The Owners – Strata Plan No 2661 v Selkirk

1. [1]

   LEEMING JA: The owners corporation of a strata scheme in Darling Point with nine lots brings this appeal against Ms Simone Selkirk, the owner of Lot 5, pursuant to s 83 of the Civil and Administrative Tribunal Act 2013 (NSW), from a decision of the Appeal Panel of the NSW Civil and Administrative Tribunal: Selkirk v The Owners - Strata Plan No 2661 [2024] NSWCATAP 17. The appeal only lies with leave and is confined to questions of law.

2. [2]

   The procedural history is lengthy, although the issues dividing the parties are quite confined. They arise from Ms Selkirk’s claim for rectification and lost rent following a leak from her flat’s bathroom some 3½ years ago and the owners corporation’s conceded breach of the duty imposed on it by s 106(1) of the Strata Schemes Management Act 2015 (NSW) to repair and maintain the common property.

3. [3]

   Despite the appeal being confined to questions of law, it is necessary to have regard to the procedural history and factual findings made by the Senior Member – essentially, no breach of duty, no basis for rectification order, no causation, and unreasonable conduct by Ms Selkirk – some of which were concededly wrong, but notwithstanding all of which the Appeal Panel found in Ms Selkirk’s favour. Most of the factual material in what follows is taken from the reasons of 310 paragraphs of the Senior Member, because the actual documents (which I would infer were voluminous) were not tendered before me, nor was the transcript of the hearing at first instance.

4. [4]

   But before addressing that history, it is best to commence with statute. The Appeal Panel identified the questions arising on the appeal as including whether there had been established by evidence:

5. [5]

   The issues thereby summarised are not unfamiliar. No doubt the terminology reflected the parties’ pleadings and submissions. But in order to understand concepts like “fulfil its strict duty”, “caused her own loss”, “failed to mitigate her loss” and “sought an inappropriate measure and amount of damages” the necessary starting point is statute. In particular, central to the reasoning of the Appeal Panel in finding that Ms Selkirk was entitled to damages pursuant to s 106(5), the relatively new subsection enacted in 2015 so as to reverse the result determined by Owners Strata Plan 50276 v Thoo [2013] NSWCA 270; 17 BPR 33,789, was its reliance on the statutory power conferred on the owners corporation by s 122 to enter Ms Selkirk’s property to investigate and repair the leak.

6. [6]

   Section 106 of the Strata Schemes Management Act provides:

7. [7]

   Subsections (1), (2) and (3) are identical to subsections (1), (2) and (3) of s 62 of the Strata Schemes Management Act 1996 (NSW); the remaining subsections are new. Subsections (1) and (2) impose important duties on the owners corporation, which (when appearing in predecessor provisions) have been the subject of a deal of authority. Subsection (3) disapplies those duties in relation to specified property where a special resolution has been passed. Subsection (4) qualifies the obligation of the owners corporation to perform those duties in circumstances where the owners corporation has taken action against an owner or a third party, in circumstances where there is no issue of safety. Subsection (7) imposes a further qualification to the duties imposed by the section.

8. [8]

   Subsection (5) is new and overturns the result in Thoo. It is now established that NCAT is authorised to order the “damages for breach of statutory duty” in s 106(5) to which an owner of a lot may be entitled: Vickery v The Owners – Strata Plan No 80412 (2020) 103 NSWLR 352; [2020] NSWCA 284. Until quite recently, this was quite unclear: thus in The Owners – Strata Plan No 74835 v Pullicin; The Owners – Strata Plan No 80412 v Vickery [2020] NSWCATAP 5 at [9] the Appeal Panel said, correctly, that “[t]here are now three partially inconsistent Appeal Panel decisions about the same issue”. The time limits within which a claim is to be brought are found in s 106(6), whose operation was considered and explained in The Owners – Strata Plan No 74232 v Tezel [2023] NSWCA 35. However, it would be wrong to say that all of the principles bearing upon the relatively new statutory entitlement to damages are settled.

9. [9]

   It is clear that the lot owner’s entitlement is conditioned upon the lot owner’s loss being both “reasonably foreseeable” and “as a result of” a contravention of the section. I shall proceed on what was implicitly common ground between the parties, and which is consistent with the conventional understanding of a remedy of “damages”, that a lot owner’s entitlement to recover damages is as of right on the establishment of the preconditions to s 106(5).

10. [10]

    Thus one consequence of a breach of the duties imposed by s 106(1) and (2) and the inapplicability of ss 106(3), (4) and (7) is that one of the elements of a lot owner’s entitlement to recover damages pursuant to s 106(5) will have been satisfied.

11. [11]

    Separately from the above, s 232 relevantly provides:

12. [12]

    Section 4 provides that “function includes a power, authority or duty, and exercise a function includes perform a duty”. There is nothing to displace that extended meaning for those words in s 232. Thus where there is a “complaint or dispute” about the failure to perform the duties imposed by s 106, NCAT is empowered to make an order to settle the complaint or dispute. It is quite plain that the power conferred on NCAT under s 232 is discretionary. The notion of a claimant having an entitlement as of right to damages and the possibility of discretionary relief under the same statutory regime is not unfamiliar: see Masterton Homes Pty Ltd v LED Builders Pty Ltd (1996) 33 IPR 417 at 424-425 (damages and account of profits for copyright infringement) and, more closely comparable to the present regime, Jonval Builders Pty Ltd v Commissioner for Fair Trading (2020) 104 NSWLR 1; [2020] NSWCA 233 at [41] (damages and “other orders” following contraventions of the Trade Practices Act 1974 (Cth) pursuant to ss 82 and 87). Counterpart provisions in earlier cognate legislation are considered in Vickery v The Owners – Strata Plan No 80412 (2020) 103 NSWLR 352; [2020] NSWCA 284 at [47]-[52] and [125]-[134].

13. [13]

    The third presently important provision in the regime established by the Act is s 122. Rather than conferring rights upon lot owners, it empowers the owners corporation (save that subsection (6) imposes a further liability upon the owners corporation). Section 122 in the current Act provides:

14. [14]

    To the extent that the duties imposed by s 106 require or authorise the owners corporation to do work, s 122 authorises the owners corporation to enter onto any part of the scheme property, including a lot owner’s lot, for the purpose of carrying out that work. Obviously that power may be exercised on behalf of the owners corporation, which is itself an artificial person which can only act through agents. Further, s 122(2) makes it clear (if clarity were required) that the power extends to entry for the purpose of determining whether work needs to be done. The power is available without more in the case of an emergency: s 122(3). In the absence of an emergency, consent of a lot owner or an order from NCAT is required: s 122(4). Obstructing or hindering an owners corporation is made an offence by s 122(5) but the owners corporation is made liable for damage in circumstances where it has entered or carried out work, unless the damage arises because it was obstructed or hindered. It is convenient to pause to observe that, in the two provisions which give rise to an entitlement to damages, ss 106(5) and 122(6), there are no fewer than four terms importing notions of causation: “as a result of”, “caused by”, “arising out of” and “because”. Of course ordinarily a shift in the language in a statute implies a shift in legal meaning (see for example Carr v Carr [2022] NSWSC 166; 21 ASTLR 511 at [82]). However, there is nothing in the context to suggest that each of those terms bears a different meaning. To the contrary, this is a case which recalls the shift from “by” to “because” when s 82 of the Trade Practices Act was subsumed by s 236 of the Australian Consumer Law but with no effect on the legal meaning (the equivalence of both words in this context was noted in Williams v Pisano (2015) 90 NSWLR 342; [2015] NSWCA 177 at [98]). It provides further support for the conclusion that rather than being a finely crafted, free-standing statutory regime, instead aspects of causation drawn from general law, including remoteness and mitigation, inform the availability of the right to damages conferred by s 106(5).

15. [15]

    Section 124 expressly empowers NCAT to make an order on the owners corporation’s application “requiring the occupier of a lot or part of a lot in the scheme to allow access to the lot” for the purpose, inter alia, of enabling “the owners corporation to carry out work referred to in” section 122 (inter alia) “or to determine whether such work needs to be carried out”.

16. [16]

    Brereton J influentially analysed the duty owed by an owners corporation under s 62(1) of the predecessor statute, which in this respect is materially identical to s 106(1), in Seiwa Pty Ltd v Owners Strata Plan 35042 [2006] NSWSC 1157; 12 BPR 23,673 at [3]:

17. [17]

    His Honour went on to explain how that duty required maintenance before a malfunction occurred, such that:

18. [18]

    An appeal was dismissed: The Owners SP 35042 v Seiwa Australia Pty Ltd [2007] NSWCA 272; 13 BPR 24,789. Subsequently, speaking of Brereton J’s decision at first instance, in Riley v The Owners - Strata Plan 73817 [2012] NSWCA 410 at [76] Ward JA said, with the agreement of Macfarlan and Barrett JJA:

19. [19]

    Brereton J’s analysis was also cited with evident approval in Brotherhood of St Laurence v Sarina Investments Pty Ltd [2024] VSCA 46 at [82]-[83].

20. [20]

    In Seiwa, Brereton J also dismissed the submissions on behalf of the owners corporation that it was not to the point that the owners corporation had used all reasonable steps, or that the lot owner was guilty of contributory negligence: at [21]. This aspect of Seiwa was approved in The Owners - Strata Plan No 74232 v Tezel at [35].

21. [21]

    It is convenient to describe the duties imposed upon an owners corporation by ss 106(1) and (2) as “strict”. That adjective conveniently captures the fact that they are not discharged by the exercise of reasonable care. Nor, consequently, does Part 1A of the Civil Liability Act 2002 (NSW) apply. Obviously, they are neither universal nor unqualified. The duties may be disapplied by s 106(3), and they may be qualified by s 106(4) and (7). This appeal raises, quite acutely, the interplay between the (conceded) breach of the obligation upon the owners corporation to perform repair work and investigative work requiring access to a lot owner’s lot, and the absence of consent on the part of the lot owner to the grant of access. The owners corporation conceded – and in my opinion it was correct to concede – that it was in breach of duty in the aftermath of the discovery of the leak from Ms Selkirk’s lot. But following refusal by a lot owner to grant access to a lot, in circumstances which do not amount to an emergency, is an owners corporation inevitably in breach when it is necessary to obtain an order from NCAT? Suppose the lot owner has commenced proceedings against the owners corporation but no action has been taken by the owners corporation such as to engage s 106(4)? Or suppose the owners corporation seeks an order pursuant to s 122, but NCAT refuses to make an order, the owners corporation having advanced all that should reasonably have been advanced in support of an order; is the owners corporation still in breach? Or suppose NCAT reserves on its decision to grant an order because of the opposition of the lot owner – do damages continue to run in favour of the lot owner in the meantime? Those questions are not satisfactorily answered by an invocation of the proposition that the duty is “strict”. Indeed, doing so distracts from the real issues, because it is plain that whether or not there is an entitlement to damages turns on s 106(5), one element of which is that there is a contravention of the Act, but breach, of itself, is not sufficient to make an order for damages. Breach is a necessary but not a sufficient condition of an entitlement to damages. The issues of practical utility, and which squarely arise in this appeal, are in what circumstances following “resistance” (to use a neutral and deliberately vague term, which was also deployed by the Appeal Panel) by a lot owner will that lot owner nonetheless be entitled to recover statutory damages pursuant to s 106(5), and how will such “resistance” affect the power to resolve a dispute pursuant to s 232.

