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Nicole Stanton v The Owners of Strata Plan 60724 [2010] NSWSC 175 (12 March 2010)

Last Updated: 18 March 2010

NEW SOUTH WALES SUPREME COURT

CITATION:
Nicole Stanton v The Owners of Strata Plan 60724 [2010] NSWSC 175
This decision has been amended. Please see the end of the judgment for a list of the amendments.

JURISDICTION:
Common Law

FILE NUMBER(S):
2009/12417

HEARING DATE(S):
4 December 2009, 16 February 2010

JUDGMENT DATE:
12 March 2010

PARTIES:
Nicole Stanton (First Plaintiff)
Denis Olender (Second Plaintiff)
Steven Olender (Third Plaintiff)
The Owners of Strata Plan No 60724 (Defendant)

JUDGMENT OF:
Harrison AsJ

LOWER COURT JURISDICTION:
Local Court

LOWER COURT FILE NUMBER(S):
53/05

LOWER COURT JUDICIAL OFFICER:
O'Shane LCM

LOWER COURT DATE OF DECISION:
8 April 2009


COUNSEL:
4 December 2009
L Wilson (Plaintiffs)
P Barham (Defendant)

16 February 2010
L Wilson (Plaintiffs)
P Ton (Defendants)

SOLICITORS:
Rosana Tyler (Plaintiffs)
Grace Lawyers (Defendant)


CATCHWORDS:
APPEAL - Practice and procedure - Question of law - Cross claim in Local Court for damages and loss of rent - Finding by Magistrate that plaintiff statute barred from cause of action and that defendant did not breach statutory duty - Whether Magistrate erred in not finding for plaintiff

LEGISLATION CITED:
Limitation Act 1969
Local Court Act 2007
Strata Schemes Management Act 1996
Supreme Court Act 1970

CATEGORY:
Principal judgment

CASES CITED:
Adams v Ascot Iron Foundry Pty Ltd (1968) 72 SR (NSW) 120
Allen v Kerr & Anor (1995) Aust Torts Reports 81-354
Argyropoulos v Layton [2002] NSWCA 183
Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139
Carr v Neill  [1999] NSWSC 1263 
Commonwealth of Australia v Amann Aviation [1991] HCA 54; (1991) 104 ALR 1
Creevey v Barrois [2005] NSWCA 264
Devries v Australian National Railways Commission [1993] HCA 78; (1993) 177 CLR 472
Frank v Equitiloan Securities Pty Limited [2007] NSWSC 812
Greetings Oxford Koala Hotel Pty Ltd v Oxford Square Investments Pty Ltd (1989) 18 NSWLR 33
Earl of Harrington v Corporation of Derby [1905] 1 Ch 205
Hamilton v National Coal Board [1960] AC 633
Hawkins v Clayton (1986) 5 NSWLR 109
Haydon v Kent County Council [1978] QB 343
Jacklin v Proprietors Strata Plan No 2795 [1975] 1 NSWLR 15
Lin v Owners Strata Plan No 50276 [2004] NSWSC 88
Lubrano v Proprietors Strata Plan No 4038 (1993) 6 BPR 13,308
Nelson v Wyong Shire Council (1989) 68 LGRA 164
O'Neill v Foster [2004] NSWSC 906; (2004) 61 NSWLR 499
Proprietors of Strata 464 v Oborn (1975) 1 BPR 9623
Proprietors Strata Plan No 159 v Blake (1986) CCH Strata Titles Cases 30-068
Proprietors Strata Plan No 6522 v Furney [1976] 1 NSWLR 412
Proprietors of Strata Plan 30234 v Margiz Pty Ltd (1993) 7 BPR 14,458
Ridis v Strata Plan 10308 [2005] NSWCA 246
R L & D Investments Pty Ltd v Bisby [2002] NSWSC 1082; (2002) 37 MVR 479
Scarcella v Lettice [2000] NSWCA 289; (2000) 51 NSWLR 302
Seiwa Pty ltd v Owners Strata Plan [2006] NSWSC 1157
Sheldon v McBeath (1993) Aust Torts Reports 81-209
State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in Liq) [1999] HCA 3; (1999) 160 ALR 588
Swain v Waverley Municipal Council [2005] HCA 4; [2005] 220 CLR 517
Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514

