The Owners - Strata Plan 32735 v Heather Lesley-SWAN - [2012] NSWSC 383

Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: The Owners - Strata Plan 32735 v Heather Lesley-SWAN [2012] NSWSC 383
Hearing dates: 16 December 2011
Decision date: 10 August 2012
Jurisdiction: Common Law
Before: Hall J
Decision:
(1) Appeal allowed.
(2) The judgment and order of the Local Court made on 30 May 2011 by way of a verdict in the sum of $39,997.18 together with interest be set aside.
(3) The costs order made by the Local Court on 30 May 2011 be set aside.
(4) The proceedings be remitted to the Local Court on the following bases;
(a) The claim for lost rental income only to be determined by that Court constituted by another member of that Court.
(b) Judgment to be entered in favour of the appellant (the defendant to proceedings 2010/3041 in the Local Court) in respect of the respondent's claim in that Court for expenses incurred by her for the re-tiling of the balcony, the subject of the proceedings.

Catchwords: REAL PROPERTY - STRATA MANAGEMENT - Appeal from Local Court - management and control - rights and obligations of proprietors - where owners corporation breached duty to repair and maintain common property - where lot owner made repairs to common property without permission of owners corporation - whether lot owner entitled to be compensated for expense incurred in undertaking rectification work on common property - expenses not recoverable as a loss attributable to breach of duty - Act does not authorise lot owner to determine nature and extent of construction to be undertaken on common property or engage a contractor to perform work on common property without the consent or approval of the owners corporation - statutory and other remedies available to lot owner where owners corporation in breach of statutory duty - whether lot owner entitled to be compensated for loss of rent attributable to the owners corporation's breach of its duty - Magistrate failed to resolve disputed issues of fact and failed to provide proper reasons as to the basis for conclusions reached - order awarding damages for lost rental claimed set aside - rental claim remitted to Local Court for determination.
Legislation Cited: Evidence Act 1995
Fair Trading Act 1987
Local Court Act 2007
Strata Schemes Management Act 1996
Strata Titles Act 1973
Cases Cited: Alchin v Daley [2009] NSWCA 418
Allianz Australia Insurance Ltd v GSF Australia Pty Ltd [2005] HCA 26; (2005) 79 ALJR 1079
Campbell Davys v Lloyd [1901] 2 Ch 518
Earl of Lonsdale v Nelson (1823) 2 B & C 302, (1823) 107 ER 396
Falcke Scottish Imperial Insurance Co (1886) 34 Ch D 234
Groves v Lord Wimborne [1898] 2 QB 402
Lagan Navigation Co v Lambeg Bleaching, Dyeing and Finishing Co Ltd [1927] AC 226
Lubrano v Proprietors of Strata Plan No 4038 (1993) 6 BPR 13,308
Makita (Australia) Pty Ltd v Sprowles [2001] 52 NSWLR 705, [2001] NSWCA 305
Nicita v Owners of Strata Plan (No 64837) [2010] NSWSC 68
Pollard v RRR Corporation [2009] NSWCA 110
Proprietors SP14198 v Cowell (1989) NSWLR 478
Ridis v Proprietors of Strata Plan 10308 [2005] NSWCA 246, (2005) 63 NSWLR 449
SAS (Sales) Pty Ltd v SJPJ Pty Ltd [2011] NSWSC 905
Seiwa Pty Ltd v Owners Strata Plan 35042 [2006] NSWSC 1157
Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247
Stolfa v Owners Strata Plan 4366 and Ors [2010] NSWSC 1507
Travel Compensation Fund v Tambree [2005] HCA 69
Trevallyn-Jones v Owner Strata Plan No 50358 [2009] NSWSC 694
Whittaker v Rozelle Wood Products Ltd (1936) 36 SR (NSW) 204
Workers Compensation (Dust Diseases) Board of NSW v Smith [2010] NSWCA 19
Young v Wheeler (1987) Aust Torts Reports 80-126
Texts Cited: Halsbury's Laws of Australia, 4th edition
Category: Principal judgment
Parties: The Owners - Strata Plan 32735
Heather Lesley-Swan
Representation: Counsel:
Appellant - Mr H Woods
Respondent - Mr M Young SC
Solicitors:
Appellant - Jane Crittenden, Lawyer
Respondent - Dixon Holmes du Pont

File Number(s): 2011/00207012
Publication restriction: No
Decision under appeal

Jurisdiction:

9109

Date of Decision:

2011-05-30 00:00:00

Before:

Magistrate Maloney

File Number(s):

2010/3041

Judgment

PART A - The Proceedings

These proceedings arose by way of summons commencing an appeal and/or seeking leave to appeal a decision of the Downing Centre Local Court, given 30 May 2011.

The claim in the Local Court arose out of certain problems or defects in the tiled floor of a balcony adjoining the respondent, Ms Lesley-Swan's unit. The balcony formed part of the common property of the strata title. A dispute developed between the appellant, Owners Strata Plan 32735 (referred to in this judgment as the "appellant" or the "owners corporation") and the respondent as to whether the balcony defects could be rectified by repairing the tiles that 'lifted' or were otherwise defective or whether, as the appellant contended, the whole balcony had to be resurfaced.

On 13 December 2011, an amended summons was filed with the consent of the respondent in these proceedings. In it the appellant claims that his Honour, the learned Magistrate, erred in relation to a number of questions of law and questions of mixed fact and law. The grounds of appeal and the submissions of the parties on them are set out below.

The appellant seeks orders that the judgment of his Honour be set aside and that judgment be entered in favour of the appellant.

These proceedings involve a comparatively small damages claim. However, the unfortunately protracted and lengthy history of this matter has required a close examination of a very detailed series of events. That, together with issues of law concerning the two heads of claim pursued in the Local Court and the 12 grounds of appeal in the present proceedings has led to a judgment of greater length than is normally required in an appeal from a Local Court decision.

The proceedings are brought in this Court upon the basis of s 39 of the Local Court Act 2007. Section 39(1) provides for a right of appeal to this Court, but only on a question of law. Where questions of mixed law and fact are raised a party may appeal from a decision of the Local Court only by leave of this Court: s 40(1).

The Supreme Court in an appeal under ss 39(1) or 40 may grant relief in terms of s 41(1) which includes a power to make an order setting aside a judgment or order of the Local Court: s 41(1)(b) and remit the matter to the Local Court, as specified in s 41.

PART B - THE FACTS

In or around July 2006 Ms Lesley-Swan purchased a home unit in Challis Avenue, Potts Point ("the unit"). On 18 September 2006, the unit was leased, and continued to be leased until 17 September 2007, at a weekly rent of $850.00.

On 13 December 2006 the lessee then occupying the unit sent an email to the respondent. In it he stated that the balcony tiles had "popped [and] lifted".

On 2 July 2007, the respondent applied to the City of Sydney Council for development approval in respect of "Internal alterations to residential Unit no. 3". Development consent was granted, to operate from 13 July 2007.

On 29 July 2007 a quotation was obtained by the owners corporation from Coastline Remedial Building Services Pty Ltd for rectification of the defects in the balcony tiles. That company quoted a price of $3,000 (plus the cost of tiles, to be supplied by the respondent). It recorded the condition of the tiles as follows:

"Tiles have delaminated and are lifting..."

On 15 November 2007 the respondent wrote to Mr Bruce Robertson, the Chairperson of the owners corporation at the time in relation to proposed work on her unit stating:

"...this is to advise in writing that building works will commence on (the unit) no earlier than Tuesday 29 November 2007"

On 21 November 2007, the respondent wrote to Mr Robertson, the letter stated:

"I have received a verbal quote from Joe Sassine Tiling, Lic. No. 140899C for retiling the front porch with an appropriate expansion joint. The quote is $7,800 cash, or $8,580 by cheque with GST. I think you'd agree this is unacceptable -on a couple of counts.

Knud Hansen, our builder, suggested a cost of no more than $3,300 should be expected..."

The respondent sent a further letter to Mr Robertson on 21 November 2007, stating that she had been unsuccessful in sourcing tiles similar to those laid throughout the complex. She stated that on advice to her by several retailers, the particular tile had been discontinued from manufacture some 15 years previous. That letter referred to a suggestion by Mr Robertson that the owners corporation had "...an alternate source for the minimum 22 metres of tiles required".

On 8 January 2008 the respondent again wrote to Mr Robertson advising:

"Our Building Supervisor has now recovered from a severe accident, the construction certificate is now available, and work will finally proceed as planned"

Minutes of the meeting of the Executive Committee, dated 4 February 2008, record that the owners corporation maintained its position that the following repairs only were, in its assessment, required:

"...repairs to verandah #3 - EC agrees to repair only the damaged section of the verandah tiles".

On 7 February 2008, a letter was sent by the respondent to the appellant. It referred to a request by her for repair of the common property tiling defect on the balcony on 19 December 2007. The letter suggested a number of "options" for the repair work. The respondent stated she understood that the patch-repair option had been abandoned by the Executive Committee.

In a report by Peter O'Neill of P & D Pty Ltd, based on an inspection carried out on 13 February 2008, the defective area of the balcony was identified in the following terms:

"...that ceramic floor tiles in an area approximately 1.5 metres wide x 1.8 metres deep and located centrally in the span of the front balcony had catastrophically separated from the substrate and buckled upwards as a result of differential movement... Of the remaining tiled area only approximately 20% of the total area appeared sound visually with no current evidence of drummy or loose tiles (other than the buckled tiles):" p 6.

In a later Statutory Declaration made on 4 May 2009 Mr O'Neill stated that, on the basis of his inspection on 13 February 2008, approximately 80% of the balcony tiling was "drummy". He also said that approximately 4m2 of the 22m2 tiling surface had catastrophically lifted from the slab.

On 13 February 2008, a letter was sent from Mr Robertson, on behalf of the owners corporation, to the respondent. He stated that the corporation's belief was that "...the only practical solution is to repair the damaged area. We don't have sufficient tiles to undertake a complete retiling and are unable to purchase more than an odd 100 or so from second hand merchants." Mr Robertson confirmed that it was the opinion of the owners corporation that laying tiles other than the original tiles "would seriously detract from the building's appearance from the street."

On 14 March 2008 a letter was sent to the respondent by the owners corporation. It said that an amount of "drumming" existed on the balcony floor tiles but this had been the condition at the time of purchase. It advised a building consultant had been engaged in respect of "the current tiling problem".

On 22 April 2008 the respondent advised the secretary of the Strata Plan that:

"We advise that we will be undertaking repair of the tiling to current building standards at our own expense."

On 24 April 2008 an application was made by Mr Robertson, to the Consumer Trading and Tenancy Tribunal ("CTTT") seeking an interim order restraining the respondent (Application no. SCS 08/22470). In the application it was stated:

"Owner has had delivered ceramic tiles of her own choosing. These tiles are a white grey glazed surface compared to the existing tile which is a red/brown unglazed...Yesterday the owner cleared the... terrace and weather permitting will start laying immediately. No consent has been made by body corporate."

On 24 April 2008 the CTTT granted an interim order pursuant to s 170 of the Strata Schemes Management Act 1996 ("the Act") restraining the respondent from laying tiles on the balcony without the consent of the owners corporation or further order.

On 28 April 2008 the respondent wrote to the Chairman and members of the Executive Committee of the owners corporation and advised that work had ceased. A request was made for the owners corporation's 'approval' "...to complete waterproofing and screeding only, not tiling... "

In August 2008 the respondent lodged an application with the CTTT seeking orders pursuant to s 158 of the Act that the owners corporation had unreasonably refused consent to an exclusive use by-law (Application 08/40616). The application was dismissed by the Adjudicator. The respondent appealed, but subsequently withdrew the appeal.