22. [22]

    The answers to those questions turn in part upon the juridical nature of the rights created by statute. The answers were treated by the parties as turning upon general law concepts of causation and mitigation, and by the Appeal Panel as being answered by the availability of the power in s 122. I respectfully cannot agree with the latter and I am conscious of the limited utility of the former. To anticipate what follows, consider a case where there is a defect in common property (such as a water leak) which is not an emergency, the investigation and repair of which requires entry into a lot owner’s property, and which causes ongoing loss in the form of rent foregone. True it is that the owners corporation is, then and there, prima facie in breach of its duty under s 106(1). But suppose thereafter the lot owner steadfastly refuses to permit access. Is the lot owner entitled to damages for lost rent under s 106(5) for the period while the owners corporation prepares an application for an order from NCAT under s 122? Suppose the lot owner opposes the application and NCAT reserves its decision. Is the lot owner entitled to damages under s 106(5) while the decision is reserved? It is, to say the least, arguable that in circumstances where the continuance of the leaking pipe is brought about by the refusal of the owner to grant consent and extra time passes while the owners corporation is applying for and obtaining an order under s 122, the owners corporation is not liable in damages pursuant to s 106(5).

23. [23]

    This present appeal illustrates that there are a number of ways of characterising the reasons why it might be said that s 106(5) is unavailable: it might be said that the lot owner is behaving unreasonably, or is failing to mitigate his or her loss, but as will be developed below, I think the safer course is one which sticks to the language of the statute, and asks whether such damage as is caused by the delay following the lot owner’s intransigence is properly characterised as being damage “as a result of” the owners corporation’s contravention, but instead is damage which is, as a matter of practical assessment, caused by the lot owner’s own action. I am far from persuaded that analysis will be assisted by importing notions from other areas of the law, especially misnomers like a “duty to mitigate”.

24. [24]

    Those points will be developed below. For present purposes, the only point sought to be made is that it is far from self-evident that the power conferred by s 122 is a panacea to resistance or obstruction of the part of a lot owner and of itself resolves favourably to the lot owner the question of the extent of damages under s 106(5).

Background

1. [25]

   Ms Selkirk was the plaintiff in a proceeding commenced by summons filed in the Common Law Division of this Court in July 2021, pursuant to which she sought “to try and [sic] manage the [owners corporation’s] extended delays up to [9 July 2021] to appropriately repair the Lot 5 common property leak in a like-for-like pre-loss aesthetic condition”. The claim at that stage included an allegation based on part of the Australian Consumer Law that was not within the jurisdiction of NCAT, but it seems (from what Darke J said in Selkirk v The Owners – Strata Plan No 2661 [2022] NSWSC 858 at [8]-[9]) that Ms Selkirk intended to reformulate that claim. Whether or not that be so, the proceedings were transferred almost a year later to NCAT pursuant to cl 6(2) of Schedule 4 to the Civil and Administrative Tribunal Act.

2. [26]

   A hearing over two days took place before NCAT, constituted by Senior Member Tyson, on 13 and 14 February 2023. The decision, dismissing Ms Selkirk’s claim, was handed down on 15 August 2023. It appears not to have been made available on CaseLaw, and has not been given a medium neutral citation – points to which I shall return.

3. [27]

   The claims dismissed by the Senior Member included allegations concerning “debt recovery fees” and “accrued interest” said to have been unreasonably levied on Ms Selkirk, and that the second respondent, Ms Stournaras, who owned the lot for the flat directly above Ms Selkirk’s flat, had installed flooring in breach of by-laws which interfered with the defendant’s enjoyment of her lot. Ms Selkirk’s appeal to the Appeal Panel did not extend to those claims, and Ms Stournaras was not a party to that proceeding. I do not know why those claims were dismissed, because the parts of the Senior Member’s decision addressing them were not included in the material tendered in support of the appeal (pages 41-57 of the decision, amounting to the whole of paragraphs 174-236, were not reproduced, in a conscious effort to restrict the materials available on appeal to those necessary to resolve the appeal). It seems clear from the points of claim filed in NCAT that they were relatively minor: the fees and interest were alleged to total $1524.93 plus interest of $706.70, and the order sought against Ms Stournaras was that she install floor coverings to reduce the transmission of noise through her floor.

4. [28]

   The remaining and seemingly principal claim was what the Senior Member called “the water ingress issue”. This concerned the owners corporation’s liability following a leak that was noticed on 30 November 2020 in the bathroom of Ms Selkirk’s lot. This was said to constitute a breach of the owners corporation’s statutory duty of care, under s 106 of the Strata Schemes Management Act 2015 (NSW), for “failing to properly maintain and keep in a state of good and serviceable repair the common property”.

5. [29]

   Ms Selkirk sought orders that “an experienced, qualified and licensed building contractor”:

6. [30]

   Ms Selkirk also sought damages for lost rent in the amount of $117,832.89 for the period from 5 December 2020 to 25 August 2022 (her points of claim were filed on 24 August 2022), and thereafter at the rate of $1,300 per week plus interest.

7. [31]

   There was evidence that the owner of lot 2, which was immediately below lot 5, had complained to Ms Selkirk that water was “cascading” from the ceiling because Ms Selkirk’s tenants were continuing to use the bathroom. The tenants apparently vacated the premises on 4 December 2020. Around that time, Ms Selkirk represented to the owners corporation that, although the damage was to common property and it was the owners corporation’s responsibility to rectify it, she “would like to have a say in what and how that [remediation] process takes place”. She also attached in an email to the owners corporation what purported to be a “twelve month residential tenancy agreement” with a Mr Wang, as a record “to substantiate a future claim of loss of rental income suffered arising from the plumbing water damage incident”.

8. [32]

   The Senior Member found, consistently with Mr Wang’s evidence, that there was no such tenancy agreement between Mr Wang and Ms Selkirk.

9. [33]

   The points of claim alleged that on 11 February 2021 Ms Selkirk received, for the first time, a copy of remedial works proposed by “Auseal Waterproofing”. The quotes were dated 8 December 2020, and in its points of defence the owners corporation stated that it received the quotes at about that time.

10. [34]

    Ms Selkirk alleged that the Auseal Waterproofing remedial works did not propose to return her bathroom to its pre-loss “like-for-like” condition, and would instead return it “in a significantly impaired aesthetically corrupted condition”. It was also alleged that the works were not compliant with Australian Standards, and that the owners corporation has a duty to raise those matters with her. The owners corporation denied those allegations.

11. [35]

    Ms Selkirk alleged that at all material times, she had “remained communicative, cooperative, ready, willing and able to make her Lot 5 available for the [owners corporation] to complete appropriate remediation works”, and alleged that the owners corporation had breached its duty under s 106. The owners corporation denied that it had breached its duty, and advanced a positive case of unreasonable conduct by Ms Selkirk, alleging:

12. [36]

    The Senior Member found that the owners corporation’s pleaded case of unreasonableness was established. That was not expressly overturned by the Appeal Panel, which nonetheless found that Ms Selkirk was entitled to damages by reason of the owners corporation’s failure to exercise power under s 122. The challenge to that conclusion was the principal matter argued on appeal. Accordingly, it is necessary to summarise the Senior Member’s findings and the material on which they were based. What follows is taken from the summaries and extracts of documents reproduced in the reasons of the Senior Member.

13. [37]

    Following the report of water ingress into the flat below Ms Selkirk’s flat, the owners corporation engaged a plumbing firm, Woollys Water Works, to investigate the leak, and by two colour dye tests identified that the water was soaking into the shower floor. Two quotes were provided: a “minor fix” (removing the grouting and applying new grout and sealing the shower base) and a “major fix” involving removing the existing shower base tiles.

14. [38]

    There was an email exchange between the owners corporation and Ms Selkirk on 3 December 2020 when the owners corporation asked her to ask her tenants not to use the washing machine which was in the bathroom and instead to use the common washing machine, and she responded that the tenants were departing the following day and that “as it is my bathroom that will be demolished to complete the plumbing rectification works and I would like to have a say in what and how that process takes place”. On 7 December Ms Selkirk asked to be connected with the owners corporation’s insurance broker.

15. [39]

    On 11 December Ms Selkirk advised that her tenants vacated on 4 December 2020, and attached to her email a lease agreement “to substantiate a future claim of loss of rental income suffered arising from the plumbing water damage incident”. The Senior Member recorded at [111] that the copy of the email stated that it contained an attachment, “Terry Wang 12 Month Residential Tenancy Agreement 20 Nov 2020 to 20 Nov 21.pdf”. At this point in the recitation of events, the Senior Member summarised Mr Wang’s affidavit, which was read before him:

16. [40]

    The Senior Member then made reference to the evidence supplied by Ms Selkirk that a weekly rental of $1,300 would apply to the flat, and to the scheme by-laws, including Special By-law no 4 which prohibited short term accommodation, and made the following findings:

17. [41]

    The Senior Member then referred to Ms Selkirk’s cross-examination about the lease:

18. [42]

    It is quite plain that the rejection of Ms Selkirk’s explanation of a relatively innocent account for the claim made by Ms Selkirk to the owners corporation’s insurer was one that was informed by her demeanour during cross-examination.

19. [43]

    However, despite four times stating that he was “very concerned”, the Senior Member refrained from making further findings, for the reasons given at [125]-[126]:

20. [44]

    The Senior Member then returned to the events of the first half of 2021. On or around 11 February 2021, the strata committee approved the larger quote from Auseal Waterproofing and provided both quotes to Ms Selkirk.

