility to the owner, then when you were told by Mr Hecker that the Owners Corporation was responsible, then you knew very well that Owners Corporation had to pay for it. Isn't that right?

MR O'BRIEN: No, I answered that question. I didn't know that. I knew the work had to be done.

MR AFSHAR: Right. But you knew someone had to pay for it?

MR O'BRIEN: Correct.

MR AFSHAR: Yes. And it was common property? Yes?

MR O'BRIEN: Correct.

MR AFSHAR: And the Owners Corporation's responsible for the common property? Yes.

MR O'BRIEN: Look, we've been down this road.

MR AFSHAR: No. Well, I'm asking you, did you understand that Owners Corporation was responsible for the common property?

MR O'BRIEN: In ordinary circumstances, yes.

MR AFSHAR: What was extraordinary about this, in light of the email that Mr Hecker sent you?

MR O'BRIEN: That the membrane had been damaged by a prior renovation. That changed the liability for the cost of the work.

MR AFSHAR: But you said a moment ago that you didn't hold a view, didn't hold that view.

MR O'BRIEN: I'm sorry.

SENIOR MEMBER: You said a moment ago that you didn't have a view.

MR AFSHAR: You didn't hold that view.’

476. The relevant points which arise out of the above passages are that Mr O’Brien stated in connection with Mr Hecker’s email and the work that it referred to:

‘The OC was responsible for rectifying it, who was going to pay for it was another issue.’

477. He also stated that in apparent confirmation of what was stated above that he:

‘understood that there was a distinction between the Owners Corporation being responsible to carry out works and who should pay for it?’

478. Mr O’Brien stated that he came to this view based on a by-law that he had been told about and which he did not read.

479. Mr O’Brien stated that after he had read Mr Hecker’s email which stated that the membrane was not sound in any event, he understood the following:

‘MR AFSHAR: Yes. You understood that the Owners Corporation had to replace that membrane and the tiles in any event, regardless of whether or not it had been pierced by the posts. That was your understanding after you read this email, wasn't it?

MR O'BRIEN: Correct.’

480. Even on that understanding, Mr O’Brien did not understand when the OC was responsible to do that work, it was responsible for paying for it. Mr O’Brien’s evidence about how he came to this point of view was unclear, characterized by a lack of recollection and not particularly satisfactory. Perhaps the best explanation was that Mr O’Brien when he was pressed, stated that he held that view because the membrane had been damaged by a prior renovation. And that changed the liability for the cost of the work. This explanation is I find the most accurate indication of the state of Mr O’Brien’s thinking. This understanding indicates a misunderstanding of the content of Mr Hecker’s email or an unwillingness to face up to the consequences of what he was being told.

481. Counsel for the owners also submits that Mr O’Brien appeared to fail to read or consider important information placed before him regarding the unit or the rectification of the balconies. Page 47 of day 3 of the transcript is relied upon. The extract is as follows:

‘MR AFSHAR: Are you in the habit of not reading any emails that are not addressed directly to you? Is that what you are telling this Tribunal?

MR O'BRIEN: Well, I'd scan them, but if they're not addressed me, I wouldn't look at them in detail.

MR AFSHAR: Can I suggest to you, you take a very relaxed attitude as chairman of this particular strata committee to the communications you receive about a lot owner's unit. Do you agree with that? It's very relaxed, isn't it?

MR O'BRIEN: No, I disagree.

MR AFSHAR: You scan things when they're not immediately addressed to you.

MR O'BRIEN: Correct.

MR AFSHAR: You don't read reports, you simply ask about them.

MR O'BRIEN: Correct.’

482. I consider that this submission has been made out by reference to Mr O’Brien’s evidence. Whether or not this rises high enough to justify the removal of Mr O’Brien from the strata committee remains to be considered.

483. With the benefit of hindsight it is relatively easy for criticisms to be made of a strata committee member and to say whether at a particular point in time, a strata committee was proceeding in the correct direction, or was proceeding with sufficient speed, or from an overall perspective was operating in an impressive manner. However these are not the criteria which govern the question of whether the removal of strata committee member is warranted. The matters which the owner has established in connection with Mr O’Brien while serious do not in my view rise high enough to establish that he has not acted with due care and diligence or engaged in serious misconduct. I find that the owner has not established that the criticisms made of Mr O’Brien are of sufficient magnitude to remove him from the strata committee.