On 4 September 2008 the then Chairperson of the Executive Committee, Ms Lois Diamond, wrote to the respondent stating that at approximately 7.30am that day she was walking down Challis Avenue and became aware that tradesmen were working on the front balcony of the respondent's unit. Ms Diamond said that one tradesman had advised her that they were laying tiles on the balcony. They had said that they had been requested to lay tiles across the whole balcony.

In her letter Ms Diamond observed that the tiles being laid were "the tiles of your choice". She requested that the work stop as, being common property, it was not open to her to "to lay tiles of your choice without consent from the Owners Corporation."

On 4, 5 and 6 September 2008 the respondent's contractor retiled the whole of the balcony with new tiles.

On 6 September 2008 the respondent wrote to the Chairperson and the Executive Committee Members stating:

"We have taken the decision to complete the tiling on our front balcony.

As advised, these tiles should be considered temporary. When the Owners Corporation is ready and able to re tile all balconies at ...Challis Avenue, then Lot ...'s should be considered along with all others.

This decision follows the CTTT's dismissal of the previous Chairman's action and continued delay beyond the Executive Committee's own preference for 'end of August'.

At the Executive Committee meeting of 24 July 2008 we clearly stated that we wanted to move into our home. We have now found it necessary to take action, after almost two years, to effect repairs ourselves in order to obtain an Occupation Certificate."

In the above letter of 6 September 2008 reference was made to the fact that all repair costs had been met by the owners of Lot ... stating:

"Lot ... has borne all costs directly arising from the Owners Corporation's lack of proper and timely maintenance, all repairs meet current building standards, as required by the Sydney City Council."

The respondent also noted in the letter:

"The Owners Corporation at only December 2007 offered part payment towards Lot ...'s funding the repair of the balcony ourselves.

That offer was rejected, in writing, on the basis that it would provide an improper and unfair precedent which would adversely affect other owners."

On 8 September 2008 the respondent lodged an application (no. SCS 08/45172) with the CTTT for a number of orders including an order under s 140 of the Act "approving repairs already made by an owner to common property tiling surface directly affecting the owner's lot:" para 1.1 of the Reasons for Decision dated 18 December 2008. The application was dismissed.

The Adjudicator stated in his decision that he did not "...consider that the Owners Corporation unreasonably refused its consent to the alterations in question:" Reasons at p 5.

The Reasons for Decision set out findings and reasons for that conclusion. It was noted that the dispute between the parties was not in relation to which party was legally obliged to repair the tiling works, being common property, "...but rather as to the extent and manner in which the repair will be carried out:" Reasons at p 5.

The CTTT Adjudicator referred to the work undertaken by the respondent and the submissions opposing the order sought as follows:

"The respondent says that the applicant will not accept the respondent's solution to the problem which includes repairing and replacing the section of damaged tiles;

The respondent says that it has not been unreasonable in refusing the applicant the right to lay tiles of her choice to the entire balcony and stair area;

It is contended that to give the applicant the responsibility for repair and maintenance will allow her to lay any tiles of her choice without restriction;

The predominantly light tiles chosen by the applicant (and in fact now installed at the premises) are not in keeping with the rest of the building which are terracotta tiles. This is contrary to by-law 17;

The respondent says that it has tried to seek a resolution with the support of the majority of owners and the applicant, but this has not been possible:" Reasons at p 4.

The Adjudicator also observed:

"The Owners Corporation was apparently always willing to carry out the repairs, but an agreement could not be reached with the applicant as to how that would be done. It is this disagreement (and not the reluctance of the Owners Corporation) which caused the delay." Reasons at p 5.

The Adjudicator further noted:

"The Owners Corporation's preference was to repair the area that had lifted only with terracotta tiles (which is what was originally in place), but the applicant was always of mind to upgrade the entire area, including the stairs with the same tiles which she used in the internal renovation. These tiles are significantly different to the existing external tiles, which can be freely seen from various areas outside of the complex..." Reasons at p 5.

The Adjudicator determined that the owners corporation was entitled to conclude "...that light natural stone tiles are significantly different to the existing terracotta tiles and the tiling works (now in place) are in fact out of keeping with the rest of the building. It is therefore considered that their objection to the works on this basis was not unreasonable:" Reasons at p 5.

The Adjudicator finally observed: "Whilst the applicant considered that there may have been some urgency in carrying out the tiling works, when she elected to go ahead, she did so with the knowledge that the Owners Corporation (a) did not consent to the selected tiles, (b) was likely to seek orders requiring that the works be removed." Reasons at p 6.

On 1 March 2010 the respondent, by her solicitors Dixon Holmes Du Pont, made a claim for loss of rent. This was the first indication that the respondent intended to make a claim for lost rental.

PART C - THE STATUTORY SCHEME

The Strata Schemes Management Act 1996 commenced on 1 July 1997. It is described in the Act as: "an Act to provide for management of strata schemes and the resolution of disputes in connection with strata schemes, and for other purposes."

The objects of the Act are stated, inter alia, as "(a) to provide for the management of strata schemes:..." Section 3.

The Act states: a "strata scheme means a freehold strata scheme or a leasehold strata scheme". See Dictionary to the Act.

Chapter 3 of the Act - Key Management Areas, includes Part 2 - Maintenance Repairs, alteration and use of common property and fire inspections. That part includes s 62 which is in the following terms:

(1) An owners corporation 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 clause does not apply to a particular item of property if the owners corporation determines by special resolution that:

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

(b) 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.

Chapter 5, Part 4, Orders of Adjudicator includes sections 138 and 139 which are in the following terms:

138 General power of Adjudicator to make orders to settle disputes or rectify complaints

(1) An Adjudicator may make an order to settle a dispute or complaint about:

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

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

(2) For the purposes of subsection (1), an owners corporation or building management committee is taken to have failed to exercise a function if:

(a) it decides not to exercise the function, or

(b) application is made to it to exercise the function and it fails for 2 months after the making of the application to exercise the function in accordance with the application or to inform the applicant that it has decided not to exercise the function in accordance with the application.

(3) An Adjudicator may not make an order under subsection (1) for the settlement of a dispute or complaint:

(a) dealt with in another section of this Chapter, or

(b) referred to the Tribunal or only within the jurisdiction of the Tribunal, or

(c) relating to the exercise, or the failure to exercise, a function conferred on an owners corporation by this Act or the by-laws if that function may be exercised only in accordance with a unanimous resolution or a special resolution (other than a special resolution under section 62 (3), 65A or 65B), or

(d) that includes the payment by a person to another person of damages.

(4) If a dispute or complaint arises from or relates to the operation or application of a provision of a lease of a lot, or of the common property, in a leasehold strata scheme, the lessor of the strata scheme must not:

(a) commence other proceedings in connection with the settlement of the dispute or complaint after having made an application under this section for the settlement of the dispute or complaint, or

(b) make an application under this section for the settlement of the dispute or complaint after having commenced other proceedings in connection with the settlement of the dispute or complaint.

(5) An application for an order under this section may be made only by an interested person.

139 Order for settlement of dispute between adjoining strata schemes

(1) An Adjudicator may make an order to settle a dispute between 2 strata schemes if:

(a) the strata schemes concerned are contiguous, and

(b) the matter in dispute is not regulated by or under any other Act.

(2) An application for an order under this section may be made only by an owners corporation for a strata scheme involved in the dispute.

(3) An order must not be made under this section unless the owners corporation for the other strata scheme involved in the dispute consented to the making of the application for the order.

The provisions of the Act, accordingly vest power and responsibility for the "management and control" of the use of common property, for the benefit of the owners, in an owners corporation.

As set out above, the provisions of s 62 impose responsibility on an owners corporation for "maintaining and repairing the common property of the strata scheme:" s 61(2).

The Act accordingly establishes a strata scheme under which the power and control of the use of common property is vested in an owners corporation and the responsibility for its maintenance and repair is a "key management area" for a strata scheme. Such power, control and responsibility is exclusively prescribed as that of an owners corporation, not of lot owners or anyone else. The rationale for the scheme is evident. The maintenance and repair of common property if undertaken by lot owners may result in issues and disputes. By way of example, work carried out by a lot owner on common property without the necessary oversight or supervision to ensure that such work was performed properly and in harmony with the particular strata scheme in question, could be productive of liability and expenditure issues for an owners corporation.

The imposition of statutory duties on owners corporations in respect of 'key management areas' ensures accountability for any maintenance and/or repair work carved out on common property. The statutory duty upon an owners corporation is expressed to be "to properly maintain and keep in a state of good and serviceable repair" (the common property). The nature of the obligation or duty created by s 62 is a strict one: Seiwa Pty Ltd v Owners Strata Plan 35042 [2006] NSWSC 1157. Remedies available under the Act (and, in some circumstances those also available under the general law) may be sought in the event of a breach of duty under s 62.

The Act accordingly specifies that the decision-making power is in the owners corporation to undertake the maintenance and repair of common property either according to its own determination or, in the event of an order by a Strata Scheme Adjudicator, under s 140, then in accordance with such order. Section 140 empowers an Adjudicator to require an owners corporation to consent to work proposed to be carried out by an owner if he or she considers that the owners corporation has unreasonably refused its consent and the work relates to any of the following:

(a) Alterations to common property directly affecting the owner's lot,

(b) Carrying out repairs to common property or any other property of the Owners Corporation directly affecting the owner's lot.

Accordingly, an order under s 140 constitutes the only qualification or exception to the control of an owners corporation in respect of 'Key Management areas' concerning common property. Otherwise the power and control to undertake maintenance and repair of common property wholly resides in an owners corporation.

The issue arising out of the claim made by the respondent in the present proceedings is whether, in the event of a breach by an owners corporation of its duty under s 62, an individual lot owner is at liberty, without an order under s 140 and without the consent of the owners corporation to proceed to perform maintenance or repair work upon common property and then recover the cost or expense of the work.

PART D - The Parties' Submissions

In the appellant's Amended Summons there are 12 grounds of appeal, each asserting error. Some grounds assert error on questions of law and others assert error on questions of mixed fact and law. The written submissions on behalf of both parties address each of those grounds.

The grounds of appeal in the amended summons are as follows:

(1) His Honour erred on a question of law by finding at page 9.5 to 9.7 of the Judgment that the statement of principle by Justice Brereton in Seiwa Pty Limited v Owners Strata Plan 35042 [2006] NSWSC 1157 was not applicable to the facts of this case because Seiwa was closely analogous to a nuisance case but that there was no such analogy in the present case.

(2) His Honour erred on a question of law, or alternately, on a question of mixed fact and law, by finding at page 9.8 to 10.2, that if Brereton J's statement did apply that costs incurred were incurred by way of mitigation of the respondent's damages, which his Honour said arose from the respondent (the appellant in the Local Court proceedings below) seeking to lease her premises and so wanted to take advantage of the high potential weekly rents available for the property during the summer of 08/09.

(3) His Honour erred on a question of law in finding that the respondent was entitled to lay a tile that differed from other common property tiles, and did not require approval of the appellant to do so.

(4) His Honour erred on a question of law or in the alternative on a question of mixed fact and law in finding that although the respondent proceeded voluntarily to select and lay her own tiles, she was entitled to claim the cost of those tiles and laying of those tiles from the appellant.

(5) His Honour erred on a question of mixed fact and law in finding at page 9.1 that the respondent has no alternative but to strip the entire veranda and re-lay new tiles.

(6) His Honour erred on a question of mixed fact and law in finding at page 8.5 that using tiles from the Owners Corporation's stockpile would have been an absurd choice of tiles.

(7) His Honour erred on a question of mixed fact and law, in allowing into evidence the letter dated 29 July 2010 from the respondent's builder, as to the cost of works, and at page 10 by placing any weight on that letter, and by accepting that letter as evidence of the cost of the work, particularly in circumstances where his Honour ruled during the hearing that he would place no weight on the letter as proving the cost of the work.

