By Mike Roberts, Partner
This is the second of the aforementioned two important decisions for Strata Insurers, this being made on 28 June 2024. This Jurisdiction covers limitation periods and their extension, or lack thereof.
Decision: 28 June 2024 Jurisdiction: NCAT Appeal Panel: S Westgarth, Deputy President
A Suthers, Principal Member
Key Takeaways
- The limitation period in s.106(6) is two years from the date the lot owner first became aware of the type of loss that would give rise to a claim for damages.
- NCAT cannot extend this limitation period under s.41 of the NCAT Act.
- Loss of rent claims in NSW will now not exceed two years
Background
The lot owner owners discovered a water leak into her living room in February 2020.
She had formed the view that she was going to rent the second bedroom to her nephew, but the water leak caused her to revoke this offer and the lot owner moved out of her unit in May 2020.
The Applicant did not commence proceedings until 1 April 2022.
NCAT Proceedings
Proceedings were then commenced in NCAT seeking orders for rectification and for damages under s.106(5) for loss of rental income as a result of the common property defect. Mills Oakley acted for the Owners Corporation.
The NCAT Application was heard by Senior Member Boyce who ordered rectification and damages.
- The Tribunal found that the time limit in s 106(6) is not a jurisdictional limit.
- The Tribunal found that it was satisfied that Hua Nan Trading Pty Limited v The Owners Strata Plan No 32396 [2023] NSWCATAP 66 (which found that Section 41 allows the Tribunal to extend the limitation period) is precedent for granting leave to bring the Respondent’s application out of time and that decision must be “favoured over the single member decision of Boutenko v The Owners Strata Plan No 77480 [2022] NSWCATCD 166 which was a single Member decision stating that damages claims need to be brought within the limitation period of two years.
The Hua Nan decision was issued on 1 March 2023 and pronounced an interpretation of the limitation period and an outcome inconsistent with the Court of Appeal of the Supreme Court of NSW in The Owners Strata Plan No 24232 v Tezel [2023] NSWCA 35 (handed down the same day).
NCAT Appeal Panel
This firm appealed the decision of Senior member Boyce to the Appeal Panel of NCAT.On 28 June 2024 the NCAT Appeal Panel found that Hua Nan was wrong and should not be followed. It found that Section 41 is only a procedural provision and cannot enliven a jurisdiction in NCAT that does not exist. In other words,
NCAT does not have jurisdiction to hear a claim for damages if the claim is not brought within two years of when the lot owner first became aware of the type of loss that could rise to a claim for damages.
Implications
The implications of the Appeal Panel decision and the decision of Tezel are immense for strata insurers in New South Wales in that claims for loss or damages must be brought within two years. The net effect of that, is that there can never be a claim for loss of rent which goes beyond two years.We recently received instructions in a matter in which the lot owner was making a claim for loss of rent damages going back six years in the sum of $176,000.00.The implications of the Tezel and Pickard decisions are that claim simply cannot be brought against the Owners Corporation. Even if a claim was to be brought that was in time the loss would have been in the order of $60,000.00 rather than almost $180,000.00.
Clearly these two decisions dramatically reduce the potential cost of claims under Strata Liability Policies for breaches of s. 106 by Owners Corporations in New South Wales.
Colin Purdy of Counsel appeared in each hearing and his excellent and detailed submissions were in the majority accepted by the appellate court/tribunal.
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