NCAT does not have jurisdiction to award damages under s 106(5) of the Strata Schemes Management Act 2015

Background

The owners of a lot in a strata scheme filed an application in the NSW Civil and Administrative Tribunal (“NCAT”) alleging that water had entered and damaged their property. The lot owners sought orders against the owners corporation under section 232 of the Strata Schemes Management Act 2015 (“SSMA”) for the carrying out of rectification works and consequential orders and for the payment of damages under section 106(5) of the SSMA for compensation for loss of rent and the cost of replacement of the carpet in the lot.

NCAT ordered the owners corporation to pay $542.86 in compensation for loss of rental income to the lot owners but dismissed the application.

The lot owners appealed to the NCAT Appeal Panel against the amount awarded for loss of rent and also the adverse costs order made against them.

On appeal, the owners corporation argued that NCAT had neither jurisdiction nor power to deal with a claim for damages based on statutory breach created by section 106(5) of the SSMA.

Section 106 of the SSMA provides that the owners corporation must maintain and repair the common property. A failure to comply with this statutory duty will enable a lot owner to recover damages from the owners corporation for any “reasonably foreseeable loss” the lot owner has suffered. It is worth noting that section 106 of the SSMA is silent as to the jurisdiction in which the lot owner should pursue the damages claim.

NCAT Appeal Decision

The NCAT Appeal Panel held that:

–   NCAT did not have jurisdiction to award damages under s 106(5) of the SSMA.

–   The drafters of the legislation have been very careful in conferring jurisdiction upon NCAT to make certain orders or decisions. Section 106 of the SSMA, while it provides for the making of an award of damages, does not specify which body can make that order.

–  The lack of specificity contained within s 106 of the SSMA is to be contrasted with a number of other provisions of the SSMA which do create specific powers in NCAT to make monetary orders. 

–  It would be unusual to empower NCAT with the right to determine whether and to what extent damages for statutory breach should be ordered, in the absence of any specific provision in the SSMA creating such empowerment.

–  Legislation conferring jurisdiction on a Tribunal, which exercises defined and confined powers and uses different rules of procedure and evidence to courts, should not, in the absence of the clearest language, be construed so as to confer power to determine claims at common law. 

–  The language used in s 106(6) of the SSMA which refers to the bringing of an “action” for damages is more pertinent to and consistent with an intention on the part of the legislature that a claim for damages under s 106(5) of the SSMA should be brought before a court. This is language normally associated with the jurisdiction and powers of courts to deal with such matters. It is not language normally used when describing the powers of NCAT where the legislature makes particular provision for the remedies available to be ordered by NCAT. 

–  In The Owners Strata Plan No 30621 v Shum [2018] NSWCATAP 15, the NCAT Appeal Panel held that the jurisdiction of NCAT to make an order for damages under section 106(5) arising from a breach by an owners corporation of the duty imposed by section 106 is granted by the general order making power in section 232 of the SSMA. However, given the structure of the SSMA and the order making powers contained within it, it is impermissible to import into the general power in section 232 a specific power such as that exercisable under s 106(5) of the SSMA. An action under s 106(5) of the SSMA for damages for breach of statutory duty must be maintained in a court of competent jurisdiction.

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.