The Owners Strata Plan No 2661 v Selkirk

[2024] NSWSC 760

Supreme Court

New South Wales

Medium Neutral Citation:

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

Hearing dates:

12 June 2024

Decision date:

21 June 2024

Jurisdiction:

Common Law

Before:

Leeming JA

Decision:

1. Grant leave to appeal, confined to ground 3 of the summons filed on 5 March 2024, and otherwise refuse leave.

2. Appeal allowed.

3. Answer the question “Whether a mitigation defence is available in answer or partial answer to a claim for damages under s 106(5)”:

It is open to an owners corporation to seek to establish that all or part of a lot owner’s claimed damages are not damages for foreseeable losses as a result of the owners corporation’s breach of duty, including by establishing that the lot owner has behaved unreasonably in failing to mitigate his, her or its loss.

4. Note that the remittal pursuant to order 3 made by the Appeal Panel on 6 February 2024 will be conducted in accordance with these reasons.

5. The Registrar of this Court be directed to refer a copy of these reasons for judgment, and a copy of part of the reasons of Senior Member Tyson delivered on 15 August 2023 (insofar as those reasons have been provided to this Court) to the Office of the Legal Services Commissioner, with a view to considering whether any steps should be taken in relation to the Senior Member’s findings at [123].

Catchwords:

LAND LAW – strata title – duties of owners corporation – duty to maintain and repair common property – claims for rectification works and damages by lot owner under Strata Schemes Management Act 2015 (NSW), s 106(5) and 232(1) following breach of duty – whether entitlement of owners corporation to apply for orders to inspect and perform works on lot owner’s property an answer to resistance by lot owner to accessing her property – whether open to owners corporation to rely on unreasonable conduct by lot owner in failing to mitigate her loss in partial defence to claim for damages – consideration of nature of duty owed by owners corporation and statutory right to damages under s 106

Legislation Cited:

Australian Consumer Law, s 236

Civil and Administrative Tribunal Act 2013 (NSW), s 83, cl 6(2) of Sch 4

Civil Liability Act 2002 (NSW), Pt 1A, s 5D

Civil Procedure Act 2002 (NSW), s 56

Court Suppression and Non-publication Orders Act 2010 (NSW)

Home Building Act 1989 (NSW)

Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (NSW), r 5

Residential Tenancies Act 2010 (NSW), s 52

Safety, Rehabilitation and Compensation Act 1988 (Cth)

Strata Schemes Management Act 1996 (NSW), s 62

Strata Schemes Management Act 2015 (NSW), ss 4, 106, 122, 123, 124, 232

Trade Practices Act 1974 (Cth), ss 82, 87

Cases Cited:

Adeels Palace Pty Ltd v Moubarak (2009) 239 CLR 420; [2009] HCA 48

AK v Western Australia (2008) 232 CLR 438; [2008] HCA 8

Alexandria Landfill Pty Ltd v Transport for NSW (2020) 103 NSWLR 479; [2020] NSWCA 165

Bak v Glenleigh Homes Pty Ltd [2006] NSWCA 10

British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd [1912] AC 673

Brotherhood of St Laurence v Sarina Investments Pty Ltd [2024] VSCA 46

Carli v The Owners - Strata Plan No 56120 [2018] NSWCATCD 55

Carr v Carr [2022] NSWSC 166; 21 ASTLR 511

CJD Equipment Pty Ltd v A&C Constructions Pty Ltd [2011] NSWCA 188

Comcare v Martin (2016) 258 CLR 467; [2016] HCA 43

Edwin Davey Pty Ltd v Boulos Holdings Pty Ltd [2022] NSWCA 65; 20 BPR 42,355

Fisher v Nonconformist Pty Ltd [2024] NSWCA 32

Fitzgerald v Penn (1954) 91 CLR 268; [1954] HCA 74

Fox v Percy (2003) 214 CLR 118; [2003] HCA 22

Galafassi v Kelly (2014) 87 NSWLR 119; [2014] NSWCA 190

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

Henville v Walker (2001) 206 CLR 459; [2001] HCA 52

Jonval Builders Pty Ltd v Commissioner for Fair Trading (2020) 104 NSWLR 1; [2020] NSWCA 233

Karacominakis v Big Country Developments Pty Ltd [2000] NSWCA 313; 10 BPR 18,235

Liberant v The Owners - Strata Plan No 62713 [2020] NSWCATCD 16

March v E & MH Stramare Pty Ltd (1991) 171 CLR 506; [1991] HCA 12

Masterton Homes Pty Ltd v LED Builders Pty Ltd (1996) 33 IPR 417

Military Rehabilitation and Compensation Commission v May (2016) 257 CLR 468; [2016] HCA 19

Owners SP 76674 v Di Blasio Constructions PL [2014] NSWSC 1067

Owners Strata Plan 50276 v Thoo [2013] NSWCA 270; 17 BPR 33,789

Queensland v Masson [2020] HCA 28; (2020) 94 ALJR 785

Riley v The Owners - Strata Plan 73817 [2012] NSWCA 410

Schwartz Family Co Pty Ltd v Capitol Carpets Pty Ltd [2017] NSWCA 223

Seiwa Pty Ltd v Owners Strata Plan 35042 [2006] NSWSC 1157; 12 BPR 23,673

Selkirk v The Owners – Strata Plan No 2661 [2022] NSWSC 858

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

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

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

Tapp v Australian Bushmen's Campdraft & Rodeo Association Ltd (2022) 273 CLR 454; [2022] HCA 11

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

The Owners – Strata Plan No 74835 v Pullicin; The Owners – Strata Plan No 80412 v Vickery [2020] NSWCATAP 5

The Owners – Strata Plan No 76674 v Di Blasio Constructions Pty Ltd [2014] NSWSC 1067

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

The Owners SP 35042 v Seiwa Australia Pty Ltd [2007] NSWCA 272; 13 BPR 24,789

Vickery v The Owners – Strata Plan No. 80412 (2020) 103 NSWLR 352; [2020] NSWCA 284

Wallace v Kam (2013) 250 CLR 375; [2013] HCA 19

Weld-Blundell v Stephens [1920] AC 956

White v Betalli (2007) 71 NSWLR 381; [2007] NSWCA 243

Williams v Pisano (2015) 90 NSWLR 342; [2015] NSWCA 177

Young v Chief Executive Officer (Housing) [2023] HCA 31

Category:

Principal judgment

Parties:

The Owners – Strata Plan No 2661 (Plaintiff)
Simone Selkirk (Defendant)

Representation:

Counsel:
C Purdy (Plaintiff)
A Rizk (Defendant)

Solicitors:
Mills Oakley (Plaintiff)
Sachs Gerace Lawyers (Defendant)

File Number(s):

2024/85147

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

NSW Civil and Administrative Tribunal

Jurisdiction:

Appeal Panel

Citation:

[2024] NSWCATAP 17

Date of Decision:

6 February 2024

Before:

S Westgarth, Deputy President
G Burton SC, Senior Member

File Number(s):

2023/289207

JUDGMENT

1. LEEMING JA: The owners corporation of a strata scheme in Darling Point with nine lots brings this appeal against Ms Simone Selkirk, the owner of Lot 5, pursuant to s 83 of the Civil and Administrative Tribunal Act 2013 (NSW), from a decision of the Appeal Panel of the NSW Civil and Administrative Tribunal: Selkirk v The Owners - Strata Plan No 2661 [2024] NSWCATAP 17. The appeal only lies with leave and is confined to questions of law.

2. The procedural history is lengthy, although the issues dividing the parties are quite confined. They arise from Ms Selkirk’s claim for rectification and lost rent following a leak from her flat’s bathroom some 3½ years ago and the owners corporation’s conceded breach of the duty imposed on it by s 106(1) of the Strata Schemes Management Act 2015 (NSW) to repair and maintain the common property.

3. Despite the appeal being confined to questions of law, it is necessary to have regard to the procedural history and factual findings made by the Senior Member – essentially, no breach of duty, no basis for rectification order, no causation, and unreasonable conduct by Ms Selkirk – some of which were concededly wrong, but notwithstanding all of which the Appeal Panel found in Ms Selkirk’s favour. Most of the factual material in what follows is taken from the reasons of 310 paragraphs of the Senior Member, because the actual documents (which I would infer were voluminous) were not tendered before me, nor was the transcript of the hearing at first instance.

4. But before addressing that history, it is best to commence with statute. The Appeal Panel identified the questions arising on the appeal as including whether there had been established by evidence:

what was required for the scope of work by the [owners corporation] to fulfil its strict duty to maintain and repair common property; [that] the appellant caused her own loss; the appellant failed to mitigate her loss for substantially the same reasons as causing her own loss; the appellant failed to establish the scope of remediation of tiling that was required, and the appellant sought an inappropriate measure and amount of damages for alleged lost rent.

5. The issues thereby summarised are not unfamiliar. No doubt the terminology reflected the parties’ pleadings and submissions. But in order to understand concepts like “fulfil its strict duty”, “caused her own loss”, “failed to mitigate her loss” and “sought an inappropriate measure and amount of damages” the necessary starting point is statute. In particular, central to the reasoning of the Appeal Panel in finding that Ms Selkirk was entitled to damages pursuant to s 106(5), the relatively new subsection enacted in 2015 so as to reverse the result determined by Owners Strata Plan 50276 v Thoo [2013] NSWCA 270; 17 BPR 33,789, was its reliance on the statutory power conferred on the owners corporation by s 122 to enter Ms Selkirk’s property to investigate and repair the leak.

6. Section 106 of the Strata Schemes Management Act provides:

106 Duty of owners corporation to maintain and repair property

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

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

(3) This section 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.

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

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

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

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

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

7. Subsections (1), (2) and (3) are identical to subsections (1), (2) and (3) of s 62 of the Strata Schemes Management Act 1996 (NSW); the remaining subsections are new. Subsections (1) and (2) impose important duties on the owners corporation, which (when appearing in predecessor provisions) have been the subject of a deal of authority. Subsection (3) disapplies those duties in relation to specified property where a special resolution has been passed. Subsection (4) qualifies the obligation of the owners corporation to perform those duties in circumstances where the owners corporation has taken action against an owner or a third party, in circumstances where there is no issue of safety. Subsection (7) imposes a further qualification to the duties imposed by the section.