21. [45]

    On 11 March 2021, Ms Selkirk advised that she had reviewed the insurance policy, had concluded that it did not exclude water damage claims and suggested:

22. [46]

    Ms Selkirk also stated that the “water proofing works seem to me to be irregular”. She added that the works contemplated replacing the first row of tiles in the shower, that the existing bathroom tiles were unable to be matched, and that “it is fairly obvious that this repair works scope proposal will leave my bathroom looking horrendous and like a patchwork of mis-matched tiling throughout the bathroom such that it will devalue my property investment”. She also added that “[i]nsurance will respond to this Owners Corporation liability to re-tile the whole bathroom such that rectification water damage works will ‘not to [sic] detract from the appearance or value of the lot’”. The letter stated that “established case law” required the owners corporation to match new tiles as closely as possible in appearance and value to existing tiles so as not to detract from the appearance or value of the lot, although no particular decision was identified.

23. [47]

    On 19 March 2021 Ms Selkirk reiterated that the “works order you have received is not acceptable” and “under no circumstances will I agree for the value of my apartment to be compromised on the basis of a works scope” which “will leave my bathroom looking like a patchwork quilt, which is quite unacceptable”. She added:

24. [48]

    The underwriting agency rejected Ms Selkirk’s claim on 31 March 2021. Ms Selkirk requested a review on 15 April 2021, with included the claim that “[t]he bathroom usage was an essential part of the tenant’s expectation … As a consequence, the Lease loss of rent is consequential loss and damage arising … Lot 5 water leakage, claimable event”. But on 6 May 2021 the insurer confirmed that its decision was unchanged.

25. [49]

    On 20 May 2021 Ms Selkirk requested a stage 2 internal review by the insurer. That too was rejected on 10 June 2021. The Senior Member reproduced the following paragraph of the insurer’s response:

26. [50]

    On 20 June 2021, Ms Selkirk lodged an application for review by the Australian Financial Complaints Authority of the denial of the claim, and on 9 July 2021 she filed proceedings in the Common Law Division which were transferred to NCAT and which have ultimately led to the present appeal. It is not necessary at this stage to summarise the impasse which continued between Ms Selkirk and the owners corporation, save to note that on 17 September 2021 the owners corporation issued what it described as a “final notice” pursuant to ss 106 and 122 of the Act that it be provided access to her flat, to which Ms Selkirk did not agree. Ms Selkirk responded saying, inter alia, that (a) the bathroom rectification works were a matter with AFCA and there was to be a conciliation with AFCA on 5 October 2021, (b) there was now Supreme Court litigation on foot, (c) the owners corporation should have approached its insurer before issuing the notice and should do so as a matter of priority, (d) the works proposed “will not resolve the Supreme Court proceedings”, and (e) “I will require a full indemnity from the Strata Owners Corporation for any future waterproofing issues that may arise from the Final Notice waterproofing works proposed”.

27. [51]

    The Senior Member recorded that the AFCA mediation occurred, and Ms Selkirk later discontinued her complaint.

28. [52]

    The Senior Member rejected the claim for a works order as sought in paragraph 1(a) of the points of claim at [241]-[251]. His reasons were that the evidence did not suggest that any of the tiles had been removed to date, and that there was “no compelling evidence about either the source or sources of the water leakage, nor the extent of damage to either floors or walls”, nor any expert opinion identifying those matters or the scope of works. The Senior Member referred to Ms Selkirk’s own response of 14 April 2021:

29. [53]

    The Senior Member said that the scope was uncertain, and that it was not possible to evaluate against any proposed scope of works whether what was needed was what was reasonably necessary to achieve a minimal compliance with the statutory duty, citing Glenquarry Park Investments Pty Ltd v Hegyesi [2019] NSWSC 425 at [74] and [111]-[112]. He added that the scope of rectification works was very uncertain, asking (a) whether the “minor fix” originally suggested might suffice, (b) if tiles needed to be replaced, did they extend to the shower floor, or to a row of wall tiles, or more extensive replacement. He stated that the extent to which villa board linings and compressed cement sheeting needed to be installed was unknown. He said there was no expert evidence in compliance with the Tribunal’s Procedural Direction to ground an order requiring particular work to be done, noting that any expert investigation seemed likely to involve some removal of tiles and invasive investigatory works. After making further points about whether there was defective water proof lining, he concluded that:

30. [54]

    The Senior Member said that the second order did not arise, but that in any event he would have declined it in the absence of evidence concerning the possibility that “like-for-like” replacement tiles were available:

31. [55]

    It was common ground before me that, before the Senior Member, the owners corporation, notwithstanding its points of defence, had conceded that as a result of the unrectified leak, Ms Selkirk’s lot was no longer fit for habitation by a tenant, for the purposes of section 52 of the Residential Tenancies Act 2010 (NSW), and that it was in breach of the duty under s 106.

32. [56]

    At [263] the Senior Member recorded that on or about 30 November 2020 the owners corporation was in breach of its duty under s 106. However, he added at [264] that there was no suggestion that once the leak was stopped, there was any ongoing risk of damage or deterioration. By reference to the steps taken after 2 December 2020, he found that the owners corporation had taken steps to comply with s 106, and concluded that he was “not satisfied that the evidence shows the [owners corporation] was failing to comply with its duty under s 106(5) [sic] of the Act”: at [269].

33. [57]

    The Senior Member thereafter, in the alternative, addressed whether Ms Selkirk had established any reasonably foreseeable loss suffered by her as a result of a contravention of s 106. He said that the cause of action was analogous to a claim in negligence or nuisance and the approach to measuring damages in tort should be applied, that causation was a matter of common sense, and a question of fact on which the applicant bore the onus, and that an applicant was “not entitled to recover losses attributable to its own unreasonable conduct”, citing The Owners – Strata Plan No 76674 v Di Blasio Constructions Pty Ltd [2014] NSWSC 1067 at [42]. He noted that this was a decision for breach of the statutory warranty under the Home Building Act 1989 (NSW), but said that it reflected a general principle of law.

34. [58]

    He then stated at [272]:

35. [59]

    Paragraphs [273]-[277] were directed to the conclusion that “the cause or the reason that the applicant has not tenanted her lot since 5 December 2022 lies with the applicant’s own conduct”. The Senior Member reiterated the references in documents to the applicant’s preference for her matter to be resolved by the insurance claim, and said repeatedly, at [274] and [276], that “the inference the Tribunal draws is that the applicant saw the insurance recovery avenue as a means for her to have the whole of her bathroom re-tiled”.

36. [60]

    Then the Senior Member addressed unreasonable conduct at [278]-[288] and found that her conduct had been unreasonable and that it was her own unreasonable conduct which caused the flat to be untenanted. The Senior Member concluded that Ms Selkirk had failed to mitigate her loss. It is convenient to defer summarising this aspect of the reasoning until dealing with the second ground of the appeal.

37. [61]

    Finally, against the possibility that he was wrong about breach, that he was wrong to have concluded that Ms Selkirk was the cause of her loss, and that his conclusions of unreasonable conduct and mitigation were also wrong, the Senior Member considered damages, and found that the lost rent would have been $1,200 to $1,300 per week.

38. [62]

    The result was that Ms Selkirk’s claim was dismissed.

Appeal Panel

1. [63]

   Ms Selkirk brought an appeal to the Appeal Panel, partly on questions of law, but she also sought leave insofar as the grounds extended to matters of fact or mixed questions of fact and law. The grounds need not be summarised in full.

2. [64]

   In written submissions supplied in advance of the hearing, the owners corporation did not seek to defend the finding that there was no breach of s 106(1), but said that the findings were “best understood as directed to relieving the Owners Corporation of any responsibility for the ongoing condition of the appellant’s bathroom while she took matters into her own hands and denied the Owners Corporation the necessary access to her lot” and that this ground “would not per se affect the outcome if, as the Owners Corporation contends, the breach was only causative of loss for a brief period and was unquantifiable on the evidence adduced by the appellant in the proceedings below”.

3. [65]

   In challenging the finding that there was no damage or risk of damage, the owners corporation’s written submissions conceded:

4. [66]

   However, the owners corporation maintained that the loss was not quantifiable.

5. [67]

   The written submissions also contended that there were two aspects of what the Senior Member had found concerning causation: the “primary causation issue of whether the loss was suffered as a result of the contravention of s 106(1)” and the owners corporation’s mitigation defence, although it was accepted that both issues turned “on precisely the same issues”.

6. [68]

   At the outset of the hearing, Mr Purdy, who appeared for the owners corporation in the Appeal Panel and before me, conceded that the owners corporation was in breach of s 106(1) (“[D]oes Mr Purdy accept that there was a breach of s 106(1), at least initially? The strict obligation? Yes, Senior Member” T4.43), and that “We have accepted below and accept now that it was not feasible for the applicant, as she was then, to rent out her apartment with a defective bathroom” (T5.10-11). There was then a debate, with the members of the Appeal Panel referring to the findings on causation and mitigation, and Mr Rizk stating that “causation itself didn’t appear to have been an issue that was live at first instance, and the hearing wasn’t conducted by reference to issues of causation” (T7.23). That statement, which as will be seen was later reflected in the reasons of the Appeal Panel, may reflect a misapprehension of the role of causation and mitigation in this area.

7. [69]

   The owners corporation, having made the concessions recorded above, contended that if damages were available, “they’re available only for a short period, and that’s up until the point at which the appellant should have enabled or facilitated the words proposed by Auseal. That I would suggest, is about mid-March 2021”. It maintained that it could not accede to replacing all of the tiles in the bathroom, because of the constraints upon its obligation identified in Glenquarry Park Investments Pty Ltd v Hetyesi.

8. [70]

   The Appeal Panel recorded those concessions, and at [13] identified the issues on appeal as being whether there was error in the findings at first instance that:

9. [71]

   Dealing first and at greatest length with the dismissal of the claim for works pursuant to paragraph 1(a) of the points of claim, the Appeal Panel said at [22]-[23]:

10. [72]

    The Appeal Panel passed over the question of procedural fairness in making a finding contrary to the owners corporation’s concession, and addressed the matter on the facts. They said at [25]:

11. [73]

    On that basis, the Appeal Panel concluded that the Senior Member had erred in concluding that Ms Selkirk had failed to make out an evidentiary basis for the order she sought. It added that to the extent there was an issue as to what was needed to be done in accordance with Glenquarry Park Investments Pty Ltd v Hetyesi that too fell at the feet of the owners corporation. To the extent that the Senior Member had proceeded on the basis that those matters were necessarily the subject of expert evidence, they disagreed. The conclusion was expressed at [41]-[42]:

12. [74]

    At [43]-[46] the Appeal Panel addressed the Senior Member’s failure to make the order sought in paragraph 1(b).

