The Owners - Strata Plan SP20211 v Rosenthal; Rosenthal v The Owners - Strata Plan SP20211 - [2018] NSWCATAP 243 - NSWCATAP 2018 case summary

NCAT Appeal Panel|2018-04-16

Background

In order to address the appeal grounds, some factual background to the dispute is necessary.
The appellants purchased their lot in SP 20211 in February 2015. Lot 64 is on three levels of the building, levels 18, 19 and 20, level 20 being the roof terrace. Part of lots 62 and 63 are also on the roof terrace.
The evidence of Dr Rosenthal was that shortly after taking possession of lot 64 the Owners noticed water ingress to the kitchen area, the master bedroom, the spare bedroom and office, and over the ensuing months they noticed continuing water ingress to their lot and continued to notify the OC of the issue.
The evidence of Mr Cavenagh, who is the owner of five lots in SP 20211 and has been a member of the strata committee since 2004 and treasurer since 2005, was: 1. the strata scheme was first registered on 12 May 1983; 2. alterations were made between 1983 and 1990 without the benefit of an appropriate by-law, which included: 1. Enclosure of the pergola on level 20 and conversion of it to a bedroom, which work included demolition of common walls, bricking in areas of the pergola and installation of windows and sliding doors; 2. Conversion of the bar and toilet on level 20 to an en-suite spa and toilet; 3. Extension and enclosure of a fountain on level 20 to convert into a studio which work included building new walls and roof; 4. Erection of a wooden deck on the south-east side of level 20; 5. Extension of the bedroom on the south side of level 19 which included demolition of a common wall and construction of another wall, windows and a raised wooden floor; 1. further works were conducted between 1990 and 1997 by the then owners of lot 64 unapproved by any application to the Owners Corporation, including: 1. Installation of the skirting boards at the entrance to lot 64; 2. Installation of brass bolts on the entry door; 3. Installation of air conditioning equipment on the roof of the level 20 bedroom and on level 20 common property; 1. there were no details of the plans or construction of any of those works; 2. in 2000 special by-law 6 was created to deal with further alterations to lot 64; and 3. in 2008 special by-law 23 was made dealing with the pergola.

Grounds of Appeal

The amended Grounds of Appeal, at 3(a), take issue with the Member's findings at [84] and [85]:3(a)(i), [87]:3(a)(ii), [88], [89], [92] and [118]: 3(a)(iii), [124]: 3(a)(iv), [127]: 3(a)(v), [131] and [133]: 3(a)(vi), [133]:3(a)(vii), [138]: 3(a)(viii), [147]: 3(a)(ix) and (x), [141]: 3(a)(xi), [99]:3(a)(xii), and [104]:3(a)(xiii).
At 3(b), in the alternative, the OC contends that to the extent that the grounds in 3(a)(i)-(vii) and (xi) are errors of fact, leave to appeal should be granted, on the basis that the findings were unreasonably arrived at and clearly mistaken, cause an injustice that is plain and readily apparent, and arise from an unorthodox fact-finding process that has caused an unfair result.
From the appellant's written submissions it is possible to draw from the list in 3(a) those grounds of appeal which appear to raise questions of law: 1. whether the Member reversed the onus of proof and as a consequence failed to make proper findings in relation to whether the OC was in breach of its duty and liable for the leaks; 2. whether the Member erred in his construction of by-laws 6 and 23; 3. whether the Member erred in finding that the work done between 1983 and 1997 became unauthorised additions of or alterations to the common property; 4. whether the Member erred in making findings of fact about the state of the waterproof membrane based on no evidence; 5. whether the Member erred in his findings as to the OC's responsibility for repairs; 6. whether the Member erred in finding that by reason of s 106(5) of the SSMA the Tribunal had jurisdiction to award damages.

