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[2024] NSWCATCD 71
General information, not legal advice.
NCAT Consumer and Commercial
2024-12-30
Original judgment source is linked above.
106 Duty of owners corporation to maintain and repair property
(1) An owners corporation for a strata scheme must properly maintain and keep in a state of good and serviceable repair the common property and any personal property vested in the owners corporation.
(2) An owners corporation must renew or replace any fixtures or fittings comprised in the common property and any personal property vested in the owners corporation.
(3) This section does not apply to a particular item of property if the owners corporation determines by special resolution that -
(a) it is inappropriate to maintain, renew, replace or repair the property, and
(b) its decision will not affect the safety of any building, structure or common property in the strata scheme or detract from the appearance of any property in the strata scheme.
(4) If an owners corporation has taken action against an owner or other person in respect of damage to the common property, it may defer compliance with subsection (1) or (2) in relation to the damage to the property until the completion of the action if the failure to comply will not affect the safety of any building, structure or common property in the strata scheme.
(5) An owner of a lot in a strata scheme 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 this section by the owners corporation.
(6) An owner may not bring an action under this section for breach of a statutory duty more than 2 years after the owner first becomes aware of the loss.
(7) This section is subject to the provisions of any common property memorandum adopted by the by-laws for the strata scheme under this Division, any common property rights by-law or any by-law made under section 108.
(8) This section does not affect any duty or right of the owners corporation under any other law.
"An order that the [Owners] be made to cover the costs of reinstating the [applicant's] bathroom to a condition that does not adversely impact the investment value of [the applicant's lot];
Alternatively, the [owners] reimburse the [applicant] the costs of remediation of the ... bathroom."
"The [owners] pay consequential loss of rent damages arising from the delays in repairing the defective ... bathroom strata common property."
(1) An order requiring the Owners to engage a building contractor to "rectify the defective waterproofing beneath the floor" of the applicant's bathroom in a specified manner; and reinstate the applicant's bathroom "to a like-for-like condition";
(2) Damages for lost rent and "interest representing damages for rent foregone";
(3) An order quarantining the applicant from liability to pay any share of the Owners' liability to the applicant for damages and costs; and
(4) Other orders which are no longer pursued.
"The proposed Strata Common Property Remedial Works did not propose to return the Applicant's ... bathroom in a pre-loss 'Like - for - Like' condition and have would have returned the ... Bathroom in a significantly impaired aesthetically corrupted condition to the ... bathroom state prior to the Strata Common Property Remedial Works, causing the applicant investment loss and damage."
"1 unreasonably rejected the [Owners'] proposed remediation works" and
"2 unreasonably elected between 11 March 2021 and June 2021 to pursue claims for alternative remedial works under the [Owners'] insurance policy rather than accept the [Owners'] proposed remediation works or negotiate with the [Owners]."
the Applicant has, prior to December 2020, acted in contravention of the [Owners'] Special By-Law 4 prohibiting the letting of the Applicant's unit for short term accommodation;
by reason of the Applicant's obligations under Special By-Law 4 to indemnify the [Owners] against costs or damages to which the [Owners] may become liable in respect of the Applicant's use of her unit in contravention of the By-Law, the [Owners] is not liable to pay damages to the [applicant] for loss of rental income which the Applicant would have derived from continuing to use her unit in contravention of the By-Law;
(b) says further that by reason of the matters pleaded in paragraph 10 above the Applicant has unreasonably failed to mitigate her loss, if any, arising out of any breach of the [Owners'] obligations under s.106 SSMA and any damages to which she may be entitled under that section ought be reduced accordingly".
"2.7. I engaged my employees to remove some wall tiles and take up the base bathroom shower tiles to expose the render and wall infrastructure to identify the water leak cause and the extent of damage and deterioration would be required to be repaired. My employees reported to me that upon removing a number of tiles the render on the shower wall, where the "drummy tiles" were identified, was simply falling away with little impact from the brick wall infrastructure behind it.
This also happened at the places on the internal bathroom wall where there had been found to be similar "drummy tiles". After taking some initial photos ... of the invasive tile removal investigation works it was clear that there were 'holes' in the foundation brickwork that was also contributing to the failure of the tiles and render which were falling away untouched. As a consequence, it was clear the full bathroom needed to be stripped out to be able to fix the wall infrastructure and reinstate the bathroom with appropriate waterproofing to the current Australian Waterproofing standards.
It was also reported, as shown in the photos, that the bathroom was completely without any waterproofing throughout any of the shower nor external wet areas of the Lot 5 bathroom, which would have meant any water overflowing from the bath, and water in the shower area would have leaked directly into the Lot 2 ceiling below without any waterproofing barrier to prevention. The full Lot 5 bathroom was evidence to required waterproofing to remediate the water leak cause and future risk of water leak to the Lot 2 ceiling space below."
"That [the applicant] is prohibited from commencing or continuing to carry out any building work or construction work (including demolition) within [the applicant's lot] without the proper approval of the [Owners]."
"Undertaking repair work to the common property waterproofing and any other work affecting common property that is not authorised in accordance with the Strata Schemes Management Act 2015 and or by special by law passed by the owners corporation in general meeting".
"Both applications are adjourned today so that the Appeal Panel may deliver its orders and reasons for decision in the appeal ... In the event the Appeal Panel orders that the related proceeding is remitted to the Tribunal for further determination, the parties today foreshadowed that they are likely to apply to have these proceedings listed together with the remittal of the related proceeding."
"1. As against the first respondent Owners SP 2661, (a) to the extent necessary leave to appeal is granted, and (b) the appeal is allowed.
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3. The proceedings are remitted for determination by the Tribunal consistent with the findings and reasons in this decision on the following matters and any related matters pressed on this appeal: the scope of work and terms of the work order to be complied with by the first respondent Owners SP 2661 in respect of the common property; the amount of the rent and other losses established by the applicant/appellant lot owner under s 106(5) of the Strata Schemes Management Act 2015 (NSW) for a period commencing on 5 December 2020."
"9 On the undertaking of [the applicant] not to do any further work pending the outcome of the remitted appeal, the owners corporation withdraws the interim application."
"1 The application is dismissed because the applicant has withdrawn the application."
"25 The existence of the OC's strict duty under SSMA s 106(1) was not in dispute. Once the OC conceded its breach of that duty from 5 December 2020, it was part of the scope of fulfilling that duty and rectifying that admitted breach for the OC, not the appellant, to establish the source of water entry and the extent of damage and the scope of works required to remediate it, particularly when an expert quotation said that "membrane failure" about which the appellant complained was one source. The same conclusion would apply if the admission was not made (as it properly was here) but, rather, it was established by the lot owner that there was a breach of duty by, for example, water entry.
26 To the extent that expert evidence was required for such purpose, it was within the OC's scope of duty and obligation to remediate to provide it. This was reinforced when the quotation referred to by the appellant in itself was a source of expert opinion sufficient to require a response that satisfied the requirements for weight to be given to an expert report.
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31 It is trite law, and was uncontroversial in these proceedings, that the OC owed and owes lot Owners a strict duty to maintain and repair, including as required to renew or replace, common property under s 106(1) and (2) of the Strata Schemes Management Act 2015 (NSW) (SSMA) as interpreted in well-established authority: Seiwa PL v Owners SP 345042 [2006] NSWSC 1157 at [3]- [7], [21]-[23]; Trevallyn-Jones v Owners SP 50358 [2009] NSWSC 694 at [128] et seq, esp at [154]-[156]; Riley v Owners SP 73817 [2012] NSWCA 410 at [75]- [76], referring to the same content of duty in the predecessor to SSMA s 106, being s 62 of the 1996 Act. There was no qualification on appeal to what was said in Seiwa at first instance in relation to the strict nature of the duty: Owners SP 345042 v Seiwa Australia PL [2007] NSWCA 272 - Hodgson JA at [5] referred to the strict nature of the duty in similar terms to Brereton J in Seiwa, as did Tobias JA at [54] with an acknowledgement of what is now s 106(3) that is not presently relevant. The same approach on the present provision was endorsed by reference to the earlier authority in Smith v Owners SP 3004 [2022] NSWSC 1599 at [30]- [31].
