When the Tenant Stays, Rent Losses Don’t Make Sense or Add Up

Szeto v The Owners - Strata Plan No 1418 [2023] NSWCATAP 105

Quick Read

This 2023 decision by the NSW NCAT Appeal Panel is about a dispute in a small Cremorne Point strata title building about a strata owner’s claims for rent losses and other damages because of water entry into and mould in her strata lot. The strata lot was rented to the same person for a long time, water and mould had existed since 2013, the strata building was slow to fix things, and the tenant stopped paying rent in 2020. But, without expert evidence, it wasn’t clear how [and if] the water entry caused the mould and led to the rent loss. The key issues were whether the rent loss was reasonably foreseeable and caused by the strata building’s failure to fix the faults as required in s 106(5). After considering NCAT’s earlier decision, how s 106(5) worked and other Court or Tribunal decisions, the NCAT Appeal panel decided that the strata owner hadn’t properly established what caused the rent loss and that it didn’t make sense that the renter didn’t stop paying rent until 7 years after the problems began but stayed living in the strata lot. It’s an important decision that clarifies how section 106(5) strata damages claims need to be established and the principles that apply to the foreseeability and the causes of losses. Plus, it reinforces the need to have clear, common sense and, sometimes, expert supported facts and material to make strata damages claims and how limited NCAT appeal rights are.

Implications

S 106(5) strata damages claims are like negligence claims.
The NSW Supreme Court decision in Smith’s Case confirms that about the nature of those claims.
Reasonable foreseeability in s 106(5) is a limit on the remoteness of recoverable damages and is different to causation.
The NSW Court of Appeal decision in Tezel’s Case confirms that view about foreseeability.
Causation in s 106(5) involves applying common sense.
Causation in s 106(5) is established by a duty failure, even if there are other causes.

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Full Report & Case Details

This 2023 decision by the NSW NCAT Appeal Panel is about a dispute in a small Cremorne Point strata title building about a strata owner’s claims for rent losses and other damages because of water entry into and mould in her strata lot.

The strata lot had been rented for a long time but experienced water entry which had been investigated but not resolved, mould developed in the strata lot, and, by May 2020 the tenant had stopped paying rent. So, the strata owner asked for orders that the strata building fix the water entry and mould and pay damages for the lost rent until it was fixed under section 106(5) of the Strata Schemes Management Act 2015.

Section 106(5) of the Strata Schemes Management Act 2015 gives NCAT power to order damages when a strata building’s failure to maintain, repair or replace common property causes reasonably foreseeable loss or damage to a lot owner.

In this case, the strata building opposed the claim arguing that the strata owner had not established by expert evidence how the common property faults caused the mould issues and why the tenant stopped paying rent in 2020; so long after the water entry and mould problems began.

The primary issue was to consider how the section106(5) of the Strata Schemes Management Act 2015 requirements that the loss was ‘reasonably foreseeable’ and that loss was ‘the ‘result of a contravention of section 106(1) … by the owners corporation’ operated.

In making its decision the NCAT Appeal Panel, reviewed the material at NCAT, NCAT’s reasoning, as well as the NSW Court of Appeal decision in The Owners – Strata Plan No 74232 v Tezel [2023] NSWCA 35 and concluded …

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Keywords

#NSW #NCATAppealPanel #mould #rent #damages #causation #forseeability #2023 #SSMA2015 #s106(5)