NSW: Does a Common Property Memorandum or Exclusive Use By-Law Absolve the Owners Corporation of its Duties Under Section 106 of the Strata Schemes Management Act 2015?

This article is about what to do if your by-law was unreasonably refused.

This was considered by the Appeal Panel in the recent case of Mastellone v The Owners-Strata Plan No 87110 [2021] NSWCATAP 188.

Background

In this case, Ms Mastellone appealed one of the orders made by the Tribunal dismissing her claim for painting the ceilings in the bedroom, kitchen and living room of her lot which she claimed was to rectify water damage to the paintwork resulting from the Owners Corporation’s breach of section 106(1) of the Strata Schemes Management Act 2015 to repair and maintain the common property roof.

The Tribunal dismissed the claim because there was a common property memorandum and a special by-law for the scheme which exempted the Owners Corporation from any liability for the paintwork. In view of this, the Tribunal did not make any findings on whether the cause of the damaged paintwork was the result of a breach of section 106(1) of the Act.

The main ground of appeal was that the Tribunal did not appreciate that the common property memorandum and by-law were not applicable to a claim founded upon consequential damage for a failure to maintain and repair the common property that remained within the Owners Corporation’s responsibility. Ms Mastellone argued that Tribunal should have found that such a failure caused the damage based on the opinion of the Owners Corporation’s handyman and from the fact that leaf leaks stopped after the recommended roof works were carried out.

Decision

In making an order that the Owners Corporation was to re-paint the ceilings in the bedroom, kitchen and living room of Ms Mastellone’s lot, the Appeal Panel stated that:

1. the Tribunal erred in applying the common property memorandum and by-law to defeat Ms Mastellone’s claim as they did not exempt the Owners Corporations from its duty in respect of the common property roof.
2. the extensiveness of the meaning “make an order to settle a complaint or dispute” in section 232 of the Act adopted by Justices Basten and White in Vickery v The Owners – Strata Plan No 80412 [2020] NSWCA 284; 103 NSWLR 352 supports the position that the Tribunal has the jurisdiction to make work orders sought by Ms Mastellone. There was clearly a dispute falling within the terms of s 232(1) of the Act for which the Tribunal is empowered to make an order “to settle”.
3. they do not agree that the reference in section 106 of the Act to a claim for damages only prevents the Tribunal from making orders of a different kind pursuant to section 232 of the Act.
4. Ms Mastellone’s claim of breach by the Owners Corporation of section 106 of the Act resulting in consequential damage requiring new paintwork was founded on the handyman’s document and the fact that the leaks into the ceiling in Ms Mastellone’s lot ceased once the roof work recommended in the handyman’s document was carried out.

It is interesting to note that the unrebutted document produced by the Owners Corporation’s handyman was relied on by the Tribunal although it was not produced by an expert, but rather a tradesperson. The Tribunal described the document as more than a quote, it contained a report based upon the observations by the handyman. The Appeal Panel agreed with this and stated that the report was clear in connecting water stains on relevant parts of the ceiling with a particular problem with the roof and about a method of overcoming a deficiency in the roof’s ability to prevent water ingress. The fact that the handyman was engaged by the Owners Corporation to carry out an inspection and produce a report indicated that they had some expertise in this area and there was no evidence to the contrary.

Owners Corporations, beware

The lesson to be learnt by Owners Corporations from this case is that although a scheme may have a common property memorandum and/or by-law exempting it from repairing certain items of property, this would not absolve an Owners Corporation from consequential damage to this item of property in the event it was damaged as a result of a failure to repair and maintain common property that remained within the Owners Corporation’s responsibility.

Allison Benson
Kerin Benson Lawyers
E: [email protected]
P: 02 4032 7990

This post appears in Strata News #500.

Have a question about what to do if your by-law was unreasonably refused or something to add to the article? Leave a comment below.

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Read next:

• NSW: Q&A Issuing and Enforcing a Notices to Comply with a By Law
• NSW: Can an Owners Corporation Repeal a Common Property Rights By-law Without Obtaining the Lot Owner’s Written Consent?
• NSW: 2021 New Strata Legislation Will Soon Become Law

This article has been republished with permission from the author and first appeared on the Thoughts From a Strata Lawyer website.

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