13. [75]

    Ms Selkirk submitted that the Tribunal erred in finding that the owners corporation failed to establish the source of the defect and therefore the scope of work required by section 106, and in finding that Ms Selkirk caused her own loss and failed to mitigate her loss.

14. [76]

    I shall in what follows reproduce the entirety of the Appeal Panel’s reasoning on the alternative findings of causation and mitigation, but it is convenient to do so in light of the parties’ submissions and my resolution of them. Suffice it to say for present purposes that:

    1. (1)

       the Appeal Panel regarded loss of rent as a type of “self-evident loss”: at [47];

    2. (2)

       reasonable efforts by the owners corporation did not relieve it from the consequence of non-compliance with its strict duty: at [48];

    3. (3)

       there was an error by the Senior Member when stating at [49] the effect of Owners SP 76674 v Di Blasio Constructions PL [2014] NSWSC 1067 at [42];

    4. (4)

       by reference to principles of contract law (at [50]-[51]), the onus lay on the owners corporation to establish that the lot owner acted so unreasonably as to cause her own loss or to have failed to mitigate her own loss: at [52];

    5. (5)

       there was an error warranting a grant of leave in the application of those principles when the Senior Member relied on Ms Selkirk’s conduct because the “resistance and advocacy” did not excuse the owners corporation from obtaining orders pursuant to s 122: at [53]-[54];

    6. (6)

       it was not necessary to address Ms Selkirk’s submission, which was contested, that causation had not been in issue on appeal: at [55].

15. [77]

    The result was that the appeal was allowed, (implicitly and necessarily) the orders made by NCAT constituted by the Senior Member dismissing Ms Selkirk’s application were set aside, and there was a remitter:

16. [78]

    The reference to “5 December 2020” in the order for that remittal was the subject of the third proposed ground of appeal to this Court.

17. [79]

    Two important developments have occurred after the Senior Member’s decision. First, Ms Selkirk removed all of the tiles and the whitegoods from her bathroom, leaving it “a shell”, without notice to or the consent of the owners corporation. This was sought to be established by affidavit before the Appeal Panel, but leave to rely upon it was refused, and the appeal to this Court did not extend to that order. Nonetheless, I was told this without objection at the hearing, and it was also asserted in the owners corporation’s submissions, without demur from Ms Selkirk, and it plainly is relevant to the grant of leave.

18. [80]

    Secondly, the owners corporation has itself commenced proceedings in NCAT, and that is set down for final hearing on 27 June 2024 (which is to say, 15 days after the hearing of this appeal), simultaneously with the remitter of the present proceedings. None of this is before me, despite its obvious bearing on the grant of leave. The issue arising on the owners corporation’s new proceedings was explained to me thus:

19. [81]

    At the close of the hearing, in response to the owners corporation’s request, with which Ms Selkirk did not cavil, I indicated that I would attempt to produce my judgment resolving the appeal during the following week, so as to permit the hearing on 27 June to proceed smoothly.

The grounds of appeal in this Court

1. [82]

   The owners corporation advanced three grounds of appeal. They were “ground 2”, “ground 3” and “ground 4” of its notice of appeal but in order to avoid confusion I shall refer to them as the first, second and third ground respectively, and I shall follow the more efficient order adopted by Mr Rizk, who appeared for Ms Selkirk as he had done in NCAT.

2. [83]

   This ground maintained that when remitting the proceedings for further hearing, the Appeal Panel erred in order 3 by stating that the damages for lost rent were to be determined “for a period commencing on 5 December 2020”. The owners corporation’s point was that the date was erroneous and that on no view could Ms Selkirk be entitled to damages for loss of rental income before 20 December 2020, when Mr Wang’s short-term tenancy expired. It had put in written and oral submissions to the Appeal Panel that because the Senior Member made a finding, which was not challenged or addressed on appeal, that Ms Selkirk had been engaging in short-term letting in breach of the Strata Scheme’s Special By-law 4, damages for loss of such income was not recoverable. This was said to be “simply a clear case of injustice to the plaintiff by reason of an error on the Appeal Panel’s part”, such that the owners corporation had become exposed to liability for loss for “two weeks longer than it ought to be”.

3. [84]

   There is considerable force to the owners corporation’s submissions, save for the fact that it is far from self-evident that the ground amounts to an “appeal on a question of law” within the meaning of s 83 of the Civil and Administrative Tribunal Act. Ms Selkirk pointed out in her written submissions that, contrary to what has repeatedly been said about the grounds of appeal explicitly identifying the question of law (see for example Schwartz Family Co Pty Ltd v Capitol Carpets Pty Ltd [2017] NSWCA 223 at [13]), this proposed ground failed to do so. It is also self-evident that this ground concerns an amount in the order of $2,500, making it an unattractive candidate for the grant of leave. But it is unnecessary to take those matters any further, in light of the stance taken by Ms Selkirk.

4. [85]

   Ms Selkirk said that in circumstances where, irrespective of the outcome of this appeal, there was to be a hearing on 27 June, she would not object to it being within the scope of that hearing for the owners corporation to contend that there were no damages in the period between 5 and 19 December 2020. After that concession was made, counsel confirmed the correctness of my understanding that Ms Selkirk “accepts that it’s open to the owners corporation to say to the tribunal on Thursday fortnight zero damages for the period from 5 December to 20 December” (transcript, 12 June 2024, p 20).

5. [86]

   In circumstances where Ms Selkirk accepts that it will be open to the owners corporation to have the question of her loss between 5 and 19 December 2020 determined on the merits on the evidence before NCAT on 27 June 2024, to the extent that there be any error of law, it is one which is immaterial, and there is no need to interfere with the terms of the order remitting Ms Selkirk’s proceeding. It follows that there is no basis for granting leave on this ground.

6. [87]

   This proposed ground concerned the works orders sought by Ms Selkirk. As developed in oral submissions, the attention was on the refusal to make the order sought in paragraph 1(a) of her points of claim. The owners corporation said that the Appeal Panel erred in law in holding that the owners corporation bore the onus of identifying the defects in the common property and the means of rectifying them once it was found that it had breached its duty.

7. [88]

   The gravamen of the reasons of the Senior Member was that he was unsatisfied that an order in those terms should be made, there being no evidentiary basis for it, and – critically – no other relief should be granted notwithstanding the admitted breach of s 106(1). This was addressed at [242]-[251] of the reasons of the Senior Member, which have been summarised above.

8. [89]

   The owners corporation’s submissions had the advantage that, perhaps unusually, the only substantive relief sought was the particular works order in paragraph 1(a):

9. [90]

   Ms Selkirk’s points of claim did not include a paragraph seeking “such further or other order as the Tribunal’s sees fit” or something to that effect.

10. [91]

    The owners corporation maintained that the Appeal Panel had reversed the onus of proof when it said:

11. [92]

    The owners corporation submitted that this “ignored the fundamental evidentiary and persuasive onus upon a party asserting entitlement to a particular remedy to prove the facts necessary to invoke the court or tribunal’s powers to grant it.”

12. [93]

    Ms Selkirk submitted that this missed the point. The Panel’s statements at [26]-[28] were in support of its principal conclusion at [22]-[23] that the Tribunal erred in requiring proof of “the definitive source of the water leakage” before it could compel the owners corporation under a works order. Ms Selkirk drew attention to the fact that there “had been uncontested evidence adduced that a membrane failure was a cause of the water leakage.”

13. [94]

    The owners corporation nonetheless submitted that, in order to exercise its powers under s 232, the Tribunal needed to be apprised of “the factual parameters of the complaint” to formulate an order with sufficient specificity. But that submission falls short of answering the point made by the Appeal Panel at [41], which was that the order itself can compel the owners corporation to undertake the investigations necessary to identify the source of the defect in the first place.

14. [95]

    In oral submissions, Mr Purdy conceded that this proposed ground turned on Ms Selkirk running an “all or nothing” or “the highway or my way” case. That submission is consistent with the form of the points of claim.

15. [96]

    Mr Rizk denied that his client had been running an all-or-nothing case:

16. [97]

    Neither side tendered the transcript of what had in fact occurred before the Senior Member. However, Ms Selkirk relied on what had been said before the Appeal Panel. At that stage, when developing the appeal from the refusal to make the order sought in paragraph 1(a) of the points of claim, Mr Rizk repeatedly asserted that it would have been open to the Senior Member to have made some lesser order for works. Thus, for example, he submitted:

17. [98]

    After an exchange concerning the possibility of there being investigative works, followed by doing whatever was required as a result of those investigations, Mr Rizk said:

18. [99]

    The owners corporation did not cavil with those statements in its address to the Appeal Panel.

19. [100]

    In submissions in reply in this Court, it was said that Ms Selkirk:

20. [101]

    I do not seek to cast any doubt upon either counsel’s recollection of the hearing which occupied 13 and 14 February 2023. But enough has been said to expose the fundamental obstacles to the owners corporation’s success on this proposed ground. They are twofold.

21. [102]

    First, the Appeal Panel found that in confining his attention only to the particular order sought by Ms Selkirk, the Senior Member erred, and instead it was for the owners corporation, which was concededly in breach of duty, to take such steps to identify appropriate work to rectify the leak, or at least in the first instance, investigatory work.

22. [103]

    Accordingly, I think the concession in this Court by the owners corporation was properly made. “All-or-nothing” claims are not unknown in this area: see for example CJD Equipment Pty Ltd v A&C Constructions Pty Ltd [2011] NSWCA 188 at [6].

23. [104]

    If Ms Selkirk was not confining herself to an “all-or-nothing” case then it was not sufficient for the Senior Member to conclude that there was no evidentiary basis for the particular order nominated by her. In the circumstances of the present case, where there was a conceded breach, and it is clear that there were a number of possible courses which could be taken by the owners corporation, the functions of the Tribunal did not come to an end when it was unpersuaded that the nominated order was unavailable.

