Owners Corporation Strata Plan No 14172 v Cai

The OC's CASE

1. The OC says that the owner has owned lot 10 since 24 June 2014 and that the occupier took occupation between 6 September 2015 and 22 December 2017, during which time he operated a coffee shop/sandwich bar.
2. Directly below lot 10 is lot LG01 which is used as an orthodontic surgery (the downstairs lot).
3. The OC states that from October 2015 it received complaints from the downstairs lot of water dripping into and penetrating that lot.
4. It is the OC's case that water coming from the air conditioner belonging to lot 10 and water leaking from the overflow of the fridge, also belonging to lot 10, penetrated through lot 10's damaged and inadequate vinyl floor covering and into the downstairs lot.
5. The OC says that the owner made continual demands of the occupant to rectify these matters, refusing to rectify these matters himself. It was therefore " left" to the OC to investigate and carry out work at its own expense to "stop the water ingress".
6. The OC gained access in late 2017 and had repairs carried out to lot 10 which remedied the problem.
7. The OC states that in so doing, it incurred costs of $76,108.25 which includes the cost of investigative work as well as of the repair work.
8. The OC now seeks that the owner and occupant reimburse that amount, arguing that their failure to address the water penetration issue amounted to a breach of their duty under s 153 SSMA, thus entitling the OC to carry out the work itself and "recover the cost of the work" from them as a "debt" under s 120(3) and (5)SSMA.
9. The OC took the Tribunal to and relied on the Tribunal's order making powers under 232(1)(a) and (e) SSMA.

THE OWNER'S CASE

1. The Owner argues that the Tribunal does not have jurisdiction to make the order sought.
2. In any event, the Owner argues that it is an old building of some 90 years of age and as such, there are potentially a wide number of points for water entry into the downstairs lot beyond what the OC seeks to establish.
3. Further, the Owner argues that there is no evidence to link the water penetration into the downstairs lot with Lot 10 and that to the extent that there may be any such link, it arises from problems with the common property slab for which the OC is responsible.
4. The owner has also raised a previous fire incident and invites the Tribunal to consider the impact of that incident on the current matter.
5. Finally, the Owner notes that the 2018 application is an "amended application" in respect of which no mediation was conducted pursuant to s 227 SSMA.

THE OCCUPANT

1. The occupant also raises jurisdiction.
2. The Occupant submits that as his lease of lot 10 only commenced in August 2016 and as the OC concedes, it was aware of water penetration in the lower ground floor area since 2015, some 10 months before he took occupancy of lot 10, he cannot be responsible for the damage.
3. The dates of the occupant commencing occupation and vacating are not in dispute.