Ground 1: whether the Member reversed the onus of proof

The OC submits that the Owners had the onus of proving that the OC was obliged to rectify the defects and had not done so, and the Member's findings at [84] and [85] reflect a reversal of the onus of proof that impermissibly imposed on the OC the onus of proving that the water ingress and other defects were not its responsibility. The Member cited no authority for the proposition that the onus of proof should shift from the applicant to the respondent, and that was a fundamental error. The Owners had to prove that the OC was in breach of s106(1), which they failed to do. The reversal of the onus of proof infected the whole decision because the Tribunal failed to make proper findings in relation to the relevant issues.
The Owners accept that they had the onus of proving that the OC was obliged to rectify the leaks to the kitchen, main bedroom, second bedroom and study and third bedroom, and submit that the onus was discharged. They submit that the Member did not shift the onus of proof, rather he correctly stated the law in Seiwa (Brereton J) and Ridis. In the context of the statutory duty to take preventative measures to ensure that the common property does not fall into a state of disrepair, the Member was referring to an obligation on the OC to establish that it did not have an obligation to repair the common property. There was no fundamental error made by the Member and the reference in [84] to an apparent breach of duty had to be read in the context of the statutory duty imposed by s 106(1).
Section 106 of the SSM Act provides: 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.
Section 106(1), (2) and (3) are in the same terms as 62(1), (2) and (3) of the 1996 Act. The decision of Brereton J in Seiwa summarises the relevant principles: 3. ……Section 62(1) imposes on an owners corporation a duty to maintain, and keep in a state of good and serviceable repair, the common property. That duty is not one to use reasonable care to maintain and keep in good repair the common property, nor one to use best endeavours to do so, nor one to take reasonable steps to do so, but a strict duty to maintain and keep in repair. 4. The duty to maintain involves an obligation to keep the thing in proper order by acts of maintenance before it falls out of condition, in a state which enables it to serve the purpose for which it exists [Hamilton v National Coal Board [1960] AC 633, 647 (Lord Keith of Avonholm); Haydon v Kent County Council [1978] QB 433, 464 (Shaw LJ); Ridis v Strata Plan 10308 [2005] NSWCA 246, [161]]. Thus the body corporate is obliged not only to attend to cases where there is a malfunction, but also to take preventative measures to ensure that there not be a malfunction [Greetings Oxford Koala Hotel Pty Ltd v Oxford Square Investments Pty Limited (1989) 18 NSWLR 33 (Young J); Ridis, [162]-[163]]. The duty extends to require remediation of defects in the original construction of the common property [Proprietors Strata Plan No. 6522 v Furney [1976] 1 NSWLR 412, 416 (Needham J); Ridis [164]-[165]]. And it extends to oblige the owners corporation to do things which could not be for the benefit of the proprietors as a whole or even a majority of them [Proprietors Strata Plan 159 v Blake (1986) CCH Strata Titles Cases ¶30-068 (Yeldham J); Ridis, [166]]. 5. It follows that as soon as something in the common property is no longer operating effectively or at all, or has fallen into disrepair, there has been a breach of the s 62 duty [cf Ridis [177]]. Insofar as Ridis held that s 62 did not oblige an owners corporation to conduct or procure the conduct of an expert assessment of every possible source of danger in the common property, personal property vested in it, and fixtures and fittings comprised in the common property, that was in the context of a submission that by imposing the statutory duty to maintain and repair, s 62 had the ancillary effect of extending the common law duty of care of an owners corporation as an occupier of the common property to include rigorous duties of inspection. The Court of Appeal rejected the submission that s 62 expressly or implicitly resulted in the imposition of such a common law duty. But that is beside the point; in this case, unlike in Ridis, the plaintiff relies on a statutory cause of action said to arise on s 62, rather than a duty of care said to arise consequentially from s 62 [cf Ridis, [87]-[88]]. 6. The duty of an owners corporation under s 62 is owed to each lot owner, and its breach gives rise to a private cause of action under which damages may be awarded to a lot owner for breach of statutory duty. This conclusion was reached by Young J, as his Honour the Chief Judge then was, in respect of the predecessor of s 62, namely Strata Titles Act 1973, s 68, in Lubrano v Proprietors Strata Plan No 4038 (1993) 6 BPR 97,457, at 13,310-13,311, upon a thorough consideration of earlier authorities to like effect [Jaklyn v Proprietors Strata Plan No 2795 [1975] 1 NSWLR 15, 24 (Holland J); Proprietors Strata 464 v Oborn (1975) 1 BPR 9623, 9624 (Holland J); Proprietors Strata Plan 159 v Blake, 50,654 (Yeldham J); Proprietors Strata Plan 30234 v Margiz Pty Ltd (NSWSC, Brownie J, 30 June 1993). Gzell J has since followed it in the context of the 1996 Act [Lyn v Owners Strata Plan No 50276 [2004] NSWSC 88, [90]].
In the context of the factual dispute in these proceedings, the Member's comments at [82] and [83] are a starting point to his analysis. There was no dispute that there was water ingress: the issue was whether it was caused by some defect or inadequacy in common property for which the OC had a duty to maintain and repair, or whether for some reason the OC was not subject to the absolute duty imposed by s 106(1). The Member's comment at [83] that once it is apparent that there is water ingress into lot property the OC had an obligation to investigate with appropriate expert assistance the cause of the water ingress and correct it, is consistent with the principles set out in Seiwa by Brereton J at [5], that the obligation on an owners corporation includes engaging expert assessment of the common property where necessary to comply with the duty imposed by the Act.
In its submissions at first instance the OC contended (at [5]) that there are two relevant limitations on the OC's duty under s106(1), that is that the duty relates to "common property", and is "subject to the provisions of …any common property rights by-law (section 106(7))". It submitted that the Owners had failed to prove that the orders they sought arise from the disrepair of the common property and to the extent that they do, the common property involved is not the subject of an exclusive use or special privileges by-law.
We are satisfied that the Member approached his task correctly. As explained in Seiwa, the duty on the OC under s106(1) is a strict duty to maintain and keep in repair, including an obligation to take preventive measures if necessary. An owners corporation can rely under s 106(7) as a defence to that otherwise strict obligation on there being a common property rights by-law that imposes maintenance or repair obligations on a lot owner as part of an authorisation for work or use of common property. The Member's comment at [85] reflects that position. The Member's attempt to understand whether either by-law 6 or 23 in fact did excuse the OC from its strict obligation was not to shift the onus of proof, and his finding that he could not be satisfied as to what works those by-laws covered meant that there was no basis on which he could find that the OC was not otherwise subject to the strict obligation imposed under s 106(1).

Ground 2: whether the Member erred in his construction of by-laws 6 and 23

The OC takes issue with the Member's analysis at [88]-[89] of by-laws 6 and 23. The OC submits that the findings that by-laws 6 and 23 had no application or could not be determined to have application to the leaks, effectively that they could not be construed, was an error of law: the Tribunal abdicated its responsibility to construe the by-laws which were without disagreement binding on the parties.
The Owners submit that the Member's finding that it was not possible from an examination of the by-laws and plans to determine what building work was intended to be covered by the by-laws was a finding open on the evidence before the Member.
We agree with the Owners' submission. The text and plans for both by-laws are in the Agreed Bundle at 205-212 and 396-400. By-law 6 authorised building works defined by reference to plans and drawings, conferred exclusive use of the parts of the common property occupied by those works, and imposed the obligation on the owner to "properly maintain and keep the common property" to which those works were erected or attached "in a state of good and serviceable repair". By-law 23 conferred the right to exclusive use and enjoyment of that part of the common property roof in accordance with a specified sketch plan for the purpose of installing a pergola on the roof of lot 64, subject to conditions that the owner was responsible for the proper maintenance and repair of the common property in respect of which the exclusive use and enjoyment had been granted, and for the proper maintenance and repair of any alterations or additions undertaken pursuant to the by-law. Both by-laws accordingly could potentially be relied upon by the OC under s 106(7): the Member's task was to consider the meaning of the annexed plans and drawings and, if possible, construe it.
At the conclusion of the evidence in the first instance hearing the Member stated (transcript p 636.101) that he would need a good understanding of the scope of the work intended to be covered by by-laws 6 and 23, in determining if liability in relation to the water ingress was to be shared; and at that stage he did not see how he could come to any conclusion on the evidence presented. The Member requested that the parties address that issue in their submissions.
However, the submissions of the OC provided after the hearing did not assist, and in fact supported the conclusion reached by the Member. Those submissions comment (at [29]) that from the plan forming part of by-law 6 it appeared that a deck, pergola and other structures were constructed; from the plan, "which is at a small scale and very unhelpful to understand clearly what work was done and what structures and areas are covered by the by-law", there was also visible the master bedroom and pavilion. The submissions comment "it is not clear whether those structures were built at that time", nor "whether the plan is intended to cover those structures". Notwithstanding those reservations, the submissions were that "the master bedroom, pavilion, roof terrace and all other structures referred to in that plan are covered by the Special by-law 6". In relation to by-law 23, the submission was that it appeared to relate to the relocation of the pergola and its installation in another area, and that while the drawings were scant on detail, they showed the requirement to waterproof the fixings of the pergola to the slab; as to other work, "it is not clear exactly what work was done and what area was intended to be covered by Special By-law 23". The ultimate submission was that, to the extent that any of the work was above the upper surface of the existing membrane or, if there were originally tiles, the tiles, that work was located in the Owners' lot and was the owners' responsibility.
The Owners submitted that by-law 6 was for proposed works for the construction of a pergola and change from glass bricks with clear glazing and replacement of glass bricks with a sliding door, and by-law 23 related to the relocation of the pergola; in each case, it was only the footprint of the pergola that was to be the subject of responsibility for maintenance by the Owner.
In circumstances where (a) the Member had identified for the parties the need to understand whether by-law 6 or by-law 23 had the effect of imposing maintenance obligations on the owners of lot 64 for work affecting the common property authorised by those by-laws; and had requested and been provided with submissions as to the interpretation and application of those by-laws; and (b) the submissions of the OC acknowledged that it was not clear what structures or works were covered by the by-laws, there can be no error in the Member's conclusion that the OC had been unable to refer to any special privilege or exclusive use by-law that excused it from its s 106(1) obligations. The Member did not 'abdicate' any responsibility to attempt to construe the by-laws.