24. [105]

    The duty was imposed on the owners corporation by s 106(1). The breach conceded by the owners corporation was that it had not properly maintained and kept in a state of good and serviceable repair the common property. The order sought by Ms Selkirk invoked s 232(1)(e). The issue was whether NCAT should make an “order to settle a complaint or dispute about” the breach of duty by the owners corporation, and, if so, what that order should be. If Ms Selkirk’s dispute with the owners corporation was an all-or-nothing case, to rectify her bathroom as sought in paragraph 1(a) or nothing, then it would be a sufficient response to that application to conclude that the order sought in paragraph 1(a) was not available. That is so notwithstanding that the owners corporation continued to be in breach of its duty to repair the common property. But I am unpersuaded that that was the nature of the dispute. The owners corporation has not persuaded me that Ms Selkirk wanted only the order sought in paragraph 1(a), and nothing less.

25. [106]

    Ms Selkirk’s attitude prior to the commencement of litigation appears to have been less than constructive, and not one which disclosed any element of compromise for the sake of getting the job done, and that at least in part she seems to have been motivated by the hope that the owners corporation’s insurer might be persuaded to pay for more extensive works than the owners corporation was contemplating. Her primary position was that the defect be fixed and the entirety of the tiles in her bathroom replaced. But the absence of any enthusiasm on the part of Ms Selkirk for the works proposed by the owners corporation falls short of establishing that it was a sufficient answer to Ms Selkirk’s application for an order under s 232 to point to the absence of an evidentiary basis for that precise order. I am unpersuaded that she ran such a case. For one thing, the onus rests on the owners corporation to establish that Ms Selkirk ran a case which would entirely fail if she were not entitled to the relief she sought, and it is far from self-evident that an applicant, if the claimed relief be unavailable, would not accept anything less. Secondly, it also seems inconsistent with what was said, much closer to the time, by Mr Rizk to the Appeal Panel, with which the owners corporation did not cavil. Thirdly, the mere fact that the points of claim identify one specific work order, without a fallback, provides only a slight support for the inference it seeks to draw. It is not suggested that there is any other question of principle or public importance involved in this proposed ground.

26. [107]

    Secondly, the hearing before me proceeded on the basis that Ms Selkirk has herself last September caused works to occur in her flat’s bathroom, leaving it a “shell”, and there is to be later this month a hearing on (a) the owners corporation’s application and (b) the matter remitted by the Appeal Panel. In short, events have moved on. The materials before me do not disclose what orders are sought by the owners corporation, or whether they are opposed by Ms Selkirk. But either there is agreement between the parties about the way in which the bathroom of Ms Selkirk’s flat is to be made usable, or there is a dispute dividing them, and whichever of those alternatives be the case, there is precious little utility in seeking to identify whether there was legal error in the way the Appeal Panel addressed the finding by the Senior Member that no order should issue. In a few days’ time, NCAT will determine the application brought by the owners corporation which (I assume although it is not before me) will require NCAT to exercise the discretion to make orders under s 232. All of this disfavours granting leave to determine whether there was error in effect in the Appeal Panel relying on the failure by the owners corporation to conduct its own investigation.

27. [108]

    That is sufficient to resolve this proposed ground of appeal. However, I respectfully do not wholly agree with all aspects of the reasons of the Appeal Panel. That said, I do not wish to overstate the minor extent to which I disagree. At least in most ordinary cases, owners corporations should proceed on the basis that they should investigate and take steps to rectify defects in the common property, even if they cannot obtain the lot owner’s consent. At least in most ordinary cases, the existence of an ongoing breach of the owners corporation’s duties under ss 106(1) and (2) will warrant the making of an order under s 232 to investigate (if necessary) and rectify the defect in the common property. But I accept the owners corporation’s submissions that that is not inevitably so, and to that extent I respectfully do not agree with those aspects of the reasons of the Appeal Panel which frame the position in absolute terms. If a lot owner insists upon what might be styled “Rolls Royce” rectification works, and makes it plain that he or she will settle for no less, and NCAT concludes that such works are impossible, or not justified on the evidence, then the fact that there is an admitted ongoing breach of s 106 does not of itself entail that there must be an exercise of power under s 232. Such cases are likely to be rare. In the very large majority of cases, where there is an ongoing breach of s 106(1) or (2), and the lot owner and the owners corporation dispute what should be done, it may be expected that each side will identify the orders pursuant to s 232 which are sought, and save in exceptional circumstances it will be appropriate of NCAT to make some order so as to rectify the breach. That said, in principle, the existence of a breach of s 106 is a factor which enlivens the discretionary power in s 232, but it does not compel its exercise.

28. [109]

    I have emphasised a theoretical possibility which is unlikely to arise in practice because a cognate distinction between breach of s 106 and the new power to order damages under s 106(5) is at the heart of the main point argued in this Court, and the cognate reasoning is much less unlikely to arise in practice. In particular, there is one aspect of the Appeal Panel’s reasoning, at [34], which I am persuaded not only goes too far but also was material to the Appeal Panel’s reasoning on the second ground of appeal. I shall address it when dealing with that ground.

29. [110]

    This proposed ground combines two sub-grounds, alleging that the Appeal Panel erred in holding that:

30. [111]

    The summons seeking leave to appeal states that the question of law raised is “whether a mitigation defence is available in answer or partial answer to a claim for damages under s 106(5) SSMA”.

31. [112]

    The owners corporation relied on the Senior Member’s “careful analysis of [Ms Selkirk’s] conduct”, including her resistance to the proposed renovations which were the subject of a resolution of the scheme’s committee, and her persistent advocacy for the insurer to organise the renovations in the Scheme’s stead.

32. [113]

    The owners corporation submitted that the Appeal Panel conflated two stages of the inquiry under s 106, of breach of duty and causation. The owners corporation submitted that the Appeal Panel incorrectly imported imperatives from the breach “stage” – such as the fact that the duty is “strict” and does not account for “reasonable steps” taken by the owners corporation – into the inquiry in section 106(5). The owners corporation submitted that:

33. [114]

    As will be seen from what follows, I agree with that submission. The effect, according to the owners corporation, was that the Appeal Panel took an unduly burdensome view of what was necessary for the owners corporation to prove that Ms Selkirk had acted unreasonably and failed to mitigate her loss.

34. [115]

    Ms Selkirk said that that was a misreading of [54] of the Appeal Panel’s reasons. She said that [54] was “not establishing a general principle that a lot owner's intransigence can never amount to a failure to mitigate or cause a break in causation, but is again applying it to the facts of this specific case.”

35. [116]

    Ms Selkirk also said that while the Appeal Panel had been less than explicit (“unhelpfully, they haven’t identified the depth of all of the material they have considered in the evidence”), nonetheless the Appeal Panel had been taken carefully through the evidence, and were to be taken to have expressed a conclusion that in the facts of this case, the power under s 122 was a complete answer to the claimed unreasonableness and opposition of Ms Selkirk, although acknowledging that “[n]ow, again, I appreciate that the way it is worded and the way it is set out is not very helpful or clear”. The submission continued as follows:

36. [117]

    I shall resist the invitation to rely upon what was said (although I was not taken to the particular passages) to be a detailed traversal of the facts when the matter was heard by the Appeal Panel. Exchanges during argument do not form part of the reasons for decision: AK v Western Australia (2008) 232 CLR 438; [2008] HCA 8 at [16] (Gleeson CJ and Kiefel J). Heydon J, agreeing, said at [111]:

37. [118]

    Those statements, made in relation to the reasons for judgment of a court, are equally applicable to NCAT. That is so, notwithstanding that I accept that where as here fact finding by the Appeal Panel is not reviewable except to the extent that it reveals an error of law, the requirement to give reasons is diluted. Ms Selkirk did not rely upon it, but her submissions concerning the dispositive [54] recalled what was said by Basten JA in Alexandria Landfill Pty Ltd v Transport for NSW (2020) 103 NSWLR 479; [2020] NSWCA 165 at [29]:

38. [119]

    I shall apply the same approach.

39. [120]

    In large measure, this aspect of the Appeal Panel’s reasons involved overturning the factual conclusions reached by the Senior Member. In light of the debate over what in fact the Appeal Panel did, it is best to reproduce the Senior Member’s and Appeal Panel’s reasons on these issues in detail.

40. [121]

    The starting point is the nature of the findings made by the Senior Member. On the pleadings, the Senior Member was required to determine whether Ms Selkirk had established a foreseeable loss for the purposes of s 106(5) which was as a result of the owners corporation’s breach, and also the owners corporation’s positive defence that Ms Selkirk had “unreasonably failed to mitigate her loss”.

41. [122]

    The Senior Member addressed causation and unreasonableness separately, commencing at [272]:

42. [123]

    The Senior Member proceeded to make a series of factual findings at [273]-[277]:

43. [124]

    Read in isolation, there might be room for debate about the meaning of the conclusion that “the” reason for the owners corporation not being able to deal with the common property “lay with” Ms Selkirk. However, read as the conclusion to a section which commenced at [272] with the framing of an issue by reference to the statutory test of “as a result of”, the reasoning is fairly to be read as a conclusion that the loss of rent should not be regarded as a consequence of the owners corporation’s breach, because it was caused by Ms Selkirk’s own conduct.

44. [125]

    The Senior Member then addressed whether Ms Selkirk’s conduct was unreasonable, doing so at some length, and concluded that it was, including because (a) she had rejected the owners corporation’s plan to proceed with the Auseal Waterproofing quotation ([280]), (b) she was seeking a recovery from the owners corporation’s insurer to advance her own interests (at [281]), and (c) she commenced legal proceedings against the owners corporation in June 2021. Further, her response to the owners corporation’s notice to arrange and facilitate the rectification works made by her involved, “in the Tribunal’s assessment, further unreasonable conduct on the part of the Applicant”, in that (a) she sought a “full indemnity” for damage caused and loss of rent, (b) she said that the owners corporation had to wait while she was negotiating rectification works with AFCA, and (c) she stated that “like for like” reinstatement was not possible contrary to what she sought from NCAT.

45. [126]

    For all of those reasons, the Senior Member found that the owners corporation had discharged its onus of establishing that Ms Selkirk had failed to mitigate her loss. He concluded at [289]:

46. [127]

    The reference to British Westinghouse is to Viscount Haldane’s statement that in a claim for breach of contract the plaintiff is under a “duty” to take all reasonable steps to mitigate its loss. That language is not to be understood as representing the law in Australia, even in cases of breach of contract. I am bound by what was said by the Court of Appeal in Karacominakis v Big Country Developments Pty Ltd [2000] NSWCA 313; 10 BPR 18,235 at [187]:

47. [128]

    That is why the Court of Appeal has, repeatedly, made reference to the “so-called” duty to mitigate: see Galafassi v Kelly (2014) 87 NSWLR 119; [2014] NSWCA 190 at [157]; Edwin Davey Pty Ltd v Boulos Holdings Pty Ltd [2022] NSWCA 65; 20 BPR 42,355 at [75] and see Bak v Glenleigh Homes Pty Ltd [2006] NSWCA 10 at [3].

