By Partner, Mike Roberts, Special Counsel, Tara Plumbe and Lawyer, Julia Racheha

• Hearing Date(s): 13 and 14 February 2023
• Date of Orders: 15 August 2023
• Date of Decision: 15 August 2023
• Jurisdiction: Consumer and Commercial Division
• M Tyson, Senior Member
• Appeal likelihood high, prospects of defending decision very good.
• Evidentiary burden of bringing a claim for damages under s.106.

Key takeaways

• The Applicant bears the onus of establishing their case. This involves the preparation of all evidence in support of the claim presented. The Tribunal is prepared to find against an Applicant if it does not have the necessary evidence to establish its position.
• The Tribunal must be satisfied that the lot owner has established that their lot was unusable or uninhabitable in order to be entitled to damages for breaches of s.106. It is not sufficient to simply claim damages for the period of time that the unit was uninhabited at the market rate.
• Replacement on a ‘like-for-like’ basis does not mean to the same pre- incident aesthetic condition; i.e., with an identical appearance and quality when compared with the pre-damaged unit.
• The obligation of the Owners Corporation under s.106 to renew or replace items of common property is not defined by what the applicant, or any other individual lot owner, desires.
• The obligation under s.106 is a strict obligation but where the Owners Corporation is seeking to comply with the obligations and it is the conduct of the lot owner that is preventing the Owners Corporation from carrying out its duties, there will be no breach of s.106

Background

The Applicant is a lot owner within Strata Plan 2661, a brick multi-story apartment complex that was built circa 1920.

On 30 November 2020, a failure in the waterproofing membrane of the Applicant’s bathroom resulted in the flow of water into the Lot immediately below. Within a month or so of being notified of the issues, the Owners Strata Plan obtained scopes of works to investigate the failure of the waterproofing membrane and undertake the necessary remedial works.

The Applicant rejected the Owners Corporation’s proposed works on the basis that the investigative works would cause damage to the tiling pattern in the bathroom and that due to the building’s age, it would be impossible to source matching tiles. The Applicant then refused to accept the Owners Corporation’s proposal for remedial works and stated that a full bathroom tile replacement was necessary. The Applicant lot owner made a claim on the Owners Corporation’s strata insurer who rejected the claim at first instance and on IDR.

With respect to the claim under s.106, the Applicant commenced proceedings seeking:

• An order for the installation of new waterproofing membrane, villa board lining and decompressed cement sheeting within her bathroom
• The reinstatement of her bathroom on a “like-for-like” basis.
• The Applicant also sought an order for damages for loss or rent on the basis that the apartment was uninhabitable.

There was also a separate dispute as to sound from flooring above which was dismissed.

Tribunal’s determination

The Applicant’s claim was dismissed in full.

In relation to the orders for works to the bathroom, the Tribunal was not satisfied that there was persuasive evidence to base an order requiring specific work. Senior Member Tyson held that it was the applicant who bears the onus of persuading the Tribunal of her entitlement to the order advanced in her points of claim and that the Applicant had failed to discharge that burden.

The Tribunal went on to consider whether it was necessary for the Owners Corporation to carry out a ‘like for like’ replacement of the bathroom. The Tribunal held at p. 225 that:

“…a reinstatement of the applicant’s bathroom on a “like for like” basis, means that the applicant’s bathroom does not have to be re-instated after rectification works, with an identical appearance and quality when compared with the bathroom before the water leak was discovered, but the bathroom would have to have substantially similar appearance, characteristics and quality”.

The Tribunal was not satisfied that this had to be in a ‘like-for-like pre-loss aesthetic condition’.

The Tribunal went on to question whether reinstating the bathroom ‘like-for-like’ would be consistent with achieving a minimal compliance with the statutory duty, or would it go beyond the duty. In his finding, the Tribunal held that the Applicant’s request would exceed the duty and that “the obligation of the owners corporation (under s106) to renew or replace items of common property is not defined by what the applicant, or any other individual lot owner seeks”.

In considering any breach of s.106, whilst the Tribunal accepted that the Owners Corporation was in breach of its strict duty under s.106 because of the water leak, the Tribunal held that the Owners Corporation sought to comply with obligations under s.106 and the Applicant, rather than engaging in that process, elected to pursue the issue through alternative processes. The Owners Corporation had made a fully concerted effort to comply with its obligations under s.106 and the Tribunal was not satisfied that the evidence showed the first respondent was failing to comply with its obligations.

The Tribunal also found that unreasonable conduct by the Applicant had caused her losses.

Despite finding there was not breach of s.106, the Tribunal went on to consider whether and to what extent the Applicant would be entitled to the damages sought.

The Tribunal stated, it was not enough to simply point to a period of time when the property was vacant and the market rate during that period and then claim damages. Whilst the Tribunal accepted that some loss of rent was foreseeable, it was not satisfied that the Applicant had established that her lot was unusable or uninhabitable after the leak was discovered.