NCAT Slices Up the Rent Loss Salami in this Strata Damages Claim

Wang v The Owners – Strata Plan No. 88789 [2022] NSWCATCD 157

Quick Read

This 2022 decision by the NSW NCAT Appeal Panel decision is about a dispute in a large Greenwich strata title building about a strata owner’s rent loss claim for water entry whilst the strata building was pursuing a building defects claim for related faults. The simple story is that there were original building defects some of which caused water entry into the strata owner’s rented lot, they led to rent reductions for a while, a later flood into the apartment, some internal damage, and the loss of the tenant. In the meantime, the strata building had started legal action against the builder, Icon, for the defects and also decided to defer its common property repair obligations for those defects under s 106(4). But Icon went into liquidation before the legal action was resolved. The issues in the case were whether the damages claim was made within 2 years of the strata owner’s awareness of the rent and other losses and whether deferring repair obligations limited the strata building’s liability for strata damages. After considering what happened [and when] and the decision in Tezel’s Case, the NCAT Appeal Panel decided that the strata owner’s damages claim could be split into different types and over different periods to deny some rent losses [as they were made more than 2 years after awareness], deny some rent losses [as they arose when the strata building was not liable because of its action on building defects and the deferral decision], and allowed other rent losses others which happened after the flood and when the building defects action had ended. This decision is an important example of how strata buildings can, at least temporarily, reduce their exposure to strata damages claims when there are building defects actions and s 106(4) decisions. It also, interestingly, opens the possibility of multiple s 106(5) strata damages claims by owners for differing events and causes.

Implications

Strata owners have the onus [legal burden] of establishing all the requirements for s 106(5) strata damages claims.
The 2 year time limit for s 106(5) strata damages claims starts with the strata owner’s awareness as outlined in Tezel’s Case.
The 2 year time limit in s 106(5) will be strictly applied.
A strata owner’s s 106(5) strata damages claim can be split if the damages have separate causes and/or have different awareness dates, even if they are of a similar type [like rent losses].
In this case, the flooding of a strata lot, created a new and distinct loss under s 106(5).

For the all the implications of this strata case [and all the other Strata Case Watch] become a paid subscriber to GoStrata Stak

Full Report & Case Details

This 2022 decision by the NSW NCAT Appeal Panel decision is about a dispute in a large Greenwich strata title building about one strata owner’s rent loss claim for water entry whilst the strata building was pursuing a building defects claim for related faults.

Original construction defects in the strata building were being claimed against the builder, Icon, with a series of defects reports in 2015 and 2019 and negotiations. But when those negotiations failed the strata building started District Court legal action against Icon in February 2020.

In 2020 the strata building also decided to defer its obligations to maintain, repair and replace the common property affected by the building defects. Section 106(4) of the Strata Schemes Management Act 2015 allows a strata building to make that kind of decision where it is taking action against someone for that building damage.

In February 2021, Icon went into liquidation and in July 2021 the strata building ended its legal action against it for building defects.

Some of the building defects claimed against Icon affected the strata owner’s lot and even though they weren’t identified in the 2015 report, they were notified to the strata building in 2018 and were included in the 2019 report. The defects caused water to enter the strata lot and forced the strata owner to give her tenant rent reductions from September 2019 to February 2022, causing the tenant to leave and the strata owner to lose rent from February 2022 when the unit was flooded after a storm, and caused damage to carpets and other finishes from the flooding.

In November 2021, the strata owner claimed those amounts from the strata building under section 106(5) of the Strata Schemes Management Act 2015.

Section 106(5) of the Strata Schemes Management Act 2015 gives NCAT power to order damages when a strata building’s failure to maintain, repair or replace common property causes reasonably foreseeable loss or damage to a lot owner.

The primary issues in the case were whether the damages claim was made within 2 years of the strata owner’s awareness of the rent and other losses and whether the decision to defer repair obligations limited the strata building’s liability for strata damages.

For the full report on & details of this strata case [and all the other Strata Case Watch] become a paid subscriber to GoStrata Stak

Keywords

#NSW #NCATAppealPanel #damages #rentloss #repairs #deferrepairs #defects #2022 #SSMA2015 #s106(1) #s106(4) #s106(5)