(8) His Honour erred on a question of mixed fact and law in finding at page 16.3 that the appellant gave permission to the respondent to do the work that was eventually done by the respondent's builder and that such approval was given in late April 2008, when there was no evidence to support that finding and the incontrovertible fact is that the appellant did not give permission to the respondent to lay the new tiles, and expressly informed her that its permission had not been given.

(9) His Honour erred on a question of law, or alternatively, on a question of mixed fact and law, by failing to give reasons for his finding at page 10.1 that the respondent sought to lease her unit, and otherwise by so finding as the tribunal of fact that the respondent sought to lease her unit in the period from 5 September 2007 to 14 January 2008.

(10) His Honour erred on a question of law, or alternatively, on a question of mixed fact and law by ultimately finding that the respondent was entitled to the entire loss of rent claim without considering whether the respondent had sought to lease the premises, or whether the premises were capable of being leased given the state of the veranda, and without considering whether it was the state of the veranda that caused the loss of rent, or whether the proper measure of damage was the gross rent said to have been forgone from September 2007 to January 2008.

(11) His Honour erred on a question of law, or alternatively, on a question of mixed fact and law by finding at 14.2 that in the absence of the appellant pleading "lack of mitigation", the respondent was entitled to the entire loss of rent claim.

His Honour erred on a question of mixed fact and law, at page 14, by placing any weight on the opinion evidence of Mr Pavlakis, and in accepting Mr Pavlakis' estimate as to the achievable rent as being the loss incurred without considering the diminished weight to be given to Mr Pavlakis' report and affidavits where such material did not comply with the requirements set out by Heydon JA in Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305, (2001) 52 NSWLR 705 at [85].

A summary of the parties' submissions is set out below.

A Submissions on the claim for recovery of expenses incurred in re-tiling the balcony

GROUND 1

Error on a question of law and failing to apply the principle stated in Seiwa Pty Ltd v Owners Strata Plan 35042 [2006] NSWSC 1157 per Brereton J.

In Seiwa (supra) it was held that the claim for the cost of rectifying a defect in common property was in the nature of a claim concerning the costs of abatement and was not recoverable as damages from the owners of the strata plan. The position was said to be analogous to abatement of a nuisance.

In the appellant's submissions it was acknowledged that whilst the facts in Seiwa and the present case differed nonetheless it was argued that the principle as stated in that case applied to the respondent's actions in engaging a contractor to undertake work on common property. The submission was that this was analogous to the claim for the costs of abatement in nuisance.

It was observed in the respondent's submission that the facts in Seiwa were different and the respondent explained the approach taken in that case. The facts there concerned a failure to maintain the integrity of a water proofing membrane in the common property below tiles on the appellant's balcony. Rainwater had penetrated through and travelled into the interior of the appellant's unit causing damage.

The facts of Seiwa, it was submitted, when so understood were reasonably analogous to a claim in nuisance.

GROUND 2

On the basis that the principle stated in Seiwa applied, the Local Court erred, in holding that the costs incurred were incurred by way of mitigation of the respondent's damages which were incurred on the basis of the respondent seeking to lease a premises.

The appellant's submissions in the present proceedings address factual matters set out at [17] of its submissions. In relation to the summer period of 2007/2008 it was noted the respondent contended that she had wished to lease the premises to take advantage of the high potential weekly rents available and that the builder was in possession of the site from about 9 January 2008 to perform internal building works pursuant to a development application. The appellant contended that the evidence did not support the respondent in her claim that she had intended to rent out the unit.

It was the respondent's submissions that the particular factual matters relied upon by her were not addressed. She argued that damages are not confined to a loss of rent claim. They could include a claim for diminution in the value of real estate. Against that background it was contended that by replacing the tiles the respondent saved the appellant damages based on a diminution in the value of the unit. This was said to be a true example of mitigation of damages.

GROUND 3

There was an error of law in finding that the respondent was entitled to lay a tile that differed from common property tiles and did not require approval of the appellant to do so.

In the submissions for the appellant reference was made to page 19.7 of the judgment of the Magistrate where his Honour observed that there were no CTTT orders in force in September 2008 precluding the respondent from replacing the tiles. Against that background it was stated that it may be inferred from the judgment that the Magistrate had found that the respondent did not require the appellant's approval to remove and replace tiles. Notwithstanding the lack of any approval, the appellant observed that the Magistrate held that the respondent was entitled to be reimbursed for the cost of removing and replacing them.

In response it was contended for the respondent that there was no finding made by the Magistrate in the terms alleged and no such finding is to be found in the judgment. Therefore, it was argued, the Ground must fail.

In the appellant's submissions it was submitted that, in the absence of a special resolution or by-law or an order under the Act entitling the respondent to remove and replace the tiles, the respondent was not entitled to carry out the works to the common property and was not entitled to compensation for the cost of the works.

Reference was made to the respondent's evidence to the effect that the balcony was "re tiled" notwithstanding that no formal consent had been provided.

The submission for the appellant was that in the absence of a special resolution an owner is not entitled to enhance or improve common property, a matter dealt with in s 65 of the Act.

It was also submitted that the Act does not permit individual lot owners or occupiers to assume management or control of common property in the event of a failure by the owners corporation to exercise its management and control functions. The mechanism, it was submitted, is to be found in s 138 under which an owner may obtain orders from a Strata Scheme Adjudicator.

It was further submitted that the Act does not permit lot owners to repair, maintain and replace common property of their own accord and then obtain recompense from the owners corporation for the cost of such works.

Finally it was submitted that it was unclear from the judgment as to how the Magistrate had set about resolving the issue. It was contended that whatever approach was adopted must have resulted from an erroneous construction of the provisions of the Act.

The respondent submitted that the authorities referred to in the appellant's submissions were of no assistance.

It was argued on her behalf that in circumstances where it was contended that the appellant "failed to acquit its statutory duty for many years, and that failure was likely to be ongoing", the case was not one that was concerned with the ability of the lot owner, in the ordinary course of a properly managed strata scheme, to conduct works on common property. It was submitted it was a case which concerned the granting of an appropriate remedy "to a person aggrieved by an admitted breach of statutory duty".

It was further submitted that the finding that the respondent was "entitled" to lay the tiles that she did lay was not a matter that she needed to establish in order to make out her claim.

GROUND 4

Error on a question of law or alternatively on a question of mixed fact and law in relation to the Magistrate finding that, although the respondent proceeded "voluntarily to select and lay her own tiles", she was entitled to claim the cost of the tiles and the work in laying them from the appellant.

In the appellant's written submissions it was noted that reference was made by his Honour to the general principle that money expended on another's property does not normally create a lien upon the property or an obligation to repay expenditure incurred. However the Magistrate stated that the principle did not apply on the facts of the case. This was said to be so on the ground that there was a strict obligation on the appellant under s 62 of the Act and it was no answer to such an obligation for the appellant to assert that it acted reasonably. Specifically it was contended that the approach taken by the Magistrate did not resolve the question whether, in the circumstances where the expenses were said to have been incurred "voluntarily", the appellant could as a matter of law be held liable for the cost.

The appellant's submissions referred to the fact that it was the respondent who firstly arranged for her builder to remove the tiles in April 2008. Then later in September 2008, she arranged for new travertine tiles to be laid by a contractor. She did so "voluntarily" as work on common property, being property of another.

It was submitted that it was not an expense incurred to ensure the property could be rented out to prevent damage as in Seiwa (supra) and there was no entitlement to claim the costs from the appellant.

On behalf of the respondent it was submitted that there was never any finding, either express or implied, that she had in fact laid tiles "voluntarily". It was submitted that, impliedly, the Magistrate found the opposite, namely that the respondent's actions were involuntary in that they were "forced upon her by the Appellant's breach of statutory duty".

It was submitted for the respondent that the approach taken by the Magistrate was that it was not open to the appellant in the circumstances in which it was subject to strict liability to contend that the tiles were laid voluntarily. It was contended that the expenses she incurred did not constitute voluntary expenditure by her for work she had performed on the appellant's land "...but rather an action flowing from and caused by the Appellant's breach of duty".

GROUND 5

The Magistrate erred on a question of mixed fact and law in finding (p 9.1) that the respondent had no alternative but to strip the entire verandah and re-lay new tiles.

It was submitted for the appellant that the finding was not open on the evidence.

The appellant relied on evidence given by the respondent to argue that there was an option open to her, namely the ability to re-lay the existing tiles and to supplement them with tiles that were in storage. However it was noted her builder had disposed of the existing tiles. This, it was argued, occurred after the respondent had already purchased the travertine tiles that were laid in September 2008. Accordingly, it was submitted that it was not open to the Magistrate to find that the respondent was left with "no other alternative" but to strip the entire balcony surface and re-lay the tiles.

In the submissions for the respondent references are made to evidence said to support the Magistrate's finding, as detailed at [30] of its submissions.

The submission was that in the circumstances, not only was there evidence to support the Magistrate's conclusion but that the weight of evidence was consistent with that conclusion.

GROUND 6

The Magistrate erred on a question of mixed fact and law in finding (p 8.5) that using tiles from the owners corporation's stockpile would have been "an absurd choice" of tiles.

It was noted for the appellant that it was open to the Magistrate to find that re-tiling the whole of the balcony with tiles in storage was not an appropriate option. However, the appellant took issue with this finding, if it were also intended to mean that the tiles in storage could not have been used even to fill a small number of gaps that had been apparent after the tiles that were removed were first re-laid.

The respondent in her submissions relied upon evidence which indicated that the tiles in stockpile were not adequate as they were the wrong colour and did not include any bull-nosed edging tiles. Accordingly it was submitted the conclusion reached by the Magistrate was correct.

GROUND 7

The appellant asserted error on a question of law by the Magistrate in admitting a letter dated 29 July 2010 from the respondent's builder as to the cost of the works. It was also asserted that the Magistrate was in error (at p 10 of the Judgment) by placing any weight on the letter and by accepting it as evidence of the cost of the work.

In submissions it was submitted that the Magistrate erred in the above respect and in finding that the loss incurred by the respondent for the removal and replacement of the tiles amounted to $9,597.00.

The particular bases upon which the appellant sought to support the alleged error was detailed at [49 to 54] of its written submissions.

It was observed for the respondent that before the Local Court it had been submitted that the letter in question was admissible pursuant to s 64 of the Evidence Act 1995 and that it would appear that this was ultimately the ground upon which it was admitted. It was contended that it was open to the Magistrate to admit the letter as an exercise of his discretion.

Detailed submissions were made as to other quotations in evidence for the repairs and replacement of the tiles at [41 to 44] of the respondent's submissions.

GROUND 8

This ground asserted error on a question of mixed fact and law in finding that the appellant gave permission and approval to the respondent to do the work that was eventually done by her builder in late April 2008 in circumstances where there was no evidence to support such a finding and where the evidence established that the appellant did not give such permission and so informed her.

In the appellant's submissions it was contended that the finding referred to in Ground 8 involved an error of law because "...there was no evidence to support the finding".

In paragraph [57] of the appellant's submissions it was submitted that on this aspect, there was "incontrovertible evidence" as to the relevant facts set out in sub paragraphs (1) to (9) of that paragraph.

On the basis of those matters it was contended that the tiles were laid "...without permission of the appellant". It was further submitted that, save for the waterproofing of the balcony and the laying of screed, it was not open on the evidence for the Magistrate to find, as his Honour did, that the appellant had given permission to do the work.

The effect of a finding in favour of the appellant on this point, it was submitted, would be that the respondent was not entitled to the cost of removing the tiles and replacing them.

