Owners SP 54026 v Kastri Aev Pty Ltd

Background, primary decision, issues, procedure

1. The respondent to this appeal (the applicant in the primary proceedings) (the lot owner) owns three lots in a 618-lot multi-storey strata scheme known at least in part as UniLodge on Broadway in Ultimo, a suburb on the edge of the city of Sydney, NSW. The appellant (the respondent in the primary proceedings) is the owners corporation (OC) of the scheme.
2. In the primary proceedings filed 8 August 2023 the lot owner claimed lost rental income from two of the three lots for periods 11 January to 28 December 2021 (50 weeks and one day) for one lot and 12 March 2021 to 21 February 2022 for the other lot (49 weeks and three days). Rental for one lot was $420pw; rental for the other lot was $500pw. The decision not to rent out was made after receipt of a notice in mid-January 2021 that extensive remedial works to the common property exterior and to a specific common property matter in the lot owner's lots required access for a stated period of six weeks from commencement of the works.
3. The lot owner said that hoardings installed by the OC for fascia repairs had been "preventing" the lot owner from renting the lots for much longer than the specified period and that the OC "has continuously failed to install and remove the hoardings on the dates promised to do so".
4. The OC said that the claims were for damages for alleged breach of duty under s 106(5) of the Strata Schemes Management Act 2015 (NSW) (SSMA) and were filed out of time under s 106(6) because the lot owner first became aware of the loss allegedly suffered as a result of the OC's alleged breach of its strict duty under s 106(1) to maintain and repair the common property which included the façade more than two years before the proceedings were filed. The OC said that the date of first awareness was either the date of notice in mid-January 2021 or May to June 2021, based on emails from the lot owner complaining about the hoardings and their effect on the rentability of the lots.
5. In the primary decision made 19 October 2023 the primary member accepted the lot owner's argument, apparently on a basis reflective in part of the reasoning of the Appeal Panel in Tezel v Owners SP 74232 [2022] NSWCATAP 149 (10 May 2022), that first awareness occurred and therefore time under SSMA s 106(6) began to run from when the rental lost could be quantified which was the completion of the works. Accordingly, the proceedings were filed within time (being from December 2021 and February 2022) whichever lot was in question.
6. The primary member said, relevantly: "12. I do not accept that [mid-January 2021] is when time for the applicant to have commenced. It could not possibly have been in position to know of its loss. However, the notice of works had a consequential effect on the applicant causing its loss. But is not the commencing point for time to run. In fact the applicant advised the respondent [OC] in June 2021 of its potential claim for damages on going loss of rent then. The respondent was aware of the claim at that time. 13. I accept that the time ran from the quantification of the alleged loss, in February 2022 and I find that the application is accordingly within time."
7. The primary decision post-dated the delivery of the NSW Court of Appeal's decision, on 6 March 2023, in Owners SP 74232 v Tezel [2023] NSWCA 35, which reversed the Appeal Panel's decision. The decision is discussed below.
8. The primary member found at paras 14 and 15 of the primary reasons (PR) that there were long-running delays by the builder in carrying out the remedial works with "constant failure of delivery within specified time periods to the inconvenience of the applicant". The OC was found to have breached its duty by failing "to manage the building works of the common property in a proper manner to ensure that the works on the common property were completed timely and efficiently thereby causing damage of an economic loss to the applicant".
9. The primary member at PR para 16 further found that the lot owner's choice not to re-let the lots (once notified of the imminent works) was based on the previous strata manager's promises "of commencement of works to be undertaken … hence the significant delays not anticipated by the applicant".
10. The primary member found, at PR paras 17 to 26, as follows: the OC would have taken 12 weeks to complete the works directly affecting the relevant two lots the subject of claim if acting in an efficient manner (with four months being a more than generous time to complete the works efficiently, we assume meaning overall); delays beyond the efficient time for the two lots were to be compensated which for their lot owner meant 38 weeks for each unit (taking a global approach); the compensation took into account the lot owner's duty to mitigate by taking a lower rental in the circumstances (which included the consequences of the covid epidemic and the works); that lower rental was found to be $350pw for each lot.
11. The OC appealed only on the limitation point; there was no other ground of appeal from either party.
12. On 1 December 2023 the OC was granted leave for legal representation on condition that it did not seek recovery of its legal costs under orders in the proceedings. The lot owner was granted leave to be represented by its sole director who we were told was a beneficial owner of the lots in question. At the appeal hearing she was supported by her father who was a solicitor but not present in that capacity - with no disrespect, we do not know the father's experience in respect of strata matters.
13. At the appeal hearing the OC did not object to further evidence sought to be led by the lot owner but said that it was irrelevant if its argument succeeded that the entire claim was out of time.
14. It was not sought to be argued by the parties that s 41 of the NCAT Act operated so as to empower the Tribunal to extend time for the lot owner's application under SSMA s 106(6) to date of filing, and that such extension should be granted in the present case on the principles in Jackson v NSW Land and Housing Corporation [2014] NSWCATAP 22 at [22]. There is authority in the Appeal Panel that such power exists: Hua Nan Trading PL v Owners SP 32396 [2023] NSWCATAP 66 at [47]-[76] and [89]-[94] and generally [43]-[109]. That decision was delivered on the same day, 6 March 2023, as the NSW Court of Appeal upheld an appeal from the Appeal Panel's decision in Tezel, in Owners SP 74232 v Tezel [2023] NSWCA 35.
15. The Tribunal is empowered under s 41 of the NCAT Act to extend time of its own motion. In the circumstances just outlined we considered it in accord with the Tribunal's duties, including to accord procedural fairness, in s 38 of the NCAT Act, to afford the parties an opportunity to make written submissions on this topic based on the existing evidence.