TEXTS CITED:
Balkin & Davis, The Law of Torts, 2nd ed (1996) Butterworths

DECISION:
(1) The orders of her Honour Magistrate O'Shane dated 8 April 2009 are affirmed.
(2) The appeal is dismissed.
(3) The summons filed 6 May 2009 is dismissed.
(4) Costs are reserved.



JUDGMENT:

IN THE SUPREME COURT

OF NEW SOUTH WALES

COMMON LAW DIVISION

ASSOCIATE JUSTICE HARRISON

FRIDAY, 12 MARCH 2010

2009/12417 - NICOLE STANTON (formerly Sztachanski)

& 2 ORS v THE OWNERS OF STRATA

PLAN 60724

JUDGMENT (Appeal decision of LCM – Strata Schemes

Management Act 1996 – Limitation period for cross claim)

1 HER HONOUR: By summons filed 6 May 2009, the plaintiffs seek first, an order that the judgment of her Honour Magistrate O’Shane dated 8 April 2009 in Local Court proceedings numbered 53/05 be set aside; and secondly, an order that there be judgment for the plaintiffs in the terms set out in their further amended statement of cross claim filed in the Local Court on 6 November 2008.

2 The first plaintiff is Nicole Stanton. The second plaintiff is Denis Olender. The third plaintiff is Steven Olender. The second and third plaintiffs are de facto partners. The first plaintiff is the daughter of the second plaintiff (“the plaintiffs”). The defendant is the Owners of Strata Plan No 60724 (“the Owners Corporation”). The plaintiff relied on the affidavit of Nicole Stanton dated 17 July 2009. The Owners Corporation relied on the affidavit of Peter Ton dated 9 September 2009.

3 In 1999, the plaintiffs purchased unit 27 in Strata Plan No 60724. The Owners Corporation filed a statement of claim seeking payment of strata levies from the plaintiffs. Shortly before the hearing took place, the parties settled the matters in dispute in the statement of claim.

4 The dispute in the Local Court was in relation to the cross claim filed by the defendants seeking $58,000 damages for water damage and loss of rent. The Magistrate dismissed the cross claim on the basis that she was not satisfied that the cross claimant had made out her claim. A verdict was entered in favour of the cross defendant.

The appeal in this Court

5 The plaintiff seeks relief under s 39 of the Local Court Act 2007 which provides that a party to proceedings before the Court sitting in its General Division who is dissatisfied with a judgment or order of the Court may appeal to the Supreme Court, but only on a question of law.

6 The onus lies on the plaintiff to demonstrate that there has been an error of law. What is a question of law (as opposed to a question of fact) was considered in Allen v Kerr & Anor (1995) Aust Torts Reports 81-354; Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 155-156; Carr v Neill  [1999] NSWSC 1263  and R L & D Investments Pty Ltd v Bisby [2002] NSWSC 1082; (2002) 37 MVR 479. The judicial officer cannot act on evidence inconsistent with facts that are incontrovertibly established by the evidence - see Devries v Australian National Railways Commission [1993] HCA 78; (1993) 177 CLR 472 per Brennan, Gaudron and McHugh JJ at 479 and State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in Liq) [1999] HCA 3; (1999) 160 ALR 588.

7 The plaintiff also sought leave pursuant s 40 of the Local Court Act. The onus lies with the plaintiff to demonstrate that there has been an error of law or that leave should be granted on a mixed question of law and fact. On 16 February 2010, leave was granted to the Owners to re-open the hearing in order to place in evidence a copy of the plaintiff’s application to the Consumer, Trader and Tenancy Tribunal (“CTTT”) that was filed before the hearing of this appeal on 23 October 2009 and at the time of hearing of this appeal was unknown to the defendant. It received a copy of the application on 23 December 2009 after the hearing had concluded. It only become relevant should leave be granted on a mixed question of fact and law and may be relevant to the discretion to grant leave.

