Tezel v The Owners - Strata Plan No. 74232

Case •

[2021] NSWCATCD 132

•

08 November 2021

No judgment structure available for this case.

Civil and Administrative Tribunal


New South Wales

Medium Neutral Citation: Tezel v The Owners – Strata Plan No. 74232 [2021] NSWCATCD 132
Hearing dates: 02 November 2021
Date of orders: 08 November 2021
Decision date: 08 November 2021
Jurisdiction:Consumer and Commercial Division
Before: Graham Ellis SC, Senior Member
Decision:

1.The applicant must allow access to the respondent, and any representatives of the respondent, for the purpose of enabling work to be carried out in accordance with Schedule 1 provided 48 hours’ notice (or such less period agreed between the parties in writing) is given.

2. On or before 28 February 2022 (or such later date agreed between the parties in writing) the respondent is to complete the work set out in Schedule 1 in a proper and workmanlike manner using good and suitable new materials, being work on the applicant’s lot and the associated common property.

3. The application is otherwise dismissed.

4. Any application for costs is to be made by written submissions which are to be filed and served by 22 November 2021.

5. Any submissions in response to any such application are to be filed and served by 06 December 2021.

6. Any written submissions filed and served in relation to costs are to indicate whether the party agrees that costs should be determined on the papers, without the need for a hearing.

Catchwords:

STATUTORY INTERPRETATION – Meaning of limitation period in s 106(6) of the Strata Schemes Management Act 2015

STRATA TITLE – Assessment of loss under s 106(5) of the Strata Schemes Management Act 2015

Legislation Cited:

Civil and Administrative Tribunal Act 2013 (NSW)

Civil and Administrative Tribunal Rules 2014 (NSW)

Interpretation Act 1987 (NSW)

Strata Schemes Management Act 2015 (NSW)

Cases Cited:

Bonita v Shen [2016] NSWCATAP 159

Browne v Dunn (1893) 6 R 67

Dimitropoulos v Capital Constructions Pty Ltd [2019] NSWCATAP 164

Guo v The Owners Strata Plan No 70067 [2018] NSWCATAP 260

Hawkins v Clayton (1986) 5 NSWLR 109

Latoudis v Casey [1990] 170 CLR 534

News v Cotes [2019] NSWCATAP 186

Oshlak v Richmond River Council [1998] HCA 11

Plaintiff M70/2011 v Minister of Immigration and Citizenship [2011] HCA 32

The Owners Strata Plan No 30621 v Shum [2018] NSWCATAP 15

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

The Owners - Strata Plan No 80412 v Vickery [2021] NSWCATAP 98

The Owners - Strata Plan No. 80412 v Vickery (No 2) [2019] NSWCATAP 97

The Owners - Strata Plan No 94623 v Taouk [2019] NSWSC 857

Thompson v Chapman [2016] NSWCATAP 6

Tom v Jenkins [2018] NSWCATCD 24

Vickery v The Owners - Strata Plan No 80412 [2020] NSWCA 284

Texts Cited:

Nil

Category:Principal judgment
Parties: Feride Tezel (Applicant)
The Owners – Strata Plan No. 74232 (Respondent)
Representation:

Solicitors:
Sachs Gerace (Applicant)
Chambers Russell (Respondent)

Counsel:
Mr J Knackstredt (Applicant)
Mr T Davie (Respondent)
File Number(s): SC 20/46782
Publication restriction: Nil

REASONS FOR DECISION

Outline

  1. The owner of a lot in strata titled premises in Bondi Beach (the applicant) sought a variety of orders against the owners corporation (the respondent) as a result of water penetrating her lot. Since many of the matters raised in the application have been agreed between the parties, the Tribunal was only required to consider the claim for damages for loss of rent, based on s 106(5) of the Strata Schemes Management Act 2015 (SSMA), and a limited number of other matters.

  2. The primary issues which requiring determination are what impact, if any, does the limitation imposed by s 106(6) of the SSMA have on the applicant’s claim for loss of rent and what amount, if any, is recoverable. Questions relating to levies and costs also required consideration. After considering the evidence and submissions, both written and oral, the Tribunal’s decision may be summarised as follows:

  1. By reason of the Tribunal’s interpretation of s 106(6) of the SSMA, for which the respondent contended, the applicant is unable to recover damages.