Grounds of appeal

1. The Notice of Appeal was filed within time on 15 November 2023.
2. As said, only ground of appeal was that the primary member erred in law by accepting that first awareness and therefore time ran from when the lost rent could be quantified. This was alternatively characterised as an error of fact justifying the grant of leave to appeal. We have found it unnecessary to consider the alternative characterisation.
3. The appellant OC did not appeal the findings of breach of duty.

Scope and nature of internal appeals

1. Section 80(2) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) states, in respect of Division decisions: "Any internal appeal may be made: (a) in the case of an interlocutory decision of the Tribunal at first instance - with the leave of the Appeal Panel, and (b) in the case of any other kind of decision (including an ancillary decision) of the Tribunal at first instance - as of right on any question of law, or with the leave of the Appeal Panel, on any other grounds."
2. Clause 12 of Schedule 4 to the NCAT Act states: An Appeal Panel may grant leave under section 80 (2) (b) of this Act for an internal appeal against a Division decision only if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because: (a) the decision of the Tribunal under appeal was not fair and equitable, or (b) the decision of the Tribunal under appeal was against the weight of evidence, or (c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
3. A Division decision is a primary decision of the Consumer and Commercial Division. The primary decision here is such a decision.
4. In summary, internal appeals may be made as of right on a question of law, and otherwise with leave (that is, the permission) of the Appeal Panel.
5. In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 the Appeal Panel set out at [13] a non-exclusive list of questions of law: 1. Whether there has been a failure to provide proper reasons where they are required; 2. Whether the Tribunal identified the wrong issue or asked the wrong question; 3. Whether a wrong principle of law had been applied; 4. Whether there was a failure to afford procedural fairness; 5. Whether the Tribunal failed to take into account relevant (i.e., mandatory) considerations; 6. Whether the Tribunal took into account an irrelevant consideration; 7. Whether there was no evidence to support a finding of fact; and 8. Whether the decision is so unreasonable that no reasonable decision-maker would make it.
6. Taking into account an irrelevant consideration or not taking into account a relevant consideration includes not making a finding on an ingredient or central issue required to make out a claimed entitlement to relief: see CEO of Customs v AMI Toyota Ltd (2000) 102 FCR 578 (Full Fed Ct), [2000] FCA 1343 at [45], applying the statement of principle in Craig v South Australia (1995) 184 CLR 163 at 179.
7. It is not necessary to discuss further the basis for granting leave to appeal for an alleged error of fact. If the OC's limitation argument succeeds then the primary decision was in our view the subject of an error of law in the form of incorrectly stating the relevant legal principle. That success on appeal would, absent what is discussed in the following paragraph, mean that the proceedings were out of time and the application should be dismissed under the broad powers given to the Appeal Panel in s 81 of the NCAT Act.
8. On the matter we raised with the parties to provide further written submissions, if we found that the Tribunal was empowered to extend time and exercised the power to do so, the absence of challenge to the primary decision on any other ground would mean that the application was brought within time and the appeal should be dismissed.
9. Purely for completeness, and if we are found to have been wrong in characterising the limitation argument as solely an error of law, the circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are limited by cl 12(1) of Sch 4 to the NCAT Act. In such cases, as already set out, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice on the basis that: 1. the decision of the Tribunal under appeal was not fair and equitable; or 2. the decision of the Tribunal under appeal was against the weight of evidence; or 3. significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
10. In Collins v Urban [2014] NSWCATAP 17, the Appeal Panel stated at [76] and [79] that a substantial miscarriage of justice for the purposes of cl 12(1) in Sch 4 to the NCAT Act may have been suffered where: "[76] …there was a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance in para (a) or (b) not occurred or if the fresh evidence under para (c) had been before the Tribunal at first instance. … [79] In order to show that a party has been deprived of a "significant possibility" or a "chance which was fairly open" of achieving a different and more favourable result because of one of the circumstances referred to in cl 12(1)(a), (b) or (c), it will be generally be necessary for the party to explain what its case would have been and show that it was fairly arguable. If the party fails to do this then, even if there has been a denial of procedural fairness, the Appeal Panel may conclude that it is not satisfied that any substantial miscarriage of justice may have occurred - see the general discussion in Kyriakou v Long [2013] NSWSC 1890 at [32] and following concerning the corresponding provisions of the [statutory predecessor to CATA (s 68 of the Consumer Trader and Tenancy Tribunal Act)] and especially at [46] and [55]."
