Dr Thoo's claim for damages for breach of s 62(2)
198The primary judge held (at [90] of the second judgment) that Dr Thoo could claim damages for breach of s 62(2) as the s 62 duty was owed to each lot owner and its breach gave rise to a private cause of action under which damages could be awarded to a lot owner for breach of statutory duty. So much was decided by Young J (as he then was) in Lubrano v The Proprietors of Strata Plan No 4038 (1993) 6 BPR 13,308.
199In Lubrano, Young J was dealing with the equivalent provision of the Strata Titles Act 1973. After citing the relevant principles for determining whether breach of a statute gives rise to a private cause of action for damages, his Honour referred to various provisions of that Act, including those which empowered the Strata Titles Commissioner to make an order where there was a complaint, inter alia, that there had been a non-performance of a duty imposed by the Act. He then referred to the decision of Brownie J in Proprietors of Strata Plan No 30234 v Margiz Pty Ltd (30 June 1993, unreported) where his Honour said:
... once it is recognised that the Act imposes a duty on the plaintiff, and that the defendant is one of the class of persons for whose benefit the duty was created ... there does not seem to be any reason why the ordinary rules of the common law would not give the Court jurisdiction to award the defendant damages, upon proof of breach of duty and consequential damage.
His Honour cited, inter alia, O'Connor v SP Bray Ltd (1937) 56 CLR 464 at 477-8.
200In Lin, Gzell J (at [90]) referred to Lubrano as holding that the duty of the Owners Corporation under s 62 was owed to each lot owner and that its breach empowered the Court to award damages to that owner. In Seiwa Pty Ltd v The Owner of Strata Plan 35042 [2006] NSWSC 1157; (2006) 12 BPR 23,673, Brereton J (at [6]) also held that the duty of an owners corporation under s 62 was owed to each lot owner and that its breach gave rise to a private cause of action under which damages could be awarded to a lot owner for a breach of statutory duty. Brereton J observed that that conclusion was reached by Young J in Lubrano "upon a thorough consideration of earlier authorities to like effect". Those authorities were Jacklin v Proprietors of Strata Plan No 2795 [1975] 1 NSWLR 15 at 24 (Holland J); Proprietors of Strata Plan No 464 v Oborn (1975) 1 BPR 9623 at 9624 (Holland J); and Proprietors of Strata Plan No 159 v Blake (1986) CCH Strata Titles Cases 30-068 at 50,654 (Yeldham J). Although it was held in each of those cases that a body corporate owes a duty to each proprietor to maintain the common property, none of their Honours addressed the present issue of whether a breach of that duty gave rise to a private cause of action for damages. They therefore do not support the general proposition for which they were apparently cited.
201There was an appeal from Brereton J's judgment in Seiwa, which originally included the claim that his Honour had erred in holding that s 62(1) imposed a statutory duty which gave rise to a private cause of action sounding in damages. However, that claim was abandoned two days before the hearing of the appeal and the Court of Appeal therefore did not deal with that aspect of the matter: The Owners SP 35042 v Seiwa Australia Pty Ltd [2007] NSWCA 272; (2007) 13 BPR 24,789 at [15].
202In Trevallyn-Jones v Owners Strata Plan No 50358 [2009] NSWSC 694; (2009) 14 BPR 27,113 Ward J (as she then was) referred (at [134]) to Lubrano and Seiwa, but noted that the owners corporation in that case did not dispute that a private right to damages could arise by reason of a breach of s 62.
203Finally, in Nicita v Owners of Strata Plan 64837 [2010] NSWSC 68 Bryson AJ at [13] stated that it was well established, and was clearly stated in Seiwa, that s 62 creates a duty owed to each lot owner, breach of which gives rise to a private cause of action for damages for breach of statutory duty.
