Question: A new committee has discovered the strata manager authorised repairs over the past few years that should have been lot owner responsibility. Can we get reimbursed?
Our new committee has reviewed repair and maintenance invoices paid by the Owners Corporation over the past couple of years.
We have found a number of these invoices were for repairs to lot property and not common property eg burst pipe in an internal wall.
This was because the Strata Manager did not understand the internal layout of our units, and in particular, the location of plumbing and other services in internal lot walls.
Can the Owners Corporation recover the costs of such repairs from the lot owner?
Answer: Your owners corporation should consider making a claim against the strata manager for reimbursement of the cost.
It will be difficult for the owners corporation to recover the cost of repair of lot property from the owner of the lot. However, it may be easier for the owners corporation to recover the cost from the strata manager.
The key to answering the question is working out the legal basis for a person having to pay the owners corporation.
It is assumed that the internal wall pipe is lot property. This is because pipes in an internal lot property wall that service more than one lot are common infrastructure and therefore common property because of the definitions of “common infrastructure” and “common property” in section 4(1) of the Strata Schemes Development Act 2015.
The strata manager has a common law duty of care to the owners corporation. That duty would include a duty to take care that the strata manager only spends the owners corporation’s money on work that the owners corporation is authorized to carry out. Repair of lot property is not something an owners corporation is generally not authorized to do (there are some exceptions in the Strata Schemes Management Act 2015 to this eg section 122(6) but on the information provided it does not appear an exception applies. In addition, it is likely that the strata managing agency agreement only authorizes the strata manager to organize repair of common property and not lot property.
Therefore, in the present case, it appears that the strata manager has been negligent and is in breach of contract. This would entitle the owners corporation to seek and recover from the strata manager damages representing the cost of this repair. Therefore, your owners corporation should consider making a claim against the strata manager for reimbursement of the cost. Should your owners corporation wish to consider legal action against the strata manager then it should seek legal advice.
It is difficult to say the owner of the lot has a legal liability to reimburse the owners corporation. The starting point is the case of The Owners – Strata Plan 32735 v Heather Lesley-Swan [2012] NSWSC 383 where the NSW Supreme Court made it clear that where a person spends their own money to fix another person’s property, the first person is not entitled to be reimbursed the cost by the property owner unless there is a prior agreement between the two to permit the reimbursement.
There may be an argument that the owner of the lot is liable to reimburse the owners corporation based on the legal doctrines of mistake and unjust enrichment however these can be difficult to establish and further information would be required. Your owners corporation should seek legal advice on whether it can claim from the owner of the lot based on mistake and unjust enrichment.
This post appears in Strata News #500.
Carlo Fini Lawyer (NSW)