Ground 3: whether the Member erred in finding that the work done between 1983 and 1997 became unauthorised additions of or alterations to the common property

The OC contends that the Member erred in holding (at [87]) that the unauthorised works done in the period 1983 to 1997 became unauthorised additions to or alterations of the common property, when the unauthorised work was to lot property, or not proven by the Owners to be common property.
The OC dealt in the submissions at first instance, and on appeal, with what is common property on levels 18, 19 and 20, having regard to the strata plan, the statutory definitions, and the authorities. The OC relies on the delineation on the strata plan to show that much of the terrace area and the area on which the third bedroom has been constructed on level 20 is lot property; and on level 19, that the irregular shaped area of the main bedroom which contains a balcony and which was formerly enclosed by a straight wall is within the lot.
It does not appear that there was evidence before the Member to establish whether the roof membrane and tiles were affixed to the slab prior to the date of registration of the strata scheme. In any event, the parties proceeded below, and on appeal, on the basis that the slab and any original membrane and tiles on top are common property. It does not appear from the submissions made at the hearing or in the written submissions that the Member was taken in detail to the copy of the strata plans in evidence. On the appeal the OC relied on the level 20 strata plan notation that "Those parts of lots 62, 63 and 64 shown ᴪ are limited in stratum to 3 metres above the upper surfaces of their respective concrete floors", and the survey dated 1 October 2014 which notes "new walls appear to be within height limit". The approach adopted by the parties to the lower horizontal boundary of lot 64 on level 20, together with the notation on the strata plan which is in similar terms to that considered by the Court of Appeal in The Owners SP 35042 v Seiwa Australia Pty Ltd [2007] NSWCA 272 at [22]-[39], lead to the conclusion that the upper horizontal boundary of the cubic space that is lot 64 is 3m above the lower horizontal boundary of that space, namely the upper surface of the tiles. On our reading of the strata plans, which include a vinculum to the balconies adjoining lot 64, the additions on level 20, including the construction of new walls on the northern and eastern side, were within the lot. The extension of the southern wall of the main bedroom on level 19 was also within the lot. To the extent that the construction of new walls and fixings to the slab were required, the works potentially impacted the membrane that was common property. Those works would not otherwise become part of the common property, defined as any part of a parcel that is not comprised in a lot (s5 Strata Schemes (Freehold Development) Act 1973, s4 Strata Schemes Development Act 2015), as determined at the date of registration of the strata plan: Seiwa (Brereton J) at [18]. The Member's concluding sentence in [87] was expressed too broadly. The contribution of any defects in the construction of those walls for the water ingress was the subject of the expert evidence, considered below.

Ground 4: whether the Member made findings of fact about the state of the waterproof membrane based on no evidence

The OC contends that the Member erred in his finding at [124] that in a situation in which it had been demonstrated that the roof membrane is more than ten years older than its expected service life, is exposed to the weather, has been unsuccessfully patched and is likely to further deteriorate and that further repairs are unlikely to be warranted, the OC would be in breach of its duty if it did not now replace the entire roof membrane on level 20, when: 1. There was no evidence that the whole of the membrane was exposed to the weather (the evidence being that most of the membrane is beneath tiles, decking or landscaping); 2. There was no evidence, save for the kitchen area, that the membrane had been unsuccessfully patched; 3. There was no evidence that further repairs were unlikely to be warranted; and 4. There was no evidence that any membrane failure was the cause of water ingress.
The OC further contends that the Member erred, by making the following findings in relation to replacement of the membrane for which there was no evidence: 1. at [127] that replacement of the membrane over the kitchen area was necessary, when there was no evidence that the membrane was the cause of the water penetration and Mr Drakakis' evidence was that it was one only of a number of possible causes; 2. at [133] that replacement of the membrane on the common property balcony above the main bedroom was necessary when the moisture readings showed otherwise and Mr Drakakis stated that the membrane should only be replaced as routine maintenance.
Whether there is no evidence to support a finding of fact is a question of law, from which an appeal can be brought as of right: Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 at [13], referring to Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 355-6; The Australian Gas Light Company v Valuer-General (1940) 40 SR (NSW) 126 at 138. The test is a demanding one: as Mason CJ made clear in Bond, there is no error of law in making a wrong finding of fact, and so long as there is some basis for a finding, even if the reasoning is unsound that does not amount to an error of law.
The Member had expert reports of Mr Drakakis and Mr McGill (on behalf of the owners), and Mr Martyn (on behalf of the OC). Mr Drakakis and Mr Martyn gave oral evidence concurrently. It was common ground that the waterproof membrane at lot 64 had exceeded its service life (transcript 636.68), that the balcony membrane adjacent to the bedroom hob for the third bedroom on level 20 had more than likely failed (transcript 636.70), and that fixing points for the timber decking and other structures represent potential source of water ingress (transcript 636.72, 636.73). Mr Martyn conceded in cross examination (transcript 636.76) that, in terms of the lot 64 area, a large proportion of the membrane practically should be replaced. The Member had expert evidence as to multiple sources of water ingress to the kitchen (transcript 636.81), that the waterproofing above the main bedroom was contributing to the moisture ingress in that bedroom (transcript 636.82), and that the balcony waterproofing adjacent to the second bedroom and around the master bedroom required replacement (transcript 636.86). The experts discussed whether a patch repair of the membrane could have success or whether the entirety of the membrane required replacement (transcript 636.93-98).
In the context of the detailed expert reports of Mr Drakakis and Mr Martyn, and the comprehensive discussion in oral evidence, it cannot be said that there was no evidence for the findings made by the Member in relation to the need to replace the waterproofing membrane. At best, the OC's position reflects a disagreement as to the findings made. The OC has not established an error on a question of law in the making of those findings.
However, for the reasons below, we would grant leave to appeal against Order 1(1) to the extent that it requires the replacement of the entire roof membrane on level 20, as opposed to the replacement of that part of the membrane around lot 64.