204At [91], the primary judge acknowledged that this line of first instance authority may be contrary to the following observations of McColl JA in Ridis at [115]:
This review of the scheme of the Strata Schemes Management Act indicates that, as its name indicates, the Act is concerned to allocate responsibilities for the strata scheme between the owners corporation and lot proprietors, to set out the functions of the owners corporation and to establish a regime to enable the enforcement, without recourse to courts, of a function conferred or imposed by or under the Strata Schemes Management Act in relation to a strata scheme. Significantly, too, there are some matters the legislature considered so significant as to create a liability in damages for exercise of the function (s 65) or to create an offence by the owners corporation for their breach (ss 65C, 83, 84 and 87). A "breach" of s 62 does not sound in damages nor constitute an offence under the Strata Schemes Management Act. Rather, it is apparent, in my view, that the legislature intended the system of adjudication established under Ch 5 to be the vehicle through which the owners corporation's discharge of its s 62 functions could be regulated.
205As McColl JA herself noted at [87] of her reasons, Mr Ridis did not assert that s 62 gave rise to a statutory cause of action. He relied solely on a claim for common law negligence on the part of the defendant owners corporation. Both before the primary judge and in this Court the Owners Corporation emphasised her Honour's remark that "a 'breach' of s 62 does not sound in damages". The primary judge noted (at [92]) that her Honour's observations were obiter, which clearly they were, and remarked that it was not evident from the judgments of the other members of the Court that there was a contest as to whether cases such as Seiwa and Lin were wrong when each held that a breach of s 62 did give rise to a claim for damages for breach of statutory duty. That is also correct. In these circumstances, his Honour considered that McColl JA's observations were not an impediment to his finding in the present case that the Owners Corporation's breach of s 62(2) in relation to Lot 17 did give rise to a right to recover damages.
206The Owners Corporation submitted that his Honour ought to have followed McColl JA's views in Ridis which, it was submitted, were to the contrary of those of Brereton J in Seiwa, Ward J in Trevallyn-Jones and Gzell J in Lin.
207It was common ground that whether a breach of a statutory duty gives rise to a civil remedy is a question of ascertaining the legislature's intention as a matter of construction of the relevant legislative language. In Sovar v Henry Lane Pty Ltd (1967) 116 CLR 397, which involved an action for damages for personal injuries brought by the plaintiff for breach of a provision of the Factories, Shops and Industries Act 1962 (NSW) relating to the fencing of dangerous machinery, Kitto J said, relevantly (at 404-405):
In the case of an enactment ... prescribing conduct to be observed by described persons in the interests of others who, whether described or not, are indicated by the nature of a peril against which the prescribed conduct is calculated to protect them, the prima facie inference is generally considered to be that every person whose individual interests are thus protected is intended to have a personal right to the due observance of the conduct, and consequently a personal right to sue for damages if he be injured by a contravention : see Whittaker v. Rozelle Wood Products Ltd (1936) 36 SR (NSW) 204; 53 WN 71. ... But at the outset of every inquiry in this field it is important, in my opinion, to recognize ... that the question whether a contravention of a statutory requirement ... is actionable at the suit of a person injured thereby is one of statutory interpretation. ... The legitimate endeavour of the courts is to determine what inference really arises, on a balance of considerations, from the nature, scope and terms of the statute, including the nature of the evil against which it is directed, the nature of the conduct prescribed, the pre-existing state of the law, and, generally, the whole range of circumstances relevant upon a question of statutory interpretation ... It is not a question of the actual intention of the legislators, but of the proper inference to be perceived upon a consideration of the document in the light of all its surrounding circumstances. ...
This passage was referred to with approval in Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410 at 460-461; Miller v Miller [2011] HCA 9; (2011) 242 CLR 446 at [29]; Field v Dettman [2013] NSWCA 147 at [39].
208It was submitted by the Owners Corporation that one of the most important indicia as to whether a breach of a statutory duty gives rise to a private cause of action for damages is whether or not the legislation provides an alternate remedy, such as administrative or quasi-judicial machinery through which an aggrieved person can pursue a complaint: Martin v Western District of the Australasian Coal & Shale Employees' Federation Workers' Industrial Union of Australia (Mining Department) (1934) 34 SR (NSW) 593 at 596 per Jordan CJ, referred to with approval by Dixon J in O'Connor v SP Bray Ltd (1937) 56 CLR 464 at 478. Thus it was submitted that it was the existence of Chapter 5 of the 1996 Act, referred to by McColl JA at [115] of her reasons in Ridis, that caused her Honour to express the view that a breach of s 62 did not sound in damages. It was submitted that her Honour's reasoning was correct and as a consequence the first instance decisions which held to the contrary should be overruled. This was so notwithstanding that she did not refer to the principles of construction to which I have referred at [207] above, although it was asserted that her Honour's reasoning was consistent with those principles.