32 The duty extends to remediation of defects in the construction of the common property, because repair means making something good even if it was not originally good: Proprietors SP 6522 v Furney [1976] 1 NSWLR 412 at 416.
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34 Alleged restriction of access to, or interference with or resistance to, remediation by a lot owner as a matter of law does not qualify the OC's performance of its strict duty: Seiwa [2006] NSWSC 1157 at [21]- [23]; Carli v Owners SP 56120 [2018] NSWCATCD 55 at [101]- [103]. The OC can seek orders for access and non-interference: SSMA ss 122, 124. If faced with what it regarded as obstruction and interference, it ought to seek orders for access and non-interference, which is a concomitant of performance of its strict duties under SSMA s 106.
35 The OC does not require approval by the owners in general meeting of the OC to carry out its strict statutory duty under SSMA s 106: Stolfa v Hempton [2010] NSWCA 218 at [9]- [10].
36 Delays associated with the OC's insurers are an explanation but not an excuse: Nicita v Owners SP 64837 [2010] NSWSC 68 at [11]. One would expect the same to apply to others involved in the process such as delays by contractors or regulatory authorities, subject to the limited exception in s 106(4) where the OC itself takes the initiative in bringing proceedings against a third party.
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38 The foregoing principles are not qualified by the decision in Glenquarry Park Investments PL v Hegyesi [2019] NSWSC 425 at [57]- [74] et seq, [100]-[114]. In Glenquarry Park there were jurisdictional deficiencies in formulation of the orders for remediation, because the formulation potentially imposed on the owners corporation in that case, without basis in the findings, a scope of works which went beyond the owners corporation's strict duty. It was not a dispensation from the strict duty. There was recognised a degree of flexibility in the form of compliance by the owners corporation with the strict duty, which, on the authorities canvassed extensively by Parker J (Ridis v Owners SP 10308 (2005) 63 NSWLR 449, [2005] NSWCA 246, Owners SP 50276 v Thoo [2013] NSWCA 270 and Stolfa) includes replacement if that is reasonably necessary because the item has come to the end of its serviceable operating life and can no longer be kept in a state of good and serviceable repair. The same must be true if the state of the item is so damaged or deteriorated that it cannot be repaired but must be replaced.
39 The requirements in Glenquarry find complementary support in the requirements for work orders under the Home Building Act 1989 (NSW) (HBA). Under HBA s 48O(1)(c) an owner is required to specify action by the builder that is grounded in proof by the owner of, not only the defect, but also the manner of remediation and a work order must focus on the particular defect to be rectified and must be certain, practical and enforceable: Catapult Constructions PL v Denison [2018] NSWCATAP 158 at [46]- [61] and the authority there cited. The evidentiary onus is on the homeowner to set out the appropriate method of rectification: ibid, at [59]. In Bellgrove v Eldridge (1954) 90 CLR 613, [1954] HCA 36, the High Court said that the scope of remedial works must not be disproportionate to the defect. The High Court has also stated that there is a high bar for unreasonableness or disproportion once a breach is established: Tabcorp Holdings Ltd v Bowen Investments PL (2009) 236 CLR 272, [2009] HCA 8 at [13]- [20]; see also Walker Group Constructions PL v Tzaneros Investments PL [2017] NSWCA 27 at [186]; Barwick v Shetab [2017] NSWCATAP 127 at [87]- . The analysis in the paragraphs in the decision, and the authority there reviewed, also makes it clear in these passages that reinstatement, provided it is not extravagantly disproportionate, is the appropriate measure of relief. Reinstatement means works with a certain standard of amenity and presentation which includes not being at risk of emergent problems returning or growing which in form and finish produces an outcome that matches other components in form and finish and makes the works of the originally-intended quality and integrity.
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41 It is consistent with the strict nature of the OC's duty that, once a breach is admitted or established of that duty, it is incumbent on the owners corporation, to fulfil the duty, to establish the source or reason for the breach and the scope of the breach. If the owners corporation fails in fulfilling those aspects of its duty then part of the remedial order is necessarily to compel the required investigations (often expert) to establish those matters so that they can be undertaken as part of the order.
42 While a lot owner will be required, on commonsense principles of causation akin to those in negligence or nuisance, to establish damage to lot property or other loss under SSMA s 106(5) (further discussed on lost rental cited below), certain types of loss such as those claimed in this case will be self-evident from the breach of strict duty admitted or established by its consequences, in this case water entry that rendered premises admittedly uninhabitable and therefore unrentable from the inability to use the bathroom: cp McCue v Owners SP 3844 [2021] NSWCATCD 35.
43 Our conclusions above mean that the Tribunal, contrary to PR [253], was required to consider the issues raised by the appellant's claim 1(b) that her bathroom ought to be reinstated to a "like-for-like" condition". Helpfully, the Tribunal went on to consider at PR [254] et seq that matter in the event that it was later found to be in error on the matters already considered.
44 The Tribunal at PR [255] correctly, in our view, stated that the OC's fulfilment of its strict obligation required it to repair or replace common property so that it substantially was similar in appearance, characteristics and quality compared with what was there before, to which could be added functionality and amenity to the extent those are not already encompassed within the Tribunal's words. It is inevitable that replacement in fulfilment of duty will bring an element of improvement and does not attract a discount: Owners SP 36613 v Doherty [2021] NSWCATAP 285 at [163], [165]-[166], [181]; authority discussed in Glenquarry already referred to; cp Hyder Consulting (Australia) PL v Wilh Wilhemsen Agency PL [2001] NSWCA 313 at [47], [54], [107].
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46 If identicality could not be achieved then substantial similarity in terms of quality and amenity could be achieved on the evidence cited by the Tribunal, and if that required replacement of a larger section of tiling to achieve substantial similarity, then such was a consequence of the OC's breach of duty. On the foregoing authority the OC was required to remediate the breach even if there was an element of improvement in the outcome.
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53 In applying the test just discussed to the facts the Tribunal erred in a manner justifying a grant of leave. The reason given at PR [273] et seq for saying that the appellant caused her own loss or failed to act reasonably to mitigate her loss was her pressing "an alternative means for her to recover rent loss and for rectification works, namely, recovery and carrying-out of rectification works through the [OC's] insurer" and to have the whole bathroom re-tiled.
54 As said earlier, the OC was entitled as well as obliged to fulfil its strict duty whatever the appellant lot owner advocated as an alternative or whatever the appellant did to attempt to resist the chosen course. The OC was empowered, as said earlier, under SSMA s 122 to obtain access orders to fulfil its strict duty as part of moving through any such resistance, with s 124 governing relief for any associated damage to the appellant's property whatever the appellant's assertions about right of indemnity, requests for indemnity for damage and references to rights under other provisions (ss 106(5) with 232) in respect of her alleged losses. Such resistance and advocacy does not, contrary to the primary findings, constitute a means of discharging the evidential onus on the OC to establish a break in causation or a failure by the lot owner to mitigate loss. As already said, if the motivation was in part re-tiling of the bathroom, again that was either within the scope of the OC's duty, or not, irrespective of the lot owner's motives or conduct."