Ground 5: whether the Member erred in his other findings as to the OC's responsibility for repairs

The other findings with which the OC takes issue are those made in [133], [138], [147], and [141].
The findings at [147] relate to the need for remediation of the rooftop drainage, addressed in Mr McGill's report. The OC contends that the Member erred in finding (implicitly) that the OC is responsible for remediation of the hydraulic drainage system caused by unapproved alterations when there was no evidence that that system was causing the alleged water ingress, and the unapproved alterations were to lot property or were covered by by-laws 6 and 23 or were not proven to be common property and/or not covered by by-law 6 or 23. The Member noted at [145] that the reason for non-compliance appeared to be related to unapproved alterations to the rooftop area and creation of altered catchment areas. The Member made no orders in relation to the rooftop drainage, and simply noted that the rooftop drainage is an urgent issue. In those circumstances, the OC has not established how that observation constitutes an error on a question of law.
The findings at [131] and [133] relating to the main bedroom resulted in the Member's order 1(2) that the OC correct weep holes to the brick cavity wall and correct as necessary the flashing in the brick cavity wall. The OC had submitted that the defect is in the bedroom wall, along the northern side of the building, which had been moved from its original position and for which the OC is not responsible. The OC submits on appeal that the Member erred in finding that the OC was responsible for the repairs when the location of the defects was on lot property or the Owners had not proven that the location of the defects was on common property.
The Owners had submitted at first instance that the water ingress into the main bedroom occurring by reason of the water bypassing flashing, and the problems with the weepholes, was not their responsibility for repair as it was a failure in the common property. The OC submitted that the location of the defect was in the wall which had been moved from the original location and was therefore located in lot property. For the reasons above at [48] the Appeal Panel agrees that the wall is located in lot property, and that to the extent that the location of the defect is above the upper surface of the tiles and membrane and below the height specified in the strata plan, it is not a common property defect for which the OC has responsibility under s 106(1).
The finding at [138] relates to the bedroom on level 20, resulting in order 1(4). The OC contends that the Member erred in finding that the OC was responsible for this repair, as the defects were in lot property or covered by by-law 6 or 23 or the Owners had failed to prove that the defects were to common property or not covered by those by-laws.
At [139] the Member held that it was the OC's obligation to take all necessary steps to resolve the water ingress, pointing to the experts' opinion that the absence of the water stop to the top of the hob, lack of sufficiently upturned flashing to the east of the window suite, failure of end-stops at the end of the sub-sills and failure of mitre joints all contribute to the problem. The OC points to the evidence of Mr Drakakis which supports the proposition that the water penetration is caused by issues at the hob which was installed above or on top of the original membrane and tiles and also associated with an additional layer of tiling, and that all those items are in the lot space above the original slab membrane and tiling and therefore are lot property. The Owners' submissions at first instance do not explain why it is the responsibility of the OC to ensure that water ingress does not occur by reason of those failures. For the reasons above at [48] the Appeal Panel agrees that to the extent that the location of the defect is above the upper surface of the tiles and membrane and below the height specified in the strata plan, it is not a common property defect for which the OC has responsibility under s 106(1).
At [141] the Member found that the OC was responsible for repair of the fire door, resulting in order 2. The OC contends that the Member erred in so finding, when there was undisputed evidence that the door was damaged by lack of a door stop installed to the skirting board, which was lot property, and in circumstances where no order was made requiring the Owners to install a door stop or take other measures to prevent future damage to the fire rated door. It was not in dispute that the fire rated door was part of the common property, and that it was damaged and required replacement. The OC has not established that the Member erred in determining that the OC's duty under s106(1) extended to replacing the door. As the Member pointed out in [142] and [143], it was not for the Tribunal to consider whether the OC was entitled to recover the cost of doing so from the person who may have caused the damage; and there was no application by the OC before the Tribunal for any orders under the SSM Act to require work to be done by the Owners in compliance with any of their obligations.

Ground 6: whether the Member erred in finding that by reason of s 106(5) of the SSMA the Tribunal had jurisdiction to award damages