209The Owners Corporation then summarised the relevant provisions of the 1996 Act, which were referred to by McColl JA at [104]-[114] of her reasons in Ridis. Without repeating that analysis, attention should be drawn to two aspects of the structure of the Act. The first is s 3, which sets out its objects, which are, first, to provide for the management of strata schemes created, relevantly, under the 1973 Act and, secondly (and significantly), to provide for the resolution of disputes arising in connection with the management of strata schemes.
210Chapter 5 extends from ss 123 to 210. It is headed "Disputes and orders of Adjudicators and Tribunal". Section 138 contains the general power of an Adjudicator to make an order to settle a dispute or complaint about, inter alia, "an exercise of, or a failure to exercise, a function conferred or imposed by or under this Act". The word "function" is defined in the Dictionary to the Act to include a "power, authority or duty". Section 138 thus encompasses the failure of the Owners Corporation to exercise its duty under s 62(2). The regime set out in Chapter 5 is, to say the least, detailed and extensive. It provides (s 177) for appeals to the Consumer, Trader and Tenancy Tribunal established by the Consumer, Trader and Tenancy Tribunal Act 2001 from orders made by an Adjudicator. There is an appeal to the District Court from orders of the Tribunal (s 200). Part 6 of Chapter 5 relates to the enforcement of orders of Adjudicators and the Tribunal.
211Section 207 in Part 7 of Chapter 5 provides, relevantly, that an order under s 138 in which an Adjudicator declares that the order is to have effect as a decision of the owners corporation is to take effect as a resolution of the owners corporation to do what is needed to comply with any requirement imported by that order. In other words, an order made by an Adjudicator under s 138 that the owners corporation perform its duty under s 62(2) to renew or replace a particular part of the common property takes effect as a resolution of the owners corporation with which it is bound to comply. If it fails to do so, the obvious remedy would be a mandatory injunction. However, it is to be noted that by operation of s 138(3)(d) an Adjudicator cannot make an order under subs (1) for the settlement of a dispute or complaint that includes the payment by a person to another person of damages. In my opinion, that provision is some indication of an intention on the part of the legislature that disputes relating to the owners corporation's duties under the 1996 Act, as well as disputes as to the strata scheme generally, are to be resolved in a manner which does not involve the payment of damages.
212I have not attempted an exhaustive analysis of the provisions of Chapter 5. However, the Owners Corporation submitted that Chapter 5 establishes a detailed and comprehensive scheme for non-judicial resolution of disputes arising from the management of strata schemes. In short, it provides a comprehensive regime by which a lot owner who is dissatisfied with the performance by an owners corporation of its role to maintain, renew or replace common property can seek redress from a specialist tribunal. If the complaint is justified, then the owners corporation can be ordered to carry out such work as is necessary to fulfil its role.
213It was further submitted that any damages awarded against an owners corporation would be at the expense of the lot owners (including the lot owner claiming the damages), since it is only from them that funds can be raised, if necessary by special levy, to meet any award of damages. That can occur in circumstances where there has been no investigation into the personal responsibility of any particular lot owner for the breach. Indeed, it may well be that some, or perhaps all, lot owners have also suffered loss from the relevant breach.
214In the light of the foregoing considerations, it was submitted that it was not necessary to supplement the express statutory right conferred on lot owners to compel an owners corporation to fulfil its statutory duties through the Part 5 machinery of the 1996 Act with the additional right to claim damages from the owners corporation for breach of those duties.
215Dr Thoo submitted that, when read in context, the observation made by McColl JA at [115] of her reasons that a breach of s 62 does not sound in damages was directed to the absence of an express provision in the 1996 Act (such as s 65(6)) conferring a statutory right to damages for breach of s 62. It was contended that her Honour's statement was not directed to, and says nothing in respect of, a private right of action in tort for breach of a statutory duty sounding in damages. This was because the appellant in Ridis did not assert that s 62 gave rise to any such cause of action, but rather relied on a breach of s 62 as evidence of negligence: Ridis at [90].