In the submissions for the respondent it was contended that the Magistrate's findings were "presumably" based upon a letter from Mr Robertson of the appellant to the respondent's husband, Mr Don McLay dated 25 April 2008. An extract from that letter is set out in the respondent's submissions at [47] and it is relied upon to support the contention.

As discussed below that letter is to be considered in the context of later correspondence and other events. These include a letter written by the respondent and her husband dated 28 April 2008 to the Executive Committee of the owners corporation in which approval was sought from the owners corporation, (in accordance with the then operative interim order restraining her from undertaking work) to complete waterproofing and screeding but no tiling.

The submissions for the respondent seek to address the Magistrate's statement at page 16 that approval was given in late April 2008.

Those submissions also seek, at [48], to address the context in which the Magistrate's finding was made, namely, in determining whether the respondent's request for re-tiling the entire balcony was reasonable or not.

The submission was that the Appellant's submissions simply misinterpret the Magistrate's finding and accordingly there is no error of law.

B Submissions concerning the loss of rent claim

In Ground 9 to Ground 12 the appellant submitted that the Magistrate had erred in a number of respects in awarding damages for loss of rent.

GROUND 9

The Magistrate erred on a question of law or alternatively a mixed fact and law, in failing to give reasons for the finding (p 10.1) that the respondent sought to lease her unit and in finding that the respondent sought to lease her unit during the period 5 September 2007 to 14 January 2008.

GROUND 10

Error on a question of law or alternatively a mixed fact and law by ultimately finding that the respondent was entitled to the entire loss of rent claim without considering whether she had sought to lease the premises or whether the premises were capable of being leased given the state of the balcony and whether the state of the balcony caused the loss of rent or whether the proper measure of damage was the gross rent said to have been foregone from September 2007 to January 2008.

In the submissions for the appellant issue was taken with what were said to be "assertions" made on behalf of the respondent, namely that:

The respondent had sought to lease the unit out;
The state of repair of the verandah (balcony) that the respondent said it was in September 2007; and
That the unit was unable to be rented out from September 2007 because of the state of the balcony.

Reference was made in the submissions at [63] to a number of matters said to arise from the cross-examination of the respondent. Without being exhaustive these matters include:

The existing lease expired on 17 September 2007 and yet the loss of rent claim made from 5 September 2007.
There was an issue as to whether the condition of the balcony tiled floor as depicted in four photographs tendered in evidence depicted the state of the balcony as at September 2007 or whether that condition arose in or about April 2008.
There was a question as to whether any delay in starting work to rectify the defect of the balcony was attributable in any extent to the delay in building work being carried out internally in the respondent's unit and further whether delay had arisen because the certifier of such work had had an accident.
That the respondent had not in her correspondence written in June and November 2007 and January 2008 at any time indicated that she had wanted to rent the property out on a short-term basis but was unable to do so until the balcony floor was fixed.
No advertising had been arranged for the unit to be rented out from September 2007.

It was noted for the appellant that it had raised both issues as to:

(i) the state of repair of the balcony;

(ii) whether its condition prevented it from being rented; and

(iii) the respondent's evidence that she had intended to (and had sought to) rent her unit out: [65].

The criticism in the submissions for the appellant was that the Magistrate at 10.1 of the judgment simply stated:

"The Appellant sought to lease her premises and so wanted to take advantage of the high potential weekly rents available for the property during the summer of 08/09". (Note: This was an incorrect date reference. The correct date was 2007/08).

It was submitted that the judgment did not provide any consideration of the matters that had been raised by the appellant in cross-examination of the respondent or in its submissions (in particular the matters set out in (a) to (d) of paragraph [67] of the appellant's submissions).

In particular it was submitted that the learned Magistrate failed to provide reasons leading to the finding that the respondent had sought to rent the unit out. The judgment in question, it was submitted, does not permit the appellant to understand the basis upon which it lost on the issue of the rent claim: see paragraphs [69 to 71] of the appellant's submissions.

The respondent in reply submitted that there were before the Magistrate photographs tendered by her as well as and opinion evidence recommending the total removal of the tiles. Such evidence, it was contended, supported the conclusion that damage to the tiles was considerable.

It was also submitted for the respondent at [56] that the fact that the property had been leased up to 4 September 2007 prior to the lease term expiring on 17 September 2007 was a relevant factor and that the respondent had given evidence of her intention to let it out as soon as the tiling was fixed. The unit was a property by which the respondent was able to earn money, and was one that could be quickly rented because the market at the relevant time was very strong.

The respondent submitted there was no evidence adduced by the appellant to suggest that she did not truly intend to lease the unit if the tiling had been repaired. The strongest evidence advanced by the appellant was said to have been the letter to it dated 15 November 2007 in which the respondent stated: "This is to advise the building works will commence at (her unit) ...no earlier than Thursday 29 November 2007."

However the respondent denied in cross-examination, when it was put to her, that she had in fact intended to commence building work on 29 November 2007. Reliance was also placed upon the respondent's evidence in her second affidavit, (sworn 26 October 2010) at [26] that she knew from September 2007 that building work would not commence prior to 2008. The letter of 22 July 2007 was written two months prior to the respondent being told by her builder in September 2007 that the building work would not commence until 2008.

GROUND 11

This ground asserts an error as to a question of law or alternatively a question of mixed fact and law (at 14.2) of the Judgment of the Local Court in finding that in the absence of the appellant pleading lack of mitigation, the respondent was entitled to the entire loss of rent claimed.

It was submitted that the learned Magistrate erred in failing to provide any reasoning for this finding.

It was accepted that mitigation had not been pleaded. It was argued that although it is not clear from the judgment, the Magistrate failed to refer to the point made in Mr Hyam's (property valuer) evidence (as to rent values for the unit - that it could have been rented but that the weekly rent was dependent on the state of repair of the balcony and he estimated a reduction on this basis of an amount between $50 to $100 per week).

It was submitted that this was evidence in support of the appellant's contentions in relation to (a) whether the unit was in fact capable of being rented; (b) whether the claim for lost rent was maintainable; and (c) whether the appellant caused the loss, and, if so, the correct measure of any loss or damage: appellant's submissions at [76].

The appellant's submission was that no findings were made by the Magistrate in relation to matters that were in issue. In particular, no consideration was given to (a) the evidence as to the actual state of repair of the balcony as at September 2007, nor was any finding made as to the condition of the balcony at the relevant time; or (b) whether the damage or defects was/were such as to prevent it from being rented out or, depending upon the state of the repair, what was the true measure of any loss, if there was any.

It was submitted that it did not follow that the respondent, by not pleading failure to mitigate, meant that the respondent was entitled to the whole of the claim without inquiry into the issues raised concerning "loss", causation of any loss and the correct measure of any loss or damage.

In other words the appellant's submission was, in effect, that the Magistrate proceeded upon the basis that, in the absence of a plea of failure by the respondent to mitigate, the respondent was then entitled to the whole of the loss of rental income claimed. The Magistrate's conclusions, it was contended, was initiated by an error of law.

On behalf of the respondent it was submitted that a fair reading of what the Magistrate said as to the absence of a plea of failure to mitigate was to be understood as meaning that no amount should be deducted from the respondent's damage by reason of a failure to mitigate her loss.

The respondent's evidence was that she would have put the unit up for lease in the relevant period if not for the fact that she considered she could not do so because of the state of the tiling.

She said therefore that she suffered the loss of rents that she could have obtained by leasing the unit over the period.

The argument put on behalf of the appellant, namely, that acting reasonably the respondent could have rented out the unit for a lower price, could be characterised as a failure to mitigate argument and that the Magistrate was correct in rejecting the argument on the basis that lack of mitigation had not been pleaded.

It was further argued for the respondent that she did not lease the unit with the defects in the balcony because she believed that course was not available to her. Without a plea of lack of mitigation, the respondent was entitled to the entire loss of rent for the period even if her decision not to rent it at a lower figure could be properly characterised as 'unreasonable'. The respondent however submitted that her decision was not unreasonable. The question did not arise due to the absence of the failure to mitigate defence.

GROUND 12

This ground asserts an error on a question of mixed fact and law by the Magistrate placing any weight on the opinion evidence of Mr Pavlakis and in accepting his estimate as to the achievable rent as being the loss incurred without considering the diminished weight to be given to his report and affidavits where such material did not comply with the requirements for expert evidence enunciated in Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305, [2001] 52 NSWLR 705 at [85].

The appellant observed that Mr Pavlakis (local real estate agent) expressed the opinion that his assessment of the possible rental was between $1,600 and $1,800 per week over the summer period. Mr Hyam gave contrary evidence on the question for the appellant.

In relation to this ground the contention was that Mr Pavlakis failed to identify any basis for his opinion that the property would have rented for between $1,600 and $1,800 per week. He accepted in cross-examination that in providing an appraisal or valuation as to the estimated rent one would, in the normal course, look to comparable rentals. However, he had not identified in his letter of 10 February 2010 comparable rentals to support his range of $1,600 to $1,800 per week. It was asserted that the witness had said that although Mr Pavlakis had based his range on his rent roll, the rent roll was not placed in evidence.

Additional points relied upon by the appellant included the fact that Mr Pavlakis had not inspected the property prior to preparing his letter of 10 February 2010 or his affidavit sworn on 12 August 2010 (his first inspection was in October 2010).

Reference was also made to the evidence that the respondent had drafted the affidavit of Mr Pavlakis, sworn in October 2010 to which the respondent and Mr Pavlakis then made changes. It was noted that the single comparable referred to in that affidavit was dated 19 October 2008 ought in fact to have been dated 19 October 2010.

It was contended that in principle where an expert's report and affidavit did not comply with the requirements enunciated in Makita (supra), it ought not to have been relied upon by the Magistrate. However it was argued his Honour completely accepted and acted on the opinion of Mr Pavlakis, stating at p 14:

"Notwithstanding Mr Pavlakis failing to acknowledge that he was bound by the Experts Code of Conduct he did give sworn evidence and I accept that he was a local real estate agent and could be regarded as being at the coalface of rental properties in the area, his assessment of the rental at a minimum of $1,600 over the summer period of 07/08 is the acceptable figure."

The appellant's submission was that the finding made by the Magistrate did not elucidate any understanding as to how Mr Pavlakis had come to the figure or his reasoning as to the basis upon which he derived the amount of $1,600 per week.

In the absence of any material to support the figure including the rent roll, the Court did not have supporting material "to properly consider Mr Pavlakis' bare statement" or his opinion as to the likely rent. It was submitted that the Magistrate's acceptance of the opinion of Mr Pavlakis as to the expected rent involved an error with respect to a question of law.

It was submitted that, if this Court did not find favour on the other points raised in respect of the loss of rent claimed then it ought to set aside the damages awarded for loss of rent and damages and reduce it to a figure in line with the opinion of Mr Hyam.

In the submissions for the respondent it was accepted that criticisms could be made of the evidence of Mr Pavlakis but that equal or greater criticisms could be made of the evidence of Mr Hyam. Not surprisingly it was observed, the Magistrate found deficiencies in the evidence of both experts.

In paragraph 70 of the respondent's written submissions it is stated that the Magistrate preferred Mr Pavlakis' evidence simply on the basis that "he was a local real estate agent and could be regarded as being at the coal face of rental properties in that area" and because of the problems he identified in relation to Mr Hyam's evidence.

It was submitted that this ground did not involve an error of law in view of "the abandonment of the complaint with respect to the admission of the evidence". It was also contended that there was no error of mixed fact of law. It was contented that the Magistrate was aware of the criticisms made of the evidence of Mr Pavlakis but simply found his evidence to be more persuasive and that this was not challengeable on appeal.

PART E - ANALYSIS

(i) The Judgment - findings and conclusions

The judgment of the Local Court commenced with a number of introductory matters between pages 1-7. The analysis of evidence commences at the end of page 7 following the quotation attributed to Albert Einstein.