8. Subsection (5) is new and overturns the result in Thoo. It is now established that NCAT is authorised to order the “damages for breach of statutory duty” in s 106(5) to which an owner of a lot may be entitled: Vickery v The Owners – Strata Plan No 80412 (2020) 103 NSWLR 352; [2020] NSWCA 284. Until quite recently, this was quite unclear: thus in The Owners – Strata Plan No 74835 v Pullicin; The Owners – Strata Plan No 80412 v Vickery [2020] NSWCATAP 5 at [9] the Appeal Panel said, correctly, that “[t]here are now three partially inconsistent Appeal Panel decisions about the same issue”. The time limits within which a claim is to be brought are found in s 106(6), whose operation was considered and explained in The Owners – Strata Plan No 74232 v Tezel [2023] NSWCA 35. However, it would be wrong to say that all of the principles bearing upon the relatively new statutory entitlement to damages are settled.

9. It is clear that the lot owner’s entitlement is conditioned upon the lot owner’s loss being both “reasonably foreseeable” and “as a result of” a contravention of the section. I shall proceed on what was implicitly common ground between the parties, and which is consistent with the conventional understanding of a remedy of “damages”, that a lot owner’s entitlement to recover damages is as of right on the establishment of the preconditions to s 106(5).

10. Thus one consequence of a breach of the duties imposed by s 106(1) and (2) and the inapplicability of ss 106(3), (4) and (7) is that one of the elements of a lot owner’s entitlement to recover damages pursuant to s 106(5) will have been satisfied.

11. Separately from the above, s 232 relevantly provides:

232 Orders to settle disputes or rectify complaints

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

…

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

...

(2) Failure to exercise a function For the purposes of this section, an owners corporation, strata committee or building management committee is taken not to have exercised 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.

12. Section 4 provides that “function includes a power, authority or duty, and exercise a function includes perform a duty”. There is nothing to displace that extended meaning for those words in s 232. Thus where there is a “complaint or dispute” about the failure to perform the duties imposed by s 106, NCAT is empowered to make an order to settle the complaint or dispute. It is quite plain that the power conferred on NCAT under s 232 is discretionary. The notion of a claimant having an entitlement as of right to damages and the possibility of discretionary relief under the same statutory regime is not unfamiliar: see Masterton Homes Pty Ltd v LED Builders Pty Ltd (1996) 33 IPR 417 at 424-425 (damages and account of profits for copyright infringement) and, more closely comparable to the present regime, Jonval Builders Pty Ltd v Commissioner for Fair Trading (2020) 104 NSWLR 1; [2020] NSWCA 233 at [41] (damages and “other orders” following contraventions of the Trade Practices Act 1974 (Cth) pursuant to ss 82 and 87). Counterpart provisions in earlier cognate legislation are considered in Vickery v The Owners – Strata Plan No 80412 (2020) 103 NSWLR 352; [2020] NSWCA 284 at [47]-[52] and [125]-[134].

13. The third presently important provision in the regime established by the Act is s 122. Rather than conferring rights upon lot owners, it empowers the owners corporation (save that subsection (6) imposes a further liability upon the owners corporation). Section 122 in the current Act provides:

122 Power of owners corporation to enter property in order to carry out work

(1) An owners corporation for a strata scheme may, by its agents, employees or contractors, enter on any part of the parcel of the scheme for the purpose of carrying out the following work—

(a) work required or authorised to be carried out by the owners corporation in accordance with this Act (including work relating to window safety devices and rectification work carried out under Part 11),

(b) work required to be carried out by the owners corporation by a notice given to it by a public authority,

(c) work required or authorised to be carried out by the owners corporation by an order under this Act.

(2) An owners corporation for a strata scheme may, by its agents, employees or contractors, enter on any part of the parcel for the purpose of determining whether any work is required to be carried out by the owners corporation in accordance with this Act.

(3) In an emergency, the owners corporation may enter any part of the parcel for those purposes at any time.

(4) In a case that is not an emergency, the owners corporation may enter any part of the parcel for those purposes with the consent of any occupier of that part of the parcel or, if the occupier does not consent, in accordance with an order of the Tribunal under this Division.

(5) A person must not obstruct or hinder an owners corporation in the exercise of its functions under this section.

Maximum penalty—5 penalty units.

(6) An owners corporation is liable for any damage to a lot or any of its contents caused by or arising out of the carrying out of any work, or the exercise of a power of entry, referred to in this section unless the damage arose because the owners corporation was obstructed or hindered.

14. To the extent that the duties imposed by s 106 require or authorise the owners corporation to do work, s 122 authorises the owners corporation to enter onto any part of the scheme property, including a lot owner’s lot, for the purpose of carrying out that work. Obviously that power may be exercised on behalf of the owners corporation, which is itself an artificial person which can only act through agents. Further, s 122(2) makes it clear (if clarity were required) that the power extends to entry for the purpose of determining whether work needs to be done. The power is available without more in the case of an emergency: s 122(3). In the absence of an emergency, consent of a lot owner or an order from NCAT is required: s 122(4). Obstructing or hindering an owners corporation is made an offence by s 122(5) but the owners corporation is made liable for damage in circumstances where it has entered or carried out work, unless the damage arises because it was obstructed or hindered. It is convenient to pause to observe that, in the two provisions which give rise to an entitlement to damages, ss 106(5) and 122(6), there are no fewer than four terms importing notions of causation: “as a result of”, “caused by”, “arising out of” and “because”. Of course ordinarily a shift in the language in a statute implies a shift in legal meaning (see for example Carr v Carr [2022] NSWSC 166; 21 ASTLR 511 at [82]). However, there is nothing in the context to suggest that each of those terms bears a different meaning. To the contrary, this is a case which recalls the shift from “by” to “because” when s 82 of the Trade Practices Act was subsumed by s 236 of the Australian Consumer Law but with no effect on the legal meaning (the equivalence of both words in this context was noted in Williams v Pisano (2015) 90 NSWLR 342; [2015] NSWCA 177 at [98]). It provides further support for the conclusion that rather than being a finely crafted, free-standing statutory regime, instead aspects of causation drawn from general law, including remoteness and mitigation, inform the availability of the right to damages conferred by s 106(5).

15. Section 124 expressly empowers NCAT to make an order on the owners corporation’s application “requiring the occupier of a lot or part of a lot in the scheme to allow access to the lot” for the purpose, inter alia, of enabling “the owners corporation to carry out work referred to in” section 122 (inter alia) “or to determine whether such work needs to be carried out”.

14. Brereton J influentially analysed the duty owed by an owners corporation under s 62(1) of the predecessor statute, which in this respect is materially identical to s 106(1), in Seiwa Pty Ltd v Owners Strata Plan 35042 [2006] NSWSC 1157; 12 BPR 23,673 at [3]:

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.

17. His Honour went on to explain how that duty required maintenance before a malfunction occurred, such 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.

18. An appeal was dismissed: The Owners SP 35042 v Seiwa Australia Pty Ltd [2007] NSWCA 272; 13 BPR 24,789. Subsequently, speaking of Brereton J’s decision at first instance, in Riley v The Owners - Strata Plan 73817 [2012] NSWCA 410 at [76] Ward JA said, with the agreement of Macfarlan and Barrett JJA:

However, as made clear in Seiwa, 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.

19. Brereton J’s analysis was also cited with evident approval in Brotherhood of St Laurence v Sarina Investments Pty Ltd [2024] VSCA 46 at [82]-[83].

20. In Seiwa, Brereton J also dismissed the submissions on behalf of the owners corporation that it was not to the point that the owners corporation had used all reasonable steps, or that the lot owner was guilty of contributory negligence: at [21]. This aspect of Seiwa was approved in The Owners - Strata Plan No 74232 v Tezel at [35].

21. It is convenient to describe the duties imposed upon an owners corporation by ss 106(1) and (2) as “strict”. That adjective conveniently captures the fact that they are not discharged by the exercise of reasonable care. Nor, consequently, does Part 1A of the Civil Liability Act 2002 (NSW) apply. Obviously, they are neither universal nor unqualified. The duties may be disapplied by s 106(3), and they may be qualified by s 106(4) and (7). This appeal raises, quite acutely, the interplay between the (conceded) breach of the obligation upon the owners corporation to perform repair work and investigative work requiring access to a lot owner’s lot, and the absence of consent on the part of the lot owner to the grant of access. The owners corporation conceded – and in my opinion it was correct to concede – that it was in breach of duty in the aftermath of the discovery of the leak from Ms Selkirk’s lot. But following refusal by a lot owner to grant access to a lot, in circumstances which do not amount to an emergency, is an owners corporation inevitably in breach when it is necessary to obtain an order from NCAT? Suppose the lot owner has commenced proceedings against the owners corporation but no action has been taken by the owners corporation such as to engage s 106(4)? Or suppose the owners corporation seeks an order pursuant to s 122, but NCAT refuses to make an order, the owners corporation having advanced all that should reasonably have been advanced in support of an order; is the owners corporation still in breach? Or suppose NCAT reserves on its decision to grant an order because of the opposition of the lot owner – do damages continue to run in favour of the lot owner in the meantime? Those questions are not satisfactorily answered by an invocation of the proposition that the duty is “strict”. Indeed, doing so distracts from the real issues, because it is plain that whether or not there is an entitlement to damages turns on s 106(5), one element of which is that there is a contravention of the Act, but breach, of itself, is not sufficient to make an order for damages. Breach is a necessary but not a sufficient condition of an entitlement to damages. The issues of practical utility, and which squarely arise in this appeal, are in what circumstances following “resistance” (to use a neutral and deliberately vague term, which was also deployed by the Appeal Panel) by a lot owner will that lot owner nonetheless be entitled to recover statutory damages pursuant to s 106(5), and how will such “resistance” affect the power to resolve a dispute pursuant to s 232.

22. The answers to those questions turn in part upon the juridical nature of the rights created by statute. The answers were treated by the parties as turning upon general law concepts of causation and mitigation, and by the Appeal Panel as being answered by the availability of the power in s 122. I respectfully cannot agree with the latter and I am conscious of the limited utility of the former. To anticipate what follows, consider a case where there is a defect in common property (such as a water leak) which is not an emergency, the investigation and repair of which requires entry into a lot owner’s property, and which causes ongoing loss in the form of rent foregone. True it is that the owners corporation is, then and there, prima facie in breach of its duty under s 106(1). But suppose thereafter the lot owner steadfastly refuses to permit access. Is the lot owner entitled to damages for lost rent under s 106(5) for the period while the owners corporation prepares an application for an order from NCAT under s 122? Suppose the lot owner opposes the application and NCAT reserves its decision. Is the lot owner entitled to damages under s 106(5) while the decision is reserved? It is, to say the least, arguable that in circumstances where the continuance of the leaking pipe is brought about by the refusal of the owner to grant consent and extra time passes while the owners corporation is applying for and obtaining an order under s 122, the owners corporation is not liable in damages pursuant to s 106(5).