In the amended Grounds of Appeal the OC contended that the Member erred in finding that the Tribunal had jurisdiction to award damages in relation to a claim under s 106(5) of the SSM Act, and in construing Sch 3 Part 2 cl 3 of that Act to mean that, to the extent of any breach of duty under s 62 of the 1996 Act, it was to be treated as a breach of duty under s 106 of the SSM Act, on the basis that such a construction left no work for the words in cl3(2)(b) to do. The OC submitted that s106(5) (and s232) do not contemplate payment of damages for breach of s 106(1) in the Tribunal, and referred to its submissions at first instance that cl 3 of the transitional provisions in Sch 3 to the SSM Act prevent the case being dealt with under the SSM Act. The OC submitted that the alleged breach of duty, and the Owners' knowledge of the defects, all pre-dated the SSM Act and in those circumstances, it would, in the terms used in Sch 3 Part 2 cl 3(2)(b) be "inappropriate" that the damages provisions applied.
The grounds of appeal, and the written submissions on the appeal, were prepared before the decision of the Appeal Panel in The Owners Strata Plan No 30621 v Shum [2018] NSWCATAP 15. The Appeal Panel in Shum addressed the issue of whether the Tribunal has jurisdiction to award damages to the owner of a lot in a strata scheme for breach by an owners corporation of a statutory duty to maintain and repair property in accordance with s 106, and summarised its conclusions in the following terms: 2. The Appeal Panel has reached the following conclusions: (1) An owners corporation has statutory duties: (a) to properly maintain and keep in a state of good and serviceable repair the common property and any personal property vested in the owners corporation; and (b) to renew or replace any fixtures or fittings comprised in the common property and any personal property vested in the owners corporation. (2) In respect of the duty to maintain and keep in a state of good and serviceable repair, there is a continuing obligation imposed on the owners corporation, breach of which may give rise to multiple causes of action. (3) Pursuant to s 106(5) of the 2015 Management Act a lot owner is entitled to recover reasonably foreseeable loss suffered in consequence of each breach. (4) The Tribunal has jurisdiction under s 232 of the 2015 Management Act to make an order in favour of a lot owner against an owners corporation for the payment of money by way of damages for each such breach. (5) There is no monetary limit to the jurisdiction of the Tribunal in respect of an order for compensation. (6) The 2015 Management Act is not retrospective in its operation and there is no power to make an order: (a) in respect of a breach by an owners corporation of its obligation to comply with s 62 of the Strata Schemes Management Act, 1996 (1996 Management Act); (b) for damage suffered by a lot owner prior to the commencement of the 2015 Management Act on 30 November 2016.
The application in Shum was made in February 2017, for orders under s106, 126 and 232 of the SSM Act in relation to damage caused by water leaks from the common area roof, seeking an order for loss of rent due to delay by the strata committee and strata managing agent in relation to repairs and the costs required to bring the property's interior back to its original condition before it was damaged by the roof leaks. At first instance the Tribunal found that the common area roof suffered water penetration from about January 2016 by reason of a leak or leaks; the owners corporation had a strict duty to repair the common area roof pursuant to section 106(1) by rectifying the leak that was allowing order penetration; and the owners corporation had between January 2016 and May 2017 failed to rectify the common area roof in breach of the statutory duty imposed by s 106(1). The Tribunal ordered the owners corporation to pay an amount for loss of rent from 1 September 2016 to 26 February 2017, a percentage of associated council and water rates and levies, and interest.
On appeal the Appeal Panel considered the extent of the powers conferred by s232(1) of the SSM Act "to make an order to settle a complaint or dispute about…" matters specified in paragraphs (a)-(f), which include (a) the operation, administration, or management of a strata scheme, or (e) an exercise of, or failure to exercise, a function conferred or imposed by or under the SSM Act or the by-laws of a scheme; noted that claims for damages under s 106(5) were not excluded complaints under s232(4) or (7); and concluded having regard to the historical context that the Tribunal has jurisdiction to determine a claim for damages under s106(5) of the SSM Act.
The claim at issue in Shum covered the period before and after the commencement of the SSM Act on 30 November 2016. An issue was whether liability could be imposed on an owners corporation to pay damages to a lot owner for reasonably foreseeable loss suffered by the owner as a result of a contravention by the owners corporation of its duties under s 106 which occurred prior to the commencement of the SSM Act. In that regard the Appeal Panel confirmed (at [112]) that there are two separate liabilities or obligations in s106: one being an obligation on the owners corporation to maintain the common property in accordance with the duties imposed by s 106, and the other being a liability for breach of duty to pay damages to a lot owner for breach of the duty to repair and maintain. The effect of Sch 3 Part 2 cl3(1) was to permit a person to seek orders for an owners corporation to repair and maintain common property even where the breach relied upon occurred prior to the commencement of the SSM Act. The Appeal Panel continued (applying Maxwell v Murphy (1957) 96 CLR 261, [1957] HCA 7 and Worrall v Commercial Banking Company of Sydney Ltd (1917) 24 CLR 28, [1917] HCA 67): 114. However, the language of cl 3(1) does not express an intention to create a liability to pay damages to a lot owner under the 2015 Management Act for events occurring prior to its commencement where such right did not previously exist. In our view it could not be said "that the force of the language (of cl 3(1)) in its surroundings carries such strength of impression" that the liability imposed by s 106(5) was to operate retrospectively.
The Appeal Panel concluded that s106(5) does not operate retrospectively so as to give a lot owner an entitlement to claim damages for breach of statutory duty where the loss suffered arises from a breach of duty occurring before the commencement of the SSM Act.
The Appeal Panel continued, holding (at [128]) that the obligation on an owners corporation to maintain and keep in good repair is a continuing obligation, breach of which occurs on each and every day the duty is not performed; so where there are multiple breaches of a statutory duty, each breach constitutes a separate cause of action. So in that context, on commencement of the SSM Act the lot owner was entitled to claim damages suffered in consequence of any breach of duty occurring on and after that date. The issue then is whether the owner has established that the loss is reasonably foreseeable, suffered as a result of such continuing breaches. In that regard, causation is a question of fact, to be answered by common sense and experience; and so long as a cause of the loss is the breach about which complaint is made, the fact that there are multiple causes for the loss will not prevent a claimant recovering damage: Shum at [130]-[133]. The Appeal Panel concluded (at [138]) that the lot owner's loss and damage was caused not only by the initial failure to carry out repairs in consequence of the water penetration but also by the continuing failure to effect the repairs.
The OC's formal submission on the appeal is that Shum is wrong, based on the analysis in Mullen v Owners Corporation SP 15342 [2017] NSWCATCD 97. At [38] Senior Member Bell expressed doubt about whether the Tribunal has jurisdiction to award damages for breach of statutory duty, based on the absence of an express reference to jurisdiction to make an order for a monetary payment and the absence of a monetary limit in s106(5), however he did not need to decide the jurisdictional issue because he was not satisfied that the owners corporation was in breach of the s106(1) duty. The Owners submit that Shum should be followed.
We are not bound by the Appeal Panel decision in Shum, however unless we were persuaded that it is wrong, we would be reluctant to depart from its comprehensive and carefully reasoned analysis of the relevant statutory provisions and the authorities. We are not so persuaded, and adopt the reasoning in Shum at [69]-[95], and the conclusion that the Tribunal has jurisdiction to determine a claim for damages under s106(5) of the SSM Act. On that basis, the Member did not err in holding that the Tribunal has jurisdiction to order damages under s 106(5) of the SSM Act for breach of statutory duty.
The second ground on which the OC challenges order 4 is on the basis that, based on the reasoning on the second ground of appeal in Shum, damages were not recoverable because all the damage occurred before 30 November 2016. The Owners submit that the damage for which the Owners sought compensation was in respect of continual water ingress, representing breach of the continuing obligation of the OC.
The appeal in Shum was heard on 30 November 2017, and decided on 8 January 2018. The first instance decision the subject of this appeal was delivered on 29 August 2017. At [115]-[120] the Appeal Panel in Shum considered the Member's reasoning in support of his conclusion that s106(5) operates retrospectively, concluding at [116] that the Member was incorrect in holding at [105] that s106(5) applies to a breach of the duty to repair and maintain common property in circumstances where the breach commenced as a breach of the 1996 Act and, pursuant to cl 3 of the transitional provisions, became a breach under the SSM Act and continued after that Act commenced.
As above, we adopt the reasoning in Shum at [101]-[119], and the conclusion at [120] that s106(5) does not operate retrospectively so as to give a lot owner an entitlement to damages for breach of statutory duty where the loss suffered arises from a breach of duty occurring prior to the commencement of the SSM Act on 30 November 2016. In those circumstances, the OC has established an error in the Member's conclusion that the liability for damages extended to damage caused by breach of s 106(1) before 30 November 2016.
Having regard to his conclusion at [105] that s 106(5) applies to a breach of the duty to repair and maintain the common property in circumstances where the breach commenced as a breach under the 1996 Act and became a breach under the SSM Act and continued as a breach under the SSM Act, the Member did not need to, and did not, distinguish, and make findings on, damage arising as a consequence of the water ingress in breach of s 106(1) before 30 November 2016 and after. His order that the OC pay the Owners $8,793.49 was based on Mr Drakakis' evidence as to the cost of rectification of the damage to the kitchen and the consequential damage to the main bedroom, second bedroom and study, and third bedroom. The breakdown of costs (Appendix E2, agreed bundle 385-387) indicates that the rectification works related to removal and replacement of water damaged panels and skirting boards, plaster repairs and painting, and works to the windows and doors of the second bedroom.
The Member had evidence as to the history of the water ingress in the witness statement of Dr Rosenthal, in which he records water ingress into the kitchen and southern side of the unit following a big storm event on 21 April 2015, at which time he observed water ingress and swollen walls in the master bedroom, spare bedroom and office, all of which are on the southern side of the building. There were more heavy downpours of rain resulting in the kitchen flooding in August to October 2015. Dr Rosenthal states that he has observed water ingress into the kitchen every time it rains heavily, and due to the continual water ingress the cabinetry, doors and skirting boards have become swollen and require replacing. There was a big storm event on 4 June 2016, during which water entered the third bedroom on level 20 causing damage to the carpet and skirting boards. In or about 2016 Dr Rosenthal observed damage to the ceilings in the master bedroom, ensuite, second bedroom and office, including bubbling paint. He observed new bubbling and peeling of paint in the ensuite of the third bedroom in or about March 2017.
At its highest, there is evidence that water ingress damaging cabinetry, walls and skirting boards and causing paint to bubble and peel occurred before November 2016, in the storm events of April 2015 and June 2016. Dr Rosenthal's evidence was that the damage to internal elements was as a result of the continual water ingress. If water ingress after 30 November 2016 caused no additional damage to the items which, based on Mr Drakakis' evidence required rectification, that would not be a reasonably foreseeable loss suffered as a result of any continuing breach of the duty in s 106(1).
In circumstances where we are satisfied that the Member erred in not distinguishing between breaches before and after 30 November 2016, and where the uncontested evidence suggests that at best only part of the damage identified may have been attributable to any breach of duty after 30 November 2016, Order 4 cannot be maintained.
There was some evidence before the Member that further damage caused by the water ingress was observed after that date, being Dr Rosenthal's statement that he noticed new bubbling of paint in the ensuite to the third bedroom in March 2017. Based on the transcript, this issue was not explored in cross examination of Dr Rosenthal, or in the oral evidence given by the experts.
We are concerned that the amount of money the subject of Order 4 is relatively small, and would not warrant any additional costs being incurred, including the costs of further expert evidence or for further argument whether before the Appeal Panel or on a remittal to the Division, in determining how much of that relates to loss arising after 30 November 2016. This issue was not canvassed in the hearing of the appeal or in the parties' written submissions. We propose to adopt a practical approach to the issue, consistent with the general approach to assessment of damages that something less than an estimation may sometimes be required. We propose to vary Order 4 to reduce the sum awarded by 90%, to be $900, on the basis that the rectification required for bedroom 3 represented just under 10% of the total work required based on Mr Drakakis' costings, subject to giving the parties the opportunity to make submissions as to the quantum of this proposed order.