  2. Under the alternative interpretation of that statutory provision, for which the applicant contended, the applicant would have been entitled to recover damages of $447,200.

  3. The applicant is not entitled to be excluded from any levy imposed to cover the cost of investigation and/or repairs.

  4. The questions of what order should be made in relation to costs should be the subject of written submissions.

Hearing

  1. At the hearing, which was conducted over the telephone after difficulties arose using the audio-visual (AVL) facilities, Mr Knackstredt, instructed by Mr Sachs, appeared for the applicant while Mr Davie, instructed by Ms Baker, represented the respondent. A three-volume joint tender bundle became Exhibit A and an updating valuation report from Mr Casemore for the applicant was admitted, without objection, as Exhibit B.

  2. Documents lodged prior to the hearing that were marked for identification were the applicant’s Statement of Facts and Issues in Contention together with a Chronology (MFI 1) and the respondent’s Statement of Agreed Facts and Issues in Contention plus an Agreed Chronology (MFI 2). After the hearing, in response to a direction of the Tribunal, the applicant and respondent each lodged a document which set out the orders for which they contended (MFI 3 and MFI 4 respectively).

  3. The only lay evidence was that of the applicant (A32, ie from page 32 in Exhibit A), who was not required to be available for cross-examination. Expert reports were provided by Mr Seymour in relation to mould (A614) and Mr Kennedy in relation to building and waterproofing (A712), neither of whom was cross-examined by the respondent. There were also expert reports from valuers: Mr Casemore for the applicant (A63 and B1) and Mr Sklavos for the respondent (A752). They also provided a Joint Report (A791) and were both cross-examined.

  4. By reason of the written submissions already provided (A795, A850 and A875), there were brief oral submissions from counsel after the conclusion of the oral evidence, supplemented by an indication of what orders each party suggested the Tribunal should make (MFI 3 and MFI 4).

Jurisdiction

  1. As these proceedings relate to premises at Bondi Beach which are the subject of a strata scheme that was registered on 31 March 2005, the SSMA applies, and the Tribunal has jurisdiction to hear and determine the proceedings.

Statute law

  1. The obligation to repair and maintain common property is set out s 106 of the SSMA which is set out in full below:

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

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

(3)   This section does not apply to a particular item of property if the owners corporation determines by special resolution that-

it is inappropriate to maintain, renew, replace or repair the property, and

its decision will not affect the safety of any building, structure or common property in the strata scheme or detract from the appearance of any property in the strata scheme.

(4)   If an owners corporation has taken action against an owner or other person in respect of damage to the common property, it may defer compliance with subsection (1) or (2) in relation to the damage to the property until the completion of the action if the failure to comply will not affect the safety of any building, structure or common property in the strata scheme.

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

(6)   An owner may not bring an action under this section for breach of a statutory duty more than 2 years after the owner first becomes aware of the loss.

(7)   This section is subject to the provisions of any common property memorandum adopted by the by-laws for the strata scheme under this Division, any common property rights by-law or any by-law made under section 108.

(8)   This section does not affect any duty or right of the owners corporation under any other law.

Consideration

  1. The applicant’s lot is one of 18 in a six-level building which has a Campbell Parade frontage with vehicular access being available from Ramsgate Avenue on the opposite side of the building. Both the ground floor and the first floor contain two apartments and nine car parking spaces. The second, third and fourth floors each contain four apartments and there are two apartments on the fifth floor.

  2. The Campbell Parade frontage provides views over Bondi Beach and the subject building is towards the northern end of that beach. Located on the third floor, the applicant’s apartment, which is Lot 10, faces Campbell Street with views to the south and east. Lot 9 is an adjoining apartment which also faces Campbell Street, with views to the south and west. Lot 13 is the apartment located above Lot 9.