11. Even if an appellant from a decision of the Consumer and Commercial Division has satisfied the requirements of cl 12(1) of Sch 4 to the NCAT Act, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b): Pholi v Wearne [2014] NSWCATAP 78 at [32]. In Collins v Urban, the Appeal Panel stated at [84] that ordinarily it is appropriate to grant leave to appeal only in matters that involve: "(a) issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; or (c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed."
12. Turning to the specific grounds in cl 12(1)(a) and (b) of Sch 4 to the NCAT Act, in Collins the Appeal Panel said: "[77] As to the particular grounds in cl 12(1)(a) and (b), without seeking to be exhaustive in any way, the authorities establish that: 1 If there has been a denial of procedural fairness the decision under appeal can be said to have been "not fair and equitable" - Hutchings v CTTT [2008] NSWSC 717 at [35], Atkinson v Crowley [2011] NSWCA 194 at [12]. 2 The decision under appeal can be said to be "against the weight of evidence" (which is an expression also used to describe a ground upon which a jury verdict can be set aside) where the evidence in its totality preponderates so strongly against the conclusion found by the tribunal at first instance that it can be said that the conclusion was not one that a reasonable tribunal member could reach - Calin v The Greater Union Organisation Pty Ltd (1991) 173 CLR 33 at 41-42, Mainteck Services Pty Limited v Stein Heurtey SA [2013] NSWSC 266 at [153]."
13. The question of what constitutes significant new evidence not reasonably available at the time the proceedings under appeal were being dealt with under the ground in cl 12(1)(c) to the NCAT Act was considered by an Appeal Panel in Owen v Kim [2017] NSWCATAP 26. In that appeal the Appeal Panel stated at [37]-[39]: "37 In Owners - SP 76269 v Draybi Bros Pty Ltd [2014] NSWCATAP 29 the Appeal Panel stated at [109] in connection with cl 12(1)(c) of Schedule 4 to the Civil and Administrative Tribunal Act: 'In order to fall within this paragraph the appellant must be able to point to evidence which: (1) is significant; and (2) has arisen and is new in the sense that it was not reasonably available at the time the proceedings below were being heard.' 38 In Leisure Brothers Pty Ltd v Smith [2017] NSWCATAP 11 the Appeal Panel stated at [40 ]: 'The meaning of this clause was considered by the Appeal Panel in Al-Daouk v Mr Pine Pty Ltd t/as Furnco Bankstown [2015] NSWCATAP 111. At [23] - [24] the Appeal Panel said: '23 Unlike the WIM Act, the expression "reasonably available" is not qualified by the words "to the party". This difference suggests that the test of whether evidence is reasonably available is not to be considered by reference to any subjective explanation from the party seeking leave but, rather, by applying an objective test and considering whether the evidence in question was unavailable because no person could have reasonably obtained the evidence. For example, in Owners SP 76269 v Draybi Bros [2014] NSWCATAP 20 at [114] the Appeal Panel refused leave because, although the appellant may not have been aware of the evidence (being an email), it could have obtained the evidence by summons. In Prestige Auto Centre Pty Ltd v Apurva Mishra [2014] NSWCATAP 81 at [17] the Appeal Panel granted leave because the respondent to the appeal had fraudulently altered evidence. The party seeking leave under cl 12(1)(c) could not reasonably have had available to them the evidence that the report in question had been fraudulently altered at the time the proceedings were being dealt with by the Tribunal. That fact was not known to the appellant at the time of the hearing and could not reasonably be known due to fraud. 24 Each of these cases illustrates that something more than a party's incapacity to procure evidence is necessary to satisfy the requirements of cl 12(1)(c).' 39 As stated at [27] in Al-Daouk v Mr Pine Pty Ltd t/as Furnco Bankstown: 'the issue is whether, objectively, the evidence has arisen since the hearing and was "not reasonably available" at the time of the hearing.'"
14. In Ryan v BKB Motor Vehicle Repairs Pty Ltd [2017] NSWCATAP 39 an Appeal Panel stated at [10]: "An appeal does not provide a losing party with the opportunity to run their case again except in the narrow circumstances which we have described. Mr Ryan has not satisfied us that those circumstances apply to his case and we refuse permission for him to appeal."
15. Applying those principles we would have accepted the OC's alternative characterisation of its ground of appeal as justifying a grant of leave to appeal.

