The NCAT Legal Bulletin provides a summary of relevant and interesting case law of significance to the work of the NSW Civil and Administrative Tribunal.
Vickery v The Owners – Strata Plan No 80412  NSWCA 284
– in which the NSW Court of Appeal allowed an appeal from Mr Graham John Vickery, from a decision at NCAT that the Tribunal did not have the power to order damages for a breach of the owners corporation’s obligation to maintain the common property of a strata scheme, under s 106 of the Strata Schemes Management Act 2015 (NSW).
11 November 2020 – Basten, Leeming, White JJA
The Court of Appeal of New South Wales allowed an appeal from Mr Graham John Vickery, from a decision at NCAT that there was no power to order damages for a breach of s 106 of the Strata Schemes Management Act 2015 (NSW).
The appellant, Mr Graham John Vickery (Mr Vickery), was the owner of an apartment in a strata scheme, who claimed that the respondent (the Owners Corporation) breached its obligation to maintain the common property, resulting in his apartment leaking with water. Pursuant to s 106(1) of the Strata Schemes Management Act 2015 (NSW) (the SSMA), the Owners Corporation was required to maintain common property of a strata scheme and keep it in a state of good and serviceable repair. Section 106(5) of the SSMA provides 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 the section. Section 232 of the SSMA provides that the NSW Civil and Administrative Tribunal (NCAT) may “make an order to settle a complaint or dispute”.
Mr Vickery commenced proceedings in NCAT, claiming $97,000 damages for lost rent as a result of the leak. The Owners Corporation agreed that it had breached its obligation, that the breach had caused loss to Mr Vickery, and the amount of that loss. The sole issue in the appeal was whether the language of s 232 of the SSMA, providing that NCAT may “make an order to settle a complaint or dispute”, included an order for payment of damages. An Appeal Panel of NCAT held that there was no power to order damages for breach of s 106. Mr Vickery appealed to the Court of Appeal.
(Basten and White JJA allowing the appeal and remitting to the NCAT Appeal Panel, Leeming JA dissenting):
- Pursuant to the SSMA, the principal responsibility for management of a strata scheme is vested in the owners corporation, which has responsibility for maintaining and repairing the common property of the strata scheme. The owners corporation is the owner of the common property. More specifically, the owners corporation is required to maintain the common property and keep it in a state of good and serviceable repair. Where a breach of that obligation causes loss to a lot owner, that person may bring an action for damages against the owners corporation. Whether or not NCAT can order the payment of damages is a matter of how s 232 is construed. Section 232(1) of the SSMA enables NCAT to “make an order to settle a complaint or dispute about any of the following.” Whether or not this includes damages under s 106 is the central question of this matter (Basten JA at -, -).
- The respondent argued that s 232(1) should be read down so as to exclude the particular, s 106 dispute. They argued that a claim for damages under s 106(5) required, for its successful resolution in favour of a lot owner, an order for payment of money. The respondent argued was an inappropriate form of order for NCAT to make without an express enabling provision. The Owners Corporation argued that the numerous money-ordering powers under the SSMA expressly conferred powers on NCAT, but none related to s 106(5). However, there are two possible constructions to the provision. Firstly, as the respondent contends, they must be construed as necessary to confer power to order payments of money on NCAT, rather than such a power being vested solely in a court. Alternatively, each provision confers a stand-alone power to order payment of money in circumstances where no body would otherwise have such a power. On that approach, the sections involve the primary conferral of power, not a consequential allocation of power to NCAT, which would otherwise by default have vested in a court. Given the provisions of the Tribunal Act, which seek to avoid concurrent proceedings in the Tribunal and a court, it is to be expected that compensation or other money orders will be available in the Tribunal (, ).
- The legislative history of strata management is relevant. At all stages the language found in the chapeau to s 232(1) has been understood as sufficiently broad to encompass an order for the payment of damages. The language of s 232(1) finds its origin in s 105 of the Strata Titles Act 1973 (NSW) (1973 Act), conferring power on a Strata Titles Commissioner appointed under that Act to settle disputes and rectify complaints. However, it is significant that when in 1984, subs (1A) was added, permitting the Commissioner to make an order for payment of “damages not exceeding $500” no amendment was made to the language of settling a dispute or rectifying a complaint. If an order for payment of damages fell within the language of s 106(1), it is not easy to construe the same language in the 2015 Act as not adequate to include an order for payment of damages. The only substantive change has been to delete the reference to “rectifying complaints”,  a change which is either neutral or supportive of the proposed construction, by removing language less easily seen (if standing alone) to include ordering payment of damages. In the absence of an express prohibition in s 232 in relation to the powers of the Tribunal, it would be wrong in principle to construe the unchanged language as subject to an implied limitation which has not existed in its past emanations. There is little doubt that the legislation has been amended from time to time, without attempting to ensure that any infelicity created in the language used elsewhere in the legislation has been considered and rectified. The better course is to construe the operative provisions in their own terms and give effect to them accordingly (, , ).
- It is important to take into consideration the fact that the SSMA was enacted after the Tribunal Act had come into force. The jurisdiction and powers conferred by s 232 significantly expanded the powers of NCAT, as compared to the adjudicators under the 1996 Act. Further, unlike its predecessors, s 232 dealt with the issues surrounding potential jurisdictional overlap between NCAT under that section and other proceedings relating to the same dispute. In addition, cl 5 of Sch 4 of the Tribunal Act confers exclusive jurisdiction on NCAT where, when an application is made to NCAT, “no issue arising under the application” is then before a court. Conversely, where an issue is before a court at the time of an application to NCAT, NCAT has no jurisdiction to determine the issue (-).
- The decision of the Appeal Panel at NCAT should be set aside, and the matter remitted to the Appeal Panel for the Owners Corporation’s appeal to be dealt with according to law ().
Dissenting Judgement of Leeming JA
- NCAT did have power to make orders resolving a complaint about failure to maintain the common property, and NCAT is able to make orders which include monetary payments for compensation. However the appeal should be dismissed, because there was no power to hear and determine Mr Vickery’s action for breach of statutory duty (Leeming JA, dissenting, at ).
- It is common ground that NCAT can make orders resolving a dispute under s 106(1), and it is clear that Mr Vickery contends, and the Owners Corporation denies, that those orders can include damages. But there is an important distinction between a dispute concerning the Owners Corporation’s failure to maintain common property, and a cause of action sounding in damages for breach of statutory duty. The right of the appellant to recover damages for breach of statutory duty pursuant to s 106(5) of the Act is a right at common law, commonly known as the tort of breach of statutory duty (Leeming JA, dissenting, at , ).
- Section 232 of the Act does not authorise NCAT to order damages for breach of statutory duty. The language of “settle” a “complaint” or “dispute”, and the breadth of the power, speaks of dispute resolution by means other than by payment of damages. This is supported by statutory precursors to s 232, which expressly provided a power to order damages, limited in monetary value, and by the lack of jurisdictional limit accompanying s 232 (Leeming JA, dissenting, at -, -, ).
- The uncertainty of the legislation regarding NCAT’s power to award damages should be resolved by legislative amendment, as these aspects will probably affect hundreds or thousands of lot owners dealing with owners corporations (Leeming JA, dissenting, at ).
Read the decision on the NSW Caselaw website.
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- NSW: Confusion Reigns: NCAT Weighs in on its Power to Award Compensation
- NSW: Q&A Duty to Maintain and Repair Common Property
- NSW: Damages claim for failed common property? Don’t take it to the Tribunal!
This article appeared in NCAT Legal Bulletin | Issue 11 of 2020.
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