23. This present appeal illustrates that there are a number of ways of characterising the reasons why it might be said that s 106(5) is unavailable: it might be said that the lot owner is behaving unreasonably, or is failing to mitigate his or her loss, but as will be developed below, I think the safer course is one which sticks to the language of the statute, and asks whether such damage as is caused by the delay following the lot owner’s intransigence is properly characterised as being damage “as a result of” the owners corporation’s contravention, but instead is damage which is, as a matter of practical assessment, caused by the lot owner’s own action. I am far from persuaded that analysis will be assisted by importing notions from other areas of the law, especially misnomers like a “duty to mitigate”.

24. Those points will be developed below. For present purposes, the only point sought to be made is that it is far from self-evident that the power conferred by s 122 is a panacea to resistance or obstruction of the part of a lot owner and of itself resolves favourably to the lot owner the question of the extent of damages under s 106(5).

Background

25. Ms Selkirk was the plaintiff in a proceeding commenced by summons filed in the Common Law Division of this Court in July 2021, pursuant to which she sought “to try and [sic] manage the [owners corporation’s] extended delays up to [9 July 2021] to appropriately repair the Lot 5 common property leak in a like-for-like pre-loss aesthetic condition”. The claim at that stage included an allegation based on part of the Australian Consumer Law that was not within the jurisdiction of NCAT, but it seems (from what Darke J said in Selkirk v The Owners – Strata Plan No 2661 [2022] NSWSC 858 at [8]-[9]) that Ms Selkirk intended to reformulate that claim. Whether or not that be so, the proceedings were transferred almost a year later to NCAT pursuant to cl 6(2) of Schedule 4 to the Civil and Administrative Tribunal Act.

26. A hearing over two days took place before NCAT, constituted by Senior Member Tyson, on 13 and 14 February 2023. The decision, dismissing Ms Selkirk’s claim, was handed down on 15 August 2023. It appears not to have been made available on CaseLaw, and has not been given a medium neutral citation – points to which I shall return.

27. The claims dismissed by the Senior Member included allegations concerning “debt recovery fees” and “accrued interest” said to have been unreasonably levied on Ms Selkirk, and that the second respondent, Ms Stournaras, who owned the lot for the flat directly above Ms Selkirk’s flat, had installed flooring in breach of by-laws which interfered with the defendant’s enjoyment of her lot. Ms Selkirk’s appeal to the Appeal Panel did not extend to those claims, and Ms Stournaras was not a party to that proceeding. I do not know why those claims were dismissed, because the parts of the Senior Member’s decision addressing them were not included in the material tendered in support of the appeal (pages 41-57 of the decision, amounting to the whole of paragraphs 174-236, were not reproduced, in a conscious effort to restrict the materials available on appeal to those necessary to resolve the appeal). It seems clear from the points of claim filed in NCAT that they were relatively minor: the fees and interest were alleged to total $1524.93 plus interest of $706.70, and the order sought against Ms Stournaras was that she install floor coverings to reduce the transmission of noise through her floor.

28. The remaining and seemingly principal claim was what the Senior Member called “the water ingress issue”. This concerned the owners corporation’s liability following a leak that was noticed on 30 November 2020 in the bathroom of Ms Selkirk’s lot. This was said to constitute a breach of the owners corporation’s statutory duty of care, under s 106 of the Strata Schemes Management Act 2015 (NSW), for “failing to properly maintain and keep in a state of good and serviceable repair the common property”.

29. Ms Selkirk sought orders that “an experienced, qualified and licensed building contractor”:

(a) [R]ectify the defective waterproofing beneath the floor of Lot 5’s bathroom by installing a new waterproof membrane that complies with AS3740-2022, installing new villa board linings and compressed cement sheeting, and carrying out all ancillary works required to prevent the leaking of water from Lot 5’s bathroom into the floor cavity and the lot below;

(b) Reinstate Lot 5’s bathroom to a like-for-like condition.

30. Ms Selkirk also sought damages for lost rent in the amount of $117,832.89 for the period from 5 December 2020 to 25 August 2022 (her points of claim were filed on 24 August 2022), and thereafter at the rate of $1,300 per week plus interest.

31. There was evidence that the owner of lot 2, which was immediately below lot 5, had complained to Ms Selkirk that water was “cascading” from the ceiling because Ms Selkirk’s tenants were continuing to use the bathroom. The tenants apparently vacated the premises on 4 December 2020. Around that time, Ms Selkirk represented to the owners corporation that, although the damage was to common property and it was the owners corporation’s responsibility to rectify it, she “would like to have a say in what and how that [remediation] process takes place”. She also attached in an email to the owners corporation what purported to be a “twelve month residential tenancy agreement” with a Mr Wang, as a record “to substantiate a future claim of loss of rental income suffered arising from the plumbing water damage incident”.

32. The Senior Member found, consistently with Mr Wang’s evidence, that there was no such tenancy agreement between Mr Wang and Ms Selkirk.

33. The points of claim alleged that on 11 February 2021 Ms Selkirk received, for the first time, a copy of remedial works proposed by “Auseal Waterproofing”. The quotes were dated 8 December 2020, and in its points of defence the owners corporation stated that it received the quotes at about that time.

34. Ms Selkirk alleged that the Auseal Waterproofing remedial works did not propose to return her bathroom to its pre-loss “like-for-like” condition, and would instead return it “in a significantly impaired aesthetically corrupted condition”. It was also alleged that the works were not compliant with Australian Standards, and that the owners corporation has a duty to raise those matters with her. The owners corporation denied those allegations.

35. Ms Selkirk alleged that at all material times, she had “remained communicative, cooperative, ready, willing and able to make her Lot 5 available for the [owners corporation] to complete appropriate remediation works”, and alleged that the owners corporation had breached its duty under s 106. The owners corporation denied that it had breached its duty, and advanced a positive case of unreasonable conduct by Ms Selkirk, alleging:

1) unreasonably rejected the [owners corporation’s] proposed remediation works [referring to the Ausseal Waterproofing quotes];

2) unreasonably elected between 11 March 2021 and June 2021 to pursue claims for alternative remedial works under the [owners corporation’s] insurance policy rather than accept the [owners corporation’s] proposed remediation works or negotiate with the [owners corporation].

The events of the first half of 2021

36. The Senior Member found that the owners corporation’s pleaded case of unreasonableness was established. That was not expressly overturned by the Appeal Panel, which nonetheless found that Ms Selkirk was entitled to damages by reason of the owners corporation’s failure to exercise power under s 122. The challenge to that conclusion was the principal matter argued on appeal. Accordingly, it is necessary to summarise the Senior Member’s findings and the material on which they were based. What follows is taken from the summaries and extracts of documents reproduced in the reasons of the Senior Member.

37. Following the report of water ingress into the flat below Ms Selkirk’s flat, the owners corporation engaged a plumbing firm, Woollys Water Works, to investigate the leak, and by two colour dye tests identified that the water was soaking into the shower floor. Two quotes were provided: a “minor fix” (removing the grouting and applying new grout and sealing the shower base) and a “major fix” involving removing the existing shower base tiles.

38. There was an email exchange between the owners corporation and Ms Selkirk on 3 December 2020 when the owners corporation asked her to ask her tenants not to use the washing machine which was in the bathroom and instead to use the common washing machine, and she responded that the tenants were departing the following day and that “as it is my bathroom that will be demolished to complete the plumbing rectification works and I would like to have a say in what and how that process takes place”. On 7 December Ms Selkirk asked to be connected with the owners corporation’s insurance broker.

39. On 11 December Ms Selkirk advised that her tenants vacated on 4 December 2020, and attached to her email a lease agreement “to substantiate a future claim of loss of rental income suffered arising from the plumbing water damage incident”. The Senior Member recorded at [111] that the copy of the email stated that it contained an attachment, “Terry Wang 12 Month Residential Tenancy Agreement 20 Nov 2020 to 20 Nov 21.pdf”. At this point in the recitation of events, the Senior Member summarised Mr Wang’s affidavit, which was read before him:

113 In the witness statement, Mr. Wang states that he intended to occupy the applicant’s property for a short term of 26 days between 24 November 2020 and 19 December 2020. Attached to his witness statement is an invoice issued to him and signed by the applicant. The invoice is headed “Short Term Tenancy Invoice — [address of the applicant’s lot] — 24 November 20 to 19 December 20 (26 days)”. In the body of the invoice, there is the description "22 Days Short Term Tenancy ... $250/night X 25 nights ... Full payment on check in 24 November 2020 - $5,250.00 ... exit clean $200.00. Balance total: $6,450.00."

114 Also attached to Mr. Wang’s witness statement is a twelve month residential tenancy agreement between the applicant and Terry Wang. The agreement appears to bear Mr. Wang’s signature and the applicant’s signature. In that twelve month residential tenancy agreement, the rent is $1,750.00 per week. The term starts 20 November 2000 and ends on 20 November 2021. There was a $2,700.00 rental bond that had to be paid on signing of the twelve month residential tenancy agreement.

115 Mr. Wang states that he did not sign the twelve month residential tenancy agreement. Mr. Wang states that the telephone number and the email address in the twelve month residential tenancy agreement are incorrect.

116 Mr. Wang was not cross-examined on behalf of the applicant. (emphasis in original)

40. The Senior Member then made reference to the evidence supplied by Ms Selkirk that a weekly rental of $1,300 would apply to the flat, and to the scheme by-laws, including Special By-law no 4 which prohibited short term accommodation, and made the following findings:

121 The Tribunal accepts Mr. Wang’s evidence and finds that there was no 12 month residential tenancy agreement between himself and the applicant. The Tribunal further finds that there was no residential tenancy agreement between Mr. Wang and the applicant from 20 November 2020 to 20 November 2021. The Tribunal finds that Mr. Wang was using the applicant’s lot for short-term accommodation which was prohibited by special by-law no. 4 of the Strata Scheme.

122 The Tribunal finds that the 12 month residential tenancy agreement between Mr. Wang and the applicant should be given no weight at all in determining any question of the quantum of rent foregone, as claimed by the applicant from 5 December 2020.

