A nuisance for Owners Corporations: damages awarded to lot owner

In February this year, we reported on the case of McElwaine v The Owners- Strata Plan No 75975 [2016] NSWSC 1589.

To remind you of the facts, lot owner McElwaine pursued his Owners Corporation in a common law claim of nuisance, after alleging that his lot was damaged by water penetration caused by defective waterproofing. McElwaine alleged that the Owners Corporation knew about the waterproofing defects and did not fix them, despite knowing that the water penetration caused substantial and unwarranted interference with the use and enjoyment of his unit.

In the 2016 case, the Owners Corporation was successful in claiming that Chapter 5 of the Strata Schemes Management Act 1996 (‘Old Act’) precluded a lot owner such as McElwaine from making a common law claim in nuisance, as Chapter 5 provided the exclusive remedies available for breach of the statutory duty, consistent with the case of The Owners Strata Plan 50276 v Thoo [2013] NSWCA 270. The statutory duty referred to was section 62 of the Old Act, which is now section 106 of the Strata Schemes Management Act 2015 (‘New Act’). Both sections state that Owners Corporations have a duty to maintain and repair common property.

McElwaine subsequently appealed. In a decision handed down last week [McElwaine v The Owners – Strata Plan 75975 [2017] NSWCA 239], the Court of Appeal has found in McElwaine’s favour and overturned the 2016 decision of the Supreme Court, stating (at paragraph 26), that “an owners corporation, as legal owner of the common property, may owe a general law duty of care or a general law duty not to create a nuisance, and not merely a statutory duty that can be enforced only through the mechanisms provided in Chapter 5” and “the rights of a lot owner or occupier of a lot to enforce an owners corporation’s duty in respect of the management or repair of the common property that is owed to an owner or occupier of a lot in that capacity” is not precluded by the Old Act.

This recent decision has determined that, over and above pursuing an Owners Corporation for not performing its duties (such as to repair and maintain) under the law, a lot owner can make a common law claim in damages for nuisance or negligence.

So why is this significant? Well, it makes clear that lot owners and occupiers can sue an Owners Corporation for damages – even under the Old Act (which is not as clear about this issue as the New Act). Significantly, a common law claim of nuisance differs from the rights of redress in the Acts due to the time limitations to bring an action. A claim in nuisance or negligence can begin up to six years from the date the alleged damage is suffered, while section 106(6) of the New Act limits this to two years from the date the loss suffered becomes known.

The case is now before the Equity Division to determine the quantity of damages to be awarded to McElewain.

The information contained in this article is not legal advice. This article is intended to provide general information in summary form only. You should not rely on the content of this article as legal advice. If you would like advice specific to you and your situation, please contact us.

Posted in LCOR