  3. By reference to the unchallenged evidence of the applicant, and having regard to the chronologies provided by the parties (in MFI 1 and MFI 2), the events relevant to these proceedings have been summarised as follows, using the abbreviations A and R for the applicant and the respondent:

2012 A first noticed water penetrating her lot when it rained heavily

2013 R became aware of water penetration and damage to A’s lot

Jan 14 A obtained a building report which was provided to R

2014 A ceased residing in her lot full-time

2016 A ceased residing in her lot and decided to rent it

03 Jun 19 R obtained report which indicated required repairs

20 Apr 20 R obtained quote for repairs from XL Build Pty Ltd (XLB)

05 May 20 R obtained a revised quote for repair work

15 May 20 A’s solicitor wrote to R regarding damage and repairs

Jul 20 R engaged XLB for Part A but not Part B of the repair work (Part A related to common property, Part B to lot property)

12 Aug 20 A engaged Pure Protect Pty Ltd to investigate mould in Lot 10

04 Aug 20 Unsuccessful attempt at resolution by mediation

Sep 20 R engaged XLB to repair windows in Lot 10

Oct-Dec 20   Repair work carried out on common property adjacent to Lot 10   06 Nov 20   These proceedings were commenced by A

09 Feb 21   Points of claim, which included a claim for loss of rent, were filed

  1. As that chronology does not indicate the nature and extent of the water penetration and its consequences, paragraph 9 of the applicant’s statement (A32) is set out in full below:

Between 2013 and 2020 every time it rained heavily, I observed the following things in the meal room and three bedrooms of my unit:

a.   Water would flow down and out of the inside of the walls underneath the windows.

b.   Water would well up on the window sills.

c.   The walls underneath and next to the windows were saturated to the touch.

d.   The carpet would become saturated throughout the three bedrooms. It remained saturated for weeks at a time.

e.   The carpet in the three bedrooms became discoloured.

f.   The carpet in the three bedrooms began to stink.

g.   The bedrooms smelled musty and unhealthy.

h.   The air in the bedrooms constantly felt damp.

i.   After I removed the carpet water would pool on the bare concrete floor of the three bedrooms up to 2 cm high and would remain there until I mopped it up.

j.   Anything porous touching the carpet, or concrete, like the wood beds, chairs and the curtains would become soaked. The wood furniture in the rooms began to swell.

l.   The skirting boards around the three bedrooms swelled and warped and developed a green mould.   

m.   In or about 2015, after a really big storm when a lot of water came into the house, the electrical switches and outlets in the bedrooms stopped working. The electrical outlets and switches in the living room, on the side of my unit that the bedrooms are on, also stopped working.

n.   At the same time, in 2015, the electric blinds in the living room stopped working. I had purchased the electric blinds and had them installed one or two years after moving into the unit.

o.   On one occasion, the water came all the way into the living room and the rug in the living room became soaking wet and so heavy that I could not move it.

p.   In or about 2013, the air conditioning stopped working. It has not worked since.

q.   Green mould developed across several areas of the concrete.

  1. Given the extent of those matters, and the applicant’s statement saying that (1) in 2013 she removed the carpet from the unit and stopped living there because of the water, smell and discomfort, (2) in 2016 she went to live in Roselands “full time” because she could not live with the moisture and mould, (3) she then decided to rent her unit but could not do so because of the moisture and mould, and (4) the absence of any evidence of steps taken to rent the unit, it is understandable that the respondent’s submissions suggested there was no evidentiary basis for a claim for a loss of rent.

  2. However, as the applicant was not cross-examined, that allegation was not put to her. As a result, consistent with the rule in Browne v Dunn (1893) 6 R 67, that matter was not pursued in closing submissions and does not require further consideration other than to note that the applicant’s own evidence suggests she first became aware of the rental loss in 2016.

  3. The situation, in relation to the applicant’s lot, in December 2020, shortly after these proceedings were commenced, was set out in paragraph 28 of the applicant’s statement (A34), which said:

In mid-December 2020, I went to my unit, and looked around and took photos. [copies provided]. While there I saw:

a.   Damage to bottom of the plasterboard walls in three bedrooms.

b.   There were various scuff marks and dents in the plasterboard walls in the bedrooms.

c.   Parts of the skirting boards in all three bedrooms had been removed and not replaced.

d.   Gaps between the walls and the floor under the windows of about 1 cm     in all three bedrooms.

e.   The curtain rails above the windows in the bedrooms had been removed and left on the floor.

f.   The bottom of the wood door frame to one of the bedrooms had been ripped open and lots of rotten wood had been pulled away.

g.   The windows in the three bedrooms and meal room would not open beyond 12 cm. There was no way for me to open the windows more.

h.   The air-conditioning still did not work.

i.   Damage to the bottom of the walls in all three bedrooms.

