Tribunal Confirms its Jurisdiction to Award Damages for Breach of Statutory Duty

In an August 2017 decision, the NSW Civil and Administrative Tribunal has confirmed its jurisdiction to award damages for a breach of the Strata Schemes Management Act 2015 (NSW).

Rosenthal v The Owners – SP 20211 [2017] NSWCATCD 80 (29 August 2017) concerned the duty that an owners corporation has under section 106(1) of the Strata Schemes Management Act 2015 to properly maintain and keep in good repair all common property. The applicants were lot owners who alleged a breach of this duty in the form of a failure to repair a leaking waterproof membrane, causing water damage to their lot.

The NSW Court of Appeal held in The Owners of Strata Plan 50276 v Thoo [2013] NSWCA 270 (Thoo) that the equivalent duty under section 62 of the 1996 Act (now repealed) did not create a private cause of action for damages for breach of that duty.

The effect of section 106(5) in the new, 2015, Act is to reverse this decision, providing that a lot owner ‘may recover from the Owners Corporation, as damages for breach of statutory duty, any reasonably foreseeable loss suffered by the owner as a result of a contravention of this section by the owners corporation’.

Uncertainty arose in the Rosenthal case because the provision does not expressly address whether the owner may commence proceedings for recovery of those damages in the Tribunal (as opposed to a court).

The Owners Corporation argued that if Parliament’s intent was to give this jurisdiction to the Tribunal, it would have made this clear. They argued that the purpose of the provision was merely to reverse the decision in Thoo, and permit the recovery of damages in a court only. The Tribunal however took the opposite view – that in the absence of any explicit terms, it should be assumed that the Tribunal has been granted this jurisdiction.

The Tribunal supported its reasoning by reference to section 232(1)(e), which gives the Tribunal powers to make orders to settle a complaint or dispute about ‘an exercise of, or failure to exercise, a function conferred or imposed by or under this Act or the by-laws of a strata scheme’. In this case, the dispute to be settled included a claim for recovery of damages for the alleged breach of statutory duty. To settle the dispute, the Tribunal needed to be able to award these damages. Thus, in the absence of any restriction of jurisdiction in s106(5), section 232 empowers the Tribunal to make such an order.

The decision is welcome confirmation of the effect of this part of the new strata law. It’s expected we will see many more lot owners in the same position as the Rosenthals, seeking damages in similar circumstances.

 

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