JURISDICTION

1. The OC seeks an order under s 232(1(a) or (e) of the SSMA that the owner and/or occupant pay the OC the cost of the work it carried out to address the water penetration into the underground lot.
2. What the OC argues is that the "trigger" to activating and thus obtaining an order under s232(1)(a) or (e ) is to be found in s120 SSMA.
3. For completeness I have attached copies of both these provisions to this decision.
4. Put generally and as alluded to in the heading, s120 SSMA gives the OC the power" to carry out work required to be carried out by" others" (s120(1)-(3); and to recover the costs of such work (s120(4).
5. Specifically, the OC may do relevant work under s 120 SSMA, if the "others" are required to do that work under a notice given by a public authority (s120(1); under a scheme's by-law (s120(2); under an order made under the SSMA (s120(4); or, as is relevant here, where that person is an owner or tenant who "fails to carry out work in order to remedy a breach of a duty imposed under Part 8" of the SSMA (my emphasis).
6. It will be recalled that the OC alleges that the owner and occupier, by failing to remedy the water penetration into the downstairs lot, are in breach of s 153 SSMA, which is in Part 8 of the Act.
7. I leave to one side whether the OC has established that the owner and/or occupant are in breach of s153 SSMA and turn firstly to consider whether the Tribunal is empowered to make an order under s 232SSMA for the owner and/or occupant to pay the OC the cost of the work.
8. Clearly, s1204) entitles the OC to recover the costs of carrying out work in the circumstances set out in ss120(1)-(3) SSMA.
9. The question is, however, can that entitlement be converted into an order under s232 SSMA?
10. In considering this question I have considered the wording and intended operation of s232 SSMA; other relevant rovisions of the SSMA; and the case of Owners Corporation SP No 30621 v Shuim to which the Tribunal was not referred by the parties but which has come to my attention in the course of writing this decision.
11. The wording and intended operation of s 232 SSMA
12. The words in s232 SSMA, which bestow power on the Tribunal to make orders, are very general and broad. The Tribunal may make "an order to settle a complaint or dispute".
13. However, these words must be read down by the words that immediately follow. The order is to be "about any of the following", being the subsequent sub-sections (1)(a)-(f).
14. Thus the Tribunal's power under s 232(1) SSMA to make an order to "settle" a "complaint" or "dispute" must be read within the parameters and context of the ensuing sub sections (1)(a)-(f) and each of these paragraphs must be considered within the context and ambit of the others.
15. The first thing of note is that three of the six sub-sections are directed at orders that may arise from an existing "agreement". These provisions thus envisage the existence of an "agreement" that is already in place about some processes, requirement, power or obligation that arises under the strata legislation(see s232(1)(b)((c) and (d).
16. Conspicuously, sub-sections 232(1)(a)(e)and (f) make no reference to any "agreement". Yet they, too, allow for orders that will "settle" a "complaint or dispute", be it in relation to the "administration or management" of the scheme (s232(1)(a); or a "function" imposed under the strata legislation or some other Act on those who form part of the scheme (s232(1)(e) and(f).
17. On my reading, a common thread runs through s232 1(a)-(f) SSMA, namely, a call for orders that will resolve or "settle" a "dispute or complaint" by addressing agreements previously reached by those who are a part of that scheme; or, where there is no agreement, orders that will resolve or "settle" "disputes" or "complaints" by ensuring that matters concerning the "administration" and "management" of the scheme are addressed, or by ensuring that some "function" imposed on those who are a part of the scheme, is addressed..
18. This common thread sits at odds with an order to be recovered by an owners corporation as a "debt " (s120(5)SSMA).
19. When s232(1) is read in its entirety, it appears, on my reading, to be directed towards orders that require some outcome that will ensure that those within the strata scheme act, or refrain from acting, in some way that will achieve the workable operation, management and administration of that scheme.
20. What is conspicuously absent from s232 is the use of any words that even vaguely allude to an order for debt recovery. In my view this is because such remedies fall outside and are at odds with the objectives s 232 SSMA seeks to implement.
21. Thus, I am inclined to the view that the general order making provisions in s232 SSMA do not empower the Tribunal to make a monetary order for "debt recovery" "for the cost of carrying out the work" to remedy a breach of Part 8 of the SSMA, as provided for under s 120 SSMA.
22. Other relevant provisions under the SSMA
23. I am even more inclined to this view when one considers s132 SSMA which again, for completeness, I have included in full below.
24. As far as is relevant, s132(1)(b) SSMA specifically empowers the Tribunal to order the "owner or occupier to pay the owners corporation …..a specified amount for the cost of repairs of the damage" (my emphasis) where the owner or occupier has "carried out" work causing damage to the common property or to another lot. Interestingly, the amount awarded under such an order "is payable and may be recovered as if it were an amount of unpaid "contributions.". This is to be contrasted with s120(5)SSMA which refers to a "debt".