The judgment records the positions taken up by the appellant and the respondent as to the nature of the repair or remedial work with the respondent contending that a complete re-tiling of the balcony was required. The appellant, on the other hand, asserted the problem could be addressed without replacing the whole of the tiled floor.

It was noted that this unresolved difference of opinion existed and was associated with the delay that unfolded in 2007 to 2008.

The learned Magistrate referred at page 8 of the judgment to photographs of the tiles which the appellant had indicated had been held in storage. However, it appears that his Honour concluded, largely based on an examination of the photographs, that the tiles in storage would not have been appropriate to match up with the existing tiles. On that basis he concluded that to use the tiles in storage to "patch" the affected area "would have been an absurd choice:" judgment at p 8.

It was solely on this basis that the learned Magistrate concluded (at p 9.2) that both the appellant and the respondent were left with no other alternative but to strip the entire balcony floor and re-lay new tiles.

His Honour then proceeded to consider the judgment of Brereton J in Seiwa (supra). The learned Magistrate held:

(1) "That unlike the circumstances considered in Seiwa there was no analogy on the facts of the present case to a case of nuisance (in respect of the abatement of a nuisance).

(2) Even if it could be said to be analogous to a case of nuisance Brereton J noted in Seiwa that damages are probably claimable even in a case of abatement of nuisance if the work could be considered as the reasonable cost of mitigation of the nuisance:" p 9.

The discussion in the judgment (at p 10) then moves away from the issue as to whether damages could be awarded in favour of the respondent against the appellant for the cost of rectification work to the question of the expense which she had incurred in re-tiling the balcony. His Honour considered the quantum or amount of the expense for the tiling work and whether the same had been fair and reasonable: (p 11).

His Honour also examined the question of "Delay" by the respondent. (At p 11-12) followed by an examination of the issue of "Failure to Mitigate and Loss of Rent" (p 12-14.3).

His Honour then returned to the question of the respondent's entitlement to recover the expense she had incurred in having the balcony re-tiled, (at p 14) under the sub-heading "Entitlement to expenses incurred involuntarily". The issue of "entitlement" of the respondent to receive the expenses was a primary issue. It is considered at pages 14-19 of the judgment.

His Honour recorded the contention made on behalf of the appellant that the expenditure incurred by the respondent in the purchase of tiles was "...a liability incurred by her voluntarily without prior approval of the Respondent:..." p 14.

His Honour quoted two sentences from the respondent's letter of 22 April 2008. The letter was written by her and her husband to the Secretary of the owners corporation (at p 14). It gave notice that the respondent was going to re-tile the balcony. It stated:

"We are acting under legal advice in relation to the required repairs to the front balcony. We advise that we will be undertaking repair of the tiling to current building standards at our own expense".

His Honour then stated:

"I do not accept that this was a statement of the Appellant's intention to do the work at her own expense but rather undertake that expense and later look to the Owners Corporation for reimbursement. The contrary argument as put forward by the Respondent flies in the face of earlier correspondence evidence in these proceedings:" p 14.

It may be noted here that his Honour did not identify any correspondence or any other evidence which supported his conclusion that the respondent had conveyed an intention to perform the work on the basis that she would then seek reimbursement of the expenses incurred from the appellant.

His Honour proceeded to refer to "the general principle" in relation to voluntary payments made by Bowen LJ in Falcke v Scottish Imperial Insurance Co (1886) 34 Ch D 234 at 248, at p 14-15 of the judgment.

The learned Magistrate proceeded to make a finding:

"I do not find that this argument is open to the respondent in the nature of these proceedings" p 15.2.

His Honour quoted dicta of Brereton J in Seiwa (supra) to the following effect:

"...the strict nature of the Owners Corporation's duty makes, whether or not it took all reasonable steps, irrelevant, if ultimately it failed at any time to meet the strict requirements of the s 62 duty..." p 15.2.

The Magistrate noted that the appellant admitted that it was in breach of the s 62 duty and he then proceeded to reach his conclusion on the issue of 'entitlement':

"I accept the Appellant's argument that given the above test, it is no defence for the respondent to show that it acted reasonably in the circumstances given the Appellant's behaviour. There is a strict statutory duty to keep common property in repair, and if the Owners Corporation fails to keep the same in repair then it is liable for all the consequential damage regardless of any reasonable, (but unsuccessful) attempts it might have made to ameliorate the problem." At p 15.4-15.6.

It is noted at this point that his Honour did not identify or analyse what could be regarded as "all the consequential damage". Nor did he address the principle upon which expenses incurred and claimed by the respondent constituted or could properly be considered as causative damage arising from or based upon a breach of s 62. The basis relied upon is referred to in paragraph 153 below.

Following the reference to the principle stated in Seiwa (supra) his Honour proceeded to deal with the issue as to the respondent's claim for the cost of repairs by accepting the appellant's argument that it was no defence for the appellant to show that it acted reasonably in the circumstances given the respondent's behaviour: at p 15.5.

As noted above, his Honour held that failure to repair meant that the appellant was "... liable for all the consequential damage regardless of any reasonable... attempts..."

The judgment proceeded to deal with evidence relating to a contention that "it was the respondent's non cooperation that caused the Appellant's loss:..." at p 15.6.

His Honour stated that the appellant had known from 29 July 2007 that the balcony required re-tiling across the entire area. He stated that the appellant had given permission to do the work that was eventually done by the appellant's builder, stating that that approval had been given in late April 2008. That is a finding, as examined below, that is disputed by the appellant. Ground 8 of the appeal grounds on the basis that there was no evidence to support the finding.

His Honour then discussed, (at pages 16 to 17) the decisions in Trevallyn-Jones v Owner Strata Plan No 50358 [2009] NSWSC 694, Seiwa (supra) and Lubrano v Proprietors of Strata Plan No 4038 (1993) 6 BPR 13,308 and then proceeded with his "Decision", stating:

"Based upon the foregoing I am satisfied that the Appellant has proved her case in respect of the claim for loss of rent and for the cost of removal and replacement of tiles:" p 19.

His Honour proceeded to award the respondent damages for lost rental over 19 weeks totalling $30,400.00 and the costs of replacing the tiles in the amount of $9,597.18.

Judgment was given in the respondent's favour in the sum of $39,997.18 together with interest from the date of the issue of the Statement of Claim.

(ii) Principles

The question as to whether a breach by an owners corporation of its duty under the Act gives rise to a private cause of action by a lot owner who suffers damage has been the subject of consideration in a number of cases: Lubrano (supra) per Young J, as His Honour then was; Seiwa (supra), Nicita v Owners of Strata PlanNo 64837 [2010] NSWSC 68 per Bryson AJ and Stolfa v Owners Strata Plan 4366 and Ors [2010] NSWSC 1507, per Brereton J.

The issues concerning a breach of statutory duty under s 62 were also considered in Ridis v Proprietors of Strata Plan 10308 [2005] NSWCA 246, (2005) 63 NSWLR 449 and Trevallyn-Jones (supra).

In Lubrano, supra, the Court determined the preliminary question in that case (extracted below) in the affirmative. That question related to the statutory duty under s 68 of the Strata Titles Act 1973, the predecessor to Section 62 of the Act and which was expressed in similar terms. The preliminary question was in the following terms:

"Does the failure by a body corporate to comply with (a) Obligations under s 68 of the Strata Titles Act 1973... give rise to separate causes of action in a lot owner who suffers damage as the result of that failure?"

Young J in Lubrano referred to the principle stated by Vaughan Williams LJJ in Groves v Lord Wimborne [1898] 2 QB 402, 415-6, as follows:

"...it cannot be doubted that, where a statute provides for the performance by certain persons of a particular duty, and someone belonging to a class of persons for whose benefit and protection the statute imposes the duty is injured by failure to perform it, prima facie, and, if there be nothing to the contrary, an action by the person so injured will lie against the person who has so failed to perform the duty."

Young J also referred to a passage in Whittaker v Rozelle Wood Products Ltd (1936) 36 SR (NSW) 204, 207 per Jordan CJ:

"If a statute creates a new duty, the question whether a person who suffers damage by reason of a breach of the duty may maintain an action in the ordinary Courts in respect of the breach depends upon the intention of the legislature, which is to be gathered upon a consideration of the particular statute read as a whole..."

It has been accepted as now established law that the duty of an owners corporation under s 62 is a statutory duty owed to each lot owner, and its breach gives rise to a private cause of action under which damages may be awarded to a lot owner for of the duty: see Seiwa (supra) and Trevallyn-Jones (supra) at [132]. However, it is necessary to examine the circumstances of each case for there are, as discussed below, limitations upon what may be considered to be recoverable loss or damage, and in particular, losses that may be considered as having a causal nexus with a breach of duty.

The facts in Seiwa, as earlier noted, involved circumstances in which there had been water penetration to a unit due to the failure of a water proofing membrane on the common property that sealed the floor of its external patio so as to prevent water from the surface of the patio entering into the unit.

Brereton J in Seiwa observed:

"3 There is no suggestion in this case that subsection (3) is applicable. It is subsection (1) that is relevant. Section 62(1) imposes on an owners corporation a duty to maintain, and keep in a state of good and serviceable repair, the common property. That duty is not one to use reasonable care to maintain and keep in good repair the common property, nor one to use best endeavours to do so, nor one to take reasonable steps to do so, but a strict duty to maintain and keep in repair.

4 The duty to maintain involves an obligation to keep the thing in proper order by acts of maintenance before it falls out of condition, in a state which enables it to serve the purpose for which it exists [Hamilton v National Coal Board [1960] AC 633, 647 (Lord Keith of Avonholm); Haydon v Kent County Council [1978] QB 433, 464 (Shaw LJ); Ridis v Strata Plan 10308 [2005] NSWCA 246, [161]]. Thus the body corporate is obliged not only to attend to cases where there is a malfunction, but also to take preventative measures to ensure that there not be a malfunction [Greetings Oxford Koala Hotel Pty Ltd v Oxford Square Investments Pty Limited (1989) 18 NSWLR 33 (Young J); Ridis, [162]-[163]]. The duty extends to require remediation of defects in the original construction of the common property [Proprietors Strata Plan No. 6522 v Furney [1976] 1 NSWLR 412, 416 (Needham J); Ridis [164]-[165]]. And it extends to oblige the owners corporation to do things which could not be for the benefit of the proprietors as a whole or even a majority of them [Proprietors Strata Plan 159 v Blake (1986) CCH Strata Titles Cases 30-068 (Yeldham J); Ridis, [166]].

5 It follows that as soon as something in the common property is no longer operating effectively or at all, or has fallen into disrepair, there has been a breach of the s 62 duty [cf Ridis [177]]. Insofar as Ridis held that s 62 did not oblige an owners corporation to conduct or procure the conduct of an expert assessment of every possible source of danger in the common property, personal property vested in it, and fixtures and fittings comprised in the common property, that was in the context of a submission that by imposing the statutory duty to maintain and repair, s 62 had the ancillary effect of extending the common law duty of care of an owners corporation as an occupier of the common property to include rigorous duties of inspection. The Court of Appeal rejected the submission that s 62 expressly or implicitly resulted in the imposition of such a common law duty. But that is beside the point; in this case, unlike in Ridis, the plaintiff relies on a statutory cause of action said to arise on s 62, rather than a duty of care said to arise consequentially from s 62 [cf Ridis, [87]-[88]]."

The appellant's claim for relief in that case was of two kinds. Firstly, the cost of rectification works. Secondly, relief by way of a prohibitory injunction to restrain any interference with the carrying out of rectification works. Alternatively a claim was made for a mandatory injunction to require performance of rectification works to the membrane, and further alternative relief, namely damages in lieu of such an injunction, in respect of the impact on the value of the unit of the continuing defect was also claimed. A claim was also made for damages for the loss of use of the unit.