Consideration and conclusion on appeal

1. The OC submitted that the primary decision was contrary to the decision and reasoning of the NSW Court of Appeal in Owners SP 74232 v Tezel [2023] NSWCA 35 which reversed the outcome and disapproved the reasoning of the Appeal Panel in respect of a claim under SSMA s 106(5) for lost rent. The OC particularly relied on what the Court of Appeal said at [23], [24], [29], and especially at [41] and [45]-[49], to the effect that the relevant time is first awareness of the type or kind of claimed loss. The primary decision was said to mix two concepts - first awareness of loss and quantification of loss - in a way that the CA had found impermissible in the Appeal Panel's reasoning in Tezel. Quantification of loss was an irrelevant consideration in applying s 106(6). The primary decision had stated the wrong principle and asked the wrong question.
2. The OC primarily submitted that first awareness of loss of rent was from when the remedial works were notified or commenced since that was when the lot owner knew it could not rent out the lots. Such dates were in January or March 2021.
3. The lot owner said that the OC's approach rewarded an owners corporation who gave the impression that it wished to find a negotiated resolution until time ran out, or delayed until that point in responding. Proceedings had been commenced in June 2022 but were withdrawn due to hospitalisation. The losses were new losses, not a continuum of lost rental from the time of the original notice, because of the uncertainty as to how long it would be before the hoardings were installed and removed.
4. We agree with the lot owner's submission that, on the findings in the primary decision not challenged on appeal, the relevant breach of duty for which loss was claimed and compensated was not fulfilling the promised completion date (including because of not fulfilling the promised commencement date) which forestalled the lot owner's choice not to re-let from time of notice until the promised completion date, at a reduced rent.
5. On the unchallenged primary findings that point was reached 16 weeks after the original notice, being about 21 May 2021. On the unchallenged finding in PR para 12 the lot owner's first awareness is no later than when it advised the OC in June 2021 of its potential claim for damages. It was also found that the lot owner could not then quantify its potential claim because of the ongoing breach of duty by the OC's delayed completion of the works, but on the view of the CA in Tezel that is not the relevant inquiry.
6. Accordingly, proceedings for the lost rent claim filed on 8 August 2023 were filed out of time by a period of weeks.
7. Turning to the question of extension of time, in Jackson v Land and Housing Corporation [2014] NSWCATAP 22 esp at [22], the Appeal Panel at [22] stated that the relevant considerations on exercise of discretion to grant an extension of time were: the length of the delay; the reason for the delay; the claimant's prospects of success, that is, whether there was a fairly arguable case; and the extent of any prejudice suffered by the opponent. If the explanation for delay is less than satisfactory or if the opponent is substantially prejudiced, it may be appropriate to investigate if the party seeking the extension can show greater merit than a fairly arguable case.
8. If the Tribunal is empowered to extend time we would do so, to and including date of filing being 8 August 2023. Applying the principles in Jackson, the delay in filing was short (a period of weeks) and the lot owner had a good claim on the merits, as the absence of challenge to the primary findings supports. There was no obvious prejudice in the delayed filing to the OC, beyond the usual of having to litigate the matter with risk of adverse outcome, because the limit of the claim had been established with completion of the works. While not filing proceedings because of negotiations in itself is not a relevant explanation unless that is the result of misconduct by another party and the evidence does not support such a finding here in respect of the OC's conduct, the lot owner had promptly put the OC on notice of a claim arising from delayed completion and filed slightly out of time on a misunderstanding of what constituted first awareness.