"61 A number of central matters of fact and law in the proceedings, particularly in respect of onus of proof, need fundamental reconsideration in light of our foregoing findings. Those findings reveal the need in that reconsideration for a significant rethink about the nature of the evidence that the parties wish to lead.
62 It would in our view be very likely procedurally unfair to the parties to determine those matters on the existing evidence without further right of appeal within the Tribunal. That position would be the case if we re-heard the matter on the evidence put before us, whether or not that was the entirety of the evidence before the Tribunal originally and whether or not it was supplemented by the further evidence we rejected for the purposes of hearing the appeal.
63 In the circumstances where quantification is at the end of a chain of matters that need reconsideration on our foregoing conclusions, it would not be appropriate to preclude reconsideration of the rental valuation as an entirety.
64 Further, it seems as if the parties need to debate a matter which was not the subject of comprehensive evidence and debate before us, namely, the effect of work apparently undertaken to the lot by the appellant after delivery of the primary decision on the scope and method of fulfilling the OC's strict duty.
65 It may be possible that, in the context of our conclusions and reasons, the parties may achieve a negotiated outcome without the risk and cost of further proceedings.
66 Our orders will accordingly reflect remitter for re-determination on whatever evidence the parties are advised to bring but in accord with our reasons on the matters pressed on this appeal. It will not permit the appellant to re-agitate matters which were dismissed by the Tribunal in the original proceedings and were not pressed on this appeal."
"3. Answer the question 'Whether a mitigation defence is available in answer or partial answer to a claim for damages under s 106(5)':
It is open to an owners corporation to seek to establish that all or part of a lot owner's claimed damages are not damages for foreseeable losses as a result of the owners corporation's breach of duty, including by establishing that the lot owner has behaved unreasonably in failing to mitigate his, her or its loss.
4. Note that the remittal pursuant to order 3 made by the Appeal Panel on 6 February 2024 will be conducted in accordance with these reasons."
"175 The parties invited me to provide guidance for the member of NCAT before whom the hearing is to take place. It should be clear from the above that:
(1) Ms Selkirk is entitled to damages for the lost rent in the immediate aftermath of the leak, in accordance with the owners corporation's concession;
(2) The owners corporation is not precluded from contending that in the period from 5 December to 20 December, Ms Selkirk's damages should be zero because of her short term letting;
(3) The owners corporation is not precluded from contending that Ms Selkirk's conduct was, at some stage after early March 2021, such that her claim for lost rent does not answer the description of damages as a result of the owners corporation's breach. That may be because of her purpose, or because her conduct was unreasonable, or because of her unilateral work on her bathroom which I have been told took place in September 2023. I am not seeking to be exhaustive, and I am in no position to be exhaustive, because neither the owners corporation's application nor the majority of material in the remitted application is before me. But the ultimate question for NCAT is whether the claimed loss answers the statutory language of 'reasonably foreseeable loss suffered by [Ms Selkirk] as a result of' the owners corporation's breach of s 106(1)."
"176 My conclusions on the main issues argued may be summarised as follows.
(1) The duties imposed on an owners corporation by s 106(1) and (2) are not discharged by the exercise of reasonable care, nor by establishing that a lot owner has contributed to the defective condition of the property.
(2) The duties imposed on an owners corporation by s 106(1) and (2) are not invariably applicable; they may be rendered inapplicable pursuant to s 106(3) or (7), and compliance may be deferred pursuant to s 106(4).
(3) In all save exceptional cases, a breach of the duties in s 106(1) or (2) will make it appropriate for an order rectifying those breaches pursuant to s 232 to be made, including to the extent necessary an order authorising investigative works.
(4) The existence of a breach of duty is an element of the statutory right to damages conferred by s 106(5). Such a breach is a necessary but not a sufficient condition. In order to obtain an order for damages, it remains necessary for a lot owner to demonstrate that the claimed damages answer the description of "reasonably foreseeable loss suffered by the owner as a result of" that breach.
(5) It is open to an owners corporation to contend in response to a claim for damages pursuant to s 106(5) that the claimed loss is not reasonably foreseeable, or is not "as a result of" the breach.
(6) Whether or not a claimed loss is "as a result of" the breach is to be determined in a practical way.
(7) In determining whether a claimed loss is or is not "as a result of" the breach, it is open to an owners corporation to contend that the sole cause of the loss is conduct by the lot owner, or something other than the owners corporation's breach (such as an intervening act), or that the lot owner's own unreasonable conduct is the cause of the claimed loss. Rather than asking whether there has been a "break in the chain of causation", or whether the "true cause" of the loss is the lot owner's own conduct, or whether the lot owner has unreasonably failed to mitigate the lot owner's loss, it is better to attend to the statutory language and ask whether and if so to what extent the claimed damage answers the description of loss suffered "as a result of" the owners corporation's breach."
"2 The matters for the Tribunal to determine are:
(a) What works order should be made pursuant to s 232 of the Strata Schemes Management Act 2015 (NSW) (SSM Act) to repair the water leak which emanates from the common property and has caused the Lot 5 bathroom to unusable
(b) What quantum of damages is the Applicant entitled to pursuant to s 106(5) of the SSM Act.
(c) What costs orders should be made in respect of these proceedings and the original proceeding (SC 22/32390).
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III. Matters not in dispute
5 The Applicant does not understand the following matters to be in dispute:
(a) The water leaking first occurred on or around 30 November 2020.
(b) The cause of the water leak is a defect in the common property of the strata scheme.
(c) By virtue of the above matters, the Owners Corporation accepts that it has been in breach of s 106(1) of the SSM Act since around 30 November 2020.
(d) As a result of the water leaking, the bathroom of Lot 5 cannot be used, rendering Lot 5 uninhabitable for the purposes of the s 52 of the Residential Tenancies Act.
(e) Lot 5 has effectively been vacant since 4 December 2020.
(f) As of the current date, no works have been carried out to repair the water leaking.
(g) The Applicant is entitled to at least some damages pursuant to s 106(5) of the SSM Act in these proceedings.
IV. Matters in dispute
6 As for the works order, the Applicant relies on the expert report of Darren Wise [sic], of Watersedge, which outlines a scope of works that is necessary to rectify the water leak. ...
7 As for the damages, the Applicant understands that the Respondent concedes that damages are payable for loss of rent for a period of time. The dispute between the parties is as to what the start and end date should be for the assessment of damages. ...
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9 As for the value of the lost rent, the Applicant relies on the expert report of Mr Jonathan Carr.
10 The Applicant also seeks an award of damages for consequential loss of the use of money in accordance with the approach adopted by the High Court in Hungerfords v Walker [1989] HCA 8; (1989) 171 CLR 125. That claim cannot be properly quantified until such time as the repair works have been completed and any damages ordered by the Tribunal have been paid. The Applicant also seeks reimbursement for the amount paid to Watersedge for the work done to date."
"(a) The [Owners] engage an experienced, qualified and licensed contractor to carry out the works set out in the quote issued by Watersedge dated 5 March 2024 within 28 days.
(b) The [Owners] to pay damages to the Applicant comprising
(i) Approximately $267,557.14 (subject to re-calculation) for rent loss suffered in the period from 5 December 2020 to 27 June 2024
(ii) Rent loss at the rate of $1,500 per week from 27 June 2024 to the date ... that the repair works have been completed
(iii) Consequential loss to be assessed or determined at the conclusion of the proceedings (or alternatively, determined by reference to pre-judgment interest rates).