123 The Tribunal is very concerned about the applicant providing the 12 month residential tenancy agreement between Mr. Wang and the applicant to both the first respondent and also the insurer of the first respondent. The Tribunal is very concerned by the unchallenged evidence of Mr. Wang that he didn't sign his name to that 12 month residential tenancy agreement. The Tribunal is very concerned by the unchallenged evidence of Mr. Wang that the telephone number and the email address for him which have been added to that document are incorrect. The Tribunal is very concerned that included in the agreement is the purported rent of $1,750.00 per week. Rent at that level is not something that was ever agreed between Mr. Wang and the applicant and it is considerably more than the applicant’s own expert evidence, tendered in these proceedings, about the weekly rent for the applicant’s lot.

41. The Senior Member then referred to Ms Selkirk’s cross-examination about the lease:

124 The applicant’s explanation during her cross-examination by the first respondent’s counsel about the 12 month residential tenancy agreement, that she “intended” to make a 12 month residential tenancy agreement with Mr. Wang, was, in my assessment, an implausible explanation which was not credible. The purported agreement was provided by the applicant to the first respondent in December 2020 and to the insurer in 2021, not as something that the applicant “intended” but as an agreement that was already in place for the period beginning 20 November 2020 between Mr. Wang and the applicant and as material to “substantiate” the applicant’s claim for rental loss. The explanation by the applicant in no way explains why Mr. Wang’s signature was added to the document, why a telephone number and email address supposedly connected with Mr. Wang were added to the document and why a weekly rental amount supposedly agreed by him and included in the document before Mr. Wang’s signature were included in the document.

42. It is quite plain that the rejection of Ms Selkirk’s explanation of a relatively innocent account for the claim made by Ms Selkirk to the owners corporation’s insurer was one that was informed by her demeanour during cross-examination.

42. However, despite four times stating that he was “very concerned”, the Senior Member refrained from making further findings, for the reasons given at [125]-[126]:

125    The first respondent’s counsel cross-examined the applicant about whether she had placed Mr. Wang’s signature on the 12 month residential agreement by copying it from another document and suggested that the applicant had been involved in a forgery of Mr. Wang’s signature.

126   However, as there is no evidence to suggest that either the first respondent or the first respondent’s insurer were actually deceived by the provision to them of the purported 12 month residential tenancy agreement between Mr. Wang and the applicant, I have come to the view that I do not have to make any other findings, for the purpose of determining the issues before me raised by the application, arising out of the applicant’s provision to the first respondent and the insurer, of the purported 12 month residential tenancy agreement between Mr. Wang and the applicant. (That is, apart from the finding detailed above in these reasons, that the 12 month residential tenancy agreement between Mr. Wang and the applicant should be given no weight at all in determining any question of the quantum of rent foregone, as claimed by the applicant from 5 December 2020).

44. The Senior Member then returned to the events of the first half of 2021. On or around 11 February 2021, the strata committee approved the larger quote from Auseal Waterproofing and provided both quotes to Ms Selkirk.

45. On 11 March 2021, Ms Selkirk advised that she had reviewed the insurance policy, had concluded that it did not exclude water damage claims and suggested:

Rather than raise alarm to the Body Corporate and Owners Corporation, an Insurance Claim on this waterproofing water damage matter should be progressed in the usual course, without fanfare.

46. Ms Selkirk also stated that the “water proofing works seem to me to be irregular”. She added that the works contemplated replacing the first row of tiles in the shower, that the existing bathroom tiles were unable to be matched, and that “it is fairly obvious that this repair works scope proposal will leave my bathroom looking horrendous and like a patchwork of mis-matched tiling throughout the bathroom such that it will devalue my property investment”. She also added that “[i]nsurance will respond to this Owners Corporation liability to re-tile the whole bathroom such that rectification water damage works will ‘not to [sic] detract from the appearance or value of the lot’”. The letter stated that “established case law” required the owners corporation to match new tiles as closely as possible in appearance and value to existing tiles so as not to detract from the appearance or value of the lot, although no particular decision was identified.

47. On 19 March 2021 Ms Selkirk reiterated that the “works order you have received is not acceptable” and “under no circumstances will I agree for the value of my apartment to be compromised on the basis of a works scope” which “will leave my bathroom looking like a patchwork quilt, which is quite unacceptable”. She added:

The Building Insurer Claims Assessor will be able to respond appropriately to the bathroom rectification works on behalf of the building, meaning the work order obtained will no longer be relevant. …

48. The underwriting agency rejected Ms Selkirk’s claim on 31 March 2021. Ms Selkirk requested a review on 15 April 2021, with included the claim that “[t]he bathroom usage was an essential part of the tenant’s expectation … As a consequence, the Lease loss of rent is consequential loss and damage arising … Lot 5 water leakage, claimable event”. But on 6 May 2021 the insurer confirmed that its decision was unchanged.

49. On 20 May 2021 Ms Selkirk requested a stage 2 internal review by the insurer. That too was rejected on 10 June 2021. The Senior Member reproduced the following paragraph of the insurer’s response:

The Insured also provided the Residential Tenancy Agreement (‘lease’) for Unit 5 for the period 20^th November 2020 to 20^th November 2021, at a weekly rental rate of $1,750.00. The claim lodgment indicated the tenancy had been ended due to the leak, and as such the Lot Owner of Unit 5 requested consideration for loss of rent.

50. On 20 June 2021, Ms Selkirk lodged an application for review by the Australian Financial Complaints Authority of the denial of the claim, and on 9 July 2021 she filed proceedings in the Common Law Division which were transferred to NCAT and which have ultimately led to the present appeal. It is not necessary at this stage to summarise the impasse which continued between Ms Selkirk and the owners corporation, save to note that on 17 September 2021 the owners corporation issued what it described as a “final notice” pursuant to ss 106 and 122 of the Act that it be provided access to her flat, to which Ms Selkirk did not agree. Ms Selkirk responded saying, inter alia, that (a) the bathroom rectification works were a matter with AFCA and there was to be a conciliation with AFCA on 5 October 2021, (b) there was now Supreme Court litigation on foot, (c) the owners corporation should have approached its insurer before issuing the notice and should do so as a matter of priority, (d) the works proposed “will not resolve the Supreme Court proceedings”, and (e) “I will require a full indemnity from the Strata Owners Corporation for any future waterproofing issues that may arise from the Final Notice waterproofing works proposed”.

51. The Senior Member recorded that the AFCA mediation occurred, and Ms Selkirk later discontinued her complaint.

The Senior Member’s decision to refuse to make rectification orders

52. The Senior Member rejected the claim for a works order as sought in paragraph 1(a) of the points of claim at [241]-[251]. His reasons were that the evidence did not suggest that any of the tiles had been removed to date, and that there was “no compelling evidence about either the source or sources of the water leakage, nor the extent of damage to either floors or walls”, nor any expert opinion identifying those matters or the scope of works. The Senior Member referred to Ms Selkirk’s own response of 14 April 2021:

Based on the FOUR Different professionals who have so far assessed the Bathroom water leak incident not a single one of them has a consistent assessment of the water leak source. Each one is different and contradicts the other. I would not be surprised if the “waterproofing” were fixed to find that the “water leak cause” has not in fact been addressed after all …

53. The Senior Member said that the scope was uncertain, and that it was not possible to evaluate against any proposed scope of works whether what was needed was what was reasonably necessary to achieve a minimal compliance with the statutory duty, citing Glenquarry Park Investments Pty Ltd v Hegyesi [2019] NSWSC 425 at [74] and [111]-[112]. He added that the scope of rectification works was very uncertain, asking (a) whether the “minor fix” originally suggested might suffice, (b) if tiles needed to be replaced, did they extend to the shower floor, or to a row of wall tiles, or more extensive replacement. He stated that the extent to which villa board linings and compressed cement sheeting needed to be installed was unknown. He said there was no expert evidence in compliance with the Tribunal’s Procedural Direction to ground an order requiring particular work to be done, noting that any expert investigation seemed likely to involve some removal of tiles and invasive investigatory works. After making further points about whether there was defective water proof lining, he concluded that:

The applicant bears the onus of persuading the Tribunal of her entitlement to the order advanced in prayer 1(a) of the points of claim and has failed to discharge that burden.

54. The Senior Member said that the second order did not arise, but that in any event he would have declined it in the absence of evidence concerning the possibility that “like-for-like” replacement tiles were available:

The Tribunal would therefore decline to make an order in accordance with prayer 1.(b) in the points of claim. There is no sufficient evidence to suggest that reinstating the applicant’s bathroom on a like for like condition – which is what is sought in the points of claim – is possible; the applicant’s own evidence is adamant that the bathroom “shower floor and wall tiles … cannot be matched like for like.” The Tribunal is not minded to made orders requiring something to be done, which the evidence suggests cannot be done.

The Senior Member’s refusal to order damages

55. It was common ground before me that, before the Senior Member, the owners corporation, notwithstanding its points of defence, had conceded that as a result of the unrectified leak, Ms Selkirk’s lot was no longer fit for habitation by a tenant, for the purposes of section 52 of the Residential Tenancies Act 2010 (NSW), and that it was in breach of the duty under s 106.

56. At [263] the Senior Member recorded that on or about 30 November 2020 the owners corporation was in breach of its duty under s 106. However, he added at [264] that there was no suggestion that once the leak was stopped, there was any ongoing risk of damage or deterioration. By reference to the steps taken after 2 December 2020, he found that the owners corporation had taken steps to comply with s 106, and concluded that he was “not satisfied that the evidence shows the [owners corporation] was failing to comply with its duty under s 106(5) [sic] of the Act”: at [269].

57. The Senior Member thereafter, in the alternative, addressed whether Ms Selkirk had established any reasonably foreseeable loss suffered by her as a result of a contravention of s 106. He said that the cause of action was analogous to a claim in negligence or nuisance and the approach to measuring damages in tort should be applied, that causation was a matter of common sense, and a question of fact on which the applicant bore the onus, and that an applicant was “not entitled to recover losses attributable to its own unreasonable conduct”, citing The Owners – Strata Plan No 76674 v Di Blasio Constructions Pty Ltd [2014] NSWSC 1067 at [42]. He noted that this was a decision for breach of the statutory warranty under the Home Building Act 1989 (NSW), but said that it reflected a general principle of law.

58. He then stated at [272]:

As stated above, the Tribunal does not find the first respondent to be in breach of its duty under s. 106 of the Act. But if that finding is in error, the Tribunal is not satisfied that the applicant has established that the rent which the applicant claims she has not derived from her lot since 5 December 2020 is reasonably foreseeable loss “suffered by the owner as a result of a contravention of this section by the owners corporation”: s. 106(5) of the Act. (emphasis in original)

59. Paragraphs [273]-[277] were directed to the conclusion that “the cause or the reason that the applicant has not tenanted her lot since 5 December 2022 lies with the applicant’s own conduct”. The Senior Member reiterated the references in documents to the applicant’s preference for her matter to be resolved by the insurance claim, and said repeatedly, at [274] and [276], that “the inference the Tribunal draws is that the applicant saw the insurance recovery avenue as a means for her to have the whole of her bathroom re-tiled”.

