In a decision handed down yesterday, the Appeal Panel of the NSW Civil & Administrative Tribunal has held that the Tribunal does not have the power under section 106(5) of the Strata Schemes Management Act 2015 to award damages to a lot owner for their losses incurred by the Owners Corporation’s breach of its duty under sections 106(1) and (2) of the Act. The Owners Corporation’s duty is to:

(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.

This is a complete turnaround from the position in The Owners – Strata Plan No. 30621 v Shum [2018] NSWCATAP 15 where the Tribunal had awarded damages to the lot owner for their consequential loss.

After the Shum decision it was thought that section 106(5) of the Act provided the Tribunal with the jurisdiction to award compensation to lot owners for their consequential losses (lot property damages, rent etc.).

The Appeal Panel, while finding that there is no power for the Tribunal to make an order for consequential loss under section 106(5) of the Act, did leave the door open to the possibility that the Tribunal has power to award damages for a lot owner’s condsequential losses under the Tribunal’s general decision making power in section 232(1) of the Act. Specifically, the Appeal Panel, while noting that this argument had not been run before them, stated:

“our preliminary view is that the Tribunal’s order making power in s 232 is sufficiently wide to enable a money order to be made in the nature of compensation for reasonably foreseeable loss in order to settle a dispute or rectify a complaint”

Where does this leave lot owners and Owners Corporations? It is no even more important than ever to seek legal advice as soon once aware of any losses caused by a failure to maintain and repair the common property as lot owners may have a claim both in the Tribunal under section 232(1) of the Act and also in a Court under both section 106(5) of the Act and at common law. Note the limitations periods for each type of claim differ.

The case citation is: Shih v The Owners – Strata Plan No. 87879 [2019] NSWCATAP 263

This is not intended to be legal advice. You should seek legal advice specific to your situation.