In the recent NCAT Appeal Panel decisions of The Owners – Strata Plan No 74835 v Pullicin; The Owners – Strata Plan No 80412 v Vickery [2020] NSWCATAP 5, the Appeal Panel held that the Tribunal or commonly known as “NCAT” does not have the power to order damages or compensation to a lot owner for an owners corporation’s failure to comply with the owners corporation’s duty under section 106(1) of the Strata Schemes Management Act 2015 (“SSMA”). 

We have extracted and directly quoted for you below the facts and summary of the decisions:

“1. Mr and Mrs Pullicin own an apartment in Sydney. Water began penetrating into the apartment from common property outside the apartment. Their tenants complained of serious mould infestation and terminated the tenancy. Mr and Mrs Pullicin applied to the Tribunal for orders including damages for loss of rent. The Tribunal ordered the owners corporation to pay $73,744.76 in damages for breach of its statutory duty “to properly maintain and keep in a state of good and serviceable repair the common property. . .”: Strata Schemes Management Act 2015 (the 2015 Management Act), s 106(1).

2. Mr Vickery had a similar experience. He owns an apartment in Newcastle. Water penetrated the apartment from common property and he applied to the Tribunal for damages for compensation for loss of rent. The Tribunal found that the owners corporation had breached its statutory duty and ordered it to pay Mr Vickery $97,000.

3. Each owners corporation has appealed to the Appeal Panel from the Tribunal’s decision. Because there are common issues, we heard the appeals concurrently and have given all our reasons in this decision.

4. The common issue in the grounds of appeal is whether the Tribunal has power to award damages to a lot owner in a strata scheme for a breach of s 106(1) of the 2015 Management Act by the owners corporation. Section 106(5) gives the lot owner the right to recover damages for foreseeable loss as a result of a breach of the statutory duty in s 106(1). Section 232(1)(e) gives the Tribunal jurisdiction to “make an order to settle a complaint or dispute about” failure to comply with the duty in s 106(1). The lot owners contended that the dispute also came within the more general provision in s 232(1)(a). That provision gives the Tribunal jurisdiction to “make an order to settle a complaint or dispute about the operation, administration or management of a strata scheme under the Act”.

5 The lot owners in both cases acknowledged that s 106(5) gives them a private right of action to sue for damages in the Supreme Court or any other court of competent jurisdiction. They submitted that, as long as they do not have other proceedings on foot which are the subject of the application in the Tribunal, s 232(1)(a) or (e) of the 2015 Management Act gives the Tribunal power to award damages for breach of the statutory duty in s 106(1). (See 2015 Management Act, s 232(3)(b).)

6. In support of their submissions, the lot owners rely, in part, on the 2018 decision of the Appeal Panel in ­The Owners Strata Plan No 30621 v Shum [2018] NSWCATAP 15. In 2019, a differently constituted Appeal Panel decided that the Tribunal did not have power to award damages for breach of the statutory duty in s 106(1): Shih v The Owners – Strata Plan No 87879 [2019] NSWCATAP 263. We will refer to these cases as “Shum” and “Shih”. In Shih, the Appeal Panel also expressed the tentative view that, even though the Tribunal cannot order damages, the Tribunal may have power to order compensation for the same kinds of losses. The Tribunal in Vickery characterised the payment of $97,000 as being compensation for losses sustained.

7. The owners corporation for each of the strata plans contended that only a court of competent jurisdiction has power to award damages for breach of s 106(1). The Tribunal does not have that power. In addition, they submitted that the Tribunal does not have power to order the payment of compensation for losses sustained as a result of a breach of the statutory duty in s 106(1). Those questions are questions of law that this Appeal Panel has jurisdiction to consider: Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act), s 80(2).

8. We have decided that the Tribunal does not have power to order damages or compensation for failure to comply with the duty in s 106(1). In summary, that conclusion is based on the following propositions:

(1) The Tribunal has the jurisdiction and order making powers imposed or conferred on the Tribunal by the NCAT Act or other legislation.

(2) The inclusion of s 106(5) in the 2015 Management Act has put beyond doubt the existence of a private cause of action in damages for breach of the statutory duty in s 106(1) in a court of competent jurisdiction.

(3) Sub-section 106(5) of the 2015 Management Act does not confer or impose any jurisdiction or order making powers on the Tribunal, nor does it confer or impose jurisdiction on the Tribunal to exercise any other functions in connection with the conduct or resolution of proceedings.

(4) Section 232(1)(e) of the 2015 Management Act confers jurisdiction on the Tribunal to entertain complaints or disputes between a lot owner and an owners corporation about the operation of a strata scheme or the failure to comply with the duty in s 106(1) to maintain and repair common property.

(5) The word “about” in s 232(1) relates to the complaint or dispute, not the orders the Tribunal has power to make.

(6) Sub-sections 106(3) – (7) govern applications to courts of competent jurisdiction for breach of the statutory duty in s 106(1). Section 232 and relevant provisions of the NCAT Act, govern applications to the Tribunal for failure to perform the duty in s 106(1).

(7) The order making power in s 232 is expressed as being “to make an order to settle a complaint or dispute about” failure to comply with the duty in s 106(1) to maintain and repair property.

(8) The words “to settle” do not mean that the Tribunal is restricted to making consent orders under s 232.

(9) Having decided that s 232 is not confined to consent orders, the literal or grammatical meaning of the words “to settle” is “to resolve”. These are general words that do not, either expressly or impliedly, confer or impose power on the Tribunal to make an order for damages under s 106(5).

(10) The context, the consequences and the purpose of the legislation do not affect our conclusion.

(11) The 2015 Management Act does not, expressly or impliedly, impose or confer power on the Tribunal to make orders by way of compensation for failure to comply with the duty in s 106(1).”

What Does this All Mean?

The effect of the above decisions leads to the unintended result that: 

  • the Tribunal has no power to order that an owners corporation pay a lot owner damages for breach of the owners corporation’s duty to maintain and repair common property under section 106 of the SSMA; the lot owner will need to commence proceedings in the Courts; and
  • a lot owner who requires repairs to common property affecting their lot and also has suffered loss or damage due to the owners corporation’s breach of section 106 of the SSMA will be required to commence 2 separate proceedings namely, in the Tribunal for an order to rectify the defects to the common property and Court proceedings claiming damages.

Disclaimer: Please note that the information contained in this article is not legal advice and should not be relied upon. You should obtain legal advice specific to your circumstances before you take any action or otherwise rely upon the contents of this article.