Whether leave to appeal should be granted

As noted above, leave to appeal can be granted if the Appeal Panel is satisfied that is satisfied an 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).
In Collins v Urban [2014] NSWCATAP 17 the meaning of "substantial miscarriage of justice" was summarised at [71] and [79] as follows: [71] …[I]t can be seen that the concept of a substantial miscarriage of justice refers to a failure in the way a matter was conducted or decided which deprived the appellant of a chance that was fairly open of achieving a better outcome than occurred… [79] In order to show that a party has been deprived of a "significant possibility" or a "chance which was fairly open" of achieving a different and more favourable result … it will be generally be necessary for the party to explain what its case would have been and show that it was fairly arguable. If the party fails to do this, even if there has been a denial of procedural fairness, the Appeal Panel may conclude that it is not satisfied that any substantial miscarriage of justice may have occurred.
The amended Notice of Appeal does not address the particular requirements under cl 12(1) of Sch 4 to the NCAT Act, and focusses on the discretionary factors relevant to a grant of leave to appeal, which are to be considered if the cl 12(1) matters are met. Those factors are explained in Pholi v Wearne [2014] NSWCATAP 78 at [32]: Even if the appellant establishes that [they] may have suffered a substantial miscarriage of justice in the sense explained above, the Appeal Panel then retains the discretion whether to grant leave under s 80(2) of the Act (see Collins v Urban, supra at [80]-[84]). [The appellant] must demonstrate something more than that the Tribunal was arguably wrong. Leave is ordinarily granted only where the matter involves an issue of principle, questions of public importance, where the injustice is reasonably clear or where the Tribunal has gone about its fact finding process in such an unorthodox manner that it is likely to have produced an unfair result.
As discussed with the parties' representatives during the appeal hearing, the Member's finding that the entire waterproof membrane for level 20 required replacement was not consistent with the oral evidence of Mr Martyn (transcript 636.76) that at the time of his inspection there were areas around lots 62 and 63 that had recently been re-membraned. Mr Drakakis (transcript 636.77) agreed that lot 63 had received what appeared to be new polyurethane waterproofing. To the extent that the Member concluded otherwise, that finding was against the weight of evidence, and leave to appeal on that aspect of the Member's decision should be granted.
The OC sought leave to appeal against the Member's findings as stated in grounds 3(a)(i)-(vii) and (xi). As discussed above, we are of the view that the Member's findings at [131], [133] and [138] should not stand. Those findings are arguably based on an error of law. To the extent that they are not, those findings are against the weight of evidence in the terms discussed in Collins v Urban at [77], that is, the evidence in its totality was against the conclusion found by the Member such that it is likely that a substantial miscarriage of justice may have been suffered.
As to the remaining findings on which the OC seeks leave to appeal, for the reasons above the OC has not established an error in how the Member approached his task such that we could conclude that it is likely that a substantial miscarriage of justice may have been suffered.

