The NSW Civil and Administrative Tribunal (NCAT) has the jurisdiction to deal with strata disputes that fall within the Strata Schemes Management Act 2015 (NSW). This means that the NCAT can make an order to resolve a dispute in a strata scheme, including making an order relating to:

  1. An interpretation of the By-laws of an Owners Corporation and whether those By-laws are valid,
  2. Determining when the Owners Corporation have breached their obligation to maintain the common property in a strata scheme,
  3. Ordering the Owners Corporation to do something such as repairing common property, and
  4. Ordering a Lot Owner to do something such as complying with a by-law.

What about making an order for damages/compensation?

In circumstances where the Owners Corporation have breached their obligation to maintain common property, the Strata Schemes Management Act 2015 (NSW) provides that a lot owner can recover ‘damages’ from the Owners Corporation for a breach of that duty if,

  1. a loss has been suffered, and
  2. the loss was reasonably foreseeable.

This scenario would be relevant where the Owners Corporation have failed to repair a component of common property, such as a water pipe resulting in water penetration into a lot and damaging the lot owner’s property.

No power to award damages/compensation

Recently the Appeal Panel’s decision in The Owners – Strata Plan No 74835 v Pullicin; The Owners – Strata Plan No 80412 v Vickery [2020] NSWCATAP 5 confirmed that the Tribunal does not have the power to make an order for damages/compensation resulting from a breach of the Owners Corporation’s duty to maintain common property.

What can a lot owner do?

A lot owner in a strata scheme is still entitled to recover damages from the Owners Corporation, but must do so through the State Courts such as the Local, District or Supreme Court depending on the quantum of damages claimed.

However, lot owners should be mindful that the Tribunal is still the jurisdiction to obtain an order that the Owners Corporation complies with its statutory duty to repair common property. Once proceedings in the Tribunal have come to an end, the lot owner can then commence proceedings in the State Courts to recover damages stemming from that breach.

What does this mean for lot owners?

Ultimately, if a lot owner wishes to recover damages from the owners corporation the process must be commenced in the State Courts. Commencing proceedings in Court as opposed to the Tribunal is complex. Furthermore, any application and evidence adduced in Court must comply with the strict rules of evidence, whilst the Tribunal is not strictly bound by rules of evidence.

Unfortunately, the latest NCAT decision means that strata disputes could be costly and protracted for lot owners, weakening the effectiveness of NCAT as an accessible forum for resolving strata disputes.

Contact JFM LAW on 02 9331 0266 or front.desk@jfmlaw.com.au if you have any questions in relation to this article or require advice.