(iv) Reimbursement of the sum of $23,504.77 paid to date by the Applicant to Watersedge.
(c) The First Respondent pay the Applicant's costs of these proceedings on the ordinary basis as agreed or assessed.
(d) The First Respondent pay 85% of the Applicant's costs in respect of proceedings SC 22/32390 on the ordinary basis as agreed or assessed.
(e) Any money payable by the First Respondent pursuant to an order of the Tribunal in these proceedings (excluding the repair works) be paid from contributions levied on lot owners in proportion to the unit entitlements of each lot owner but excluding the Applicant's lot."
"Well, I withdraw the application Senior Member, and I propose instead to adopt Ms Selkirk's suggestion that the parties prepare for the likely hearing of this matter along with, in all probability, with the likely remitted matter between themselves and I am happy in that regard to prepare a Points of Claim because it seems to me that exposes the issues most clearly".
"And in the event there is any remittal of the appeal by the Appeal Panel to the Tribunal the parties will give consideration to these proceedings being listed for hearing together with the remitted proceedings."
(1) Her own affidavit dated 27 March 2024;
(2) An affidavit from Darren White dated 26 March 2024; and
(3) A report from Jonathan Carr dated 22 March 2024.
(1) 30 November 2020: Water leaking first reported. Inspection of Lot 5 bathroom carried out by Adam Hughes, a builder, at the request of the Lot 2 Owner.
(2) 2 December 2020: Applicant contacts Strata Managing Agent seeking urgent investigation into water leaking. Woollys Water Works attend Lot 5. Carried out an inspection and carried out some minor works.
(3) 3 December 2020: Lot 2 Owner reports further leaking. Strata Managing Agent advises Applicant that:
1. The 'rectification works' are 'an Owners corporation responsibility to rectify and not yours as the lot owner'.
2. The Applicant may be held personally liable for further damage if tenants continue to use the washing machine.
(4) 4 December 2020: Lot 5 Tenants vacate the premises.
(5) 8 December 2020: Auseal attend Lot 5 and prepare a quote following inspection.
(6) 17 December 2020: Applicant emails Strata Managing agent asking for advice on next steps regarding lost rent.
(7) 21 December 2020: Strata Managing Agent emails Applicant asking for information regarding the water leak 'so we can put an insurance claim in for loss of rent'.
(8) 7 February 2021: Applicant emails Strata Managing Agent seeking an update on the rectification works and start date.
(9) 11 February 2021: Strata Managing Agent sends Auseal quote to Applicant. Scope of works was for replacement of waterproofing membrane and removal of small section of tiles (that would be replaced with mis-matched tiles).
(10) 25 February 2021: Applicant emails Strata Managing Agent acknowledging receipt of Auseal quote. Says that she will try calling to discuss the quote and to better understand the proposal.
(11) 11 March 2021: Email from Applicant to Strata Managing Agent advising that she considered it to be the obligation of the Owners Corporation to ensure that the rectification works did not detract from the appearance or value of the lot:
"Rather than raise alarm to the Body Corporate and Owners Corporation, an insurance claim on this waterproofing water damage matter should be progressed in the usual course, without fanfare."
(12) 19 March 2021: Strata Managing Agent writes to the Applicant - including the following: I also note that the Strata Committee has approved the quotation from Auseal Waterproofing, so we will be able to proceed and issue a work order once we receive clarification and response from the broker.
(13) 7 April 2021: Agent advises the Applicant that insurer has rejected the claim. Asks whether the Applicant wants to proceed with the Auseal works. Applicant responds by email. Advises that she considers it 'unacceptable' for the Auseal quote to be accepted 'as it is proposing to leave me with a patchwork quilt of a bathroom at the completion of the works, which will compromise the value of my property'.
(14) 14-16 April 2021: Further correspondence between Applicant and Strata Managing Agent. Applicant identifies uncertainties in the underlying cause of the water leak.
(15) 20 May 2021: Applicant obtains report from Adel Keir of NSW Building Renovations Pty Ltd. Scope of works involves, fixing a burst pipe, removing tiles and floor waste, waterproofing the shower walls, installing new floor waste, retiling the shower.
(16) 9 July 2021: Applicant commences proceedings in Supreme Court of NSW.
(17) 19 August 2021: At meeting of the strata committee, the Owners resolved to:
1. Issue a final notice of access to the Applicant;
2. If access could not be obtained, to make an application to NCAT to compel access.
(18) 17 September 2021: Notice of access issued to Applicant. Owners requested the Applicant make contact with the Agent within 7 days to arrange and facilitate the required works to common property'.
(19) 22 September 2021: Applicant obtains quote from Trade NSW. Scope of works involves removing all wall / floor tiles, removing PC items, re-rendering the walls, and waterproofing the bathroom.
(20) 23 September 2021: Email from Allan Bayad of Trade NSW to Applicant advising that the limited scope works quoted by Auseal are insufficient to address the issues in the Lot 5 bathroom.
(21) 27 September 2021: Applicant responds to Notice of Access. In her response, the Applicant, inter alia, identified that:
1. This was the first notice she had received for access.
2. She did not believe that the works would resolve the issues in the bathroom, and would cause damage to the value of her property. She further noted that damages would be sought for the reduction in value and sought an indemnity for future waterproofing issues. Applicant also provides a copy of the quote from Trade NSW.
(22) 29 September 2021: Strata Managing Agent acknowledges receipt of letter from Applicant. Advises that a response will be provided in due course.
(23) 26 November 2021: Letter sent from Owners' lawyers to the Applicant. In that letter it is said that the Applicant has repeatedly refused access to her Lot, by reference to the Notice of Access issued on 17 September 2021. No other particulars are given. Applicant responds by email that same date advising that:
1. She only received the Notice of Access, but nothing else.
2. She did not receive a response to her letter on 26 September 2021.
(24) 18 March 2022: Email from Bruce McIver from WISE (Waterproofing Inspection Services and Education) to Applicant in which he advises that based on a review of photographs, he considers that flooring needs to be fixed and waterproofing works carried out. As part of those works, PC items would need to be removed (which would require re-rendering).
(25) 21 March 2022: Copy of Bruce McIver's recommended scope of works provided to Strata Managing Agent
(26) 15-16 September 2022: Correspondence between the lawyers concerning the delay in the works being carried out.
(27) 4 October 2022: Inspection carried out by Mr Murray Stark of Allied Waterproofing.
(28) 18 October 2022: Owners' lawyer sends email to the Applicant's lawyer that the Owners are arranging another quote for the Lot 5 bathroom.
(29) 18 October 2022: Applicant's lawyer writes to OC's lawyer asking for a copy of the quote prepared by Mr Stark. Noted that Mr Stark told the Applicant orally that he generally agreed with the scope of works recommended by Mr McIver. Further advises that access can be granted for the further additional quote to be prepared.
(30) 25 October 2022: Darren White from Watersedge carries out inspection of Lot 5.
(31) 21 December 2022: Owners obtain quote from Watersedge. Scope of work includes stripping out the bathroom; rerendering the walls; waterproofing walls, floors and floor wastes; retiling the bathroom, reinstalling PC items.
(32) 13 & 14 Feb 2023: Original hearing before Senior Member Tyson
(33) 15 August 2023: Decision of Senior Member Tyson dismissing Applicant's claims
(34) 4 September 2023: Applicant engages Watersedge to carry out invasive investigations
(35) 6 September 2023: Owners file interim injunction application to restrain Applicant from further unauthorised works on the bathroom file no. SC 23/40748 (interim application).
(36) 8 September 2023: Owners injunction application SC 23/40901 for final orders restraining Applicant from further unauthorised works on the bathroom (substantive application).
(37) 27 March 2024: Decision of Appeal Panel on Applicant's appeal against decision of Senior Member Tyson
(38) 21 June 2024: Decision of Leeming JA in Supreme Court of NSW on Owners' application for leave to appeal from decision of Appeal Panel.
"14 Thereafter (until September 2021), there does not appear to have been any relevant correspondence from the owners corporation concerning rectification of the defect. Notably, there was no correspondence that notwithstanding the objection raised by the applicant to the Auseal works, the owners corporation still wished to proceed with the Auseal works and required access to Lot 5 for those works to be carried out."
"(a) this was the first notice she had received for access;
(b) she did not believe that the Auseal works would remedy the defects;
(c) the proposed Auseal works would cause damage to the value of her property;
(d) if the owners Corporation sought to proceed with the Auseal works, she would require an indemnity for any future waterproofing issues (which appears referrable to [the communication sent by the Strata Managing Agent on 3 December 2020 referring to liability for damage caused to common property by the use of the washing machine]), and that she would seek damages for the reduction in value to her property."
"The natural inference that would be drawn from that is that the owners corporation would consider the points raised by the applicant before determining the next steps it wished to take and would then advise the applicant of its position. However, no such substantive response was ever provided to the applicant's letter."
(a) "your suggestion that the strata 'on numerous occasions' has requested access to Lot 5 for bathroom assessments, and that I have refused the requested access is false."
(b) "if you maintain I have been contacted for access to Lot 5, and have refused that access, please provide me with those communications, because I have none on record."
(c) "I am and have been in since my letter to the strata manager dated 27 September 2021 (being the first request for access) been open for access to the lot 5 bathroom for bathroom repairs"
"I do not understand it to be controversial that the owners corporation must replace the waterproof membrane beneath lot 5's bathroom and reinstate any damage to lot 5's bathroom on a like-for-like basis. The owners corporation has been aware of the need to carry out this work for more than 18 months, but the work is not been done. ... In circumstances where the OC knows that lot 5 cannot be used while water leaks into the ceiling space, the electrical wiring in that space, and into the unit below, it is unconscionable that it continue to delay these works."
"(a) As is made clear during the hearing, the OC has accepted that all of the walls of the bathroom (including the floor and ceiling) form part of the common property. It follows that the Owners Corporation is liable to remedy any defect that arises in that common property.
(b) As Mr White made clear in his evidence, his invasive investigations involved stripping out the walls, being works that were already part of the initial scope of works he had recommended in December 2022....
(c) ... The primary scope of works recommended by Watersedge in March 2024 is largely unchanged from the initial scope of works prepared in December 2022 ... The only additional points are the repair of the brickwork (which could not be seen or assessed until invasive works had been carried out) and the repair of the kitchen-side of the common wall. ...
(d) the invasive investigations have simply confirmed the proper scope of works that were necessary to remedy the defect in the common property. They did not create nor cause any new or additional damage that the owners corporation would not have already been liable to fix...
(e) ... the owners corporation would have been ordered to carry out the very same investigative works, if they had not already been carried out by Watersedge, as a consequence of its breach of s 106(1) of the SSMA and its failure to then properly investigate the cause and fix that breach".
"That finding makes it plain that the loss claimed by the applicant is reasonably foreseeable loss (being a matter that the owners corporation has also conceded), and that the only issue for the Tribunal to determine on this claim is whether, for any period after March 2021, the loss was no longer 'a result of' the breach of the owners corporation's duty under s 106(1) of the SSMA."
"The applicant made plain that access had not been requested previously to lot 5 for the rectification works. She also made it clear that she was not refusing access, but rather, that her correspondence was directed towards expressing her objection to the works that had been proposed, both in respect of the scope and the effect on her property."
"There is nothing inherently unreasonable about a lot owner giving their opinion on whether they agree with a particular proposed scope of works. Despite acknowledging receipt of that correspondence, the owners corporation did not then ever seek access to the property to carry out the Auseal works (or any other works or invasive investigations)."
"The owners corporation would need to establish that:
(a) the applicant refused to grant access to her lot to allow the Auseal works to be carried out; and
(b) had the Auseal works ... been carried out, ... those works would have in fact remedied the defect."
"There is nothing inherent in such conduct that would cause the loss she suffered to become a result of her own conduct. What she was not entitled to do, was to refuse access to her lot for the owners corporation to carry out the repair works it intended to have carried out."
"[Mr White's] unchallenged expert evidence was that a far greater scope of works was always obviously going to be required."
"As Mr White made clear, the invasive works were a necessary pre-requisite to carrying out the scope of works he recommended ... That is to say, the sum the applicant has paid is a sum that the Owners Corporation would have otherwise been required to pay to remedy the defect, and the only reason the applicant had to incur that cost has been because of the Owners Corporation's failure to remedy the breach of s 106(1) of the SSMA."
"The lack of rent payments has consequentially meant that she has been unable to service those mortgages, leading to additional fees and interest, including default fees". The applicant submits that that evidence was not challenged and that she has also not been able to utilise the expected rent payments to pay Strata levies, causing her to incur interest and debt recovery fees. The applicant submits that her claims in this regard cannot be properly quantified until such time as the repair work has been completed and any damages awarded by the Tribunal have been paid. The applicant seeks leave to have the quantum of that claim assessed after the Tribunal's decision. In the alternative, the applicant submits that the Tribunal should award damages at the pre-judgement rate prescribed under s 100 of the Civil Procedure Act 2005 (NSW), on the basis that "the use of a general interest rate is an appropriate proxy for the calculation of Hungerford's damages".
"It is a relatively uncontroversial proposition that an owner of an investment property would in the ordinary course use the rent from that property to pay off the mortgage (and Strata levies) associated with that property, and that the loss of rent would cause a consequential loss by reference to that mortgage and those Strata levies."
"[The applicant] manifestly rejected the proposed works in respect of which the access was sought and the owners corporation naturally and appropriately interpreted this as a refusal of access that would have required an order from the Tribunal to displace. It was, in every sense but the most technical and pedantic, a refusal of access."
"All of the opinions obtained by [the applicant] share these features, namely an asserted need to replace the entire internal bathroom cladding and an absence of any explanation or justification as to why this is necessary and a localised repair unacceptable. If it is possible to identify any common thread in these opinions it is that localised rectification of the actual defect would not guarantee the optimal performance of the bathroom as a whole in the sense that it would not prevent further leaks occurring in areas not subject of the localised rectification."
"[Mr White] did not, contrary to the assertion in [the applicant's] submissions..., say that the Auseal works would not have fixed the subject leakage. His only reason for doubting the efficacy of a localised fix appeared to be the age of the bathroom and the likelihood of imminent further problems even if the immediate defect was addressed.
He maintained this view notwithstanding the absence of any evidence of performance issues with [the applicant's] bathroom other than the subject defect."
"Her rights in relation to them are confined to establishing: -
retrospectively a loss, sounding in damages under s 106(5), from the manner in which the Owners Corporation carried out rectification of the common property defects including the installation of non-uniform tiling; and
prospectively, for purposes of invoking the Tribunal's discretionary remedial powers under s 232 SSMA, a diminution in the value of the lot likely to result from the means of rectification proposed by the owners corporation."
"46. The exercise by the Owners Corporation of its functions under s 106 SSMA also gives rise to questions of necessity to incur expense and proportionality of the expense proposed. These concepts are discussed below. Suffice to say that an obligation to re-tile a lot owner's entire bathroom would not lightly be imposed upon an owners corporation as a means of rectifying a specific localized defect.
47. In this case, despite having adduced expert valuation evidence, [the applicant] has not sought to establish any diminution in the value of her lot arising out of the manner in which the Owners Corporation proposes to carry out its functions under s 106. Absent such evidence the aesthetic contention should fail.
48. In practical terms the remedy for [the applicant's] personal concern as to the aesthetics of the Owners Corporation's proposed rectification lay in her hands attempt to negotiate an appropriate agreement with the Owners Corporation as to the replacement tiles to be used. She did not attempt to do so."
54 ... The most likely inference is that the proponents of these opinions considered complete re-tiling necessary to enhance the condition of the bathroom for better waterproofing overall quite independently of addressing the subject defect. Whilst that may be a laudable aim, and perhaps represents the preference of most of these tradespeople's customers, it is inconsistent with the actual obligations of the Owners Corporation under s 106 SSMA.
55. Those obligations are circumscribed by limitations of necessity and proportionality. As Parker J put it in Glenquarry Park Investments Pty Ltd v Hegyesi [2019] NSWSC 425 at [111] the Tribunal's orders enforcing the Owners Corporation's obligations in respect of the common property should go no further than the minimum necessary to comply with those obligations.
56. The content of the necessity obligation is as stated by McColl JA in Ridis v The Proprietors of Strata Plan 10308 [2005] NSWCA 246; (2005) 63 NSWLR 449 at [158] 'the obligations of maintenance and repair . . . are directed to keeping the common property operational and to restoring something which is defective'. Her Honour's views were accepted by Parker J in Glenquarry Park Investments (at [64)) as most closely representing the ratio of Ridis. Contrary to the views expressed by the Appeal Panel in The Owners Strata Plan No 36613 v Doherty [2021] NSWCATAP 285 at [181] (and imported into the reasoning of the Appeal Panel in the subject litigation at (44]), Ridis is not authority for extending the content of the owners corporation's [obligation] beyond the formulation of McColl JA.
57. In this case the evidence suggests that the bathroom functioned perfectly acceptably but for the manifestation of the subject defects on 30 November 2020 which, there is no dispute, required the Owners Corporation's attention. It gave it appropriate attention and obtained the Auseal quotation which addressed the relevant defects, namely leaking from the base of the shower and drummy tiles on the shower recess common wall.
58. The wholesale replacement of all of the bathroom's internal cladding represents improvement of the common property, not maintaining it in a state of good and serviceable repair.
59. To the extent that implementing the Auseal scope gave rise to aesthetic shortcomings from Ms Selkirk's point of view, that gave rise to Glenquarry Park Investments issues of necessity and proportionality. The remedy lay in the hands of [the applicant] to negotiate an appropriate agreement with the Owners Corporation as to the replacement tiles to be used. She did not attempt to do so."
"79. [The applicant's] evidence in chief as to her use of the unit prior to 30 November 2020 as a rental income producing property comprises material in her 27 March 2024 affidavit at [7] - It is extremely limited. She said that from 2013 she advertised for tenants on the platform 'Cubbi' which listed it on a variety of well known websites. She described the unit between 2013 and December 2020 as 'ordinarily being tenanted out' apart from between June 2020 to October 2020 when her sister stayed there."
"The owner indemnifies and will keep indemnified the owners corporation".
"The owner indemnifying the owners corporation in respect of the use of a lot in breach of this by-law, including but not limited to...
1.8.1 all ... claims ... which may be ... brought ... against the owners corporation;
... and
1.8.3 any costs or damages for which the owners corporation is or becomes liable:"
"106. It is apparent from the correspondence between [the applicant] and the Owners Corporation through its managing agent from March 2021 until September 2021 [the applicant] effectively placed on hold her requirement for the Owners Corporation to carry out rectification of the defects in her bathroom.
107. In the meantime she sought vindication via her claim on the CHU insurance policy of her view that she was entitled to have her bathroom completely re-tiled. That course was entirely the initiative of [the applicant]. She was unsuccessful in this endeavour.
108. From October 2021 the focus of her dealings with the Owners Corporation shifted from the scheme's insurance policy and from the aesthetic angle to the alleged insufficiency of the Auseal scope of works to address the bathroom defects.
109. In these circumstances it is submitted that the real cause of the unit's vacancy during this period of six months from April to October 2021 was [the applicant's] pursuit of a remedy under the insurance policy and that that period is unavailable to [the applicant] as one in which damages under s 106(5) can legitimately be pursued.
110. So too is the period from 3 September 2023. The "invasive water leak investigation" which effectively demolished the bathroom broke any chain of causation which had linked the subject defects to her inability to rent out the unit.
111. More generally, it is the Owners Corporation's contention that [the applicant's] refusal, post April 2021, to permit the Owners Corporation to implement the Auseal scope of works which is the real and substantial cause of the state of affairs in which [the applicant] finds herself."
(1) No timetabling orders were ever made in respect of the Owners' application;
(2) No order was made listing the Owners' application for hearing;
(3) The Owners never served any evidence they identified as evidence relied upon for the purposes of the Owners' application;
(4) No notice was given by the Tribunal listing the Owners' application for hearing;
(5) The Owners' application was not included in the hearing book provided by the Owners for the hearing; and
(6) The Owners had led no evidence at the hearing in support of their application.
"What is left is simply a bare assertion by counsel in submissions that is no way substantiated by any evidence."
"There is no rational basis to suggest that in some way, the repair works by the owners corporation could not happen while [the applicant] pursued an insurance claim, or that in any way the pursuit of the insurance claim interfered with the ability of the owners corporation to complete the repair works."
"The most persuasive evidence as to what works were always required was given by Mr White, whose expertise on this topic was not in any way challenged ... his evidence, consistently, was that the Auseal works were not sufficient to remedy [the bathroom]."
"Doing what [Auseal] has said would never ever have worked."
"There is no such localised process that could have been performed by anybody to remediate and stop the leaks."
"22 ... Firstly there has never been any persuasive evidence that the sole cause of the water leak was a leak in the base of the shower."
"23 Secondly, the evidence before the Tribunal indicates that a small, localised fix is insufficient to remedy the defect (even because at a bare minimum, waterproofing needs to be applied to the shower, and that cannot be applied in a small, localised fashion)."
"Plainly [the applicant] cannot show conclusively the income she would have actually derived from the property, as it is impossible to do so. What she must show is that the loss she claims was reasonably foreseeable and establish causation."
(1) Immediately prior to the water leak, the applicant had leased out her property
(2) "Prior to the water leak, the applicant had leased out unit 5 for the vast majority of the time that she had owned the property."
(3) The applicant had notified the strata agent of her intention to claim rental loss almost immediately after the water leaking had been identified.
(4) "Even not accounting for the above matters, as a matter of general principle, it cannot be said to be not reasonably foreseeable that a lot owner might, at any time, seek to rent out their lot to generate income. The risk of the loss suffered by the applicant in the form of rent was not 'so slight as to be dismissed as a mere far-fetched or fanciful possibility'."
(5) The Tribunal has commonly held that rental loss is a reasonably foreseeable loss resulting from a breach of the obligation under s 106 of the SSMA.
"The Tribunal should reject the invitation to speculate on the terms of the tenancies not placed before it by virtue of the forensic decision of the owners corporation."
"At a general level, the fact that the apartment is an investment property and leased out from time to time to tenants has never been a contentious matter in these proceedings."
"On its terms, it is plain that the indemnity is intended to only cover any additional costs or damages for which the owners corporation becomes liable for solely as a result of the breach of the bylaw."
"It is inconceivable that it was objectively intended that if a person breaches the by-law, the owners corporation would then be indemnified by that person for any cost or damage it ever incurred, regardless of how remote those costs or damages were from the actual breach. Or alternatively, regardless of whether that cost or damage would have been incurred even where there had not been a breach of the by-law."
"There is no conceivable reason why the unit would have remained vacant if not for the inability of the of [the applicant] to lease it out as a result of the [Owners'] breach of s 106 (1) of the SSMA. There is no evidence to suggest that [the applicant] would otherwise have had any difficulty finding tenants. It is also contrary to common sense that in ordinary circumstances, an apartment in metropolitan Sydney, in close proximity to the CBD, would not be very difficult to lease out."
(1) During what period or periods between December 2020 and June 2024 was the applicant's unit uninhabitable as a result of the Owners' failure to repair and maintain the common property of Strata Plan No 2661 in breach of s 106(1) of the SSMA?
(2) What loss has the applicant established that she sustained by reason of the uninhabitability of her unit during the period or periods identified?
(3) Whether the applicant would, if her unit had been habitable during relevant periods, have engaged in short term letting contrary to the provisions of special by-law 4 and, if so:
(a) Whether the terms of special by-law 4 require the applicant to indemnify the Owners to the extent that the Owners have no liability to the applicant in respect of periods when the applicant would have engaged in short term letting;
(b) Whether the likelihood that the applicant would have engaged in short term letting in breach of special by-law 4 is otherwise relevant to the assessment of compensation.
(4) Whether the applicant should be "quarantined" from paying any share of the liability of the Owners to the applicant.
(5) Should the Owners be directed to carry out work to rectify the common property in the applicant's lot and if so, what should be the scope of works and should the scope of works extend to the kitchen of the applicant's lot?
(6) Whether the Owners' application remains on foot and in any event, whether the Owners should be permitted to maintain that application at this hearing and, if so, what order should be made?
(1) The period up to 17 September 2021 when the Owners issued a notice requiring the applicant to provide access (and a period thereafter to allow for the time it would have taken for the works to be completed);
(2) The period from that time until Watersedge commenced its "invasive investigation" on or about 4 September 2023; and
(3) The period since the bathroom was stripped of all fittings and linings by Watersedge.
111 Work by owners of lots affecting common property
An owner of a lot in a strata scheme must not carry out work on the common property unless the owner is authorised to do so -
(a) under this Part, or
(b) under a by-law made under this Part or a common property rights by-law, or
(c) by an approval of the owners corporation given by special resolution or in any other manner authorised by the by-laws.
"60 It seems uncontroversial that if there had been a residential tenancy agreement on terms that operated through the whole of the Vacancy Period or for some other period that could be determined on the evidence, that loss of rental income would have been a reasonably foreseeable loss in the events that occurred and that an award for damages could have been made against the respondent for the period of the residential tenancy agreement.
61 In such circumstances, the award of damages would have been for actual loss suffered, rather than a loss of opportunity. The suffering of such loss needs to be proved on the balance of probabilities.
62 Where there is a claim for damages for loss of opportunity, necessarily there is some uncertainty which may relate to both the likelihood of damage and the amount of damage. The decision of the High Court in Sellars v Adelaide Petroleum NL (1994) 179 CLR 332; [1994] HCA 4 sets out the principles applicable to the assessment of damages for loss of opportunity.
63 In the recent decision of Boyded Industries Pty Ltd v Bluth & Ors [2023] NSWSC 915 (Boyded Industries), at [95]-[97], Chen J summarised the principles as follows:
95 In order for the plaintiff to succeed in a case that it had lost the opportunity to exercise its option rights under the deed, the plaintiff is required to demonstrate, on the balance of probabilities, that it has, in fact, lost an opportunity of some value, which is not negligible; and, upon demonstration of that fact, it becomes necessary to quantify the value of that opportunity. These principles (and requirements) were established in Sellars v Adelaide Petroleum NL (1994) 179 CLR 332; [1994] HCA 4 by Mason CJ, Dawson, Toohey and Gaudron JJ (at 355):
On the other hand, the general standard of proof in civil actions will ordinarily govern the issue of causation and the issue whether the applicant has sustained loss or damage. Hence the applicant must prove on the balance of probabilities that he or she has sustained some loss or damage. However, in a case such as the present, the applicant shows some loss or damage was sustained by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had some value (not being a negligible value), the value being ascertained by reference to the degree of probabilities or possibilities. It is no answer to that way of viewing an applicant's case to say that the commercial opportunity was valueless on the balance of probabilities because to say that is to value the commercial opportunity by reference to a standard of proof which is inapplicable.
96 Brennan J explained the requirement of a plaintiff to demonstrate the loss in these terms (at 367-368):
... Unless it can be predicated of an hypothesis in favour of causation of a loss that it is more probable than competing hypotheses denying causation, it cannot be said that the plaintiff has satisfied the court that the conduct of the defendant caused the loss. Where a loss is alleged to be a lost opportunity to acquire a benefit, a plaintiff who bears the onus of proving that a loss was caused by the conduct of the defendant discharges that onus by establishing a chain of causation that continues up to the point when there is a substantial prospect of acquiring the benefit sought by the plaintiff. Up to that point, the plaintiff must establish both the historical facts and any necessary hypothesis on the balance of probabilities. A constant standard of proof applies to the finding that a loss has been suffered and to the finding that that loss was caused by the defendant's conduct, whether those findings depend on evidence of historical facts or on evidence giving rise to competing hypotheses. In any event, the standard is proof on the balance of probabilities.
97 In Mal Owen Consulting Pty Ltd v Ashcroft (2018) 97 NSWLR 1163; [2018] NSWCA 135 ('Mal Owen') the relevant principles from Sellars were concisely explained by Barrett AJA at [100]-[101] as involving a two-staged enquiry:
[100] ... the joint judgment in Sellars v Adelaide Petroleum NL identifies as two distinct stages relevant to the resolution of a case such as the present. At that first stage, causation must be proved on the balance of probabilities: the question of causation is, after all, "entirely factual, turning on proof of relevant facts and on the balance of probabilities in accordance with s 5E" of the Civil Liability Act 2002 (NSW). The second stage becomes relevant only if causation is established at the first. The issue at the second stage is the assessment of damages; and the focus then is upon the actual value of the lost opportunity which, to that point, has been appraised only as not merely theoretical or negligible. Value must be ascertained at the second stage by reference to "the degree of probabilities, or possibilities, inherent in the plaintiff's succeeding had the plaintiff been given the chance" of which the plaintiff has been deprived. These are again words used in the joint judgment in Sellars v Adelaide Petroleum NL. (footnotes omitted)
[101] At each of the two stages, therefore, attention must be given to a question relevant to the value of the lost opportunity. At the first stage concerned with causation, the task is no more than to confirm that the value is not in the realms of the merely theoretical or negligible - in other words, to establish, according to the balance of probabilities, that there is some colour of value to the lost opportunity. It is only if the second stage is reached (after causation is established at the first) that anything approaching particular quantification is required. An assessment made at the second stage by reference to the degree of probabilities and possibilities of factual hypotheses may require a process of estimation extending even to a degree of guesswork and may lie at any point within a broad range. (footnote omitted)
64 We would add to Chen J's summary the following additional paragraphs from Sellars which further illuminates the summary of Barrett AJA in Mal Owen Consulting Pty Ltd v Ashcroft (2018) 97 NSWLR 1163; [2018] NSWCA 135 . At 349-350 ([22]-[24]), in passages prior to those referred to by Chen J in Boyded Industries, the plurality of the High Court in Sellars said:
22. Damages in tort have also been assessed by reference to the probabilities or possibilities of what will happen or what would have happened. That approach has been frequently adopted in the assessment of damages for personal injuries where a court has been called upon to assess future possibilities and past hypothetical situations. In Malec v. J.C. Hutton Pty. Ltd. ((20) [1990] HCA 20; (1990) 169 CLR 638.), this Court drew a distinction between, on the one hand, proof of historical facts - what has happened - and, on the other hand, proof of future possibilities and past hypothetical situations. The civil standard of proof applies to the first category but not to the second, particularly when it is necessary to determine future possibilities and past hypothetical situations for the purpose of assessing damages ((21) ibid at 639-640 per Brennan and Dawson JJ., 642-643 per Deane, Gaudron and McHugh JJ.).