60. Then the Senior Member addressed unreasonable conduct at [278]-[288] and found that her conduct had been unreasonable and that it was her own unreasonable conduct which caused the flat to be untenanted. The Senior Member concluded that Ms Selkirk had failed to mitigate her loss. It is convenient to defer summarising this aspect of the reasoning until dealing with the second ground of the appeal.

61. Finally, against the possibility that he was wrong about breach, that he was wrong to have concluded that Ms Selkirk was the cause of her loss, and that his conclusions of unreasonable conduct and mitigation were also wrong, the Senior Member considered damages, and found that the lost rent would have been $1,200 to $1,300 per week.

62. The result was that Ms Selkirk’s claim was dismissed.

Appeal Panel

63. Ms Selkirk brought an appeal to the Appeal Panel, partly on questions of law, but she also sought leave insofar as the grounds extended to matters of fact or mixed questions of fact and law. The grounds need not be summarised in full.

The parties’ submissions to the Appeal Panel

64. In written submissions supplied in advance of the hearing, the owners corporation did not seek to defend the finding that there was no breach of s 106(1), but said that the findings were “best understood as directed to relieving the Owners Corporation of any responsibility for the ongoing condition of the appellant’s bathroom while she took matters into her own hands and denied the Owners Corporation the necessary access to her lot” and that this ground “would not per se affect the outcome if, as the Owners Corporation contends, the breach was only causative of loss for a brief period and was unquantifiable on the evidence adduced by the appellant in the proceedings below”.

65. In challenging the finding that there was no damage or risk of damage, the owners corporation’s written submissions conceded:

The Owners Corporation also accepts that some damages for loss of rent was, as a matter of principle, potentially recoverable in this case.

66. However, the owners corporation maintained that the loss was not quantifiable.

67. The written submissions also contended that there were two aspects of what the Senior Member had found concerning causation: the “primary causation issue of whether the loss was suffered as a result of the contravention of s 106(1)” and the owners corporation’s mitigation defence, although it was accepted that both issues turned “on precisely the same issues”.

68. At the outset of the hearing, Mr Purdy, who appeared for the owners corporation in the Appeal Panel and before me, conceded that the owners corporation was in breach of s 106(1) (“[D]oes Mr Purdy accept that there was a breach of s 106(1), at least initially? The strict obligation? Yes, Senior Member” T4.43), and that “We have accepted below and accept now that it was not feasible for the applicant, as she was then, to rent out her apartment with a defective bathroom” (T5.10-11). There was then a debate, with the members of the Appeal Panel referring to the findings on causation and mitigation, and Mr Rizk stating that “causation itself didn’t appear to have been an issue that was live at first instance, and the hearing wasn’t conducted by reference to issues of causation” (T7.23). That statement, which as will be seen was later reflected in the reasons of the Appeal Panel, may reflect a misapprehension of the role of causation and mitigation in this area.

69. The owners corporation, having made the concessions recorded above, contended that if damages were available, “they’re available only for a short period, and that’s up until the point at which the appellant should have enabled or facilitated the words proposed by Auseal. That I would suggest, is about mid-March 2021”. It maintained that it could not accede to replacing all of the tiles in the bathroom, because of the constraints upon its obligation identified in Glenquarry Park Investments Pty Ltd v Hetyesi.

The reasons of the Appeal Panel

70. The Appeal Panel recorded those concessions, and at [13] identified the issues on appeal as being whether there was error in the findings at first instance that:

the appellant did not establish with appropriate evidence, including expert evidence, what was the source of water damage in her bathroom and therefore what was required for the scope of work by the [owners corporation] to fulfil its strict duty to maintain and repair common property; the appellant caused her own loss; the appellant failed to mitigate her loss for substantially the same reasons as causing her own loss; the appellant failed to establish the scope of remediation of tiling that was required, and the appellant sought an inappropriate measure and amount of damages for alleged lost rent.

71. Dealing first and at greatest length with the dismissal of the claim for works pursuant to paragraph 1(a) of the points of claim, the Appeal Panel said at [22]-[23]:

The reasoning behind that finding was explained in the succeeding paragraphs as a failure by the appellant to establish a definitive source of the water leakage and the extent of damage and the scope of works required to remediate it, it having been the subject of evidence in a quotation from a plumber that “membrane failure” was a cause of the water leakage.

This appears to us to constitute an error of law in misstating the scope of the [owners corporation’s] obligation to fulfil its admitted strict duty to maintain and repair common property under SSMA s 106(1). It led to an application of the wrong principle in that respect to the evidence that justifies, to the extent required, a grant of leave to appeal the findings so based.

72. The Appeal Panel passed over the question of procedural fairness in making a finding contrary to the owners corporation’s concession, and addressed the matter on the facts. They said at [25]:

Once the [owners corporation] conceded its breach of that duty from 5 December 2020, it was part of the scope of fulfilling that duty and rectifying that admitted breach for the [owners corporation], not the appellant, to establish the source of water entry and the extent of damage and the scope of works required to remediate it, particularly when an expert quotation said that “membrane failure” about which the appellant complained was one source. The same conclusion would apply if the admission was not made (as it properly was here) but, rather, it was established by the lot owner that there was a breach of duty by, for example, water entry. (emphasis in original)

73. On that basis, the Appeal Panel concluded that the Senior Member had erred in concluding that Ms Selkirk had failed to make out an evidentiary basis for the order she sought. It added that to the extent there was an issue as to what was needed to be done in accordance with Glenquarry Park Investments Pty Ltd v Hetyesi that too fell at the feet of the owners corporation. To the extent that the Senior Member had proceeded on the basis that those matters were necessarily the subject of expert evidence, they disagreed. The conclusion was expressed at [41]-[42]:

It is consistent with the strict nature of the [owners corporation’s] duty that, once a breach is admitted or established of that duty, it is incumbent on the owners corporation, to fulfil the duty, to establish the source or reason for the breach and the scope of the breach. If the owners corporation fails in fulfilling those aspects of its duty then part of the remedial order is necessarily to compel the required investigations (often expert) to establish those matters so that they can be undertaken as part of the order.

While a lot owner will be required, on commonsense principles of causation akin to those in negligence or nuisance, to establish damage to lot property or other loss under SSMA s 106(5) (further discussed on lost rental cited below), certain types of loss such as those claimed in this case will be self-evident from the breach of strict duty admitted or established by its consequences, in this case water entry that rendered premises admittedly uninhabitable and therefore unrentable from the inability to use the bathroom: cp McCue v Owners SP 3844 [2021] NSWCATCD 35.

74. At [43]-[46] the Appeal Panel addressed the Senior Member’s failure to make the order sought in paragraph 1(b).

75. Ms Selkirk submitted that the Tribunal erred in finding that the owners corporation failed to establish the source of the defect and therefore the scope of work required by section 106, and in finding that Ms Selkirk caused her own loss and failed to mitigate her loss.

74. I shall in what follows reproduce the entirety of the Appeal Panel’s reasoning on the alternative findings of causation and mitigation, but it is convenient to do so in light of the parties’ submissions and my resolution of them. Suffice it to say for present purposes that:

1. the Appeal Panel regarded loss of rent as a type of “self-evident loss”: at [47];

2. reasonable efforts by the owners corporation did not relieve it from the consequence of non-compliance with its strict duty: at [48];

3. there was an error by the Senior Member when stating at [49] the effect of Owners SP 76674 v Di Blasio Constructions PL [2014] NSWSC 1067 at [42];

4. by reference to principles of contract law (at [50]-[51]), the onus lay on the owners corporation to establish that the lot owner acted so unreasonably as to cause her own loss or to have failed to mitigate her own loss: at [52];

5. there was an error warranting a grant of leave in the application of those principles when the Senior Member relied on Ms Selkirk’s conduct because the “resistance and advocacy” did not excuse the owners corporation from obtaining orders pursuant to s 122: at [53]-[54];

6. it was not necessary to address Ms Selkirk’s submission, which was contested, that causation had not been in issue on appeal: at [55].

77. The result was that the appeal was allowed, (implicitly and necessarily) the orders made by NCAT constituted by the Senior Member dismissing Ms Selkirk’s application were set aside, and there was a remitter:

The proceedings are remitted for determination by the Tribunal consistent with the findings and reasons in this decision on the following matters and any related matters pressed on this appeal: the scope of work and terms of the work order to be complied with by the first respondent Owners SP 2661 in respect of the common property; the amount of the rent and other losses established by the applicant/appellant lot owner under s 106(5) of the Strata Schemes Management Act 2015 (NSW) for a period commencing on 5 December 2020.

78. The reference to “5 December 2020” in the order for that remittal was the subject of the third proposed ground of appeal to this Court.

79. Two important developments have occurred after the Senior Member’s decision. First, Ms Selkirk removed all of the tiles and the whitegoods from her bathroom, leaving it “a shell”, without notice to or the consent of the owners corporation. This was sought to be established by affidavit before the Appeal Panel, but leave to rely upon it was refused, and the appeal to this Court did not extend to that order. Nonetheless, I was told this without objection at the hearing, and it was also asserted in the owners corporation’s submissions, without demur from Ms Selkirk, and it plainly is relevant to the grant of leave.

80. Secondly, the owners corporation has itself commenced proceedings in NCAT, and that is set down for final hearing on 27 June 2024 (which is to say, 15 days after the hearing of this appeal), simultaneously with the remitter of the present proceedings. None of this is before me, despite its obvious bearing on the grant of leave. The issue arising on the owners corporation’s new proceedings was explained to me thus:

PURDY: At the risk of going back over this, it is important. At the moment there is - it’s a shell, the bathroom, there’s nothing in it so it has to be rectified and I think the issue before the member of NCAT lucky enough to hear that dispute is really how much of the rectification of the bathroom is as a result of the Owner Corporation’s breach and how much is due to the unilateral destruction or demolition by the lot owner.

81. At the close of the hearing, in response to the owners corporation’s request, with which Ms Selkirk did not cavil, I indicated that I would attempt to produce my judgment resolving the appeal during the following week, so as to permit the hearing on 27 June to proceed smoothly.