8 Section 41 of the Local Court Act provides that the Court may determine an appeal either (a) by varying the terms of the judgment or order, or (b) by setting aside the judgment or order, or (c) by setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the Supreme Court’s directions, or (d) by dismissing the appeal. The plaintiffs also relied upon s 75A of the Supreme Court Act 1970, which refer to an appeal to the Court. However, s 75A(4) says that this section has effect subject to any Act, so the appeal is made under ss 39 and 40 of the Local Court Act.

9 In Swain v Waverley Municipal Council [2005] HCA 4; [2005] 220 CLR 517, Chief Justice Gleeson at [2] reiterated that in the common law system of civil justice, the issues between the parties are determined by the trial process. The system does not regard the trial as merely the first round in a contest destined to work its way through the judicial hierarchy until the litigants have exhausted either their resources or their possibilities of further appeal.

Grounds of appeal

10 The plaintiffs appeals the whole of the decision of her Honour Magistrate O’Shane dated 8 April 2009 on the grounds first, that her Honour erred in law by finding that the Limitation Act 1969 statute barred the plaintiffs from their causes of action; secondly, her Honour erred in law by concluding that the defendant did not breach their statutory duties under the Strata Schemes Management Act 1996. Having found that common property had been damaged, whether on the admission of the defendant or on the evidence, her Honour ought to have held that the defendant breached its statutory duties under the Strata Schemes Management Act and/or was negligent; thirdly, her Honour erred in law by finding that, because the evidence on damages was insufficient, her Honour could not find that the defendant breached its duty under the Strata Schemes Management Act and/or was not negligent; fourthly, her Honour was in error in declining to award damages to the plaintiffs; fifthly, her Honour erred in law in failing to allow the plaintiffs to adduce evidence of: (a) the cause of damages to the common property, (b) the quantum of damage to the common property, (c) the cause of damage to the plaintiff’s internal or private property, (d) the quantum of damage to the plaintiff’s internal or private property; sixthly, her Honour erred in holding that it was for the plaintiffs to prove the cause of damage to the common property because under the Strata Schemes Management Act, it is the defendant’s duty to maintain and keep in a state of good and serviceable repair the common property within its strata plant regardless of how that damage was caused; seventhly, her Honour erred in making the costs order that the plaintiff pay the defendant’s costs on the basis that costs follow the event and , in fact, judgment ought to have been entered for the plaintiffs, regardless of the quantum of damages, and accordingly the plaintiffs are entitled to costs on the ordinary basis; and eighthly, the judgment of the Local Court dated 8 April 2009 for civil claim number 53/05 is incorrect insofar as it gives judgment for the plaintiff. The statement of claim filed by the defendant in the Local Court proceedings was settled and discontinued the night before the hearing of the cross claim took place. The hearing in the Local Court was in relation to the cross claim.

The pleadings

11 The Owners Corporation admitted that it had obligations in regards to the common property as prescribed in s 62 of the Strata Schemes Management Act 1996 (“the Act”). At the commencement of the hearing in the Local Court the Owners Corporation conceded the damage to walls, ceiling and floors within the plaintiffs lot (unit 27) were common property. However, the concession in respect to the floor was withdrawn, with the agreement of counsel for the plaintiffs, subsequent to evidence being given by first plaintiff suggesting the contrary (T 5.3.09, 12.11-13.5 and 13.32-44). Ultimately, counsel for the plaintiffs submitted she did not have a determined view as to the status of the floor (T 5.3.09, 13.1-5).

12 Points were taken in relation to the pleadings so it is necessary to briefly refer to them.

13 Paragraphs [3] and [4] of the amended cross claim pleads:

“3. The Cross Defendant is and at all material times has been the body corporate responsible for properly maintaining and keeping in a state of good and serviceable repair the area of land forming the common property as well as that area of common property containing planter boxes located above Unit 27.

