I prepared this article in response to enquiries from lot owners who have filed an application in the NSW Civil and Administrative Tribunal seeking repairs to common property and have discovered the matter is more complicated than anticipated.
The decision in the case of Rook v The Owners – Strata Plan No. 32865 [2022] NSWCATCD 38 (“Rook”) deals with two important issues which in my experience most often arise when the lot owner has filed the application in the Tribunal without legal advice, has attended the directions hearing and discovered there are complex legal issues to deal with. If the issues are not taken into consideration this may lead to an unsatisfactory outcome for the lot owner.
Ms Rook made the application seeking repairs to cracking in walls and a brick retaining wall and subsistence in paving stones in a courtyard.
The owners corporation obtained reports from geotechnical consultants and engineers and proposed to undertake the work specified in those reports. Ms Rook obtained a report from a consultant which specified more extensive work. Ms Rook refused to provide the owners corporation with access unless it agreed to undertake the more extensive work.
As is explained below, due to the limitations in her evidence Ms Rook found herself backed into a corner at the hearing resulting in checkmate to the owners corporation.
First important point – What is the extent of the owners corporation’s obligation to repair and maintain the common property?
One of the issues which arose in this case, and which commonly arises, is due to the lot owner not having an understanding that there are limitations to the owners corporation’s obligation to repair and maintain the common property.
Often, a lot owner will want to expand upon or enlarge the owners corporation’s obligation to repair and maintain the common by seeking work which may not be necessary, or a lot owner may seek replacement of common property as opposed to repairing it.
The strict obligation for the owners corporation to maintain and repair the common property was originally clarified by the Supreme Court in 2006 in the case of Seiwa Pty Ltd v The Owners Strata Plan 35042 [2006] NSWSC 115, where it was said:
That duty is not one to use reasonable care to maintain and keep in good repair the common property, nor one to use best endeavours to do so, nor one to take reasonable steps to do so, but a strict duty to maintain and keep in repair.
However, subsequently, in 2019, the Supreme Court considered the question of how extensive the maintenance and repair works needs to be. In the case of Glenquarry Park Investments Pty Ltd v Hegyesi [2019] NSWSC 425 (“Glenquarry”) it was said that:
There is force in the contention that practicality requires allowing a degree of judgment and latitude to an owners’ corporation in determining how far to go with repair and replacement work in a maintenance context. Often, the replacement of an old and obsolete item may be cheaper and more effective in the long run than continuing to try to patch it up. There is also a textual basis for allowing a degree of latitude to an owners’ corporation in deciding what and when should be replaced. Maintenance is not necessarily confined to responding to a breakdown; the term usually also includes preventative maintenance, that is, replacing something which has reached the end of its service life before it fails …
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In my view, … the obligation in s 62(2) to renew or replace items of common property is limited by a concept of reasonable necessity. …
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… on any view the Tribunal is not entitled to order an owners’ corporation to do things just because the Tribunal considers it desirable to do so. … the Tribunal’s order could go no further than the minimum necessary to comply with that obligation.
… the orders are nothing more than a vague “wish list” from Ms Hegyesi. They should not have been made and must be set aside.
What this means is that the Tribunal cannot order an owners corporation to undertake work which is not strictly necessary. This implies that the minimum required to fulfil the obligation to maintain and repair is all that is necessary.
Lot owners often do not appreciate the subtlety of the distinction between there being a strict obligation to maintain but limitations on what needs to be done to fulfil this obligation. Lot owners often go overboard and seek a scope of works which goes beyond the repairs and maintenance which is necessary.
Additionally, if the lot owner has engaged a building consultant for advice, if the building consultant has not been properly briefed by a legal practitioner, it is quite common the building consultant will not know the legal concepts referred to above and will often provide a report and advice which will not carry weight as evidence in the proceedings. This may also result in an unsatisfactory outcome for the lot owner.
In the case of Ms Rook, the Tribunal determined there were deficiencies in her expert evidence and that the scope of work she sought was not necessary, this resulted in an unsatisfactory outcome for Ms Rook.
Second important point – The requirement to obtain a litigation compliant expert report which addresses the legal questions correctly
The second problem Ms Rook encountered arose due to her not obtaining a litigation compliant report which correctly assessed the issues and the applicable legal questions.
Firstly, it should be noted that the Tribunal did not give any weight to reports which were several years old, in the form of quotations and where the authors were not available at the hearing.
The owners corporation argued that Ms Rook’s expert report provided no rationale for the works which Ms Rook sought to have undertaken and was deficient for various reasons.
The Tribunal considered both parties report and found that Ms Rook had failed to show the owners corporation was not complying with its obligation to maintain and repair the common property.
The Tribunal was critical of Ms Rook’s consultant, and said:
…there is no indication that Mr Moisidis had returned to inspect the site after his initial inspection in August 2020 and the monitoring recommended in JKGeotechics report has not been included in Mr Moisidis’ assessment.
The Tribunal found that the owners corporation’s expert report demonstrated the work it proposed to undertake was consistent with its obligations as clarified in the Glenquarry case.
The key point for lot owners to take into consideration here is that a litigation compliant report, which is current (i.e. prepared as recently as possible), which correctly addresses the legal questions, and is responsive to the issues raised by other consultants, is very important if not critical to succeed.
Important steps for lot owners
The full judgment in the Rook case is here. It is short decision, and I recommend reading the decision as it will provides good insight into the attention to detail which is applied to the issues, and how the legal concepts are applied to the documents relied upon.
It is always best to obtain legal advice prior to commencing legal proceedings. Once proceedings are commenced, and costs have been incurred, it may become very difficult to discontinue the proceedings and there may be cost consequences if the proceedings are not progressed diligently and properly.
At Williamson Lawyers we have worked with many building consultants. We specialise in construction law and strata law. We can assist you in selecting and engaging the most suitable consultant. We can brief the consultant to ensure the legal questions are properly addressed so that you have sound expectations on what can be achieved and good prospects of achieving the best outcome.
We represent lot owners and owners corporations, we understand both sides of the situation, we are completely independent, we are often able to settle disputes prior to the hearing due to our experience in construction and strata law.
Important Notice:
The information provided in this article is general information only and should not be relied upon as legal advice or be used as a substitute for obtaining legal advice. The examples provided have been simplified to explain a particular issue and there are other factors which need to be taken into consideration. The specific circumstances relating to you impact upon your legal rights and obligations and personal legal advice based upon your circumstances should be obtained. This area of law changes frequently and the law may have changed after the time this article was prepared, up-to-date legal advice should be obtained.