25. What we see in s132 therefore, is a specific provision that addresses a specific scenario, namely, where an owner or occupier has carried out work that damaged common property or another lot. In such a situation the legislature has enacted a provision, that specifically refers to and empowers the Tribunal to award an owners corporation the cost of repair flowing from that damage. This is to be contrasted with s 120SSMA, which makes no reference to the Tribunal.
26. If, as the OC argues, s 232SSMA allows the Tribunal to make an order for the OC to recover the costs it incurred pursuant to s 120(5), for repairing work arising from the owner's or occupier's breach of Part 8 of the Act, it must follow s232 also allows the Tribunal to make an order for an owners corporation to recover costs where (pursuant to s132) the owners corporation has undertaken repairs as a result of the owner or occupier having damaged common property or another lot.
27. If this is the case, what need is there for s132 to specifically refer to the Tribunal?
28. If, as the OC argues, the situation addressed under s 120 SSMA triggers the operation of the Tribunal's general order making power under s 232 so as to allow the Tribunal to make an order, it must follow that s 132 SSMA should also trigger the operation of s 232 and empower the Tribunal to make a money order without the need for s132(1) to specifically empower the Tribunal to do so. In which case, the words in s132 (1) referring to the Tribunal's power, be superfluous and of no utility .
29. Clearly, the reference in s 132(1) to the Tribunal must have some utility and must have been specifically inserted for a purpose. There must be a reason for s 132 to have been enacted in the way that it has i.e. to specifically give the Tribunal power to make an order in the situation that provision addresses.
30. It must follow that the reason is that no such power is to be found in s232 SSMA. The general order making power under s 232 does not empower the Tribunal to make an order awarding an owners corporation damages for work it has carried out to rectify damage caused by an owner or occupier (as envisaged under s132SSMA).
31. A similar analysis can be made in relation to s 86 SSMA. This provision specifically refers to the Tribunal having power to order the payment of a sum of money where there are unpaid contributions. One could argue that on the OC's analysis, this order could be made under 232 SSMA. Again one would have to ask, if this is the case, why does s 86 specifically empower the Tribunal to make the order?. The answer once agin is that no such power is to be found under s232 SSMA.
32. Interestingly, s 86(2) SSMA empowers "a court of competent jurisdiction" to also deal with unpaid contributions. In so doing, this provision refers to the court's order as being a "debt",. Tellingly, "debt" is the same word used in s120(5) SSMA.
33. Shum's Case
34. I have carefully considered the Tribunal's Appeal Panel judgement of 8 January 2018 (NSWCATAP 15) in the decision of Owners Corporation SP No 30621 v Shum.
35. Put briefly, that decision found that the general order making power under s232 SSMA gives the Tribunal jurisdiction to determine a claim by a lot owner against an owners corporation for damages arising from an owners corporation's "breach of a statutory duty" as is provided for under s106(5).
36. Clearly the Shum case takes a more expansive view of the wording of s232 than the one I have expressed above, finding that under s 232 the Tribunal's order making power is not "confined to requiring a party to perform or refrain from performing a duty, carrying out an action or undertaking some defined task . Consistent with the objects of the 2015 Management Act there is no reason to conclude that the order making power excludes a money order for the award of damages (my emphasis) or that the jurisdiction of the Tribunal is confined to a particular monetary amount".
37. It must be remembered, however, that in that decision the Tribunal was considering only s106 and that s106 is directed to awarding "damages" to a lot owner.
38. In contrast .s120SSMA, which the Appeal Panel was not required to consider, contemplates an order in the favour of an owners corporation, that is a "debt".
39. For the reasons given above, in my view, the concept of debt recovery under s 120 does not sit within the parameters of the Tribunal's general order making power under s232 SSMA.
40. Further, the Appeal Panel does not appear to have been directed towards and therefore did not consider the legislative schemes under ss 132(1)(b) and 86 SSMA which I have outlined above.
41. To conclude, therefore, for the above reasons, I am of the view that the Tribunal's power to make an order under s 232 SSMA does not extend to an order for the OC to recover a "debt" arising from s120 SSMA.
42. I therefore find that the Tribunal has no power to make the order sought by the OC.
43. I note that the OC had asked that in the event of such a finding, the Tribunal transfer the proceedings to the Local Court.
44. Not having the power to determine the application may raise the issue of whether the Tribunal has the power to transfer the proceedings. I cannot recall any such argument being put to the Tribunal in this instance and it is not one to which I am inclined in the absence of any submissions or authority.
45. In these circumstances I propose to transfer the proceedings to the Local Court as provided for under the NCAT legislation.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 29 October 2019