​​j.   The cupboards remained damaged.

k.   The electricals still did not work.

l.   There was dust and debris al around the unit and on all my personal property stored in the unit.

m.   The windows are now smaller than they were. The wall from the floor to the window is now higher which reduces the view from the bedrooms.

Limitation period

  1. Written submissions lodged for the applicant (A869 at [72]) referred to the position in relation to a cause of action based on a breach of contract, namely that each breach constitutes a fresh cause of action. The Appeal Panel decision in The Owners – Strata Plan No 80412 v Vickery [2021] NSWCATAP 98 (Vickery) at [36] was cited in support of the contention that the duty imposed by s 106(1) is a continuing duty which meant there were continuing breaches of that duty.

  2. In oral submissions for the applicant, it was contended that the Tribunal should follow what was said in The Owners Strata Plan No 30621 v Shum [2018] NSWCATAP 15 (Shum) and that what was said against Shum in Vickery was obiter dicta. It was suggested that there was a distinction between physical damage and financial loss, such as a falling roof as opposed to a loss of rent, which is a distinction between a single event and a continuing loss.

  3. Reference was also made to the recent (22 September 2021) Appeal Panel decision in The Owners - Strata Plan No. 36613 v Doherty [2021] NSWCATAP 285 (Doherty) at [93-94] where it was said that the duty to repair common property was continuous until repair occurred and was not to be regarded as a breach of duty on a single occasion.

  4. By way of summary, the applicant’s case was that the decisions in Shum and Doherty should be followed with the result contended result that the applicant was entitled to recover her loss of rent for a period of two years prior to the application being filed, ie from 06 November 2018 to 06 November 2020, which is a period of 104 weeks.

  5. In the written submissions of the respondent (from A799 at [19]) relied on what was said in Vickery which was said to be a factually similar case. As Mr Vickery commenced proceedings in April 2018, less than 18 months after the SSMA came into force on 30 November 2016, the two-year limitation period did not apply but was considered since the respondent had contended that Mr Vickery was outside that limitation period as he first became aware of the loss in 2013.

  6. The respondent relied on the analysis set out on 21 April 2021 in Vickery at [50-63] which concluded with the words: “… our non-binding observation is that a lot owner is not entitled to bring proceedings under s 106(5) on each day the statutory duty is breached and the owner incurs loss”.

  7. Reference was made to the words “first becomes aware of the loss” in s 106(6) of the SSMA in support of the outcome for which the respondent contended and that point was emphasised in oral submissions. The Tribunal was also reminded that the respondent relied on what was said by Glass JA in Hawkins v Clayton (1986) 5 NSWLR 109 at [124-125], being the paragraphs in that judgement referred to in Vickery at [59-60].

  8. The Tribunal considers the applicant’s claim for damages falls outside the limitation period, noting first that the consent work order reflects the fact that it is not in dispute that there was a breach by the respondent of the duty imposed by s 106(1) of the SSMA.

  9. The reason for the Tribunal’s decision is that, to the extent that Vickery and Shum conflict, the Tribunal considers preference should be accorded to Vickery which was a three-member panel with two judicial members, headed by the President, even though what was said at in Vickery at [63] was said to be a “non-binding observation”. As there is no utility in repeating what was said in Vickery, it is only necessary to refer to some additional matters.

  10. First, the Tribunal notes that the limitation set out in s 106(6) of the SSMA applies to s 106(5) and not s 106(1). The structure of s 106 is that s 106(1) imposes a duty on the owners corporation, s 106(5) provides a lot owner with a right of recovery for “any reasonably foreseeable loss” and s 106(6) requires the lot owner to commence proceedings not more than two years “after the owner first becomes aware of the loss”.

  11. As a result, the limitation period attaches to the loss and not the breach although it must be accepted that a loss can only be claimed under s 106(5) in respect of a breach of s 106(1). It is also observed that there is a difference in subject matter since s 106(1) is referring to the duty in relation to common property owned by an order corporation while s106(5) refers to reasonably foreseeable loss suffered by a lot owner.

  12. It is understandable that the limitation period for a lot owner would be expressed in terms of the loss rather than the breach since the breach is the cause and the loss is the effect. What might be termed ‘the limitation clock’ only starts to run under s 106(6) when the lot owner first becomes aware of the loss (ie the effect) rather than the more stringent alternative of the breach (ie the cause) and that is significant difference in the case of a latent cause, being a cause which a lot owner may not be expected to be able to discern.