The Costs Decision

The Owners sought in SC 16/55860 a costs order to be paid from contributions levied on all lot owners except the Owners, and provided written submissions. The OC provided submissions in reply, and both parties agreed that the application be determined on the papers. Both parties approached the application on the basis that under s 60 of the NCAT Act the Tribunal needed to be satisfied that there were special circumstances warranting an award of costs.
The Owners had submitted that the outcome for the Owners in the substantive proceedings was a "complete success" that would normally lead to a costs award in their favour, however acknowledged that s60(1) provided that each party was to pay their own costs unless there was a finding of special circumstances, and there was no capacity for the Tribunal to consider an award of costs pursuant to rule 38 of the Rules. The Owners had submitted that the OC was recalcitrant and unconcerned as to the Owners' continuing hardship, the proceedings were coercive in nature and of a special genus, it was necessary for the Owners to commence proceedings, and the behaviour of the OC supported a finding of special circumstances.
The OC had submitted that there were no special circumstances, on the basis that all proceedings are coercive in nature, and the need to commence proceedings to argue disputed issues of fact was insufficient to amount to special circumstances.
In his decision delivered on 24 November 2017, the Member stated that he was not satisfied that the Owners had demonstrated special circumstances warranting an order for costs, and made no order for costs. The Member noted that the so called "recalcitrance" of the OC was the very reason for the Owners having a cause of action on which to base their application; there was some uncertainty as to where liability for repairs lay; and it was as a result of the disagreement and inability to resolve it that the Owners brought their action. The Member continued: 19. That is the nature of litigation. Where one party acts contrary to what the other believes is their legal obligation it could be described as "recalcitrant" but it is that behaviour and the consequent disagreement that is the basis for the action. It is not in itself unusual, different or special. It is the norm and it differs in the circumstances of this case from the circumstances set out in [Cripps v G & M Dawson [2006] NSWCA 81] where there was a finding that the conduct of Cripps and Jones was clearly out of the ordinary and grossly unreasonable. 20. I am unable to understand the applicants' argument that the proceedings are coercive or of a "special genus". The response was correct. Those arguments were undeveloped. No special circumstance has been demonstrated in that regard. 21. The fact that it was necessary for the applicants to commence proceedings in order to get done what they believed the respondent was obliged to do was again the reason for the litigation, it was not something that is out of the ordinary in any way but is fundamental to all litigation.

Notice of Appeal

The Owners stated as their grounds of appeal: 1. The Tribunal failed to properly consider or give sufficient weight to the coercive nature of the proceedings and the necessity of the Owners to commence the proceedings; 2. The Member failed to properly consider the definition of "special circumstances"; 3. The Member failed to consider the history of the dispute and the duty of the OC pursuant to s 106 as giving rise to "special circumstances" warranting an award of costs.
The Owners sought leave to appeal pursuant to s 80(2)(b) of the NCAT Act: 1. There was an inconsistency between the costs decision and the decision on 29 August 2017 in which the Member had stated that the Owners were entirely successful and as it was an application to which rule 38 of the Rules applied it would appear that the applicants are entitled to their costs; 2. It would be unjust to allow an error which was plain and readily apparent to stand in circumstances where the Owners were entirely successful; 3. A miscarriage of justice would arise by the failure to find special circumstances where the Owners had to pursue litigation; 4. It would be unfair and inequitable where the Owners had been wholly successful not to award costs; 5. It would be unfair and inequitable where the evidence adduced in the hearing indicated that the cost of remediation of common property was in the order of $230,000.

Reply to Appeal

The OC contends: 1. The Grounds of Appeal are not errors of law, and in any event lack merit; 2. Leave to appeal should not be granted: 1. There is no inconsistency between the costs decision and the principal decision as the principal decision does not include any finding as to the applicable rules; 2. There is no injustice or plain and readily apparent error, and in any event the claim was brought in circumstances where s 60 of the NCAT Act applied; 3. There was no miscarriage of justice, or unfairness or inequity, justifying leave to appeal or at all; 4. The Owners have failed to demonstrate any basis on which leave should be given so as to justify the requirements of cl 12 of Sch 4 to the NCAT Act.

Submissions

Both parties relied on their submissions as to costs at first instance, copies of which were provided to the Appeal Panel.
The Owners submit the Member erred in recognising the recalcitrance of the OC as being the very reason for the Owners having a cause of action on which to base their application, and then determining that uncertainty as to where liability for repairs lay and an inability to resolve disagreement negated special circumstances. That, the Owners submit, ignored the very nature of the proceedings and argument as to the duty of an owners corporation under s 106(1). The Member should have applied the principle in Cripps that where a person through no fault of their own has been placed in a situation where it has been forced to pursue litigation that such circumstances constitute special circumstances. The Member appeared to place emphasis on the matters in s 60(3)(a)-(g) as being solely determinative considerations, whereas those provisions are facultative. Further, it is sufficient for circumstances to be out of the ordinary, and they do not have to be exceptional. The Member failed to consider that the proceedings were in the nature of coercive proceedings in order to compel the OC to comply with its obligations under s 106: the prior conduct of the OC showed a clear disregard to attend to its obligation to maintain and repair the common property, and absent bringing proceedings the OC would continue to breach its obligations. The significant failure of the membrane such that the costs to rectify it were in the order of $230,000 was a special circumstance, and the claim awarded in damages which was below the threshold that would otherwise enliven a normal costs order could not be viewed alone. Further, the Owners have been levied to contribute to the legal costs of the proceedings, which is disputed and in breach of s 104 of the SSM Act, and an award of costs in favour of the Owners would dispel any argument they were unsuccessful and have an obligation to contribute.
The OC submits that the exercise of the Member's discretion did not miscarry and there was no error in the Member's reasoning.

Consideration

An award of costs in Tribunal proceedings is an ancillary decision as defined in s 4 of the NCAT Act. An internal appeal can be brought as of right on a question of law, and with the leave of the Tribunal on other grounds: s 80(2)(b) NCAT Act.
The issue before the Member was whether he was satisfied that there were special circumstances warranting an award of costs. Otherwise, s 60(1) provides that each party is to pay its own costs. While there was some suggestion in [152] of the substantive reasons that the Member may have thought that rule 38 of the Rules applied so that there was a general discretion to award costs, the parties' submissions on costs at first instance accepted that rule 38 did not apply and so costs could only be awarded if there were special circumstances warranting such an order.
The discretion to award costs must be exercised judicially having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs: Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11]. The principles to be applied in considering whether a discretion has miscarried are set out in House v The King (1936) 55 CLR 499, at pp 504-505: It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.
The term "special circumstances" is not defined in the Act. It has been interpreted to mean circumstances that are out of the ordinary but not necessarily extraordinary or exceptional: Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120. The Member did not impose a higher test, relying on the decision of Santow JA in Cripps that it is sufficient if the circumstances are out of the ordinary, and they do not have to be extraordinary or exceptional. The Member noted that the Owners did not specifically rely on any of the matters in s 60(3), however there is no indication in his reasons that he regarded those provisions as determinative, and he addressed the particular matters relied upon by the Owners at [18]-[21] of his reasons.
No error of the kind specified in House v R has been established.
The Owners seek leave to appeal, contending that it would be unfair and inequitable in circumstances where the Owners have been wholly successful both in their damages claim and findings as to required repairs not to award costs; that it would unfair and inequitable where the evidence indicated that the cost of rectification of the common property was in the order of $230,000 establishing the significant nature of the hearing and the issues to be decided which required expert evidence; and that the decision would stand as determinative that a lot owner will not be awarded costs on the basis that special circumstances where there is a breach of s106 of the SSM Act thus providing owners corporations with impunity to comply with their obligations.
As noted above, pursuant to cl 12(1)(c) of Sch 4 to the NCAT Act the Appeal Panel can grant leave if satisfied that an appellant may have suffered a substantial miscarriage of justice because the decision of the Tribunal under appeal was not fair and equitable.
The Owners have not established that they were deprived of a significant possibility or chance that was fairly open that a different and more favourable results would or should have been achieved. The Member addressed all the arguments put by the Owners. In circumstances where, unless rule 38 applied, the general principle is that each party bears their own costs, the outcome that the Owners succeeded in obtaining the orders sought could not of itself constitute special circumstances. Nor was the need to initiate the proceedings to resolve the disagreement between the Owners and the OC. The decision not to award costs in these proceedings would not constitute a determinative principle that a lot owner would not be awarded costs in other proceedings to enforce compliance with the duty imposed by s 106(1). Leave to appeal should not be granted.

