Section 106(5) of the Strata Schemes Management Act 2015 introduced a new ability for lot owners. This was that a lot owner had the ability to recover from the owners corporation as damages for the breach of statutory duty, any reasonably foreseeable loses they suffered as a result of the owners corporation’s contravention of section 106 (the obligation to maintain and repair the common property).

The cases of Shum (in which the NCAT awarded damages under s106(5)) and Shih (in which the NCAT Appeal Panel cast doubt over the ability of NCAT to award damages under s106(5) and indicated it may have the power to do so under s232) followed. Then, in January 2020 the NCAT Appeal Panel in The Owners – Strata Plan No. 74835 v Pullicin; The Owners – Strata Plan No. 80412 v Vickery [2020] NSWCATAP 5 firmly stated that the NCAT did not have power to award damages to a lot owner under either s106(5) or s232 of the Act. This decision was appealed with the matter being determined by the NSW Court of Appeal.

On 11 November 2020 the Court of Appeal handed down its decision with the majority of the Court deciding that section 106(5) created a statutory right of recovery and s232 gave NCAT power to hear and determine a claim for damages under s106(5) of the Act.

What does this mean for lot owners?

First, it is good news for all lot owners who had started an action in NCAT to seek damages under s106(5) of the Act. NCAT does have the power to make damages orders.

Secondly, it clarifies jurisdiction and enables lot owners to commence action in NCAT for both an order for repairs under s106(1) and for a damages claim under s106(5). This saves time, costs and the stress of having to commence two different claims in two different jurisdictions with two different sets of rules something that was noted as being inconsistent with the statutory scheme which had been designed to avoid duplication of proceedings.

Thirdly, the decision appears to widen the power of NCAT under section 232 to make orders with the majority finding that the section 232 should not be read narrowly. This ability has been read down in recent NCAT decisions with NCAT’s powers being self-limited. This decision may mean that NCAT is less likely to confine its powers in other matters due to the now confirmed wide ranging power in section 232 of NCAT to make orders to settle a dispute.

This is not intended to be legal advice but is a general statement of my opinion. If you or your scheme is affected you should seek legal advice tailored to your specific circumstances.