4. There was at all material times water collecting inside the planter boxes located on the said land above Unit 27. At all material times this water escaped, and from time to time continues to escape, from the planter boxes located on the said land onto the tiles and concrete slab on the said land and to penetrate the walls and ceiling of Unit 27 thereby causing damage to Unit 27. These were defects within the meaning of section 64(1)(b) of the Act thus work to rectify such defects could have been carried out at its own expense.

Particulars

(a) Common property is defined in the Dictionary in the Act, pursuant to section 6 of the Act.

(b) The water was collecting because of defects in a pipe or duct that provides, or through which water or drainage passes (“the Defects”).

...”

14 Paragraph [6] alleges that that on or about March 2008, the Owners Corporation did, by its agents, employees or contractors, enter the building for the purpose of carrying out work required or permitted to be carried out by the cross defendant in accordance with the Act and such work did not adequately repair the defects and the cross defendant is liable for the damage. The cross defendant is empowered to enter the building in order to carry out the work by section 65(1) of the Act; and the cross defendant is liable for any damage to unit 27 or any of its contents caused by or arising out of any work referred to in s 65 of the Act by virtue of s 65(6) of the Act. This is a pleading directed to the Owners Corporation’s responsibility when they enter property to carry out work. Section 62 was not pleaded in the cross claim.

15 Paragraph [7] alleges that the water and property damage to the unit was caused by the negligence of the defendant and at [8] states, “By reason of the cross defendant’s negligence and/or breach of its duties under the Act, the cross claimant’s have suffered loss and damage.”

16 The defence to the amended cross claim at [7] pleads:

“7. In answer to the whole of paragraph 4 and 7 of the further amended statement of cross-claim, says that any cause of action, if any is properly pleaded, is statute barred pursuant to Sections 14(1)(b) and 63(1) of the Limitations Act 1969 (NSW).”

Section 63 (1) does not appear to be relevant.

17 Rule 14.4(2) of the Uniform Civil Procedure Rules 2005 reads:

“(2) In proceedings in the Local Court, a plaintiff may file a reply to a defence only by leave of the Court.”

18 No leave was sought to file a reply. While the limitation defence was pleaded, there was no reply that put in issue that the claim was not statute barred as the breach was a continuing one.

Whether the cross claim is statute barred

19 On this topic of whether the cross claim is statute barred the Magistrate in her reasons for judgment dated 8 April 2009 stated:

“The plaintiff cross-defendant submitted that these claims are out of time. As the cross-claimant herself quite clearly states in her affidavit of October 2009, she first noticed damage to the property in 2001, if not, 2002. I did actually go back over her statement. Notwithstanding that I did so, I was not clear by the time I wrote these comments. She does specifically state in that affidavit that she first notice the damage in 2001, but there was something else, another reference to 2002, and I am not sure that she did not actually first notice the damage to the property in 2000. But however, notwithstanding that, her claim in respect of that damage was not initiated until 6 November 2008. In that timeframe it is properly submitted on behalf of the cross-defendant that she is precluded from taking this action by operation of s 14 of the Limitation Act 1969 and in making that submission the cross-defendant further relies on pronouncements made by Handley J in the case of Scarcella v Lettice [2000] NSWCA 289; (2000) 51 NSWLR 302, where his Honour said, inter alia:

“In order for the plaintiff’s cause of action to be complete the plaintiff’s actual damage must be measurable.”

...the claimant has not provided evidence of the measure of damage in respect of which she purports to claim. Regarding the issue of economic loss, which is essentially her claim with respect to rental income from the property – and as I commented a few minutes ago, it is correlative to the alleged water damage – then as Handley J emphasised in the case of Scarcella v Lettice:

“The courts have developed special rules for distinguishing between actual and prospective damage in this area.”