In relation to these claims, Brereton J observed:

"27 The breach of duty and its consequences in this case are closely analogous to the tort of nuisance, from which guidance can be derived for the measure of damages. Ordinarily, the proper basis for assessing damages for nuisance is the diminution in value of the plaintiff's land occasioned by the breach [Moss v Christchurch RDC [1925] 2 KB 750; Owen v John L Norris Holdings Pty Ltd [1964] NSWR 1337]. Reasonably foreseeable consequential losses are also recoverable, including for example loss of custom in the case of interruption to a business conducted from the premises [Fritz v Hobson (1880) 14 ChD 542], or costs of relocation [Grosvenor Hotel Co v Hamilton [1894] 2 QB 836, 840; Evans v Finn (1904) 4 SR(NSW) 297]. Although the cost of restoring the plaintiff's property to its previous condition may be recoverable [Minter v Eacott (1952) 69 WN(NSW) 93 (FC); Taylor v Auto Trade Supply Ltd [1972] NZLR 102; Evans v Balog [1976] 1 NSWLR 35 - unless there is no prospect of the plaintiff performing the works [Hosie v De Ferro (1984) 3 BPR 9418], or such costs are entirely disproportionate to the diminution in value [Public Trustee v Hermann [1968] 3 NSWR 94; Jones v Shire of Perth [1971] WAR 56; Taylor (CR) (Wholesale) Ltd v Hepworths Ltd [1977] 2 All ER 784] - that does not extend to performance of works on the land from which the nuisance emanates. To remove the cause of a nuisance from another party's land is an act of abatement, to remedy the nuisance. While a person affected by a nuisance is entitled to abate it, including by entering onto the land from which the nuisance arises and removing its cause [Traian v Ware [1957] VR 200], the costs of abatement are not recoverable [Young v Wheeler (1987) Aust Tort Rep 80-126; Barbagallo v J & F Catelan Pty Ltd [1986] 1 QdR 245 (FC); Richmond City Council v Scantelbury [1991] 2 VR 38, 47-48], unless as reasonable costs of mitigation, and even then probably not if they involve going onto the land of the other party [Proprietors SP14198 v Cowell (1989) 24 NSWLR 478, 486-7].

28 Essentially, Seiwa's primary position involves a claim for the cost of undertaking works, not to repair damage to its own property, but to rectify a defect in the common property: it seeks to be permitted to perform the requisite repairs to the common property which the owners corporation ought to have done, and to recover damages for to the cost to it of doing so. This is in the nature of a claim for the costs of abatement. By analogy with the position relating to abatement of a nuisance, in my opinion such damages are not recoverable. In my view, therefore, the damages to which Seiwa is entitled comprise the diminution in the value of its unit occasioned by the continuing defect, and the consequential loss of the use of the unit since August 1994."

The circumstances in Seiwa differed from the facts of the present case in two main respects. Firstly, the appellant in that case had not entered onto common property and did not carry out repairs on common property. As noted above, there was a claim for an alternative form of relief, a mandatory injunction for carrying out rectification works. Secondly, the defect in Seiwa had led or resulted in water penetrating the membrane and entering into the appellant's unit. In the present case (a) the 'defect' was restricted to the tiles and associated materials on the balcony and (b) the respondent, by her contractor, in fact performed work on common property.

In Seiwa, as noted in the extracts above, the claim was for damages and was pursued on the basis of the appellant being permitted to perform repairs on the common property and then recover the cost to it of doing so. That claim failed.

In the present case, there being no infiltration or entry of water inside the respondent's unit emanating from defects in the tiles, it is not factually analogous to a case of nuisance as in Seiwa (supra).

It is necessary to identify and examine the underlying basis for the legal proposition referred to in Seiwa that a person who enters upon the land of another to abate a nuisance may be precluded from recovering the costs of the remedial works he or she undertakes on that land. The purpose in doing so is to determine whether there is a legal basis for the Magistrate's finding in this case that the respondent had an 'entitlement' to carry out work on common property and claim the expenses she incurred in replacing the tiles on that property.

The relevant principle which denies an entitlement to recover damages for abatement of a nuisance is a long-established one. In Lagan Navigation Co v Lambeg Bleaching, Dyeing and Finishing Co Ltd [1927] AC 226, Lord Atkinson stated:

"It has been well said that the abatement of a nuisance is a remedy which the law does not favour and is not usually advisable, and that its exercise destroys any right of action in respect of the nuisance. In Earl of Lonsdale v Nelson (1823) 2 B & C 302, 311 Best J said:

"The security of lives and property may sometimes require so speedy a remedy as not to allow time to call on the person in whose property the mischief has arisen, to remedy it. In such cases an individual would be justified in abating a nuisance from omission without notice. In all other cases of such nuisances, persons should not take the law into their own hands, but follow the advice of Lord Hale, and appeal to a court of justice." (emphasis added)

Lord Atkinson also referred to dicta of Collins LJ in Campbell Davys v Lloyd [1901] 2 Ch 518 at 524 as follows:

"The right of abatement by individuals is not regarded with favour by the law. In the words of Lord Hale: " because this many times occasions tumults and disorders, the best way to reform public nuisances is by the ordinary courts of justice."

In Halsbury's Laws of Australia, 4th ed, vol 34, p 126, para 349 it was observed:

"Abatement means the summary removal or remedy of nuisance by the party injured without having recourse to legal proceedings. Its exercise destroys any cause of action in respect of the nuisance except for damage in respect of harm sustained before the abatement."

Wood J in Young v Wheeler (1987) Aust Torts Reports 80-126 applied the principle that a person who has taken steps on the land of another to abate a nuisance is unable to recover the cost of the abatement as damages.

In the present proceedings although the respondent was not abating a nuisance she nonetheless, without the consent of the respondent, proceeded to engage and instruct her contractor in April 2008 to enter upon the balcony and remove the existing tiles. Later, in September 2008 she again engaged her contractor to enter the common property and lay the tiles she had chosen.

Taking into account the provisions of the Act that establish the strata scheme as discussed earlier in this judgment, a central question arises as to the basis, if any, upon which a lot owner without the consent or the approval of the owners corporation, or an order from a CTTT adjudicator under s 140(1) of the Act, may, in the event of a s 62 breach, proceed to undertake work on common property and subsequently claim reimbursement from an owners corporation of the expenses incurred.

The Act, as earlier noted, does not authorise a lot owner to undertake repair or rectification work on common property. The Act, however, provides lot owners with a statutory process by which an order under s 140 may be sought under which an owners corporation may be required to give consent to work of the kinds specific in s 140(1) (a) or (b). Additionally, as noted above, the provisions of the Act preserve the right of a lot owner to apply for a mandatory injunctive relief under the general law.

The respondent in the present case did not seek to engage either the statutory remedy under s 140 or any equitable relief. By her own decision a contractor was engaged, not for the purpose of undertaking work on her property, but to perform it on common property.

The issue of a claimed right to undertake work on another's property and claim the cost of doing so from the owner of that property in this case is to be considered in the context of the statutory scheme. It is useful to examine the relevant principles by considering the position under the general law where damage arises from a nuisance occurring on a neighbouring property.

The common law principles which limit the circumstances in which damages may be claimed for abating a nuisance have been set out above. Just as, in accordance with those principles, the unlawful performance of work on another's property does not find favour with the law for the reasons discussed in the case law above, provisions of the statutory scheme established under the Act operate so as to prevent lot owners or others from performing work on common property in the 'Key Management areas' specified in the Act. In that way the scheme, by conferring exclusive power, control and responsibility for common property in an owners corporation, ensures a controlled consistency of approach and the avoidance of disputes, or, in the language of the authorities on abatement of nuisance, "disorder".

The rationale or purpose for ensuring that all work referred to in ss 62 and 140 remains under the control of an owners corporation accordingly may readily be identified. If an individual lot owner was free to have his or her contractor enter upon common property where an owners corporation has failed to rectify a defect and perform work on it, the integrity of a particular strata scheme could be readily undermined. Repairs or rectifications undertaken by an individual lot owner could result in strata safety issues, or impact on the convenience of other owners or result in visual or structural features or other matters that are out of keeping with the style and integrity of the unit building itself.

The statutory obligations of an owners corporation to repair common property or to replace fixtures etc may be discharged by the corporation engaging contractors pursuant to s 13 of the Act. Where that occurs enforceable contractual rights against contractors operate in an owners corporation's favour should a contractor fail to meet relevant standards. In that event the owners corporation, may have the basis for seeking a remedy against a contractor. However, where work is performed by a contractor on behalf of an individual lot owner on common property, an owners corporation is obviously without such contractual remedies and rights.

The statutory scheme under the Act, in other words, centralises the control of common property in an owners corporation in 'Key Management areas' and confers both powers and functions on it to be exercised in accordance with the Act.

The approach adopted by the respondent in this case, if permissible, could result in the owners corporation incurring financial responsibility twice over. Thus in the respondent's letter of 6 September 2008 written to the Chairperson and the Committee Members of the Executive Committee, the basis upon which the respondent proceeded was stated as follows:

"We have taken the decision to complete the tiling on our front balcony. As advised, these tiles should be considered temporary. When the Owners Corporation is ready and able to re tile all balconies at... Challis Avenue, then Lot ...'s should be considered along with all others."

The "temporary" installation of tiles as fixtures to a balcony floor of a type, and/or of a colour etc, chosen by an individual lot owner may not be compatible with existing or other common property balconies. It may not represent the proper or the correct way of "repairing" defects. The respondent's statement: "these tiles should be considered temporary", in itself suggests or implies that the owners corporation may be liable for the expense of "temporary" re-tiling, notwithstanding that such expense would be wasted in the event that it was later determined that the temporary tiles were inappropriate or inadequate and required replacement by a permanent solution pursuant to decision of the owners corporation to re-tile a number or all of the balconies in the building in uniform fashion.

Additionally, expenditure on a "temporary" solution by way of a complete replacement of balcony tiling would represent an expenditure incurred for the benefit of one lot owner only, namely, the owner who had the benefit of the use of the common property (the balcony).

In order for the respondent to establish that the relevant breach of duty by the appellant under s 62 gave rise to a claim for damages in respect of the re-tiling work it was, in my opinion, necessary for the Magistrate to consider the following matters:

(i) The fact that the breach was in the nature of an omission or a failure by the appellant to repair or rectify damaged tiles.

(i) Whether in relation to such a breach there was a causal relationship between it and the alleged damage suffered by the respondent.

(ii) Whether the failure by the appellant to replace the tiles that had "popped," "lifted" or delaminated gave rise to an entitlement in the respondent in relation to:

a. The removal of all existing tiles and replace them with tiles of her choice, and

b. To recover the cost of that work from the appellant.

In essence the respondent's case was that the breach of the duty to repair under s 62 by the appellant caused the matters in (iii) (a) and (b) above. The error in the reasoning of the Magistrate is that there was a sufficient causal connection between the breach of duty and the expenditure assumes by the respondent to provide her with a right to recover from the appellant the expense of rectification as damages.

In Travel Compensation Fund v Tambree [2005] HCA 69 at [45] Gummow and Hayne JJ stated:

"...there are cases in which the answer to a question of causation will require examination of the purpose of a particular cause of action, or the nature and scope of the respondent's obligation in the particular circumstances."

In that case, based, in part upon conduct said to have been misleading and deceptive in contravention of s 42 of the Fair Trading Act 1987 it was observed that [49]:

"In the present case, where one of the claims made... was a statutory claim, "notions of 'cause' as involved in [that] statutory regime are to be understood by reference to the statutory subject, scope and purpose:" citing dicta in Allianz Australia Insurance Ltd v GSF Australia Pty Ltd [2005] HCA 26; (2005) 79 ALJR 1079 at 407.