Conclusion

The powers of the Appeal Panel in determining an appeal are provided in s81 of the NCAT Act: 81 Determination of internal appeals (1) In determining an internal appeal, the Appeal Panel may make such orders as it considers appropriate in light of its decision on the appeal, including (but not limited to) orders that provide for any one or more of the following: (a) the appeal to be allowed or dismissed, (b) the decision under appeal to be confirmed, affirmed or varied, (c) the decision under appeal to be quashed or set aside, (d) the decision under appeal to be quashed or set aside and for another decision to be substituted for it, (e) the whole or any part of the case to be reconsidered by the Tribunal, either with or without further evidence, in accordance with the directions of the Appeal Panel. (2) The Appeal Panel may exercise all the functions that are conferred or imposed by this Act or other legislation on the Tribunal at first instance when confirming, affirming or varying, or making a decision in substitution for, the decision under appeal and may exercise such functions on grounds other than those relied upon at first instance.
In the appeal AP 17/41893, the OC accepts that Order 1(3) and that part of Order 1(2) referring to the investigation and correction as necessary of water ingress from downpipe within column to south end of the main bedroom should stand. For the reasons at [58]-[60] above, the first part of Order 1(2) and Order 1(4) should be set aside. Order (1) requires amendment to specify that it is the waterproof membrane around lot 64 that is to be replaced. Order 2 is confirmed. Order 4 requires amendment to reflect an adjustment for damage resulting from breach of the duty owed by the OC under s 106(1) before 30 November 2016. The orders below provide an opportunity for the parties to provide submissions as to the appropriateness of the proposed varied Order 4.
In appeal AP 18/0172, the Owners have not established an error on a question of law, and have not established that leave should be granted to appeal against the Member's decision not to award costs of the first instance proceedings. The appeal should be dismissed.

Appeal AP 17/41893:

The appeal is allowed in part.
The orders made on 29 August 2017 are varied to be: 1. The respondent shall immediately take all steps to further investigate as necessary and to correct all sources of water ingress to lot 64 and in particular shall carry out the following work in addition to any other that is found necessary to achieve compliance with these orders: 1. Replace waterproof membrane around lot 64 on level 20; 2. Investigate and correct as necessary water ingress from downpipe within column to south end of main bedroom; 3. Waterproof the window hob to second bedroom, install or correct as necessary the flashing and weep holes to the wall between the second bedroom and study and perform all other steps necessary to correct the ingress of water to the second bedroom and study; 1. The respondent shall immediately take all steps to replace the fire rated front door to lot 64. 2. All work referred to in orders 1 and 2 shall be completed on or before three months from the date of these orders. 3. Subject to Order 3, the respondent, The Owners-Strata Plan 20211, shall pay the applicants, Thomas Rosenthal and Joanne Rosenthal, jointly, the sum of $900 within 28 days of the date of these orders.
Should either party seek an order different to amended Order 2(4), that party is to provide submissions to the Tribunal and the other party, within 14 days of the date of these orders, and the other party is to provide any submissions in reply within a further 7 days, including whether any further hearing on this issue is requested.
The appeal is otherwise dismissed.

Appeal AP 18/0172:

Leave to appeal refused.
Appeal dismissed.

Appeals AP 17/41893 and AP 18/0172:

If any party seeks an order for costs of the appeals, leave is granted to file and serve a short written submission on that issue only within 21 days of the date of these orders.
Leave is granted for the other party to file and serve a short written submission in reply within a further period of 21 days.
In any such submission the parties are to address the issue of whether the Tribunal should dispense with a hearing on the issue of costs pursuant to the provisions of the Civil and Administrative Tribunal Act 2013 s 50(2).

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: 15 October 2018

Broadcasting Tribunal v Bond (1990) 170 CLR 321 Collins v Urban [2014] NSWCATAP 17 Cripps v G & M Dawson [2006] NSWCA 81 House v The King (1936) 55 CLR 499 Maxwell v Murphy (1957) 96 CLR 261, [1957] HCA 7 Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 Mullen v Owners Corporation SP 15342 [2017] NSWCATCD 97 Pholi v Wearne [2014] NSWCATAP 78 Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 Ridis v Strata Plan 10308 [2005] NSWCA 246 Seiwa Australia Pty Ltd v Owners Strata Plan 25042 [2006] NSWSC 1157 The Owners SP 35042 v Seiwa Australia Pty Ltd [2007] NSWCA 272 The Owners Strata Plan No 30621 v Shum [2018] NSWCATAP 15 Worrall v Commercial Banking Company of Sydney Ltd (1917) 24 CLR 28, [1917] HCA 67 Category: Principal judgment Parties: The Owners - Strata Plan SP 20211 (Appellant in AP 17/41893, Respondent in AP 18/0172 ) Thomas and Joanne Rosenthal (Respondents in AP 17/41893, Appellants in AP 18/0172) Representation: Counsel: J Young (Appellant in AP 17/41893, Respondent in AP 18/0172 ) M Galvin (Respondents in AP 17/41893, Appellants in AP 18/0172)

The Owners - Strata Plan SP20211 v Rosenthal; Rosenthal v The Owners - Strata Plan SP20211

At a glance

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Judgment (19 paragraphs)

Cases Cited (18)

Cited By (10)