The grounds of appeal in this Court

82. The owners corporation advanced three grounds of appeal. They were “ground 2”, “ground 3” and “ground 4” of its notice of appeal but in order to avoid confusion I shall refer to them as the first, second and third ground respectively, and I shall follow the more efficient order adopted by Mr Rizk, who appeared for Ms Selkirk as he had done in NCAT.

Third ground

83. This ground maintained that when remitting the proceedings for further hearing, the Appeal Panel erred in order 3 by stating that the damages for lost rent were to be determined “for a period commencing on 5 December 2020”. The owners corporation’s point was that the date was erroneous and that on no view could Ms Selkirk be entitled to damages for loss of rental income before 20 December 2020, when Mr Wang’s short-term tenancy expired. It had put in written and oral submissions to the Appeal Panel that because the Senior Member made a finding, which was not challenged or addressed on appeal, that Ms Selkirk had been engaging in short-term letting in breach of the Strata Scheme’s Special By-law 4, damages for loss of such income was not recoverable. This was said to be “simply a clear case of injustice to the plaintiff by reason of an error on the Appeal Panel’s part”, such that the owners corporation had become exposed to liability for loss for “two weeks longer than it ought to be”.

84. There is considerable force to the owners corporation’s submissions, save for the fact that it is far from self-evident that the ground amounts to an “appeal on a question of law” within the meaning of s 83 of the Civil and Administrative Tribunal Act. Ms Selkirk pointed out in her written submissions that, contrary to what has repeatedly been said about the grounds of appeal explicitly identifying the question of law (see for example Schwartz Family Co Pty Ltd v Capitol Carpets Pty Ltd [2017] NSWCA 223 at [13]), this proposed ground failed to do so. It is also self-evident that this ground concerns an amount in the order of $2,500, making it an unattractive candidate for the grant of leave. But it is unnecessary to take those matters any further, in light of the stance taken by Ms Selkirk.

85. Ms Selkirk said that in circumstances where, irrespective of the outcome of this appeal, there was to be a hearing on 27 June, she would not object to it being within the scope of that hearing for the owners corporation to contend that there were no damages in the period between 5 and 19 December 2020. After that concession was made, counsel confirmed the correctness of my understanding that Ms Selkirk “accepts that it’s open to the owners corporation to say to the tribunal on Thursday fortnight zero damages for the period from 5 December to 20 December” (transcript, 12 June 2024, p 20).

86. In circumstances where Ms Selkirk accepts that it will be open to the owners corporation to have the question of her loss between 5 and 19 December 2020 determined on the merits on the evidence before NCAT on 27 June 2024, to the extent that there be any error of law, it is one which is immaterial, and there is no need to interfere with the terms of the order remitting Ms Selkirk’s proceeding. It follows that there is no basis for granting leave on this ground.

First ground

87. This proposed ground concerned the works orders sought by Ms Selkirk. As developed in oral submissions, the attention was on the refusal to make the order sought in paragraph 1(a) of her points of claim. The owners corporation said that the Appeal Panel erred in law in holding that the owners corporation bore the onus of identifying the defects in the common property and the means of rectifying them once it was found that it had breached its duty.

88. The gravamen of the reasons of the Senior Member was that he was unsatisfied that an order in those terms should be made, there being no evidentiary basis for it, and – critically – no other relief should be granted notwithstanding the admitted breach of s 106(1). This was addressed at [242]-[251] of the reasons of the Senior Member, which have been summarised above.

89. The owners corporation’s submissions had the advantage that, perhaps unusually, the only substantive relief sought was the particular works order in paragraph 1(a):

rectify the defective waterproofing beneath the floor of Lot 5’s bathroom by installing a new waterproof membrane that complies with AS3740-2022, installing new villa board linings and compressed cement sheeting, and carrying out all ancillary works required to prevent the leaking of water from Lot 5’s bathroom into the floor cavity and the lot below.

90. Ms Selkirk’s points of claim did not include a paragraph seeking “such further or other order as the Tribunal’s sees fit” or something to that effect.

91. The owners corporation maintained that the Appeal Panel had reversed the onus of proof when it said:

Once the [owners corporation] conceded its breach of that duty from 5 December 2020, it was part of the scope of fulfilling that duty and rectifying that admitted breach for the owners corporation, not the appellant, to establish the source of water entry and the extent of damage and the scope of works required to remediate it. (emphasis in original)

92. The owners corporation submitted that this “ignored the fundamental evidentiary and persuasive onus upon a party asserting entitlement to a particular remedy to prove the facts necessary to invoke the court or tribunal’s powers to grant it.”

93. Ms Selkirk submitted that this missed the point. The Panel’s statements at [26]-[28] were in support of its principal conclusion at [22]-[23] that the Tribunal erred in requiring proof of “the definitive source of the water leakage” before it could compel the owners corporation under a works order. Ms Selkirk drew attention to the fact that there “had been uncontested evidence adduced that a membrane failure was a cause of the water leakage.”

94. The owners corporation nonetheless submitted that, in order to exercise its powers under s 232, the Tribunal needed to be apprised of “the factual parameters of the complaint” to formulate an order with sufficient specificity. But that submission falls short of answering the point made by the Appeal Panel at [41], which was that the order itself can compel the owners corporation to undertake the investigations necessary to identify the source of the defect in the first place.

95. In oral submissions, Mr Purdy conceded that this proposed ground turned on Ms Selkirk running an “all or nothing” or “the highway or my way” case. That submission is consistent with the form of the points of claim.

PURDY: … If the applicant for relief chooses to frame the complaint or dispute in specific terms, either my way or the highway, either do this or do nothing at all, then the applicant for relief is essentially bound by that and in marshalling evidence to support it, must do so with an eye on that specific remedy sought.

HIS HONOUR: In other words, you say – sorry to interrupt, I hope you don’t--

PURDY: Not at all.

HIS HONOUR: If you do mind I will keep my peace and save my questions for the end. It’s more efficient this way. An essential part of this submission is your words, my way or the highway, or my words, an all or nothing case.

PURDY: Yes.

HIS HONOUR: On that basis, I can see, and obviously I will hear from your opponent, that in those circumstances it is not sufficient for an applicant who wants this, maybe you might call it a Rolls-Royce standard of order, merely to say here is a (conceded) breach of s 106, the applicant still has to do more in order to get the order.

PURDY: Yes.

96. Mr Rizk denied that his client had been running an all-or-nothing case:

HIS HONOUR: This resembles a question I put to your opponent. You deny that this is a case where your client said to Senior Member Tyson, the works order in 1(a) is the only thing that will keep me happy, and if you're not going to give me that I want nothing.

RIZK: Yes.

HIS HONOUR: And you say, I shouldn't be satisfied that this was [a my way or the] highway case, and that is supported by what I can see was said, seemingly uncontroversially, before the Appeal Panel.

RIZK: Yes

97. Neither side tendered the transcript of what had in fact occurred before the Senior Member. However, Ms Selkirk relied on what had been said before the Appeal Panel. At that stage, when developing the appeal from the refusal to make the order sought in paragraph 1(a) of the points of claim, Mr Rizk repeatedly asserted that it would have been open to the Senior Member to have made some lesser order for works. Thus, for example, he submitted:

The owners corporation was well aware of what the issues in dispute were. And the fact that, again, if the Senior Member wasn’t persuaded, for example, that villa board lining wasn’t necessary under the test in Hegyesi, that rendering does the job, then so be it. In my submission, you wouldn’t necessarily need to say, well, you’ve specifically sought villaboard linings, therefore, that’s all I’m going to consider.

98. After an exchange concerning the possibility of there being investigative works, followed by doing whatever was required as a result of those investigations, Mr Rizk said:

If the Senior Member was – whenever he formed the view that that was the necessary steps, we say that there was material before [him] to make an order. And so to simply dismiss it – and it was raised in the transcript, I think, in closing with my learned friend where the Senior Member says, “well, if I’m not satisfied, what, we just leave it” and unfortunately that’s effectively the consequences of the Senior Member’s findings.

99. The owners corporation did not cavil with those statements in its address to the Appeal Panel.

100. In submissions in reply in this Court, it was said that Ms Selkirk:

may have assumed that the application for an order in specific terms carried with it the opportunity to be more flexible, if I can put it that way, and to expand and depart from those specific terms. But I can’t recall it ever having been raised before the Senior Member Tyson.

Consideration of first ground

101. I do not seek to cast any doubt upon either counsel’s recollection of the hearing which occupied 13 and 14 February 2023. But enough has been said to expose the fundamental obstacles to the owners corporation’s success on this proposed ground. They are twofold.

102. First, the Appeal Panel found that in confining his attention only to the particular order sought by Ms Selkirk, the Senior Member erred, and instead it was for the owners corporation, which was concededly in breach of duty, to take such steps to identify appropriate work to rectify the leak, or at least in the first instance, investigatory work.

103. Accordingly, I think the concession in this Court by the owners corporation was properly made. “All-or-nothing” claims are not unknown in this area: see for example CJD Equipment Pty Ltd v A&C Constructions Pty Ltd [2011] NSWCA 188 at [6].

104. If Ms Selkirk was not confining herself to an “all-or-nothing” case then it was not sufficient for the Senior Member to conclude that there was no evidentiary basis for the particular order nominated by her. In the circumstances of the present case, where there was a conceded breach, and it is clear that there were a number of possible courses which could be taken by the owners corporation, the functions of the Tribunal did not come to an end when it was unpersuaded that the nominated order was unavailable.

105. The duty was imposed on the owners corporation by s 106(1). The breach conceded by the owners corporation was that it had not properly maintained and kept in a state of good and serviceable repair the common property. The order sought by Ms Selkirk invoked s 232(1)(e). The issue was whether NCAT should make an “order to settle a complaint or dispute about” the breach of duty by the owners corporation, and, if so, what that order should be. If Ms Selkirk’s dispute with the owners corporation was an all-or-nothing case, to rectify her bathroom as sought in paragraph 1(a) or nothing, then it would be a sufficient response to that application to conclude that the order sought in paragraph 1(a) was not available. That is so notwithstanding that the owners corporation continued to be in breach of its duty to repair the common property. But I am unpersuaded that that was the nature of the dispute. The owners corporation has not persuaded me that Ms Selkirk wanted only the order sought in paragraph 1(a), and nothing less.

