The Strata Gavel: Vickery’s Case Clarifies Damages Claims at NCAT
Quick news on important strata cases …
Last November the NSW Court of Appeal decided that the New South Wales Civil and Administrative Tribunal (NCAT) has the power to order damages under subsection 106(5) of the Strata Schemes Management Act 2015 based on NCAT's jurisdiction to resolve disputes under section 232 of the Strata Schemes Management Act 2015.
Background details
A strata owner claimed that the strata corporation breached its duty to maintain the common property under s 106(1) and that failure caused water to leak in the apartment causing the strata owner rent losses.
The strata owner took action at NCAT for the lost rent as a result of the leak under subsection 106(5) of the Act, which allows strata owners to recover damages for breach of statutory duty, and any reasonably foreseeable loss suffered by a lot owner as a result of contravening subsection 106(1) of the Act.
S 106(5) allowed an owner to claim for damages resulting from a contravention of subsection 106(1).
But, because everyone agreed the strata building had breached its duty under s 106(5), that it had caused losses and the amount of the loss, the only issue was s 232 allowed recovery at NCAT.
NCAT and the NCAT Appeal Panel decided that they could not award damages and that any damages under s 106(5) had to be made in civil Courts.
The strata owner appealed to the NSW Court of Appeal.
The decision
The NSW Court of Appeal overturned the NCAT Appeal Panel decision by a 2/1 majority vote [Basten and White JJ in favour and Leeming JA dissenting].
In deciding the case the NSW Court of Appeal made the following key findings.
There’s no reason why NCAT’s power to make an order to settle a complaint or dispute precludes NCAT from making an order for damages under s 106(5).
There’s also no express prohibition in the law against ordered damages.
S 232 [the source of NCAT’s power to [settle complaints or disputes] is wide and covers the full range of a strata building’s functions when operating, administering and managing the strata scheme.
A refusal of a claim for damages under s 106(5) by a strata owner was a complaint or dispute.
That kind of refusal was also a failure by the strata building to fulfil the function of making good reasonably foreseeable loss suffered by the lot owner as a result of a breach of s 106(1).
If NCAT could not order damages, it would create dual/split jurisdiction between NCAT and civil Courts where NCAT could decide there was a breach of duty but not order damages and a civil Court could order damages only but not make orders about duty breaches and/or have to accept NCAT findings about duty.
The dissenting judge, Leeming JA, made a few interesting points as follows:
Strata disputes over money, especially when $100,000 or more should be dealt with in civil Courts because there’s a formal hearing, rules of evidence apply, parties cross-examine witnesses, and there’s a right to an appeal by rehearing.
S 106(5) creates a right to recover damages for breach of statutory duty as a common law right.
The breadth of the language in s 232 was indicative of a dispute resolution power that was intended to cover a wide range of strata building action but excluded damages.
The statutory precursors to s 232 in earlier strata laws, expressly provided a power to order damages but limited in monetary value which was relevant to the current provisions.
The uncertainty in the strata laws regarding NCAT’s power to award damages should be resolved by legislative amendment, as these things affect thousands of strata owners and strata buildings.
Some implications
The decision confirms that proceedings for significant damages can proceed in NCAT within a less formal procedural and evidentiary jurisdiction. So, there will be a lot more damages claims.
Existing damages claims at NCAT for damages under s106(5) are saved and can continue.
There are currently no limits on the amount that can be awarded by NCAT for damages under s 106(1) of the Act. So potential damages orders are unlimited.
NCAT has limits on legal representation [only with leave], the rules of evidence don’t apply, proceedings are conducted informally, and there are limited rights of appeal. So, some parties will feel [correctly or not] that they can’t argue or defend their case adequately.
The wide interpretation of NCAT’s powers under s 232 could extend to many other [non-money] kinds of disputes in strata buildings that are not otherwise specifically identified in the strata laws.
It’s possible that there will be further strata law reforms in New South Wales to address the effect of the decision which might eliminate [or limit] NCAT’s power to order damages. Thereby changing the position for strata owners and strata buildings again.
April 23, 2021
Francesco …
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KEY DETAILS OF THE CASE
Case Name: Vickery v The Owners – Strata Plan No 80412 [2020] NSWCA 284
Judgement: https://www.caselaw.nsw.gov.au/decision/175b02209676ed598d477b48
The Parties:
Strata Building, The Owners – Strata Plan No. 80412
Owner, Graham John Vickery