48. [129]

    Ms Selkirk was not suing for breach of contract. She was seeking damages pursuant to s 106(5) for reasonably foreseeable losses as a result of the owners corporation’s breach. Even so, the words “as a result of” connote a requirement of causality. It is unhelpful to pose as the issue whether an applicant has breached a “duty” to mitigate, and it may lead to confusion to frame the issue as whether an applicant’s own conduct is “the” cause of her loss, or metaphorically that it “lay with” Ms Selkirk herself. When determining a claim under statute, it is normally better to apply the statute rather than some analogous test from a cognate area of law.

49. [130]

    The question posed by s 106(5) in a case such as the present, where lost rent was unquestionably a foreseeable head of loss, was how much longer than the conceded period until early March 2021 was the lost rent claimed by Ms Selkirk a loss which may fairly be characterised to be a loss “as a result of” the owners corporation’s breach of s 106(1). That is a question of fact. It is to be approached not by reason of philosophical notions of causation, but in a practical way. Although it has been said that that “the concept of common sense should be eschewed when applying the principles of causation” (Young v Chief Executive Officer (Housing) [2023] HCA 31 at [60]), I do not understand a majority of the High Court to have overruled what was said by a majority of the High Court on this subject in March v E & MH Stramare Pty Ltd (1991) 171 CLR 506; [1991] HCA 12 in an action for negligence governed by the common law as modified by statutory contributory negligence (or for that matter the authorities upon which Mason CJ drew in March). But it is desirable to be clear since this is an area where there is some controversy, and the Appeal Panel expressly said that “commonsense principles of causation akin to those in negligence or nuisance” applied: at [42].

50. [131]

    First, the point made by the majority in March at 515-516 was that the “but for” test was insufficient:

51. [132]

    That explanation makes it tolerably clear that when referring to “common sense”, Mason CJ was not excluding a place for value judgments within the factual determination.

52. [133]

    Secondly, although March was tried before a judge alone in South Australia, Mason CJ was writing at a time when the tribunal of fact for many common law actions remained a civil jury. The reference to “common sense” in the earlier authorities reflected the fact that in the absence of reasoning on causation, appeals were based on the judge’s directions to the jury. In Fitzgerald v Penn (1954) 91 CLR 268; [1954] HCA 74 the joint judgment of Dixon CJ, Fullagar and Kitto JJ stated that it was sufficient for the trial judge “to make it plain to the jury that no negligence was relevant except such negligence as could fairly be considered to have been a cause of the accident”, and added, revealingly “[i]t was not, as we think, necessary or even desirable in this case to say more”: at 274. Their Honours also noted that the various expressions in fact used by the trial judge, “resulting in”, “a consequence”, negligence which “led to” the accident or which was “a genuine factor in bringing about” the accident, were all “practically speaking … equivalent and interchangeable”. Their Honours added at 276 that in many cases, where no real question of causation arises, “any attempt to analyse or expound the notion of causation, or even the introduction of an adjective to qualify the noun ‘cause’, is much more likely to confuse than to assist the jury.” Their Honours may have had in mind the various adjectives “natural”, “probable”, “necessary”, “direct” and “effective” of which (and others) Lord Sumner said in Weld-Blundell v Stephens [1920] AC 956 at 984 that “these different epithets and formulae are used almost indiscriminately”. But the short point is that considerations apposite to the framing of how a jury was to be instructed were at the forefront of statements about causation being a matter of “common sense”.

53. [134]

    Thirdly, in cases to which the Civil Liability Act applies, the reasoning in March has no direct application. That is not because “common sense” has been deprecated as inapposite to any consideration of causation. It is because s 5D requires the Court to apply a “but for” test, as part of its bifurcated assessment of causation, largely adopting the approach favoured by McHugh J’s dissenting reasons in March. The High Court has repeatedly deprecated reasoning that invoked March when s 5D applied: see Adeels Palace Pty Ltd v Moubarak (2009) 239 CLR 420; [2009] HCA 48 at [41]-[44] and Tapp v Australian Bushmen’s Campdraft & Rodeo Association Ltd (2022) 273 CLR 454; [2022] HCA 11 at [45]-[46] and [101]. It is not necessary to invoke “common sense” in order to explain a “but for” test, and common sense has little or nothing to do with an evaluation of scope of liability. As was said in Wallace v Kam (2013) 250 CLR 375; [2013] HCA 19 at [23], in novel cases on scope of liability:

54. [135]

    But the Civil Liability Act does not apply to Ms Selkirk’s claim.

55. [136]

    Fourthly, there is a more general vice in the use of “common sense” in order to articulate a statutory test of causation such as that found in s 106(5). It is that the description is ambiguous at best, and obscuring at worst. There can be no dispute that a causal connection will ordinarily involve a factual assessment, and ordinarily, that falls to be determined in what is regularly described as a practical or “common sense” fashion. Indeed, as Kirk JA has recently observed in this context, the High Court has continued to assert as much: Fisher v Nonconformist Pty Ltd [2024] NSWCA 32 at [106]. His Honour’s citations include Military Rehabilitation and Compensation Commission v May (2016) 257 CLR 468; [2016] HCA 19 at [62] (“take into account common-sense inferences drawn from a sequence of events”) and Queensland v Masson [2020] HCA 28; (2020) 94 ALJR 785 at [111] (referring to what is dictated by common sense and ordinary experience as to the way a paramedic responds to a medical emergency).

56. [137]

    The difficult in using the label “common sense” is at least twofold. One is that notions of value judgment should have no part to play in determining but for causation, and do not assist with analysis of contested cases of scope of liability, yet the label of “common sense” may encourage their importation. A second is that it is unilluminating to point to common sense, especially in cases of statute.

57. [138]

    Ms Selkirk’s claim is statutory. It is not a claim in contract or tort at common law. Statute introduces the words “as a result of” as an element of her claim. The High Court’s reasons for judgment in Comcare v Martin (2016) 258 CLR 467; [2016] HCA 43 at [42], speaking of the same words in the Safety, Rehabilitation and Compensation Act 1988 (Cth), are apposite:

58. [139]

    Accordingly, regard is to be had to the purposes of the statute to determine what (if any) of the limiting doctrines developed by the common law, including remoteness and mitigation, are imported into the causal connection required by “as a result of” in s 106(5). That was the approach adopted in the joint reasons of Kiefel CJ, Gageler and Gleeson JJ in Young v Chief Executive Officer (Housing) at [25] and [29]. The joint reasons of Gordon and Edelman JJ more generally proceeded on the basis that there was nothing to displace “common law rules that have been developed incrementally over centuries” when the statute deployed the language of “compensation” and “loss or damage”: at [35].

59. [140]

    Returning to the Strata Schemes Management Act, the purpose of the legislation is wholly consistent with there being limitations on the right to damages conferred by s 106(5) that it be qualified in cases where the claimed loss is too remote, or where the plaintiff has behaved so unreasonably that part or all of the claimed loss is properly characterised as caused by the plaintiff rather than by the owners corporation’s breach. There is nothing artificial or strained about construing the statute in that fashion, and indeed the explicit qualification in s 106(4), relieving an owners corporation of compliance in some circumstances (pending action against a lot owner where there is no safety issue), confirms the consistency of the legislative scheme with such limitations. There is also nothing in the context or purpose of the statute to warrant the owners corporation being rendered liable for all loss, however remote and however unreasonable the conduct of the lot owner, consequent upon a breach. Ultimately, although the owners corporation is a separate legal person, its liability will be borne by the lot owners as a whole (perhaps excluding some), but all of the lot owners must be taken to have subjected themselves to a series of constraints so as to share the common property and so as to live in the same building forming part of the local community with opportunities for cooperation and conflict to which Campbell JA referred in White v Betalli (2007) 71 NSWLR 381; [2007] NSWCA 243 at [204]. To the above I would add the further consideration that s 106(5) was enacted so as to overturn the result reached in Thoo, previous to which there was a line of cases that damages for breach of statutory duty, assessed in a way analogous to damages for the tort of nuisance, were available, as Mitchelmore J has explained in Smith v Owners – Strata Plan No 3004 [2022] NSWSC 1599. I share the view that the legislative purpose of overturning Thoo tends to support the conclusion that the language of s 106(5) incorporates the common law doctrines from the authorities prior to Thoo: see Smith at [34] and [38].

60. [141]

    No differently from what was said in Fisher v Nonconformist Pty Ltd at [113], I apprehend that the Appeal Panel’s statement to that effect at [42] is to be regarded as a reference to causation being “an evaluative question of fact to be assessed in a practical manner”.

61. [142]

    The foregoing may seem quite theoretical, but one aspect is of direct relevance to this appeal. I do not accept (nor do I understand it to have been submitted on behalf of Ms Selkirk) that by characterising the question of causation as a factual one of “common sense”, the Appeal Panel’s conclusion was thereby insulated from an appeal which is confined to questions of law.

62. [143]

    Although aspects of the Appeal Panel’s reasons on Ms Selkirk’s challenge to the dismissal of her claim for damages were found earlier, at [34] (which is considered below) and [42] (which I have just mentioned in the previous paragraphs), the passage considering this aspect of the Senior Member’s reasoning is contained in a relatively short section of its reasons at [47]-[54]. It may be helpful to interpose commentary upon the following reproduction of those reasons.

63. [144]

    I respectfully agree. It will be seen that the words “unless otherwise demonstrated” with respect correctly accommodated the propositions that (a) all of the claimed damages for loss of rent would not inevitably be recoverable as damages, and (b) the owners corporation might be able to establish that some of the lost rent was not as a result of its breach.

64. [145]

    Paragraphs [267]-[269] are the reasons for a concededly erroneous finding that “[t]he Tribunal is not satisfied that the evidence shows that the first respondent was failing to comply with its duty under s 106(5) [sic] of the Act”. But those paragraphs do not address the separate question of an entitlement to damages under s 106(5). The Senior Member referred to s 106(5), but this section of the reasons addresses breach, not damages, as does the very sentence; I think the most likely position is that “106(5)” is an error for “106(1)”.