  13. Secondly, expressed in the context of this case, the construction of s 106(6) for which the applicant contends requires a view that the applicant first became aware of lost rent on 06 November 2018, 07 November 2018 … 05 November 2020 and that appears to be an artificial construction. As such, that interpretation does not gives the words “first becomes aware of the loss” their ordinary and everyday meaning which is the fundamental approach to statutory interpretation.

  1. In other words, considered in isolation, if it be asked when the applicant first became aware of the rent loss, the answer is 2016, when she ceased to reside in her lot, and not 06 November 2018 which is, in fact, doing no more than working backwards from when the proceedings were commenced. The construction for which the applicants contend could have been achieved by s 106(6) simply stating that a lot owner may not recover loss for a period of more than two years prior to commencing proceedings.

  2. Thirdly, as was noted in the respondent’s submissions, if the applicant’s view of the words “first becomes aware of the loss” is correct then those words have no work to do, which would be contrary to the principle expressed in Plaintiff M70/2011 v Minister of Immigration and Citizenship [2011] HCA 32 at [97]. For example, a lot owner who first becomes aware of loss in 2017 but does not commence proceedings until 2020 can still recover loss for the two year period prior to the commencement of the proceedings. It is difficult to see how the limitation suggested by s 106(6) could ever apply.

  3. Fourthly, as a result, given the clear intent of s 106(6) to impose a two-year limitation period, when faced with the alternative constructions for which the applicant and the respondent contend in this case the interpretation for which the respondent contends is to be preferred as it promotes the purpose or object of the SSMA: s 33 Interpretation Act 1987.

  4. Simply stated, under both interpretations, the ‘limitation clock’ starts when the lot owner first becomes aware of the loss but Shum suggests that clock restarts with every new part of the loss while Vickery suggests it does not reset if a continuing breach causes a continuation of the same form of loss.

  5. The Tribunal proceeds to consider the question of damages so there is a first instance finding in case a different view is taken of s 106(6) of the SSMA.

Damages

  1. The joint report of the valuers records their agreement that “The subject unit is in the prestige category of Bondi Beach home unit rentals” and that the most comparable properties are other units in the same building. While there was information available in relation to units 1 and 2, they were ground floor units. For that reason, the focus was on unit 9, which adjoins the applicant’s unit, and unit 13, which is immediately above unit 9.

  2. It is convenient set out the views of the experts as to the weekly rentals in the following table:

Mr Casemore

(Applicant)

Mr Sklavos

(Respondent)

06 Nov 18 – 05 Nov 19

$3,300

$2,700 - $3,200

06 Nov 19 – 05 Nov 20

$3,200

$2,400 - $2,800

  1. A problem in relation to assessing rental levels is that advertised amounts are more readily available than leased amounts but are less reliable as they only reveal the rent sought, not the rent achieved. An added difficulty is the adverse impact of the COVID-19 pandemic on the levels of achievable rent.

  2. The information available to the valuers may be summarised as follows, noting it was conceded that unit 13 was advertised too high at $4,000:

Date

Unit

Weekly rent

Advertised

or leased

27 Jun 19

9

$3,500

Advertised

14 Jul 20

9

$2,600

Leased

Dec 18

13

$3,500

Advertised

25 Jun 19

13

$4,000

Advertised

15 Aug 19

13

$3,000

Advertised

May 20

13

$3,150

Leased

  1. Understandably, cross-examination ranged over the features of units 9 (also on the third floor) and 13 (on the fourth floor) compared to unit 10, being the applicant’s unit. The relevant factors may be summarised as follows:

  1. Location: unit 9 is on the same floor, unit 13 is on the floor above.

  2. Views: unit 10 has superior views to unit 9, has a better aspect than unit 13 and has views from its bedrooms but unit 13 has larger balconies).

  3. Overall area: unit 9 (233 m2) is larger than unit 10 (205 m2) and unit 13 is larger still (252 m2).

  4. Internal area: unit 10 (187 m2) is larger than unit 9 (176 m2) and unit 13 (173 m2).

  5. Balcony area: unit 13 has a ‘wrap around balcony’, unlike units 9 and 10.

  1. Having considered the individual reports of the valuers, their joint report, the cross-examination and submissions, the Tribunal determines that the amounts to be used for calculating the loss of rental should be within the ranges suggested by Mr Sklavos for the reasons which follow.