Mr Gagen

484. At all relevant times Mr Gagen was a member of the strata committee. He did not file evidence in the proceedings. The matters alleged against Mr Gagen are of a high level of generality. In effect it is said that whatever the strata committee did that was wrong or capable of criticism, Mr Gagen has responsibility. I reject that general approach. It is also said that because Mr Gagen supported Mr Adamo’s approach which is in exhibit C and referred to above, he should be removed from the strata committee. I also reject that submission. Support of Mr Adamo’s position does not, in my view, amount to a failure by Mr Gagen to discharge his function as a strata committee member with due care and diligence or that he engaged in serious misconduct.

485. It is also asserted that Mr Gagen trespassed onto the owner’s unit which warrants his removal from the strata committee. The owner states that she gave no permission for him to inspect her unit. I accept that to be the case. The principles referred to at [467(3)] establish that a one off event is not sufficient to justify an order removing Mr Gagen from the strata committee.

486. The owner has not persuaded me that Mr Gagen should be removed from the strata committee.

487. The owner has also sought an order restraining the. Second to fifth respondents from acting in the position of an office holder or as a strata committee member of the OC for a period of not less than five years from the date of making the order. No reference is made to the provisions of the SSMA which would entitle me to make such an order. While s229 of the SSMA may be appropriate for such an order, there are no submissions on behalf of the owner which explain why such an order should be made. An order for the period of time referred to would amount to a punishment of Mr Adamo which I do not consider to be warranted. However I do consider it appropriate to make such an order for 1 year.

Disposition of the proceedings

488. The owner has been successful in recovering the following damages as claimed. Refer [120]:

Costs of internal rectification works -	$22,861.88
Temporary accommodation costs -	$283,266.55;
Loss of amenity damages –	$10,000.00; and
Aggravated damages –	Nil.
Total	$316,128.43

489. The owner has also been successful in obtaining an order that Mr Adamo should be removed from the strata committee and restrained from acting in the position of an office holder of the OC or as a strata committee member of the OC for a period of not less than one year from the date of making the orders in these proceedings.

490. The owner has been successful in her claim for damages against the OC in the sum of $316,128.42. I Will make an order for that amount in her favour.

491. The owner has failed in her case to establish that a duty of care is owed by the sixth and seventh respondents. I will make orders dismissing her case against those parties.

492. As regards the second to fifth respondents, the orders that I will make are that the owner’s case in negligence against them is dismissed and the owners case against the fourth and fifth respondents for their removal from the strata committee is dismissed.

493. As regards the owner’s case against the third respondent for removal from the strata committee, there will be no order made on the basis that the third respondent has stated that he will not seek election to the strata committee.

Costs

494. In the event that a party is minded to make an application for costs, such application must be lodged in the Tribunal and served on/given to the costs respondent(s) within 14 days of the date of the orders in these proceedings either attaching or referring to the documents relied upon in support of the application.

495. The costs respondent(s) will have 14 days after the date it, she or he receives the application to lodge in the Tribunal and serve on/give to the costs applicant her, his or its submissions, if any, in response to the costs application, such submissions either attaching or referring to the documents relied upon.

496. The parties must state in their submissions whether or not they consent to the costs application being determined on the basis of the parties written submissions and attached documents, if any, without the need for a hearing.

497. Subject to the parties’ submissions, the Tribunal will determine any costs application made on the basis of the submissions and papers filed in the Tribunal.   

Schedule 1

1. the spigot adaptor(s) outlets to the drains require a 50mm pipe spigot adaptor welded to the bottom of the linear drain, so no lipping exists and no water escapes to the tile bed screed;

2. the existing drainage lines should be pressure cleaned at least at the completion of the works;

3. As regards ingress of water to bedroom 3 (guest bedroom) west elevation, the source of the penetration has not been determined and further investigation is required to both the window and the cavity external wall in the courtyard;

4. In accordance with agreement of the building consultants that the balcony balustrades to the East remain incomplete by reason of a failure to carry out make good completion works, supply and install a "U" channel prefabricated powder coat finish to match existing and install from the balcony side to cover all previous holes; and

5. Provide a continuous capping to the top of the blade dividing wall between apartment balconies on level 22 west side.

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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: 09 May 2025