65. [146]

    It is with respect difficult to know what the Appeal Panel meant by this, to which I shall return immediately after reproducing the reasons which followed.

66. [147]

    It will be seen that the Appeal Panel concluded that a partial defence of acting so unreasonably as to be the cause of the lot owner’s own loss, or failing to mitigate her loss, was available. I agree. The Appeal Panel reasoned by analogy to cases under the Home Building Act and construction cases. I agree that the analogy is apposite, and gives content to the words “as a result of” in s 106(5).

67. [148]

    What is left unclear is how the Appeal Panel regarded the Senior Member as having erred. He proceeded on the bases that (a) the onus rested on the owners corporation to establish unreasonable conduct, and (b) the owners corporation was not liable for damages which were not as a result of its breach but for which the cause was Ms Selkirk. So far as I can see, that is wholly consistent with the reasons of the Appeal Panel.

68. [149]

    Before turning to the dispositive paragraphs of the Appeal Panel’s reasons, it is best to address [55]:

69. [150]

    It will be clear from the foregoing that I do not agree that causation was not in issue, or that mitigation is something which is separate from causation. Establishing that the lot owner is the sole cause of a claimed loss, or establishing that the lot owner has behaved so unreasonably that he or she has not mitigated his or her loss, are simply ways that the owners corporation can establish that a claimed loss is not one which is “as a result of” the owners corporation’s breach.

70. [151]

    The dispositive paragraphs are [53] and [54], as follows:

71. [152]

    Paragraph 53 purports to be the reasons for granting leave (required, because this ground of appeal to the Appeal Panel is one confined to a question of law). This confirms that the Appeal Panel was, with respect correctly, treating the issue as one of fact. The second sentence of [53] is a very concise summary of many paragraphs of reasoning which address both causation and mitigation. The third sentence makes it plain that the Appeal Panel was dealing with both the Senior Member’s findings on Ms Selkirk being the cause of her loss and his findings that she had acted unreasonably and therefore had not mitigated her loss.

72. [153]

    Paragraph 54 commences with “As said earlier”. That is a reference to [34] of its reasons, where the Appeal Panel said:

73. [154]

    Before determining whether those paragraphs disclose error, it is first necessary to be clear what they mean. There was a lively debate before me on this issue. Ms Selkirk submitted that these passages amounted to a revisiting of the findings of fact by the Appeal Panel, although counsel conceded that the reasoning was unhelpfully opaque and concise. I do not agree with her submission.

74. [155]

    The findings by the Senior Member fall into two categories. The Senior Member disregarded the concession by the owners corporation that some of the losses from the uninhabitability of Ms Selkirk’s flat were to be regarded as foreseeable losses which were as a result of its breach of duty. It follows that his finding that Ms Selkirk was the cause of all of her claimed losses could not stand, and it would not require much to persuade me that the Appeal Panel proceeded on that basis. That does not of itself necessarily entail that the finding that later losses were regarded as being entirely attributable to Ms Selkirk’s conduct cannot stand, although because they are based on a flawed foundation, they must be of doubtful status. But the Senior Member’s error concerning causation does not infect his separate finding that Ms Selkirk had behaved unreasonably.

75. [156]

    There is nothing in the reasons of the Appeal Panel to suggest that it engaged with the deference associated with Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 in overturning factual findings made by the finder of fact who has seen the witness cross-examined.

76. [157]

    In short, not only did the Appeal Panel not say that it was setting aside the findings of fact, but it is difficult to see how it could, consistently with appropriate technique when determining Ms Selkirk’s appeal (even an appeal which by leave extended to questions of fact), overturn the findings that Ms Selkirk had behaved unreasonably. Those findings were not contrary to any concession made by the owners corporation. What is more, despite leave being granted for the appeal to extend to questions of fact, I am doubtful that it was open to the Appeal Panel to have taken that course, not having seen Ms Selkirk’s cross-examination.

77. [158]

    I raised this during the hearing:

78. [159]

    All that may be accepted, but it does not follow that the Appeal Panel implicitly concluded that, contrary to the findings by the Senior Member, Ms Selkirk did not behave unreasonably.

79. [160]

    Contrary to Ms Selkirk’s submissions, I think that [54] of the Appeal Panel’s reasons means what it says. It is to be understood as saying that however unreasonable Ms Selkirk had been, s 122 empowered the owners corporation to obtain access to her lot, and the result was that her resistance did not “constitute a means of discharging the evidential onus on the [owners corporation] to establish a break in causation or a failure by the lot owner to mitigate loss”. That conclusion coheres with the absoluteness of the proposition stated in [34]. It also coheres with the concluding two sentences of [54].

80. [161]

    Importantly, neither [34] nor [54] is expressed as a statement of the application of principle to the facts of the particular case. Instead, those paragraphs are expressed in terms of general statements of principle. That may be seen repeatedly:

    1. (1)

       First, “whatever the appellant lot owner advocated” or “whatever the appellant did to attempt to resist the [owners corporation’s] chosen course”, “such resistance and advocacy does not … constitute a means of discharging the evidential onus on the OC”. The Appeal Panel did not say that on the facts of this case, the conduct of Ms Selkirk was not available to discharge the onus upon the owners corporation.

    2. (2)

       Consistently with that, the concluding sentence in [54] “irrespective of the lot owner’s motives or conduct” confirms that its reasoning did not rest on some particular findings of fact in the present case, but on the proposition that once it was concluded that rectifying the bathroom was within the scope of the owners corporation’s duty, Ms Selkirk’s motive and conduct were irrelevant.

    3. (3)

       Thirdly, within [34], the Appeal Panel posited the general proposition of law that “[a]lleged restriction of access to, or interference with or resistance to, remediation by a lot owner as a matter of law does not qualify the [owners corporation’s] performance of its struct duty”.

81. [162]

    Against this, Ms Selkirk submitted at the hearing of this appeal that “[paragraph] 54 is not establishing a general principle that a lot owner’s intransigence can never amount to a failure to mitigate or cause a break in causation, but is again applying it to the facts of this specific case”. But that is the natural meaning of the words it used, and it is consistent with no attempt having been made to set aside the findings that “the” reason for the claimed loss “lay at the feet of” Ms Selkirk, and that she had conducted herself unreasonably.

82. [163]

    On a fair reading of the paragraph, the Appeal Panel’s answer to the entirety of the submission that Ms Selkirk’s conduct was so unreasonable that her loss of rent could not be said to be as a result of the owners corporation’s breach, and the whole of the reasons that she had failed to mitigate her loss, lay in the power on the part of the owners corporation to obtain access orders to rectify the bathroom. That is consistent with the fact that the Appeal Panel made no attempt to alter the findings by the Senior Member concerning Ms Selkirk’s conduct being the cause of her loss, and, separately, her conduct being unreasonable.

83. [164]

    I respectfully do not agree with the absoluteness of the propositions stated in [34] and [54], for the following reasons.

84. [165]

    First, the authorities cited in [34] do not support the proposition for which they are cited. Paragraphs [21]-[23] of Seiwa addressed the irrelevance of a defence of contributory negligence, which rested on the owners corporation’s claim that “the rust damage to the steel uprights should have been seen and reported by Seiwa much earlier than in fact it was”. Brereton J was not purporting to speak of a case of conscious opposition or resistance to the performance by an owners corporation of its duty. Nor does anything in Carli v The Owners - Strata Plan No 56120 [2018] NSWCATCD 55 at [101]-[103] support the proposition attributed to it by the Appeal Panel. Those paragraphs confirm the availability of power on the part of an owners corporation to enter onto a lot in order to perform its duty. They do not speak to the consequence of conscious opposition or resistance by the lot owner to that course. The fact that the same paragraphs of Seiwa and Carli have been cited as authority for the same propositions in Liberant v The Owners - Strata Plan No 62713 [2020] NSWCATCD 16 at [69] and The Owners - Strata Plan No. 36613 v Doherty; Doherty v The Owners - Strata Plan No. 36613 [2021] NSWCATAP 285 at [175] does not alter the position.

85. [166]

    Secondly, the statute operates in a practical way. The Appeal Panel referred to “restriction of access”, “interference with” and “resistance to” remediation. I agree with what I would regard as the evident thrust of the proposition, which is that in most circumstances the lack of enthusiasm by a lot owner is not an answer to the owners corporation performing its duty and repairing the common property. But much will depend on the nature of the defect, whether it only affects the particular lot owner or affects other lot owners too, and how sustained the lot owner’s opposition is. I would not wish it to be thought that an owners corporation, faced with intransigent opposition to the investigation and repair of a minor defect which only affects the intransigent lot owner, would inevitably be justified in seeking orders for compulsive entry onto that lot owner’s property to investigate and effect a repair, notwithstanding an ongoing breach of duty, although as I have sought to explain earlier, the class of case where such an order would not be made would be regarded as exceptional. Still less would I wish it to be thought that a lot owner may recover as of right damages following a breach of duty by the owners corporation irrespective of how intransigently the lot owner opposes the owners corporation from rectifying the problem.

86. [167]

    At the core of the error in the reasoning is the conflation by the Appeal Panel of the strictness of the owners corporation’s duty with the separate remedies of orders under s 232 and damages pursuant to s 106(5). Throughout its reasons the “strictness” of the duty is invoked – more than twenty times – as an answer to the satisfaction of other elements of a lot owner’s statutory rights. Breach of the strict duty imposed by s 106(1) is easy to establish, but it is to be firmly borne in mind that (a) breach of duty is but one element of an entitlement to damages, and (b) determining whether a lot owner’s claim of damages is one which is “as a result of” the owners corporation’s breach turns on the nature of the claim and the conduct of the lot owner subsequent to the breach, rather than the strictness of the duty.

87. [168]

    Once again, this may be seen by returning to fundamentals. Section 106 imposes a duty upon an owners corporation. That duty will be breached in a case such as the present when part of the common property (such as a pipe or a waterproof membrane) fails. It is not to the point that the owners corporation has taken reasonable steps, or that the lot owner has contributed to that occurring; there remains a breach. That is why the duty is styled “strict”. Even so, performance by the owners corporation of its obligations may be deferred if s 106(4) applies, and the duty is subject to s 106(3) and (7).