  2. The figures suggested by Mr Casemore appear high: $3,300 for the first year when the advertised priced for a superior unit was $3,500, and a reduction of only $100 to $3,200 for the second year presents as being an insufficient allowance for the downturn that occurred.

  3. In relation to the period from 06 November 2018 to 05 November 2019, there are no leased amounts, only advertised amounts. An advertised amount of $3,500 for the superior unit, unit 13, close to the commencement of the period favours a finding of $3,000 (within the $2,700 to $3,200 range suggested by Mr Sklavos) allowing for a discount from $3,500 due to two factors: unit 13 being superior (Mr Casemore suggesting by $200-$300 per week) and the figure of $3,500 being an advertised amount.

  4. In relation to the period from 06 November 2019 to 05 November 2020, the figure of $2,800 (at the upper end of the $2,400 to $2,800 ranged suggested by Mr Sklavos) not only sits comfortably between achieved rents during that period of $2,600 for an inferior unit (unit 9) and $3,150 for a superior unit (unit 13) but also makes an appropriate allowance for the downturn in rents by comparison with the amount of $3,000 for the prior year.

  5. The orders sought by the applicant (MFI 3) included a claim for a third year, being the period from 06 November 2020, when these proceedings were commenced, to the date of the hearing which was, near enough, a further 52 weeks. There is no evidence to suggest there should be any change to the rental figure found to be applicable for the second year, namely $2,800.

  6. Adding 52 weeks at $3,000 ($156,000) for the period from 06 November 2018, 52 weeks at $2,800 for the period from 06 November 2019 ($145,600) and the same amount for 52 weeks from 06 November 2020 ($145,600) gives $447,200 as the amount the Tribunal would have awarded if the limitation period was held to not prevent the applicant’s recovery of rent loss.

  7. The further claim for an order for rent loss for the period from the hearing until the completion of the rectification work does not need to be considered.

Remaining issues

  1. In the Points of Claim, there were 19 orders sought, being numbered 2 to 20. The paragraphs numbered 2 to 12 did not require consideration due to the respondent’s consent. Paragraphs 13 to 15 related to the claim for rent. The remaining paragraphs sought the following orders:

16.   The Respondent pay the Applicant’s costs of these proceedings.

17.   The Respondent must not levy the Applicant for any of the Respondent’s costs of these proceedings.

18.   The Respondent must not levy the Applicant for any of the Respondent’s costs of investigation and repair works: referred to in the preceding Orders; or to the Applicant’s unit or adjacent common property due to leaks.

19.   The respondent must not levy the Applicant for any part of the costs of complying with, or payments referred to in, the preceding 18 Orders.

20.   If the Respondent has already levied the Applicant for any of the amounts referred to in the four proceeding orders, then the Respondent is to adjust its accounts and refund the Applicant for those levies within 28 days.

  1. It is convenient to first deal with paragraph 16 and then consider the remaining paragraphs together.

Costs

  1. As to costs, being the order sought in paragraph 16, the usual starting point in Tribunal proceedings is that established by s 60 of the Civil and Administrative Tribunal Act 2013 (CATA), namely that each party pays their own costs unless there are special circumstances warranting an award of costs.

  2. However, by reason of s 35 of the CATA, s 60 yields to rule 38 of the Civil and Administrative Tribunal Rules 2014 with the result that, in proceedings in the Consumer and Commercial Division of the Tribunal where the amount claimed or if dispute exceeds $30,000, it is not necessary to show special circumstances.

  3. When rule 38 applies there is a general discretion to award costs and it is well established, by decisions such as Thompson v Chapman [2016] NSWCATAP 6, Bonita v Shen [2016] NSWCATAP 159 and News v Cotes [2019] NSWCATAP 186 that: (1) the starting point is that the usual order for costs should be in favour of the successful party, (2) the award is to compensate the successful party for the costs incurred in the proceedings, not to penalise the unsuccessful party, and (3) departure from the usual order is permissible if the circumstances favour that course of action.