106. Ms Selkirk’s attitude prior to the commencement of litigation appears to have been less than constructive, and not one which disclosed any element of compromise for the sake of getting the job done, and that at least in part she seems to have been motivated by the hope that the owners corporation’s insurer might be persuaded to pay for more extensive works than the owners corporation was contemplating. Her primary position was that the defect be fixed and the entirety of the tiles in her bathroom replaced. But the absence of any enthusiasm on the part of Ms Selkirk for the works proposed by the owners corporation falls short of establishing that it was a sufficient answer to Ms Selkirk’s application for an order under s 232 to point to the absence of an evidentiary basis for that precise order. I am unpersuaded that she ran such a case. For one thing, the onus rests on the owners corporation to establish that Ms Selkirk ran a case which would entirely fail if she were not entitled to the relief she sought, and it is far from self-evident that an applicant, if the claimed relief be unavailable, would not accept anything less. Secondly, it also seems inconsistent with what was said, much closer to the time, by Mr Rizk to the Appeal Panel, with which the owners corporation did not cavil. Thirdly, the mere fact that the points of claim identify one specific work order, without a fallback, provides only a slight support for the inference it seeks to draw. It is not suggested that there is any other question of principle or public importance involved in this proposed ground.

107. Secondly, the hearing before me proceeded on the basis that Ms Selkirk has herself last September caused works to occur in her flat’s bathroom, leaving it a “shell”, and there is to be later this month a hearing on (a) the owners corporation’s application and (b) the matter remitted by the Appeal Panel. In short, events have moved on. The materials before me do not disclose what orders are sought by the owners corporation, or whether they are opposed by Ms Selkirk. But either there is agreement between the parties about the way in which the bathroom of Ms Selkirk’s flat is to be made usable, or there is a dispute dividing them, and whichever of those alternatives be the case, there is precious little utility in seeking to identify whether there was legal error in the way the Appeal Panel addressed the finding by the Senior Member that no order should issue. In a few days’ time, NCAT will determine the application brought by the owners corporation which (I assume although it is not before me) will require NCAT to exercise the discretion to make orders under s 232. All of this disfavours granting leave to determine whether there was error in effect in the Appeal Panel relying on the failure by the owners corporation to conduct its own investigation.

108. That is sufficient to resolve this proposed ground of appeal. However, I respectfully do not wholly agree with all aspects of the reasons of the Appeal Panel. That said, I do not wish to overstate the minor extent to which I disagree. At least in most ordinary cases, owners corporations should proceed on the basis that they should investigate and take steps to rectify defects in the common property, even if they cannot obtain the lot owner’s consent. At least in most ordinary cases, the existence of an ongoing breach of the owners corporation’s duties under ss 106(1) and (2) will warrant the making of an order under s 232 to investigate (if necessary) and rectify the defect in the common property. But I accept the owners corporation’s submissions that that is not inevitably so, and to that extent I respectfully do not agree with those aspects of the reasons of the Appeal Panel which frame the position in absolute terms. If a lot owner insists upon what might be styled “Rolls Royce” rectification works, and makes it plain that he or she will settle for no less, and NCAT concludes that such works are impossible, or not justified on the evidence, then the fact that there is an admitted ongoing breach of s 106 does not of itself entail that there must be an exercise of power under s 232. Such cases are likely to be rare. In the very large majority of cases, where there is an ongoing breach of s 106(1) or (2), and the lot owner and the owners corporation dispute what should be done, it may be expected that each side will identify the orders pursuant to s 232 which are sought, and save in exceptional circumstances it will be appropriate of NCAT to make some order so as to rectify the breach. That said, in principle, the existence of a breach of s 106 is a factor which enlivens the discretionary power in s 232, but it does not compel its exercise.

HIS HONOUR: Yes.

RIZK: The Appeal Panel were then entitled to, and they did grant leave to, deal with it on errors of fact.

159. All that may be accepted, but it does not follow that the Appeal Panel implicitly concluded that, contrary to the findings by the Senior Member, Ms Selkirk did not behave unreasonably.

160. Contrary to Ms Selkirk’s submissions, I think that [54] of the Appeal Panel’s reasons means what it says. It is to be understood as saying that however unreasonable Ms Selkirk had been, s 122 empowered the owners corporation to obtain access to her lot, and the result was that her resistance did not “constitute a means of discharging the evidential onus on the [owners corporation] to establish a break in causation or a failure by the lot owner to mitigate loss”. That conclusion coheres with the absoluteness of the proposition stated in [34]. It also coheres with the concluding two sentences of [54].

161. Importantly, neither [34] nor [54] is expressed as a statement of the application of principle to the facts of the particular case. Instead, those paragraphs are expressed in terms of general statements of principle. That may be seen repeatedly:

1. First, “whatever the appellant lot owner advocated” or “whatever the appellant did to attempt to resist the [owners corporation’s] chosen course”, “such resistance and advocacy does not … constitute a means of discharging the evidential onus on the OC”. The Appeal Panel did not say that on the facts of this case, the conduct of Ms Selkirk was not available to discharge the onus upon the owners corporation.

2. Consistently with that, the concluding sentence in [54] “irrespective of the lot owner’s motives or conduct” confirms that its reasoning did not rest on some particular findings of fact in the present case, but on the proposition that once it was concluded that rectifying the bathroom was within the scope of the owners corporation’s duty, Ms Selkirk’s motive and conduct were irrelevant.

3. Thirdly, within [34], the Appeal Panel posited the general proposition of law that “[a]lleged restriction of access to, or interference with or resistance to, remediation by a lot owner as a matter of law does not qualify the [owners corporation’s] performance of its struct duty”.

162. Against this, Ms Selkirk submitted at the hearing of this appeal that “[paragraph] 54 is not establishing a general principle that a lot owner’s intransigence can never amount to a failure to mitigate or cause a break in causation, but is again applying it to the facts of this specific case”. But that is the natural meaning of the words it used, and it is consistent with no attempt having been made to set aside the findings that “the” reason for the claimed loss “lay at the feet of” Ms Selkirk, and that she had conducted herself unreasonably.

163. On a fair reading of the paragraph, the Appeal Panel’s answer to the entirety of the submission that Ms Selkirk’s conduct was so unreasonable that her loss of rent could not be said to be as a result of the owners corporation’s breach, and the whole of the reasons that she had failed to mitigate her loss, lay in the power on the part of the owners corporation to obtain access orders to rectify the bathroom. That is consistent with the fact that the Appeal Panel made no attempt to alter the findings by the Senior Member concerning Ms Selkirk’s conduct being the cause of her loss, and, separately, her conduct being unreasonable.

Paragraph 54 discloses error of law

164. I respectfully do not agree with the absoluteness of the propositions stated in [34] and [54], for the following reasons.

165. First, the authorities cited in [34] do not support the proposition for which they are cited. Paragraphs [21]-[23] of Seiwa addressed the irrelevance of a defence of contributory negligence, which rested on the owners corporation’s claim that “the rust damage to the steel uprights should have been seen and reported by Seiwa much earlier than in fact it was”. Brereton J was not purporting to speak of a case of conscious opposition or resistance to the performance by an owners corporation of its duty. Nor does anything in Carli v The Owners - Strata Plan No 56120 [2018] NSWCATCD 55 at [101]-[103] support the proposition attributed to it by the Appeal Panel. Those paragraphs confirm the availability of power on the part of an owners corporation to enter onto a lot in order to perform its duty. They do not speak to the consequence of conscious opposition or resistance by the lot owner to that course. The fact that the same paragraphs of Seiwa and Carli have been cited as authority for the same propositions in Liberant v The Owners - Strata Plan No 62713 [2020] NSWCATCD 16 at [69] and The Owners - Strata Plan No. 36613 v Doherty; Doherty v The Owners - Strata Plan No. 36613 [2021] NSWCATAP 285 at [175] does not alter the position.

166. Secondly, the statute operates in a practical way. The Appeal Panel referred to “restriction of access”, “interference with” and “resistance to” remediation. I agree with what I would regard as the evident thrust of the proposition, which is that in most circumstances the lack of enthusiasm by a lot owner is not an answer to the owners corporation performing its duty and repairing the common property. But much will depend on the nature of the defect, whether it only affects the particular lot owner or affects other lot owners too, and how sustained the lot owner’s opposition is. I would not wish it to be thought that an owners corporation, faced with intransigent opposition to the investigation and repair of a minor defect which only affects the intransigent lot owner, would inevitably be justified in seeking orders for compulsive entry onto that lot owner’s property to investigate and effect a repair, notwithstanding an ongoing breach of duty, although as I have sought to explain earlier, the class of case where such an order would not be made would be regarded as exceptional. Still less would I wish it to be thought that a lot owner may recover as of right damages following a breach of duty by the owners corporation irrespective of how intransigently the lot owner opposes the owners corporation from rectifying the problem.

167. At the core of the error in the reasoning is the conflation by the Appeal Panel of the strictness of the owners corporation’s duty with the separate remedies of orders under s 232 and damages pursuant to s 106(5). Throughout its reasons the “strictness” of the duty is invoked – more than twenty times – as an answer to the satisfaction of other elements of a lot owner’s statutory rights. Breach of the strict duty imposed by s 106(1) is easy to establish, but it is to be firmly borne in mind that (a) breach of duty is but one element of an entitlement to damages, and (b) determining whether a lot owner’s claim of damages is one which is “as a result of” the owners corporation’s breach turns on the nature of the claim and the conduct of the lot owner subsequent to the breach, rather than the strictness of the duty.

168. Once again, this may be seen by returning to fundamentals. Section 106 imposes a duty upon an owners corporation. That duty will be breached in a case such as the present when part of the common property (such as a pipe or a waterproof membrane) fails. It is not to the point that the owners corporation has taken reasonable steps, or that the lot owner has contributed to that occurring; there remains a breach. That is why the duty is styled “strict”. Even so, performance by the owners corporation of its obligations may be deferred if s 106(4) applies, and the duty is subject to s 106(3) and (7).

169. Paragraph 54 of the reasons of the Appeal Panel is expressed in general terms. It refers in terms to “whatever” a lot owner advocated as an alternative or “whatever” might be done to attempt to resist the chosen course. I am unpersuaded that that is the law. Separately from the finding of breach, it was necessary for Ms Selkirk to establish that the loss for which she sought damages was loss which was “as a result of” the breach. There will come times where, despite an antecedent breach of duty, the subsequent acts of the lot owner mean that it can no longer be said that the breach of duty caused loss. Reference is sometimes made to “breaking the chain of causation”, as it was repeatedly before the Appeal Panel and before me. That is not especially helpful, for reasons that are well rehearsed in this area (see Sydney Trains v Argo Syndicate AMA 1200 [2024] NSWCA 101 at [117]-[120]), just as it is not especially helpful to refer to a “duty to” mitigate. The question is whether the part of the lot owner’s claimed loss reflects damage which is suffered as a result of the owners corporation’s breach. The question is one of statutory construction of s 106(5). There is no reason to conclude that “as a result of” entails that a lot owner whose conduct unreasonably prolongs the rectification continues to be entitled to damages, the burden of which will ultimately be borne by other lot owners, a construction which accords with Mitchelmore J’s observation in Smith v Owners – Strata Plan No. 3004 [2022] NSWSC 1599 at [38] that “the requirement for the loss to be ‘reasonably foreseeable … as a result of a contravention’ accommodates the application of mitigation”, as well as her Honour’s ultimate conclusion at [44]-[46] upholding the entitlement of an owners corporation to rely on a failure to mitigate.