216I would not accede to the foregoing submission. It is contrary to the last sentence of [115]. The submission is suggestive of her Honour using loose language, which I do not perceive. Her Honour had reviewed the scheme of the 1996 Act and it was as a result of that review and analysis that she concluded, albeit obiter, that a breach of s 62 did not sound in damages for the reason that the legislature intended the system of adjudication established under Chapter 5 to be the vehicle through which the owners corporation's discharge of its s 62 functions should be regulated.
217Dr Thoo then submitted that no error had been identified in the decisions of the single judges of the Supreme Court who had held that breach of the predecessor of s 62(2) gave rise to a statutory cause of action sounding in damages. However, in my opinion the answer to that contention is to be found in the difference of opinion at the appellate level as to the intention of the legislature in the light of the proper construction of the 1996 Act. It is simply a preference for the view of McColl JA over that of the learned judges upon whose decisions Dr Thoo relies.
218It was next submitted that the Owners Corporation's submissions did not address the application of the re-enactment presumption of statutory interpretation where the identical statutory expression "renew or replace any fixtures or fittings comprised in the common property" was employed in s 68(1)(c) of the Strata Titles Act 1973 before being deployed again in s 62(2) of the 1996 Act. It is true that Part 5 of the Strata Titles Act 1973 dealt comprehensively with disputes from ss 97-145. Section 105 was the equivalent of s 138 of the 1996 Act. However, there are some differences between the two provisions. Relevantly, s 105(1A) empowered the Commissioner, when making an order under subs (1), to include provision for the payment by one person to another person of damages not exceeding $500. This provision, as I have indicated, is not repeated in s 138, which prohibits the payment of such damages.
219In Proprietors of Strata Plan No 30234 v Margiz Pty Ltd, Brownie J referred to s 105 of the Strata Titles Act 1973 and to the decision of Kearney J in MacLeod v Proprietors of Strata Plan No 6544 [1980] 2 NSWLR 691 at 694, where his Honour held that s 146 (now s 226) had been carefully and deliberately drafted so as not to exclude the concurrent jurisdiction of the Court, (that is, the jurisdiction of the Court which was concurrent with the jurisdiction of the Commissioner to resolve disputes under the Strata Titles Act 1973). However, the concurrent jurisdiction to which his Honour was referring, and which was applied by Needham J in Proprietors of Strata Plan No 6522 v Furney [1976] 1 NSWLR 412, was the jurisdiction of the Court to make a declaration in the latter case or a mandatory injunction in the former case. Neither case dealt with the issue of whether a breach of s 68(1)(b) or (c) (now s 62(1) and (2)) gave rise to a private right of action for damages. Nevertheless, as I have noted in [199] above, Brownie J in Margiz did hold that there was such a right of action.
220In my view there is a distinction to be made between, on the one hand, the preservation of the concurrent jurisdiction of the Court pursuant to the old s 146 and the current s 226, and, on the other, the question as to whether a breach of a duty imposed by the legislation on an owners corporation gives rise to a private cause of action for damages for breach of statutory duty. In Lubrano Young J also referred to s 105 of the Strata Titles Act 1973 as well as to s 146, holding that the plaintiff owner did have an action for a breach of statutory duty, basing his decision upon the reasoning of Brownie J in Margiz.
221However, as I have indicated, ultimately I prefer the reasoning of McColl JA in Ridis where her Honour, after a careful analysis of the provisions of the 1996 Act, made it clear that in her view a breach of s 62 did not sound in damages. In this respect her Honour took into account many of the same matters that were considered by Brownie J in Margiz and by Young J in Lubrano, but came to a different view which I respectfully consider to be correct.
222Although his Honour was entitled not to adopt the views of McColl JA in Ridis, as they did not command a majority in that case for the reason that there was no claim of a breach of statutory duty sounding in damages, nevertheless it is open to this Court to decline to follow the first instance decisions relied upon by Dr Thoo and by the primary judge and to now determine on the basis of the obiter observations of McColl JA in Ridis that a breach of s 62 by an owners corporation does not give rise to an action for damages for breach of statutory duty.