88. [169]

    Paragraph 54 of the reasons of the Appeal Panel is expressed in general terms. It refers in terms to “whatever” a lot owner advocated as an alternative or “whatever” might be done to attempt to resist the chosen course. I am unpersuaded that that is the law. Separately from the finding of breach, it was necessary for Ms Selkirk to establish that the loss for which she sought damages was loss which was “as a result of” the breach. There will come times where, despite an antecedent breach of duty, the subsequent acts of the lot owner mean that it can no longer be said that the breach of duty caused loss. Reference is sometimes made to “breaking the chain of causation”, as it was repeatedly before the Appeal Panel and before me. That is not especially helpful, for reasons that are well rehearsed in this area (see Sydney Trains v Argo Syndicate AMA 1200 [2024] NSWCA 101 at [117]-[120]), just as it is not especially helpful to refer to a “duty to” mitigate. The question is whether the part of the lot owner’s claimed loss reflects damage which is suffered as a result of the owners corporation’s breach. The question is one of statutory construction of s 106(5). There is no reason to conclude that “as a result of” entails that a lot owner whose conduct unreasonably prolongs the rectification continues to be entitled to damages, the burden of which will ultimately be borne by other lot owners, a construction which accords with Mitchelmore J’s observation in Smith v Owners – Strata Plan No. 3004 [2022] NSWSC 1599 at [38] that “the requirement for the loss to be ‘reasonably foreseeable … as a result of a contravention’ accommodates the application of mitigation”, as well as her Honour’s ultimate conclusion at [44]-[46] upholding the entitlement of an owners corporation to rely on a failure to mitigate.

Conclusions and orders

1. [170]

   For those reasons, I have concluded that the Appeal Panel erred in disregarding the entirety of the findings adverse to Ms Selkirk by reason of the power of the owners corporation under s 122 to obtain orders to access her lot. The proposition relied on by the Appeal Panel was expressed to be a matter of law in [34] and the proposition in that paragraph was applied dispositively on this issue at [54].

2. [171]

   The second ground of the owners corporation’s appeal identified the question of law raised as being “whether a mitigation defence is available in answer or partial answer to a claim for damages under s 106(5)”. Despite what it had earlier said at [47] and [52], the Appeal Panel in the ensuing dispositive paragraphs determined this appeal on the basis that it could never be available. That is not the position at law. It was open to the owners corporation to establish that Ms Selkirk’s own unreasonable conduct meant that parts of the lost rent she claimed were not to be regarded as losses “as a result of” the owners corporation’s breach of s 106(1). The position in a claim under s 106(5) is no different in that respect from a claim in contract or tort which is unaffected by the Civil Liability Act or a claim for damages for misleading and deceptive conduct under statute.

3. [172]

   Accordingly, the reasons of the Appeal Panel disclose an error of law. It warrants a grant of leave because it was dispositive of the appeal, not to mention being of general importance: see The Owners – Strata Plan 74232 v Tezel at [11]. The appeal should be allowed on this ground, and the question answered accordingly.

4. [173]

   Plainly I cannot in resolving an appeal limited to questions of law engage in the inquiry which, on the view I take, the Appeal Panel should have addressed, which was, bearing in mind the factual findings made by the Senior Member but also bearing in mind the power under s 122, to what extent if at all was the lost rent claimed by Ms Selkirk damages which cannot be characterised as damages as a result of the breach by the owners corporation of s 106(1). My inability to do so was common ground before me. However, and constructively, I was invited to short-circuit a remitter to the Appeal Panel, in light of the imminent further hearing.

5. [174]

   That strikes me as eminently sensible, and consistent with the obligations imposed by s 56 of the Civil Procedure Act 2002 (NSW). The extant orders make provision for the remitter that is to occur, which will be conducted in accordance with these reasons, and I shall include a note to that effect.

6. [175]

   The parties invited me to provide guidance for the member of NCAT before whom the hearing is to take place. It should be clear from the above that:

   1. (1)

      Ms Selkirk is entitled to damages for the lost rent in the immediate aftermath of the leak, in accordance with the owners corporation’s concession;

   2. (2)

      The owners corporation is not precluded from contending that in the period from 5 December to 20 December, Ms Selkirk’s damages should be zero because of her short term letting;

   3. (3)

      The owners corporation is not precluded from contending that Ms Selkirk’s conduct was, at some stage after early March 2021, such that her claim for lost rent does not answer the description of damages as a result of the owners corporation’s breach. That may be because of her purpose, or because her conduct was unreasonable, or because of her unilateral work on her bathroom which I have been told took place in September 2023. I am not seeking to be exhaustive, and I am in no position to be exhaustive, because neither the owners corporation’s application nor the majority of material in the remitted application is before me. But the ultimate question for NCAT is whether the claimed loss answers the statutory language of “reasonably foreseeable loss suffered by [Ms Selkirk] as a result of” the owners corporation’s breach of s 106(1).

7. [176]

   My conclusions on the main issues argued may be summarised as follows.

   1. (1)

      The duties imposed on an owners corporation by s 106(1) and (2) are not discharged by the exercise of reasonable care, nor by establishing that a lot owner has contributed to the defective condition of the property.

   2. (2)

      The duties imposed on an owners corporation by s 106(1) and (2) are not invariably applicable; they may be rendered inapplicable pursuant to s 106(3) or (7), and compliance may be deferred pursuant to s 106(4).

   3. (3)

      In all save exceptional cases, a breach of the duties in s 106(1) or (2) will make it appropriate for an order rectifying those breaches pursuant to s 232 to be made, including to the extent necessary an order authorising investigative works.

   4. (4)

      The existence of a breach of duty is an element of the statutory right to damages conferred by s 106(5). Such a breach is a necessary but not a sufficient condition. In order to obtain an order for damages, it remains necessary for a lot owner to demonstrate that the claimed damages answer the description of “reasonably foreseeable loss suffered by the owner as a result of” that breach.

   5. (5)

      It is open to an owners corporation to contend in response to a claim for damages pursuant to s 106(5) that the claimed loss is not reasonably foreseeable, or is not “as a result of” the breach.

   6. (6)

      Whether or not a claimed loss is “as a result of” the breach is to be determined in a practical way.

   7. (7)

      In determining whether a claimed loss is or is not “as a result of” the breach, it is open to an owners corporation to contend that the sole cause of the loss is conduct by the lot owner, or something other than the owners corporation’s breach (such as an intervening act), or that the lot owner’s own unreasonable conduct is the cause of the claimed loss. Rather than asking whether there has been a “break in the chain of causation”, or whether the “true cause” of the loss is the lot owner’s own conduct, or whether the lot owner has unreasonably failed to mitigate the lot owner’s loss, it is better to attend to the statutory language and ask whether and if so to what extent the claimed damage answers the description of loss suffered “as a result of” the owners corporation’s breach.

8. [177]

   I will not at this stage make any order as to costs. I have not heard the parties on costs, and each has enjoyed a measure of success. It may well be that the appropriate exercise of discretion of the costs in this Court is that there be no order as to costs, with the intention that each party bears its and her own costs. But if either side wishes to apply for an order, she or it may do so by motion within the time specified by UCPR r 36.16. Likewise, if there are orders which have been made in NCAT concerning costs which, in light of this judgment, are sought to be varied or set aside (if such exist, none has been brought to my attention), then application may be made by motion within the same time period.

9. [178]

   Finally, I return to the concerns expressed by the Senior Member surrounding the provision to the insurer of a 12 month lease at rent substantially above that which on the evidence was available for a lengthy lease, in circumstances where there was no cross-examination of Mr Wang’s evidence that he was in occupation under a short term tenancy.

10. [179]

    The Senior Member stated that Ms Selkirk was a solicitor, and I was told that that continued to be the case. Rule 5 of the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (NSW) provides as follows:

11. [180]

    The Senior Member, who saw Ms Selkirk cross-examined on this issue, was very concerned, but ultimately formed the view that he need take no step, in circumstances where he dismissed her claim, and the insurer and AFCA had dismissed her applications. It may be that the Senior Member had in mind the possibility that a criminal offence was attempted to be committed, but it had not succeeded. It is unclear whether he turned his mind to the rules governing the conduct of solicitors, which extend to conduct outside the course of legal practice.

12. [181]

    I noted earlier that the decision of the Senior Member is not published on Caselaw. But the litigation is now in the Supreme Court, rather than an administrative tribunal, and this Court’s reasons and judgments are made available unless there is some compelling reason to take a different course.

13. [182]

    As I indicated during the hearing, if I shared the Senior Member’s concerns, I would be unprepared to leave the matter where it lies. I did not see Ms Selkirk give evidence, and on the limited materials made available to this Court, neither the transcript of her cross-examination nor the documents on which it was based are before me. It is inappropriate for me to say anything other than state that based on the materials before me I share the concerns of the Senior Member, although there may be extenuating circumstances of which I am entirely unaware. Those concerns lead me to refer the matter to the professional regulator. I should make it absolutely clear that I am making no finding that Ms Selkirk in fact did anything which is improper. I also confirm that my concerns are irrelevant to the resolution of the appeal.

14. [183]

    I granted leave to Ms Selkirk to be heard about the possibility of a referral. Pursuant to that leave, on 17 June 2024 she advised that she did not wish to be heard against that course. However, she asked that any referral not appear in my judgment. She made the following submission:

15. [184]

    I do not accept those submissions. As advised during the hearing, it is not possible to draft reasons dealing with the findings of unreasonable conduct by Ms Selkirk which were central to the main ground of appeal without referring to the reasons of the Senior Member concerning the lease. It is important that a published judgment of the Supreme Court of New South Wales not leave the reader in any doubt about whether the conduct found by the Senior Member warrants investigation. That is an answer to the first point. In response to the second point, I have made it clear that I have made no finding, but based on what I have read, I share the Senior Member’s concerns sufficiently so that the matter should be considered and, if found appropriate, investigated by the profession’s regulator. Contrary to Ms Selkirk’s third point, there is nothing unfairly prejudicial in my making an order against which she does not seek to be heard, and publishing that order as almost invariably happens in the case of this Court’s reasons and orders following a hearing, and nothing in Ms Selkirk’s submission addresses the mandatory relevant considerations in the Court Suppression and Non-publication Orders Act 2010 (NSW), notably the fact that a primary objective of the administration of justice is to safeguard the public interest in open justice. Concerning her fourth point, Ms Selkirk is correct that the matters in [123] of the Senior Member’s reasons do not affect the outcome of this appeal. But as was explained at the hearing, I am disinclined to refer to those matters, and leave the position ambiguous as to whether I hold the view that they are matters of concern. I share the view reiterated by the Senior Member that they are very concerning.

16. [185]

    Accordingly, the Court’s orders are: