The Appellant owns a unit (also known as lot 8) in a block of strata units constituted by the Respondent. Immediately below lot 8 is lot 6.
The Appellant lodged an application on 17 March 2023 seeking certain orders for work to be undertaken by the Respondent owners corporation to deal with leaks emanating fromlot8 and also other leaks coming into lot 8, as well as an order for compensation. The Tribunal's orders were made on 14 August 2023 when two orders were made and reasons given in writing. That decision (which we will refer to as the Decision) is the subject of this appeal.
The Decision records the following two orders:
1. Order 1 required the Respondent to carry out certain works designed to repair common property so as to resolve water leaking into the Appellant's unit from above.
2. Order 2 was an order dismissing the Appellant's application for an order that the Respondent repair a watermark in the Appellant's lot and pay compensation for the loss of the room with the watermark in the lot.
The appeal concerns only order 2 and we are we were informed at the hearing of the appeal that order 1 has been complied with.
[2]
The Decision
In order to better understand the appeal, it is necessary to summarise the reasons for order 2 as recorded in the Decision.
The Appellant contended that the Respondent had failed to properly maintain and keep in a state of good and serviceable repair the common property and sought orders from the Tribunal pursuant to jurisdiction granted to the Tribunal under the Strata Schemes Management Act 2015 (NSW) (the Strata Act).
At [5] the Tribunal stated that the Appellant sought orders for the Respondent to repair watermarks in her lot and for the Respondent to pay her compensation for loss of a room in the lot for more than two years in that related area. The Tribunal noted at [6] that the Appellant (then the Applicant) had not provided a map of the Strata Plan identifying what is and is not common property.
In mid-2020, the Respondent was advised of a water leak issue in lot 6 and in particular water damage within the ceiling of lot 6 (which is below lot 8). The Tribunal recorded that the investigation by a plumber concluded that there were no leaks within any of the common property plumbing pipes. The Tribunal recorded that the plumber concluded that silicon sealant surrounding the bath tub of lot 8 was beginning to perish and suggested that it be attended to by the Appellant. The report also stated that tapware within the shower was the most likely cause of the water damage and should be replaced and sealed.
At [8] the Tribunal recorded that the plumber was called back later in 2020 and that he confirmed that the perimeter sealant within the bath/shower recess had failed. The Tribunal noted that the bathroom is approximately 20 years old. The Tribunal also noted that the Respondent's contention was that the reason for failure was not within common property and it was not for the Respondent to fix. Nevertheless, because of the Appellant's failure to repair the bathroom, the Respondent had caused repairs to be undertaken.
At [9] the Tribunal recorded that the Appellant's present contention was that the repairs undertaken by the Respondent in 2020 caused a water stain to the wall in her lot that backs onto the bathroom. The Tribunal identified that the Appellant had obtained and submitted reports from Aussie Home Services and Adelson's Building & Bathroom Renovation Pty Ltd. The Tribunal found that there was no evidence within those reports or in the Appellant's other evidence that explained how the work that the Respondent had undertaken in 2020 could have caused the watermark.
At [11] the Tribunal found that, based upon the Respondent's evidence, "what occurred in 2020 was not a failure with the common property based upon the plumber's evidence".
At [12] the Tribunal concluded that there was nothing in the Appellant's recently obtained reports from Aussie Home Services and Adelson's that confirmed any failure with the common property in 2020. The Tribunal found at [13] that there was no failure "with the common property" in 2020 and that "it" (ie presumably the watermark) was not the Respondent's responsibility to fix. Rather, it was the Appellant's responsibility to fix the watermark. The claim for an order that the Respondent undertake such repairs was dismissed.
At [14] the Tribunal gave reasons for dismissing the Appellant's claim for compensation. The Tribunal held that by reason of s 106(6) of the Strata Act the claim for compensation was out of time. We note that the Appellant's application was lodged in 2023 and that the Appellant became aware of the water stain in 2020 (see [9] of the Decision). Since s106 (6) requires an action under s106(5) for damages for reasonably foreseeable loss arising from breach of a statutory duty in s 106(1) or (2) to be brought within two years after the owner first becomes aware of the loss, the dismissal of the claim for compensation is in our view correct. We further discuss these provisions in respect of a work order below.
Finally, the Tribunal noted that, with respect to the work order covered by order 1, there was no dispute by the Respondent. The Respondent conceded that repairs were required.
For convenience we set out the terms of s 106:
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.
[3]
The Appeal
The Appellant lodged a Notice of Appeal on 14 September 2023 against the dismissal of the application for a work order concerning the watermark and compensation, namely, order 2.
The grounds of appeal may be summarised as follows:
1. The Tribunal failed to provide procedural fairness. We note that, notwithstanding the requirement of a direction made during the course of the appeal for the parties to file a transcript or a disc of the proceedings at first instance, the Appellant failed to do so. Accordingly, it is not possible to consider whether there was any basis for the assertion that there was a failure to provide procedural fairness in so far as that ground concerns something occurring or not occurring during the hearing at first instance.
2. The Tribunal did not consider and give weight to relevant evidence and did not have any evidence to support its finding in relation to order 2.
3. The Tribunal failed to identify the watermark to be a consequence of water ingress resulting from the Respondent's failure to repair and maintain common property.
Further, the Appellant sought leave to appeal on the following bases:
1. The Decision was not fair and equitable because of the Tribunal's failure to provide procedural fairness. In particular, the Tribunal provided an interpreter for the Appellant and the interpreter was incompetent. We repeat that there is no evidence to support this contention and this ground is rejected.
2. The Appellant also contended that the Decision was against the weight of evidence. In particular, the Appellant contends that the reports from Aussie Home Services and Adelson's should have been given more weight. There was also a report from Plumbing Laser which should have been given more weight. We shall return to the content of these reports later.
3. The Appellant further sought leave on the basis that new evidence was now available that was not reasonably available at the time of the hearing. This included a market rental appraisal provided by a real estate agent and a further report from a builder.
With respect to the market appraisal, we indicated during the course of the appeal hearing to the parties that there was insufficient evidence to conclude that the Appellant had suffered loss of rent, assuming that it could be established that the Respondent was liable for breach of its obligations to repair and maintain as contended by the Appellant with the consequence that the Appellant suffered loss of rent. There was no or insufficient evidence to the effect that the Appellant leased the lot or intended to lease the lot.
The parties each provided documents upon which they based their submissions. These are dealt with in further detail in the following paragraphs.
[4]
Appellant's Material
The Appellant relied in part upon the report of Adelson's dated 11 May 2023. Relevantly, that report stated that water penetration to the bedroom wall from the bathroom "has been validated". It also stated that the water penetration "has escalated once sealing bathtub edges against the wall, creating a back force of pressure for water to be only pushed one way towards bedroom wall. Sealing the bath edges has minimised water leaking downstairs to tenants below but has not stopped it. Sealing bath edges will not fix problem as water is travelling behind tiles into the cement render". The report recommended the removal of wall tiles and floor tiles and for plumbing to be pressure tested for leaks. We interpret the report to contain the opinion that, once the bathtub edges had been sealed, a "back force of pressure" had been created causing the water to be pushed towards the bedroom wall.
The Appellant also relied upon a brief report from Aussie Home Services dated 8 May 2023 which stated that the author, a plumber, had discovered a water leak and "failed waterproofing".
The Appellant also relied upon the opinion of Plumbing Laser (being a firm that the Respondent had engaged in September 2020) in which it is stated that the waterproof membrane within the bath/shower recess has failed and requires attention. Although arguably outside the area of expertise of a plumber, Plumbing Laser also stated that the works "related to unit 8 falls under lot owner responsibility and the repair works for unit 6 falls under strata responsibility".
[5]
Respondent's Material
Mr Wang on behalf of the Respondent submitted that the wall containing the watermark is an internal wall and not common property. He submitted that, because it was the lot owner's property, it was the Appellant's responsibility to deal with the necessary work to remove the watermark. He further submitted that the leak into Lot 6 in 2020 was caused by a failure of the waterproof membrane (if there was one) or the failure to have a waterproof membrane and that the damage to the internal wall subsequently identified by the Appellant was damage to lot property (not common property) and was occasioned by defective lot property. Accordingly, his submission was that the appeal should be dismissed.
[6]
Consideration
The Civil & Administrative Tribunal Act 2013 (NSW) (the NCAT Act) provides for the regulation of appeals from the Consumer & Commercial Division of the Tribunal. Essentially an appellant has an appeal as of right "on any question of law" (s 80(2)(b)) or with leave on the grounds described in clause 12 of schedule 4 of the NCAT Act. Clause 12 provides:
12 LIMITATIONS ON INTERNAL APPEALS AGAINST DIVISION DECISIONS
(1) 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).
Note: Under section 80 of this Act, a party to proceedings in which a Division decision that is an internally appealable decision is made may appeal against the decision on a question of law as of right. The leave of the Appeal Panel is required for an internal appeal on any other grounds.
(2) Despite section 80(2)(b) of this Act, an internal appeal against a Division decision may only be made on a question of law (as of right) and not on any other grounds (even with leave) if--
(a) the appellant is a corporation and the appeal relates to a dispute in respect of which the Tribunal at first instance had jurisdiction because of the operation of Schedule 3 to the Credit (Commonwealth Powers) Act 2010, or
(b) the appeal is an appeal against an order of the Tribunal for the termination of a tenancy under the Residential Tenancies Act 2010 and a warrant of possession has been executed in relation to that order.
In this case, the question is whether the Decision was not fair and equitable or was against the weight of evidence and, if so, whether the Tribunal should grant leave to appeal. In our view, there is no significant new evidence in the sense that there is no evidence that was not reasonably available at the time the proceedings under appeal were being dealt with which should now be considered.
We are of the opinion that the Tribunal erred in two respects:
1. At [9] of the Decision the Tribunal said that there was "no evidence" in the reports from Aussie Home Services and Adelson's that explained how the work that the Respondent had undertaken back in 2020 could have caused the watermark.
2. In concluding that there was nothing in the reports from Aussie Home Services and Adelson's that confirmed any failure with the common property in 2020 or that there was insufficient evidence that refuted the Respondent plumber's investigation and conclusion from that time as to the repairs that were required.
What these conclusions overlook is that the report from Adelson's states in relatively clear terms that water penetration has been "escalated once sealing bathtub edges against the wall, creating a back force of pressure for water to be only pushed one way towards bedroom wall". Further, the report states that sealing the "bath edges has minimised water leaking downstairs to tenants below but has not stopped it. Sealing bath edges will not fix problem as water is travelling behind tiles into the cement render".
In our view this report states that in the opinion of Adelson's the sealing work (which was done in 2020 under the authority of the Respondent) has caused the water to run towards the bedroom wall. Although this report does not explicitly state that the consequence of that work was to cause a watermark, it seems to us to be a matter of common sense that that would have been the likely outcome (amongst other outcomes).
The Tribunal said that there was no evidence establishing a failure in common property. That misses the point of the Appellant's case which was that the work done at the behest of the Respondent in 2020 caused damage to the Appellant's lot irrespective of the status of the damaged property as lot property or common property, a matter we further discuss below. The Tribunal also said that there was no evidence that would make the Respondent responsible to fix the watermark. That conclusion ignores the opinion in the Adelson report. Accordingly, it is our view that the Tribunal's findings were against the weight of evidence in that the findings were against the view expressed by Adelson's. There was no countervailing view put forward by the Respondent in response to the Adelson's report.
As a result we are of the opinion that the Decision was not fair and equitable and was against the weight of evidence. The question remains whether leave should be granted.