  4. Simply stated, when Rule 38 applies, the usual rule in relation to costs is that costs follow the event unless there is some disentitling behaviour by the successful party: Latoudis v Casey [1990] 170 CLR 534, Oshlak v Richmond River Council [1998] HCA 11 (Oshlack). As was observed in Tom v Jenkins [2018] NSWCATCD 24 at [12], a successful party has a reasonable expectation of being awarded costs.

  5. As both parties have had a measure of success, an opportunity should now be made for written submissions to be filed and served on the question of costs.

  6. In the event it becomes necessary to take into consideration when the respondent first provided consent to some of the orders sought by the applicant, in the absence of submissions to the contrary, the Tribunal proposes to use 15 June 2021 as that is the date when it appears that consent was first indicated, in the respondent’s written submissions (A795).

Levies

  1. Paragraph 17 sought an order that “The Respondent must not levy the Applicant for any of the Respondent’s costs of these proceedings”.

  2. In the SSMA, s 104 provides as follows:

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

(2)   An owners corporation that is unsuccessful in proceedings brought by or against it for an order by the Tribunal cannot pay any part of its costs and expenses in the proceedings from its administrative fund or capital works fund, but may make a levy for the purpose.

(3)   In this section, a reference to proceedings includes a reference to proceedings on appeal from the Tribunal.

  1. That section was considered in The Owners – Strata Plan No. 80412 v Vickery (No 2) [2019] NSWCATAP 97 at [25-27] where it was noted that:

… s 104 expressly regulates the position of proceedings in the Tribunal.

Further, s 104 operates according to its own terms and does not provide power to the Tribunal to make an order.

Accordingly, there is no power for the Tribunal to make the order sought and we decline to do so.

  1. Based on that decision, the order requested in paragraph 17 is refused. It is noted that the decision in Guo v The Owners - Strata Plan No 70067 [2018] NSWCATAP 260 at [22-26] is to the same effect in that a declaration as to whether a party was successful was refused.

  2. It therefore remains to consider the requests contained in paragraphs 18, 19 and 20 which sought to shield or ‘quarantine’ the applicant from any levy in relation to the work the subject of the consent work order (or the claim for loss of rent).

  3. Despite a direction made on 22 January 2021 for the applicant to file and serve Points of Claim, which required the applicant to set out the factual and legal basis for her claims, the unsigned, undated document that was provided in response to that direction did no more than summarise the applicant’s evidence, express reliance on s 106 and set out the orders sought. As a result, it is only in the applicant’s written submissions (at A872) that the legal basis for in relation to the requests contained in paragraphs 18, 19 and 20 of the Points of Claim is to be found.

  4. Reliance was placed on s 90 of the SSMA and, noting that provision was expressed to apply to a court and not the Tribunal, it was suggested that s 232 could be used to overcome that impediment. Support for that approach was said to be found in was said in Vickery v The Owners – Strata Plan No 80412 [2020] NSWCA 284 by Basten JA at [28-39] and White JA at [184].

  5. The applicant’s case is that it would be unfair for her to be required to contribute to the cost of repairing her apartment. It was suggested that decisions such as The Owners - Strata Plan No 94623 v Taouk [2019] NSWSC 857 at [29-30], Oshlack, and Dimitropoulos v Capital Constructions Pty Ltd [2019] NSWCATAP 164 at [34] provided support for the proposition that fairness was a relevant when considering the application of s 90 of the SSMA. However, it must be observed that each of those decisions related to the cost of proceedings and not the cost of repairs.

  6. In support of paragraph 20, which sought an adjustment in respect of any prior levies, the submissions referred to s 232 and suggested such an order was necessary to achieve a fair and equitable outcome.

  7. The respondent queried the legislative basis for these requested orders and referred to s 83(2) of the SSMA.

  8. As to the imposition of levies, s 83(2) of the SSMA requires (emphasis added):

Contributions levied by an owners corporation must be levied in respect of each lot and are payable (subject to this section and section 82) by the owners in shares proportional to the unit entitlements of their respective lots.

  1. That requirement might be varied by either s 90 or s 104 of the SSMA. Having considered s 104 above, it remains to consider s 90 which is in the following terms:

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

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

(3)   The owners corporation must, for the purpose of paying the money ordered to be paid by it, levy contributions in accordance with the terms of the order and must pay the money out of the contributions paid in accordance with that levy.

(4)   This Division (other than provisions relating to the amount of contributions) applies to and in respect of contributions levied under this section in the same way as it applies to other contributions levied under this Division.