9. We consider that the reasoning of the Appeal Panel, differently constituted, in Hua Nan as to the extension of power in s 41 of the NCAT Act is not demonstrated to be "plainly wrong" in the manner that would justify our departing from it: Gett v Tabet [2009] NSWCA 76 at [294]-[301]. The Court of Appeal in Tezel spoke of SSMA s 106(6) as a limitation provision that prevents the bringing of proceedings rather than extinguishing the substantive right that informs the proceedings; cp the distinction drawn in Hua Nan at [43]-[102] concerning the Tribunal not being deprived of jurisdiction after expiry of the s 106(6) limitation period. There is no equivalent in the language of SSMA s 106(5) and (6) or elsewhere in the SSMA that is the equivalent of such an extinction of substantive right as in ss 63 to 68A of the Limitation Act 1969 (NSW).
10. The principal argument made by the OC in its further written submissions was to the effect that s 41 of the NCAT Act permitted extension of time for the "doing of anything" under any legislation and, on standard principles of statutory interpretation, that operated on legislation which provided for, permitted or required the doing of some thing (such as the lodging of a notice of appeal by a due date), whereas the limitation provision in SSMA s 106(6) precluded in certain circumstances, rather than required, permitted or prescribed, the doing of some thing. The Appeal Panel in Hua Nan did not correctly apply the principles of legislative interpretation to focus on that distinction in the text of the provision. Rather, it wrongly reasoned from analogy with s 1322(4)(d) of the Corporations Act 2001 (Cth) and from an incompletely-discerned legislative purpose in the NCAT Act rather than the purpose of s 106(6) in the SSMA identified by the Court of Appeal in Tezel. That led to a wrong implication (Hua Nan at [105]) that a lot owner must do something within the two-year limitation period was implicit in the prohibition in s 106(6).
11. We respectfully disagree that the distinction sought to be drawn by the appellant between preclusion and requirement, permission or prescription is sufficiently strong an argument to conclude that the decision and reasoning on this central point in Hua Nan is wrong. Indeed, we consider that there is a good argument that the posited distinction favours form over substance. Would, for instance, s 41 operate if the limitation provision was positively expressed, such as "An owner must bring an action under this section for breach of a statutory duty within two years after … "? This would be in the same form of phraseology as a provision that a notice of appeal must be filed within a specified period, which was recognised as within the scope of the text of s 41 of the NCAT Act. Further, the place for the recognition of legislative intent for SSMA s 106(6) identified by the Court of Appeal in Tezel at [40] is in the exercise of the power, not in its ability to be exercised.
12. We do not need to determine such arguments on a final basis although we consider that they have considerable weight. We consider that they are clearly sufficient to reinforce our conclusion that Hua Nan is not so plainly wrong that we should not follow it.
13. Section 81 of the NCAT Act gives the Appeal Panel a broad range of relief in determining an internal appeal such as the present. The Appeal Panel "may make such orders as it considers appropriate in light of its decision on the appeal", including but not limited to dismissing the appeal and confirming, affirming or varying the decision under appeal. The Appeal Panel may exercise all the functions that are conferred or imposed by the NCAT Act or other legislation on the Tribunal at first instance when confirming, affirming or varying, or making a decision in substitution for, the decision under appeal and may exercise such functions on grounds other than those relied upon at first instance.
14. We exercise those powers to make the orders below in the context, described earlier, that the limitation argument was the only ground of appeal and has been overcome by the grant of extension of filing time for the original application.

Orders

1. We make the following orders: 1. Extend the time for filing the application in SC 23/36562 to and including 8 August 2023. 2. The appeal is otherwise dismissed. 3. Any application with supporting evidence (not already provided) and written submissions in respect of costs of this appeal are to be filed and served on or before the end of 14 days after date of orders in this appeal. The submissions are to include whether the parties consent to or oppose the Appeal Panel determining costs on the papers and for that purpose making an order dispensing with a hearing on costs. 4. Any written submissions and supporting evidence (not already provided) in response is to be filed and served on or before the end of 28 days after date of orders in this appeal.

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: 25 June 2024