The NSW Court of Appeal has decided that a breach of section 62 of the Strata Schemes Management Act 1996 (the mandatory obligation for a strata plan to maintain the common property) does not give rise to an action for damages for breach of its statutory duty.

The Owners Strata Plan 50276 v Thoo (New South Wales Court of Appeal, 22 August 2013)

Section 62 of the Strata Schemes Management Act states:
(1)     An owners corporation 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.

THE PREVIOUS DECISIONS

Previous decisions of the courts concluded that a breach of section 62 of the Act created a right for a unit owner to claim compensation from the strata plan for damages because of a failure to maintain the common property.   For example, damage to a unit caused by water entry through a defect in the roof (common property) regardless of whether or not the owners corporation was aware of the defect, or had taken all reasonable steps to repair the defect.

In Seiwa Pty Limited v Owners Strata Plan 35042 (New South Wales Supreme Court, 6 November 2006), Justice Brereton held (paragraph 21) that:

The strict nature of the owners corporation’s duty makes whether or not it took all reasonable steps irrelevant, if ultimately it failed at any time to meet the strict requirements of the s 62 duty. And contributory negligence is no defence to an action for breach of statutory duty.

THE DECISION IN SP 50276 v THOO

The leading judgment is from Tobias AJA, who concluded (paragraph 214) that section 62 of the Act could be relied upon to compel an owners corporation to fulfil its statutory duty to maintain the common property – for example, obtaining orders from the CTTT to force the strata plan to maintain the common property, but (at paragraph 222) “a breach of s62 by an owners corporation does not give rise to an action for damages for breach of statutory duty”.

THE EFFECT OF THE DECISION

The result is that a lot owner’s claim for damages cannot be made under section 62, and would most likely be a claim in negligence.  The strata plan would now be able to defend the claim if it can substantiate that it had acted reasonably by:

• arranging all reasonable inspections to identify the relevant defects with the common property, and
• taking all reasonable steps to rectify the relevant defect.

Please contact Peter Bennett should you have any questions.