  1. Since section 90 expressly refers to the Court, and since that word is not defined in the SSMA to include the Tribunal, there is no power to make an order based on that section in these proceedings. It could be submitted that references to the Tribunal in sections 82, 85-87 and 89 favour the view that the word “Court” in section 90 should be read as including the Tribunal. If those sections referred to Court or Tribunal then it might be suggested that the use of the word Court was an oversight. However, when five of the nine sections preceding section 90 referred only to the Tribunal and section 90 only refers to the Court, it does not appear that the Tribunal should either rewrite the statute or attribute oversight to the person who drafted that provision.

  2. Support for the view that s 90 is not available in these proceedings may be found in The Owners - Strata Plan No 80412 v Vickery (No 2) [2019] NSWCATAP 97 at [25] where it was said:

There is no basis to conclude that s90 was intended to apply to proceedings in the Tribunal and no reason to construe the reference to ‘the court’ as including the Tribunal.

  1. While it is clear, from s 90(2) of the SSMA, that its operation is not confined to the costs of proceedings but extends to any order for money payable by an owners corporation, the applicant seeks to have s 90 applied not only to a work order but also applied retrospectively to any levies previously imposed. It is not necessary to consider either of those aspects as the Tribunal considers the words of the Appeal Panel quoted in the previous paragraph to be binding.

Consent orders

  1. As neither party directed any attention to a date by which the work the subject of the consent order should be completed, the Tribunal does not have any assistance on that question. But for the demand for people to carry out such work exceeding the supply of people about to do it in a post-lockdown period, and the forthcoming Christmas break, the Tribunal would have allowed a period of three months for that work.

  2. Extending the period to four months suggests a completion date of 28 February 2022 but provision will be made for the parties to agree in writing to a later date, which may become necessary for reasons such as inclement weather. It is also necessary, from an abundance of caution, to add an order for access.

Orders

  1. For the reasons set out above, the following orders are made:

  1. The applicant must allow access to the respondent, and any representatives of the respondent, for the purpose of enabling work to be carried out in accordance with Schedule 1 provided 48 hours’ notice (or such less period agreed between the parties in writing) is given.

  2.  On or before 28 February 2022 (or such later date agreed between the parties in writing) the respondent is to complete the work set out in Schedule 1 in a proper and workmanlike manner using good and suitable new materials, being work on the applicant’s lot and the associated common property.

  3.  The application is otherwise dismissed.

  4. Any application for costs is to be made by written submissions which are to be filed and served by 22 November 2021.

  5. Any submissions in response to any such application are to be filed and served by 06 December 2021.

  6.  Any written submissions filed and served in relation to costs are to indicate whether the party agrees that costs should be determined on the papers, without the need for a hearing.

Schedule 1

  1. Remove the permanent lock preventing the opening of newly installed windows to the three bedrooms and the meal room within Lot 10.

  2. Repair the moisture and mould affected parts of the common property walls adjacent to Lot 10 including the common wall between Lot 10 and lot 11.

  3. Repair the moisture and mould damaged walls within Lot 10.

  4. Repair the walls within and adjacent to Lot 10 that were damaged by the respondent’s contractor.

  5. Replace the moisture-damaged electrical circuitry, power points and switches within the common property and the internal walls of Lot 10.

  6. Replace the following items of the applicant’s property:

  1. The water damaged cupboards in the three bedrooms.

  2. The carpet in the three bedrooms.

  3. The water damaged doors, jambs and skirtings.

  1. Repair or replace the air conditioning unit servicing Lot 10.

  2. Repair or replace the electrical blinds.

  3. Repair or replace the damaged curtain rails.

  4. Engage a qualified mould remediator to investigate and report on recommended steps to remediate Lot 10, the common property and the applicant’s personal property affected by mould.

  5. Engage a qualified mould remediator to carry out the steps recommended by the mould remediator engaged to provide the report referred to in the previous paragraph.

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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: 14 February 2022

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Cases Citing This Decision

1

The Owners - Strata Plan No 74232 v Tezel [2023] NSWCA 35
Cases Cited

6

Statutory Material Cited

4

Cassis v Kalfus [2001] NSWCA 460
Cassis v Kalfus [2001] NSWCA 460
Oshlack v Richmond River Council [1998] HCA 11