In the Appeal Panel decision in Collins v Urban [2014] NSWCATAP 17 the Tribunal set out the criteria to be considered in determining whether leave to appeal should be granted. Those criteria were summarised in paragraph 84 of that decision. Paragraph 84 stated:
84 The general principles derived from these cases can be summarised as follows:
(1) In order to be granted leave to appeal, the applicant must demonstrate something more than that the primary decision maker was arguably wrong in the conclusion arrived at or that there was a bona fide challenge to an issue of fact: BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [19] and the authorities cited there, Nakad v Commissioner of Police, NSW Police Force [2014] NSWCATAP 10 at [45];
(2) 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,
BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [20] and the authorities cited there, SAB v SEM [2013] NSWSC 253 at [8] and [9] and the authorities cited there, Nakad v Commissioner of Police, NSW Police Force [2014] NSWCATAP 10 at [45];
(3) In relation to an application for leave to appeal relating to a question of practice and procedure, the application is to be approached with the restraint applied by an appellate court when reviewing such decisions, especially if the application is made during the course of a hearing: BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [21] and the authorities cited there.
In our view, the Decision contains an error that was unreasonably arrived at and clearly mistaken resulting in an injustice which is reasonably clear.
Accordingly, we of the opinion that leave to appeal should be granted.
It is necessary to consider the Respondent's contention that the responsibility for the watermark and any other damage to the internal wall remains the responsibility of the lot owner.
As stated above, in our view the Adelson's report contains the opinion that the work done in 2020 led to the subsequent damage to the internal wall within the Appellant's lot. That occurred, in part, because the Respondent caused work to be undertaken to perform its obligation to repair common property between Lot 8 and Lot 6. The Respondent may have undertaken work to the Appellant's lot because of alleged lack of co-operation by the Appellant. However, based upon the Adelson's report, the consequence of the Respondent undertaking its responsibilities under s 106 led to the damage occurring within Lot 8.
Whether the internal wall is lot property or common property is irrelevant. If it is common property, the Respondent must undertake the necessary repair work based upon its obligations under s 106. If, on the other hand, the damage is to lot property, the Respondent's obligation arises in the circumstances of this case because the damage was the consequence of the work previously undertaken by the Respondent in fixing common property between Lot 8 and Lot 6.
Accordingly, it is not necessary for us to determine whether the Respondent is correct in stating that the internal wall is lot property. Whether it is lot property or common property, the consequence remains the same and that is that the Respondent has an obligation to repair the internal wall and do such other work that reasonably addresses the issues identified in the Adelson's report.
Section 232 of the Strata Act gives the tribunal power to make orders to settle a complaint or dispute about the operation, administration or management of a strata scheme or about the exercise of a function conferred or imposed on an owners corporation under the Strata Act: see s232(1)(a) and (e). Accordingly, we are of the view that we should make an order requiring the Respondent to remedy the issues concerning water referred to in the Adelson's report.
In coming to the view expressed in the above paragraphs we have considered whether we are precluded from making the proposed work order on the basis that the Appellant's application is barred from being prosecuted by reason of s106(6), that is because the two-year time limit has expired. We are satisfied that the order can be made. There are two reasons for this view. First, it is our view that the time limit only concerns claims for compensation for loss. That is apparent from the reference to "loss" in s106(6). .The action referred to in s106(6) is the action referred to in s106(5) for recovery as damages for reasonably foreseeable loss. Secondly, regard must be had to s122.That section provides that an owners corporation has power to undertake works of various kinds. Section 122(6) provides that an owners corporation is liable for any damage to any lot caused by or arising out of any authorised work, without imposing a time limit. We are therefore of the view that the order we have proposed may be made.
It follows that the following orders should be, and are, made:
1. Appeal upheld.
2. Order 2, made on 14 August 2023, is set aside.
3. The Respondent is to undertake all necessary work to repair the internal wall within Lot 8 the subject of the Appellant's contentions in these proceedings, including attending to stop water from travelling behind tiles into cement render, removing the watermark and painting the room so that it looks the same as the room would have looked but for the damage.
4. The Respondent is to comply with order 3 by 1 March 2024.
[7]
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: 13 December 2023