More particularly, as the cross-defendants relies upon, his Honour emphasised in that case the well-established principle that once a cause of action has accrued time begins to run for limitation purposes, whether the claimant is aware or not that she has a cause of an action. I have to say that this court accepts that that submission alone has been sufficient to dispose of the cross-claim here. However, on behalf of the plaintiff cross-defendant it is further submitted that the walls and floor of her unit, which she claims to be water damaged – by the way, I think it is conceded that there is water damage in any event, so I do not mean that the court is simply hearing an allegation of water damage and does not believe it. I do not mean to convey that to the parties. I accept that there is water damage there. But the cross-defendant submitted that those areas of her unit which she claims to be water-damaged constitute, in fact, common property, and I am certainly satisfied that that is the case on the basis of Seiwa.

The submission goes further to state then she does not have standing to seek damages in relation to repair costs of property belonging to another entity, and I think that is a well-established, time-honoured principle of law in these types of matters. Once again, the court accepts that that sufficient alone is sufficient to dispose of the claim”

20 Section 14 of the Limitation Act reads

“14 General

(1) An action on any of the following causes of action is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims:

...

(b) a cause of action founded on tort, including a cause of action for damages for breach of statutory duty,

(2) This section does not apply to:

(a) a cause of action to which section 19 applies, or

(b) a cause of action for contribution to which section 26 applies.

...”

21 Ms Stanton is not claiming contribution nor does her claim relate to compensation to relatives. Hence s 14(2) is not applicable.

22 Section 74 of the Limitation Act refers to set off and reads:

“74 Set off etc

(1) Where, in an action (in this section called the principal action, a claim is made by way of set off, counterclaim or cross action, the claim, for the purposes of this Act:

(a) is a separate action, and

(b) is, as against a person against whom the claim is made, brought on the only or earlier of such of the following dates as are applicable:

(i) the date on which the person becomes a party to the principal action, and

(ii) the date on which the person becomes a party to the claim.

(2) This section extends to a claim by way of set off made by a defendant under the Civil Procedure Act 2005, even if one or more of the debts giving rise to the set off became due and payable after the date on which the defendant became a party to the principal action, so long as at least one of those debts became due and payable on or before that date.”

23 In Nelson v Wyong Shire Council (1989) 68 LGRA 164 Giles J explained at 168-169 that s 74 deals with three situations. They are:

“In the first situation where the defendant cross-claims (to use the present term) against the plaintiff, a counter-claim is put in the same position as a set-off in that lapse of time will not bar the counter claim unless the relevant period expired prior to the plaintiff bringing the proceedings against the defendant. In the second situation where the defendant cross-claims against someone not already a party to the proceedings, and who becomes a party to the proceedings when he becomes ‘a party to the claim’, that is, joined as cross-defendant to the cross-claim, time runs in favour of that cross-defendant until he is so joined. In these two situations apparently it was felt right that by bringing the proceedings the plaintiff should be taken to have stopped time running in his favour for any proper cross-claim back against him by the defendant, but not right that by bringing the proceedings within which the cross-claim might be brought the plaintiff should also stop time running in favour of potential third parties. The third situation of a cross claim by the defendant against a co-defendant, that is someone already a party to the proceedings but not the plaintiff, is treated in the same manner as the first situation, so that the plaintiff by bringing the proceedings also stops the time within which the cross-claim must be brought running in favour of the co-defendant.”

24 In O’Neill v Forster [2004] NSWSC 906; (2004) 61 NSWLR 499, Campbell JA (at [48], [53] and [54]) stated:

“[48] Section 18A(2) of the Limitation Act 1969 has the effect that an action for trespass to the person: “is not maintainable if brought after the expiration of a limitation period of three years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims.”

If the cause of action is one which a plaintiff relies upon, an action on that cause of action is “brought” when the plaintiff commences proceedings which allege that cause of action. But when is a cross-claim “brought”?

[53] Thus, where, as in the present case, the cause of action is asserted by way of a cross-claim, s 74 of the Limitation Act 1969 imposes a different test to that of the pre-1969 New South Wales law for when the action is treated as being “brought”. Section 74 provides:

“Where, in an action (in this section called the principal action), a claim is made by way of set off, counterclaim or cross action, the claim, for the purposes of this Act:

(a) is a separate action, and

(b) is, as against a person against whom the claim is made, brought on the only or earlier of such of the following dates as are applicable:

(i) the date on which the person becomes a party to the principal action, and

(ii) the date on which the person becomes a party to the claim.”