Those observations, in my opinion, are relevant in assessing the issue of causation in respect of a cause of action based upon a breach of statutory duty. The central question in the present case, is whether the statutory scheme established by the Act, its statutory subject, its scope and purpose, a breach of duty under s 62 gives rise to a claim where one lot owner decides to undertake rectification work on common property and then claims the cost.

PART F - CONSIDERATION

In determining whether a lot owner has a claim for damages for breach by the owners corporation of its statutory duty under s 62, it is necessary to determine what, as a matter of causal nexus or linkage, may be considered as being the consequences of the breach. In that respect the decision in Seiwa and the cases therein referred to establish:

(a) In some circumstances a breach of duty may support a claim in damages for diminution in the value of a property in circumstances that are analogous to a nuisance.

(b) Reasonably foreseeable consequences are also recoverable. This would include, for example, loss of custom in the case of an interruption of a business.

(c) The cost of restoring an owner's property to its previous condition may be recoverable by the owner. However that does not extend to performance of works on the property of another to eliminate a nuisance. The costs of abating a nuisance are not recoverable unless, as a reasonable cost and even then probably not if they involve going on to the land of the other party: Proprietors SP14198 v. Cowell (1989) NSWLR 478.

The factual situation that faced the plaintiff in Seiwa being the owner of the particular unit in that case, involved more serious type of loss or damage than arose in the present case in terms of the degree and amount of damage resulting from water penetration into the living area of the unit.

In the present case the relevant defect was confined to a section of common property, namely, relevant area of the tiled surface of the balcony.

Notwithstanding the nature and extent of damage in Seiwa, which as earlier noted involved property in a strata scheme, and a similar breach of statutory duty, it was held that the plaintiff could not recover the cost of performing rectification work on the common property. This was on the basis of the principle referred to and applied in Young v Wheeler (supra), confirmed in Proprietors SP 14198 v Cowell (supra). To hold that the principle that applied in those cases did not apply in the present case to prevent the respondent from performing work on common property and claim for recovery of expenses for the work would be anomalous, more particularly so as discussed above, where the statutory scheme and the legislative intent of the Act is to place the control and management of common property in the owners corporation with statutory remedies against it available to lot owners.

Brereton J in Seiwa referred to an analogy with abatement of a nuisance. However, the fundamental point being made here by his Honour concerned the principles relating to the law of nuisance. His Honour was not directing his observation merely to the facts, or to a factual analogy due to the fact of water penetration being sufficient to amount to constitute a nuisance.

The relevant principle in that respect, as discussed above, does not permit the recovery of damages for work performed on the property of another. Whilst in Seiwa it was held that the plaintiff could recover damages for the cost of undertaking repair work on the plaintiff's own property it was held that it was not entitled to undertake work on common property and then recover as damages the expenses incurred in so.

The basis for the principle against recovery in the latter situation is clear. The relevant case law authorities establish that the law does not look with favour upon an owner of one property of performing work on his neighbours property, it being recognised that such conduct carries with it the propensity for disputation, "turmoil" or "disorder". The statutory provisions that establish a strata scheme, in my opinion, are directed towards maintaining an order amongst strata lot owners and with the owners corporation. They neither authorise nor permit a lot owner to determine the nature and extent of construction to be undertaken on common property. Nor do they permit an individual owner to engage a contractor to perform work on common property without the consent or approval of the owners corporation. Accordingly, the expenditure incurred by the respondent cannot be considered as "damage" inflicted upon or occasioned to the respondent. Nor did the evidence before the Local Court establish a causal nexus between the breach under s 62 of the Act and the expenditure claimed by the respondent.

The finding by the learned magistrate that the respondent was entitled to recover the cost of the laying the new tiles was initiated by legal error and the order in favour of the respondent for the amount paid by her in that respect should be set aside.

PART G - The Claim for Lost Rental

The respondent claimed that the condition of the balcony was such as to prevent her from leasing the unit on a short-term basis in the period 4th September 2007 to 14th January 2008.

In determining the claim a number of issues and factual disputes arose on the evidence that required resolution by the Magistrate. They included:

(i) Whether the respondent had an intention in September 2007 to short-term lease her unit prior to internal renovations on her unit commencing in January 2008.

(ii) The condition of the balcony as at September 2008. In this respect:

(a) Whether the balcony was so damaged as to render it effectively unlettable or,

(b) If the unit was capable of being leased, at what weekly short-term rental having regard to the damage to the balcony?

The evidence of the respondent on the issue is addressed in her first affidavit sworn 12 August 2010 and in her cross-examination.

In her affidavit she said:

"10 At the end of the lease the tenants of the unit departed, on 4th September 2007. After the departure of the tenant, I wanted to enter into a short-term lease of the Unit so that I could earn income from it pending the renovations I planned to carry out in the course of 2008. That was not possible given the state of the balcony. It was broken up, unsightly and unsafe. I thus decided to insure that the balcony was repaired urgently."

The respondent also stated in her affidavit that between August and November 2007 she conducted investigations into the condition of the balcony with a licensed builder: paragraphs11-14.

In paragraph 9 of her affidavit, she stated that before the tenant left she inspected the unit and observed the following:

"...approximately 20 square metres of tiles on the balcony had completely lifted and broken up, and many other tiles were cracked and broken. About 80% of the remaining tiled area on the balcony produced a drum like hollow sound when walked over. At the edges of the broken area the tiles had approximately 100mm above the concrete slab...photographs that I took at the time show the state of the tiles."

Other evidence given in the proceedings on the physical or visible condition of the balcony tiles prior to work commencing the internal renovation of the unit in January 2008 was as follows:

(1) On 30th October 2006 at a quarterly owners committee meeting an item entitled "Cracked Terrace Tiles" recorded:

"Cracked Terrace Tiles of Unit 3.

Committee agrees to replace the damaged portion of the Terrace only"

(2) On 13th December 2006 the then tenant by email wrote to the respondent stating:

"Last week the front balcony tiles "Popped" - lifted...."

(3) On 29th July 2007 Nathan Farrugia of Coastline Remedial Building Services Pty Ltd sent a quotation to the owners corporation which, in part, was in the following terms:

"Tiles have been delaminated and are lifting to the front balcony of Unit 3. This will require the tiles to be removed and replaced.

Our price includes:

Removal of all tiles and screed to balcony deck (20m2);

Screed to falls;

Install Quarried tiles to match existing (supplied by fitters); and

All rubbish removed from site "

Our price will be $3,000 Inc G.S.T."

The photographs constituting Annexure G to the respondent's first affidavit consisted of the following:

3 coloured photographs showing broken tiles; and

A black and white photocopy of a photograph showing damaged tiles.

The respondent's affidavit evidence was that these photographs were taken by her around August 2007, (in cross-examination she appeared to proceed upon the basis that they were taken in September 2007, although nothing turns on the point). She was cross-examined as to the extent of the damage to the tiles that existed at that time. It was put to her that the photographs at Annexure G were not taken in August 2007 but that they post-dated the work undertaken at her request in April 2008 to remove the tiles. The respondent denied that was so.

During cross-examination on the black and white photocopy of the photograph forming part of Annexure G it was put to the respondent that something had been placed over the area of the tiles and had collected dust and that the dust had arisen from the building work on the internal renovation of the unit which had commenced in January 2008. The respondent agreed. She also agreed, when put to her, that if the building renovation work did not commence until January 2008 then the black and white photographs could not have been taken in 2007. She conceded that she had made an error in this regard. "...this one was probably taken later than the others: " Local Court Transcript, 12th November 2010 at page 27 line 24-27.

A significant issue also arose between the parties as to whether the coloured photographs, being part of Annexure G, depicted the condition of the tiles as at September 2007 or whether they were taken after the floor tiles had been broken and removed in April 2008. In this respect, the following matters are noted:

(1) On 22nd February 2008, that is before any work had been carried out on the balcony, Mr Peter O'Neill, had inspected the balcony site. A copy of his report was annexed to the respondent's affidavit. In the report (at page 6) Mr O'Neill stated that he observed on his inspection an area 1.5 metres wide by 1.8 metres deep located centrally in the span of the front balcony that had catastrophically separated from the substrata and buckled upwards as a result of differential movement. The location described was "located centrally" in the span of the front balcony. At least on one view this description of damage does not, as discussed below, accord with what is depicted in the three colour photographs reconstituting Annexure G to the respondent's affidavit.

(2) The coloured photographs do not so much depict tiles that had "buckled upward" but revealed tiles that had been broken into many pieces and otherwise fragmented. One area shown in the photographs did not have any tile covering the area at all.

(3) The first of the coloured photographs depict the extreme outer edge of brickwork to the balcony having buckled upwards. This would appear to be in an area which was capable of being seen by, a lot owner Ms Joan Henderson, who in her affidavit sworn on 14 September 2010 said that in December 2007 the balcony did not exhibit the damage shown in the coloured photographs. Ms Henderson was also cross-examined as to the accuracy of her observations, in particular as to the extent to which the respondent's balcony was visible from her balcony unit which was located at a level higher.

The issue of the condition of the balcony as at September 2007 and the reliability of the evidence of the respondent and Ms Henderson and in importantly its condition as shown in the coloured photographs attached to the respondent's affidavit, were central issues in the claim for rent. They went to the question as to whether or not the unit was rentable at all, the respondent maintaining the position that the damage to the balcony tiles was so extensive that it was not rentable and that she had suffered a total loss of income as a consequence.

On such factual issues, which had a material bearing on ultimate facts concerning the cause of action relied upon by the respondent, it was incumbent for the tribunal of fact to make necessary findings to establish what, on the probabilities, was the extent of the defects in the tiles as at September 2007. That was an essential matter in the determination in reaching the conclusion that the unit was not rentable resulting in a loss of rent at the rate of $1,600 per week.

The judgment on the claim for lost rental, however:

Failed to address and resolve the evidence and the conflict in the evidence on the issue.

Failed to make any relevant findings in relation to the photographic evidence in Annexure "G" and the other evidence on the issue.

Failed to determine the probable condition of the balcony at the material time.

Failed to determine whether the defects in the balcony made the unit un-rentable in light of findings on the above matters.

The coloured photographs in Annexure G plainly depict a significant level of damage to the tiles and to the balcony and otherwise to the balcony floor. The respondent's evidence that they had been taken in September 2007 was strongly disputed.

The photographs at least arguably appear to show more extensive damage than that reported on in the early months of 2008 as indicated by the evidence summarised above. The photos show balcony tiles in a severely broken condition, scattered tiles and in some instances resting one upon another. At least arguably, the report of Mr O'Neill and other evidence referred to above does not suggest tiles had been broken and fragmented into the pieces visible on the photographs.

It is, of course, not possible nor open on an appeal of this kind for any finding to be made as to whether the coloured photographs were in fact taken in September 2007 and related to the condition of the balcony at that time or whether, as contended for by the appellant, they depicted the condition of the balcony tiles after and not before, work to remove the tiles commenced in April 2008.

What is important for the purpose of this appeal is that the evidence of the respondent, namely of the photographs themselves and the evidence of Ms Henderson, all related to a fundamental issue of fact for the Magistrate to determine.

The learned Magistrate failed to refer in his judgment to the evidence of the respondent or Ms Henderson on the subject of the physical condition of the tiles and the facts relating thereto. Nor did his Honour undertake an analysis of the conflicting evidence or the photographs concerning it and make necessary findings on the disputed issue.

The Magistrate at the top of page 10 of his judgment in dealing with the respondent's claim for loss of rental income stated:

"The Plaintiff sought to lease her premises and so wanted to take advantage of the high potential weekly rents available for the property during the summer of 08/09..." (Reference to 08/09 was erroneous. It meant the loss of rental income as claimed for the period 4th September 2007 to 14 January 2008).