23. In Malec, Deane, Gaudron and McHugh JJ. explained the way in which the matter is to be approached in these terms ((22) ibid at 643.):
"If the law is to take account of future or hypothetical events in assessing damages, it can only do so in terms of the degree of probability of those events occurring. ... But unless the chance is so low as to be regarded as speculative - say less than 1 per cent - or so high as to be practically certain - say over 99 per cent - the court will take that chance into account in assessing the damages. Where proof is necessarily unattainable, it would be unfair to treat as certain a prediction which has a 51 per cent probability of occurring, but to ignore altogether a prediction which has a 49 per cent probability of occurring. Thus, the court assesses the degree of probability that an event would have occurred, or might occur, and adjusts its award of damages to reflect the degree of probability."
The same approach has been adopted in England ((23) Mallett v. McMonagle (1970) AC 166 at 174; Davies v. Taylor (1974) AC 207 at 212, 219.) and Canada ((24) Janiak v. Ippolito (1985) 16 DLR (4th) 1.).
24. Neither in logic nor in the nature of things is there any reason for confining the approach taken in Malec concerning the proof of future possibilities and past hypothetical situations to the assessment of damages for personal injuries. The reasons which commended the adoption of that approach in assessments of that kind apply with equal force to the assessment of damages for loss of a commercial opportunity, as the judgments in Amann acknowledge.
38. Notwithstanding the observations of this Court in Norwest, we consider that acceptance of the principle enunciated in Malec requires that damages for deprivation of a commercial opportunity, whether the deprivation occurred by reason of breach of contract, tort or contravention of s.52(1), should be ascertained by reference to the court's assessment of the prospects of success of that opportunity had it been pursued. The principle recognized in Malec was based on a consideration of the peculiar difficulties associated with the proof and evaluation of future possibilities and past hypothetical fact situations, as contrasted with proof of historical facts. Once that is accepted, there is no secure foundation for confining the principle to cases of any particular kind.
66 From the above, the following principles can be derived in respect of a claim for loss of opportunity damages:
(1) damages for loss of opportunity are available for claims in tort, contract and statutory causes for which damages may be awarded. That includes the present case which is brought under s 106(5) of the SSMA;
(2) the claimant must establish, with evidence, on the balance of probabilities:
(a) that the actions of the other party caused an opportunity to be lost; and
(b) that some loss has been suffered and is more than a mere theoretical or negligible opportunity.
In this regard, theoretical or negligible opportunity is to be assessed in the manner explained by Deane, Gaudron and McHugh JJ in Malec v. J.C. Hutton Pty. Ltd. (1990) 169 CLR 638; [1990] HCA 20 (Malec), set out above in the reasons of the plurality in Sellars at [23].
(3) If the matters in (2) are established, evidence is not required "to prove future possibilities or past hypothetical situations for the purpose of assessing damages". Assessment of these possibilities on the balance of probabilities has no part to play. Rather, the assessment is to be made in terms of "the degree of probability that an event would have occurred, or might occur" and to adjust any award of damages "to reflect the degree of probability".
(4) There must be some rational basis for the assessment, usually based on historical facts. However, by its nature, the task may lead to the possibility that fixing an amount for damages "may lie at any point within a broad range" and may, in some cases, require "a degree of guesswork".
(5) This approach does not relieve a party from proving matters of historical fact that might be relevant to establish a loss may have been suffered."
(1) Pursuant to s 106(5) of the Strata Schemes Management Act 2015 (NSW) (the Act) order the respondent to pay the applicant $98,374.29 compensation for breach of s 106 of the Act within 28 days of the date of this decision.
(2) Pursuant to s 232 of the Act, direct that the respondent is not to pay any compensation awarded to the applicant from levies to which the applicant has been required to contribute.
(3) Pursuant to s 232 of the Act, direct the respondent, within two months of the date of this decision, to engage a suitably experienced, qualified, licensed and insured contractor to undertake repairs to the brick walls in the bathroom of Lot 5 in Strata Plan No 2661 sufficient to ensure that tiling and/or a waterproof membrane can be applied to the walls.
(4) Pursuant to s 232 of the Act, direct the respondent, within two months of the date of this decision, to engage a suitably experienced, qualified, licensed and insured contractor to carry out investigations in relation to the kitchen side of the wall dividing the kitchen from the bathroom of lot 5 in Strata Plan No 2661 with a view to determining the nature and causation of any defects in that wall and devising an appropriate rectification scope.
(5) Each party may file, and serve upon the other party, submissions of no more than five pages, with any evidence in support, seeking orders in relation to the costs of the proceedings (including costs incurred in relation to the proceedings before Senior Member Tyson) within 28 days of the publication of these orders.
(6) Each party may file and serve submissions in response to submissions filed pursuant to order (5) above, of no more than five pages, with any evidence in support, within a further 14 days.
(7) Submissions in reply to submissions filed and served pursuant to Order (6) above, of no more than three pages, may be filed and served within a further 7 days.
(8) Any submissions filed pursuant to Orders (5) or (6) above must include submissions concerning whether an order should be made pursuant to s 50 of the Civil and Administrative Tribunal Act 2013 (NSW) dispensing with a hearing of the relevant application.
(9) If any submissions are filed pursuant to Orders (5) to (7) above, the parties are to prepare and provide to the Tribunal an indexed, tabbed and paginated bundle containing all submissions and evidence filed pursuant to those orders within 56 days of the publication of these orders.
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.
Selkirk
The Owners �e" Strata Plan No 2661 [2024] NSWCATCD 71
Burton v Mizzi [2024] VCAT 106
Horan v The Owners - Strata Plan No. 68307 [2024] NSWCATAP 118
Hungerfords v Walker [1989] HCA 8; (1989) 171 CLR 125
Selkirk v The Owners - Strata Plan No 2661 [2024] NSWCATAP 17
Shum v Owners Corporation SP30621 [2017] NSWCATCD 68
The Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64
The Owners - SP 80881 v Gregg [2022] NSWCATAP 172
The Owners - Strata Plan No 2661 v Selkirk [2024] NSWSC 760
The Owners - Strata Plan No 62713 v Liberant [2022] NSWCATAP 80
The Owners - Strata Plan No 74698 v Jacinta Investments Pty Ltd [2021] NSWCATAP 387
The Owners - Strata Plan No 77559 v Touma; Touma v The Owners - Strata Plan No 77559 [2022] NSWCATAP 284
Williams v Pisano [2015] NSWCA 177
(1990) 169 CLR 638
(1954) 90 CLR 613
(2018) 97 NSWLR 1163
(1989) 171 CLR 125
(1991) 174 CLR 64
(2005) 63 NSWLR 449
(2009) 236 CLR 272
(1994) 179 CLR 332