Conclusions and orders

170. For those reasons, I have concluded that the Appeal Panel erred in disregarding the entirety of the findings adverse to Ms Selkirk by reason of the power of the owners corporation under s 122 to obtain orders to access her lot. The proposition relied on by the Appeal Panel was expressed to be a matter of law in [34] and the proposition in that paragraph was applied dispositively on this issue at [54].

171. The second ground of the owners corporation’s appeal identified the question of law raised as being “whether a mitigation defence is available in answer or partial answer to a claim for damages under s 106(5)”. Despite what it had earlier said at [47] and [52], the Appeal Panel in the ensuing dispositive paragraphs determined this appeal on the basis that it could never be available. That is not the position at law. It was open to the owners corporation to establish that Ms Selkirk’s own unreasonable conduct meant that parts of the lost rent she claimed were not to be regarded as losses “as a result of” the owners corporation’s breach of s 106(1). The position in a claim under s 106(5) is no different in that respect from a claim in contract or tort which is unaffected by the Civil Liability Act or a claim for damages for misleading and deceptive conduct under statute.

172. Accordingly, the reasons of the Appeal Panel disclose an error of law. It warrants a grant of leave because it was dispositive of the appeal, not to mention being of general importance: see The Owners – Strata Plan 74232 v Tezel at [11]. The appeal should be allowed on this ground, and the question answered accordingly.

173. Plainly I cannot in resolving an appeal limited to questions of law engage in the inquiry which, on the view I take, the Appeal Panel should have addressed, which was, bearing in mind the factual findings made by the Senior Member but also bearing in mind the power under s 122, to what extent if at all was the lost rent claimed by Ms Selkirk damages which cannot be characterised as damages as a result of the breach by the owners corporation of s 106(1). My inability to do so was common ground before me. However, and constructively, I was invited to short-circuit a remitter to the Appeal Panel, in light of the imminent further hearing.

HIS HONOUR: Your view is that is the most straight forward – accepting which you must be right, I can’t possibly decide where the facts lie – you say the easiest course is just to have a rerun of that before whoever the member is.

RIZK: Yes. Because there was a concession of error in the first place. And so there would have had to be, on any view, a hearing to identify that. If that defence is open, on my learned friend’s case, then that can simply be rerun on remittal, rather than have to go back to the appeal panel to potentially deal with.

PURDY: That is a position to which my client agrees.

174. That strikes me as eminently sensible, and consistent with the obligations imposed by s 56 of the Civil Procedure Act 2002 (NSW). The extant orders make provision for the remitter that is to occur, which will be conducted in accordance with these reasons, and I shall include a note to that effect.

175. The parties invited me to provide guidance for the member of NCAT before whom the hearing is to take place. It should be clear from the above that:

1. Ms Selkirk is entitled to damages for the lost rent in the immediate aftermath of the leak, in accordance with the owners corporation’s concession;

2. The owners corporation is not precluded from contending that in the period from 5 December to 20 December, Ms Selkirk’s damages should be zero because of her short term letting;

3. The owners corporation is not precluded from contending that Ms Selkirk’s conduct was, at some stage after early March 2021, such that her claim for lost rent does not answer the description of damages as a result of the owners corporation’s breach. That may be because of her purpose, or because her conduct was unreasonable, or because of her unilateral work on her bathroom which I have been told took place in September 2023. I am not seeking to be exhaustive, and I am in no position to be exhaustive, because neither the owners corporation’s application nor the majority of material in the remitted application is before me. But the ultimate question for NCAT is whether the claimed loss answers the statutory language of “reasonably foreseeable loss suffered by [Ms Selkirk] as a result of” the owners corporation’s breach of s 106(1).

176. My conclusions on the main issues argued may be summarised as follows.

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

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

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

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

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

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

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

177. I will not at this stage make any order as to costs. I have not heard the parties on costs, and each has enjoyed a measure of success. It may well be that the appropriate exercise of discretion of the costs in this Court is that there be no order as to costs, with the intention that each party bears its and her own costs. But if either side wishes to apply for an order, she or it may do so by motion within the time specified by UCPR r 36.16. Likewise, if there are orders which have been made in NCAT concerning costs which, in light of this judgment, are sought to be varied or set aside (if such exist, none has been brought to my attention), then application may be made by motion within the same time period.

178. Finally, I return to the concerns expressed by the Senior Member surrounding the provision to the insurer of a 12 month lease at rent substantially above that which on the evidence was available for a lengthy lease, in circumstances where there was no cross-examination of Mr Wang’s evidence that he was in occupation under a short term tenancy.

179. The Senior Member stated that Ms Selkirk was a solicitor, and I was told that that continued to be the case. Rule 5 of the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (NSW) provides as follows:

5 Standard of conduct—dishonest or disreputable conduct

5.1 A solicitor must not engage in conduct, in the course of legal practice or otherwise, which—

5.1.1 demonstrates that the solicitor is not a fit and proper person to practise law, or

5.1.2 is likely to a material degree to—

(i) be prejudicial to, or diminish the public confidence in, the administration of justice, or

(ii) bring the profession into disrepute.

180. The Senior Member, who saw Ms Selkirk cross-examined on this issue, was very concerned, but ultimately formed the view that he need take no step, in circumstances where he dismissed her claim, and the insurer and AFCA had dismissed her applications. It may be that the Senior Member had in mind the possibility that a criminal offence was attempted to be committed, but it had not succeeded. It is unclear whether he turned his mind to the rules governing the conduct of solicitors, which extend to conduct outside the course of legal practice.

181. I noted earlier that the decision of the Senior Member is not published on Caselaw. But the litigation is now in the Supreme Court, rather than an administrative tribunal, and this Court’s reasons and judgments are made available unless there is some compelling reason to take a different course.

182. As I indicated during the hearing, if I shared the Senior Member’s concerns, I would be unprepared to leave the matter where it lies. I did not see Ms Selkirk give evidence, and on the limited materials made available to this Court, neither the transcript of her cross-examination nor the documents on which it was based are before me. It is inappropriate for me to say anything other than state that based on the materials before me I share the concerns of the Senior Member, although there may be extenuating circumstances of which I am entirely unaware. Those concerns lead me to refer the matter to the professional regulator. I should make it absolutely clear that I am making no finding that Ms Selkirk in fact did anything which is improper. I also confirm that my concerns are irrelevant to the resolution of the appeal.

183. I granted leave to Ms Selkirk to be heard about the possibility of a referral. Pursuant to that leave, on 17 June 2024 she advised that she did not wish to be heard against that course. However, she asked that any referral not appear in my judgment. She made the following submission:

The Defendant does however submit that if such a referral is made, this is not something that should be referenced in the judgment, noting that:

(a) The decision of Senior Member Tyson has not been published and therefore it is not available for members of the public to read. Further, the Appeal Panel decision does not refer to the finding at [123] (or the underlying evidence) in its decision. Consequentially, there is no risk that the Court could be seen as ignoring the concerns raised by Senior Member Tyson by members of the public.

(b) The Court has not assessed for itself any of the evidence which was before Senior Member Tyson, so is not in a position to assess whether the concerns raised at [123] have any merit.

(c) Noting that this issue has not been the subject of any assessment by the Court, the inclusion of a comment of this nature in the judgment could be unfairly prejudicial to the Defendant, given that it would be devoid of context and does not reflect any assessment or finding that the Court itself has made.

(d) The matters mentioned at [123] are not matters which arise for consideration in the present proceedings.

184. I do not accept those submissions. As advised during the hearing, it is not possible to draft reasons dealing with the findings of unreasonable conduct by Ms Selkirk which were central to the main ground of appeal without referring to the reasons of the Senior Member concerning the lease. It is important that a published judgment of the Supreme Court of New South Wales not leave the reader in any doubt about whether the conduct found by the Senior Member warrants investigation. That is an answer to the first point. In response to the second point, I have made it clear that I have made no finding, but based on what I have read, I share the Senior Member’s concerns sufficiently so that the matter should be considered and, if found appropriate, investigated by the profession’s regulator. Contrary to Ms Selkirk’s third point, there is nothing unfairly prejudicial in my making an order against which she does not seek to be heard, and publishing that order as almost invariably happens in the case of this Court’s reasons and orders following a hearing, and nothing in Ms Selkirk’s submission addresses the mandatory relevant considerations in the Court Suppression and Non-publication Orders Act 2010 (NSW), notably the fact that a primary objective of the administration of justice is to safeguard the public interest in open justice. Concerning her fourth point, Ms Selkirk is correct that the matters in [123] of the Senior Member’s reasons do not affect the outcome of this appeal. But as was explained at the hearing, I am disinclined to refer to those matters, and leave the position ambiguous as to whether I hold the view that they are matters of concern. I share the view reiterated by the Senior Member that they are very concerning.

185. Accordingly, the Court’s orders are:

1. Grant leave to appeal, confined to ground 3 of the summons filed on 5 March 2024, and otherwise refuse leave.

2. Appeal allowed.

3. Answer the question “Whether a mitigation defence is available in answer or partial answer to a claim for damages under s 106(5)”:

It is open to an owners corporation to seek to establish that all or part of a lot owner’s claimed damages are not damages for foreseeable losses as a result of the owners corporation’s breach of duty, including by establishing that the lot owner has behaved unreasonably in failing to mitigate his, her or its loss.

4. Note that the remittal pursuant to order 3 made by the Appeal Panel on 6 February 2024 will be conducted in accordance with these reasons.

5. The Registrar of this Court be directed to refer a copy of these reasons for judgment, and a copy of part of the reasons of Senior Member Tyson delivered on 15 August 2023 (insofar as those reasons have been provided to this Court) to the Office of the Legal Services Commissioner, with a view to considering whether any steps should be taken in relation to the Senior Member’s findings at [123].

**********

Decision last updated: 21 June 2024