His Honour later returned to the loss of rental claim at page 12 of the judgment. He then proceeded to discuss the issue as to the amount of the rent that could have been obtained from a short-term lease, with references being made to the evidence of Mr Pavlakis and Mr Hyam.

Without having determined the issue of the balcony's condition, the Magistrate then proceeded (at p 19):

"Decision

Based upon the forgoing I am satisfied that the Plaintiff has proved her case in respect to the claim for loss of rent and the cost of removal and the replacement of tiles.

As for the loss of rent I accept that a reasonable amount (as stated previously) is $1,600 per week for 19 weeks, a total of $30,400.00."

In Workers Compensation (Dust Diseases) Board of NSW v Smith [2010] NSWCA 19 at 136-138, Basten JA observed that a failure of a court to give adequate reasons for findings made constitutes an error of law citing Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247. Basten JA additionally stated at [138]: "The legal obligation on the part of a judge to give reasons for his or her decision derives from the nature of judicial power and the problem means of its exercise:" Soulemezis (supra) at (278 -279) per McHugh JA.

The relevant case law on the failure to give reasons and the failure to make findings has recently been reviewed in SAS (Sales) Pty Ltd v SJPJ Pty Ltd [2011] NSWSC 905 by Schmidt J.

In SAS, her Honour noted that the Magistrate in that case had not made reference to other evidence or to the parties' submissions, nor did he give reasons as to how he had resolved the questions of fact and law that arose for determination, other than by stating his quoted conclusions; [14]. Her Honour noted that it was not in issue that such an approach was fundamentally inconsistent with the duty to give reasons. Her Honour at [14] then set out dicta in Alchin v Daley [2009] NSWCA 418 of Sackville AJA (with whom McColl and Young JJA agreed):

"[35] There was no dispute as to the principles to be applied in determining whether a trial Judge has given adequate reasons for making findings of fact. McColl JA stated the principles, supported by detailed citation of authority, in Pollard v RRR Corporation [2009] NSWCA 110. The principles articulated in that case were summarised in Qushair v Raffoul [2009] NSWCA 329, at [52], per Sackville AJA, with whom Campbell JA and Bergin CJ in Eq agreed (the paragraph references are to McColl JA's judgment in Pollard ):

(i) The giving of adequate reasons lies at the heart of the judicial process, since a failure to provide sufficient reasons can lead to a real sense of grievance because the losing party cannot understand why he or she lost (at [57]): see Beale v Government Insurance Office (NSW) (1997) 48 NSWLR 430, at 442, per Meagher JA.

(ii) While lengthy and elaborate reasons are not required, at a minimum the trial judge's reasons should be adequate for the exercise of a facility of appeal, where that facility is available (at [56]): see Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247, at 260, per Kirby P; at 269, per Mahoney JA.

(iii) The extent and content of the reasons will depend on the particular case and the issues under consideration, but it is essential to expose the reasoning on a point critical to the contest between the parties (at [58]): see Soulemezis v Dudley , at 259, per Kirby P; at 280, per McHugh JA. This may require the judge to refer to evidence which is critical to the proper determination of the issue in dispute (at [62]): Beale v GIO , at 443, per Meagher JA.

(iv) Where credit issues are involved, it is necessary to explain why one witness is preferred to another. Consequently, bald findings on credit, where substantial factual issues have to be addressed, may not comply with the common law duty to give reasons (at [65]): Palmer v Clarke (1989) 19 NSWLR 158, at 170, per Kirby P (with whom Samuels JA agreed).

(v) Where an appellate court concludes that the trial judge has failed to give adequate reasons, the court has a discretion whether or not to direct a new trial. If, despite the inadequate reasons, only one conclusion is available, a new trial may not be necessary (at [67]).

[36] In Pollard , McColl JA also cited with approval a passage from the judgment of Ipp JA, with whom Mason P and Tobias JA agreed, in Goodrich Aerospace Pty Ltd v Arsic [2006] NSWCA 187; 66 NSWLR 186, at 191-192 [28]. The passage, including the succeeding paragraph (at [29]) is as follows:

"It is not appropriate for a trial judge merely to set out the evidence adduced by one side, then the evidence adduced by another, and then assert that having seen and heard the witnesses he or she prefers or believes the evidence of the one and not the other. If that were to be the law, many cases could be resolved at the end of the evidence simply by the judge saying: "I believe Mr X but not Mr Y and judgment follows accordingly". That is not the way in which our legal system operates. ..."

In Pollard v RRR Corporation [2009] NSWCA 110 McColl JA emphasised the need, where there are issues of credibility involved in sub-issues, for the tribunal to resolve them. Her Honour observed:

"Often important issues like credibility involve sub-issues, objective facts, or facts that are probable, are capable of having significant bearing on the sub-issues. In cases of this kind, it is incumbent upon trial judges to resolve the sub-issues and to explain, by reference to the relevant facts for conclusions to which they have come. This has not been done, they should then turn to the ultimate facts in issue and explain how their decisions on the sub-issues has assisted them in forming their conclusion on the alternate issue. It is only when adequate reasons of this kind are given that an unsuccessful party will be able to understand why the judge has believed his or successful claim."

In my opinion, his Honour failed, in finding in favour of the respondent on the loss of rental, to apply the above principles. His Honour made no reference to the evidence, or to the submissions and on the issue of the condition of the balcony on September 2007, whether the photographs in Annexure G were taken in September 2007 or after work was performed in April 2008.

In determining the likely market rental for the property his Honour accepted the evidence of Mr Pavlakis over Mr Hyam. The evidence of Mr Pavlakis, however, did not comply with the essential requirements for expert evidence. The opinion given by him as to market rental value consisted of an unsupported assertion without reference to comparable rental data or other underpinning material to support it. In those circumstances the evidence of Mr Pavlakis was strictly inadmissible: Makita (supra) at 731, 743 - 5 per Heydon JA (as his Honour then was). The evidence of Mr Pavlakis was in any event, for the reasons discussed above, of little or no weight. The learned Magistrate failed to evaluate its probative value and additionally failed to resolve the conflict between Mr Pavlakis' opinion and that of Mr Hyam. The failure to do so constitutes an omission to apply judicial method of reasoning in accordance with the principles discussed above. The order in favour of the respondent on the rental claim was accordingly afflicted by errors of law and should be set aside.

The claim for lost rental, of course, has a different basis to the claim for rectification costs. It is claimed as a direct loss said to have resulted from the appellant's breach of statutory duty. Whether it could be said to have been a recoverable loss was a matter that required determination as discussed above. In the circumstances the rental claim in the proceedings should be remitted to the Local Court for determination.

ORDERS

Accordingly, I have concluded that the following orders should be made:

(1) Appeal allowed.

(2) The judgment and order of the Local Court made on 30 May 2011 by way of a verdict in the sum of $39,997.18 together with interest be set aside.

(3) The costs order made by the Local Court on 30 May 2011 be set aside.

(4) The proceedings be remitted to the Local Court on the following bases;

(a) The claim for lost rental income only to be determined by that Court constituted by another member of that Court.

(b) Judgment to be entered in favour of the appellant (the defendant to proceedings 2010/3041 in the Local Court) in respect of the respondent's claim in that Court for expenses incurred by her for the re-tiling of the balcony, the subject of the proceedings.

**********

Amendments

23 August 2012 - corrected representation

Amended paragraphs: coversheet

Decision last updated: 23 August 2012

Medium Neutral Citation:	The Owners - Strata Plan 32735 v Heather Lesley-SWAN [2012] NSWSC 383
Hearing dates:	16 December 2011
Decision date:	10 August 2012
Jurisdiction:	Common Law
Before:	Hall J
Decision:	(1) Appeal allowed. (2) The judgment and order of the Local Court made on 30 May 2011 by way of a verdict in the sum of $39,997.18 together with interest be set aside. (3) The costs order made by the Local Court on 30 May 2011 be set aside. (4) The proceedings be remitted to the Local Court on the following bases; (a) The claim for lost rental income only to be determined by that Court constituted by another member of that Court. (b) Judgment to be entered in favour of the appellant (the defendant to proceedings 2010/3041 in the Local Court) in respect of the respondent's claim in that Court for expenses incurred by her for the re-tiling of the balcony, the subject of the proceedings.
Catchwords:	REAL PROPERTY - STRATA MANAGEMENT - Appeal from Local Court - management and control - rights and obligations of proprietors - where owners corporation breached duty to repair and maintain common property - where lot owner made repairs to common property without permission of owners corporation - whether lot owner entitled to be compensated for expense incurred in undertaking rectification work on common property - expenses not recoverable as a loss attributable to breach of duty - Act does not authorise lot owner to determine nature and extent of construction to be undertaken on common property or engage a contractor to perform work on common property without the consent or approval of the owners corporation - statutory and other remedies available to lot owner where owners corporation in breach of statutory duty - whether lot owner entitled to be compensated for loss of rent attributable to the owners corporation's breach of its duty - Magistrate failed to resolve disputed issues of fact and failed to provide proper reasons as to the basis for conclusions reached - order awarding damages for lost rental claimed set aside - rental claim remitted to Local Court for determination.
Legislation Cited:	Evidence Act 1995 Fair Trading Act 1987 Local Court Act 2007 Strata Schemes Management Act 1996 Strata Titles Act 1973
Cases Cited:	Alchin v Daley [2009] NSWCA 418 Allianz Australia Insurance Ltd v GSF Australia Pty Ltd [2005] HCA 26; (2005) 79 ALJR 1079 Campbell Davys v Lloyd [1901] 2 Ch 518 Earl of Lonsdale v Nelson (1823) 2 B & C 302, (1823) 107 ER 396 Falcke Scottish Imperial Insurance Co (1886) 34 Ch D 234 Groves v Lord Wimborne [1898] 2 QB 402 Lagan Navigation Co v Lambeg Bleaching, Dyeing and Finishing Co Ltd [1927] AC 226 Lubrano v Proprietors of Strata Plan No 4038 (1993) 6 BPR 13,308 Makita (Australia) Pty Ltd v Sprowles [2001] 52 NSWLR 705, [2001] NSWCA 305 Nicita v Owners of Strata Plan (No 64837) [2010] NSWSC 68 Pollard v RRR Corporation [2009] NSWCA 110 Proprietors SP14198 v Cowell (1989) NSWLR 478 Ridis v Proprietors of Strata Plan 10308 [2005] NSWCA 246, (2005) 63 NSWLR 449 SAS (Sales) Pty Ltd v SJPJ Pty Ltd [2011] NSWSC 905 Seiwa Pty Ltd v Owners Strata Plan 35042 [2006] NSWSC 1157 Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 Stolfa v Owners Strata Plan 4366 and Ors [2010] NSWSC 1507 Travel Compensation Fund v Tambree [2005] HCA 69 Trevallyn-Jones v Owner Strata Plan No 50358 [2009] NSWSC 694 Whittaker v Rozelle Wood Products Ltd (1936) 36 SR (NSW) 204 Workers Compensation (Dust Diseases) Board of NSW v Smith [2010] NSWCA 19 Young v Wheeler (1987) Aust Torts Reports 80-126
Texts Cited:	Halsbury's Laws of Australia, 4th edition
Category:	Principal judgment
Parties:	The Owners - Strata Plan 32735 Heather Lesley-Swan
Representation:	Counsel: Appellant - Mr H Woods Respondent - Mr M Young SC Solicitors: Appellant - Jane Crittenden, Lawyer Respondent - Dixon Holmes du Pont
File Number(s):	2011/00207012
Publication restriction:	No
Decision under appeal	Jurisdiction: 9109 Date of Decision: 2011-05-30 00:00:00 Before: Magistrate Maloney File Number(s): 2010/3041