As Giles J explained in Nelson v Wyong Shire Council (1989) 68 LGRA 164 at 169, s 74 can involve a “relation back” of the limitation period for which it provides.

[54] Applying s 74 of the Limitation Act 1969 to the facts of the present case, the claim of trespass to the person made in the cross-claim is treated, pursuant to s 74(a), as a separate action. That claim is brought against the plaintiff. The plaintiff became a party to the principal action on the date he commenced it, namely 9 August 2002. He became a party to the claim (of trespass to the person) on the date that the cross-claim was filed, namely 22 January 2004. The earlier of those dates is 9 August 2002. Thus, pursuant to s 74(b), the claim of trespass to the person is “brought” on the earlier of those dates, namely 9 August 2002. Being “brought” on that day, it is within the three-year limitation period from the date when the cause of action first accrued to the cross-claimant. Thus, it is brought within time.”

25 In Creevey v Barrois [2005] NSWCA 264 at [47] the Court of Appeal stated:

“[47] The Court’s attention was drawn to a number of authorities, although none was definitive of the construction issues under consideration. In the earliest, Nelson v Wyong Shire Council (1989) 68 LGRA 164, Giles J considered the inter-relationship of ss 26 and 74 of the Limitation Act, holding that the effect of s 74 was, in effect, to allow the limitation period provided by s 26(1) to be avoided where a cross-claim was made against a person already party to the proceedings, where that person had been joined prior to the expiration of the limitation period for a claim of contribution by another party. For present purposes, his Honour’s reasons do no more than affirm that s 74 will provide no benefit to a cross-claimant, where the proposed cross-defendant is a third party, not earlier joined in the proceedings.”

26 This is not the case here as the cross claimant was already the defendant in the proceedings.

27 In Franks v Equitiloan Securities Pty Limited [2007] NSWSC 812, Brereton J at [43] stated:

“[43] The other ground of prejudice adverted to was the possibility that causes of action otherwise statute-barred would be resurrected. It appears at least possible that part, but a relatively small part, of Equititrust’s cross-claim arose more than six years before the date on which any order granting leave to amend would be made, although within six years before the application for leave to amend was made on 10 April this year. It is probably a consequence of the (NSW) Limitation Act 1969, s 74, that if Mr Franks were joined, a cross-claim against him would be taken to have been commenced on the day when he first became a party to the proceeding as plaintiff, and that there be no limitation problem in that respect. In any event, in circumstances where he had taken the benefit of the assignment of a claim commenced many years ago, it is very difficult to see that, taking “subject to the equities”, he would be permitted to invoke a limitation defence that was not available to the assignor. Had I otherwise been of the view that leave to amend ought to be granted, I would have made the order with effect from 10 April 2007, in which event there would have been no question of a limitation difficulty.”

28 Applying s 74 of the Limitation Act to the facts of the present case, the claim of damages is treated pursuant to s 74(1)(a) as a separate action. That claim is brought against the plaintiff. The plaintiff became a party to the principal action on the date she commenced it, namely 2005. She became a party to the claim of damages on the date the cross claim was filed, namely 5 March 2008. Thus, pursuant to s 74(1)(b), the claim of water damage is “brought” on the earlier of those dates, namely in 2005. Being “brought” on that day it is within the six year limitation period from the date when the action first accrued to the cross claimant. Thus, the cross claim is brought within time. The set off provision was not argued before the Magistrate.

Continuing duty of care

29 The plaintiffs also submitted that the water damage complained of is a continuing breach and thus not statute barred. According to the plaintiff the defendant owed them a continuing duty of care and a continuing statutory duty to properly maintain and keep in a state of good and serviceable repair the common property, a fresh cause of action arises where a fresh breach causes loss going beyond the loss resulting from the barred cause of action.

30 The defendant submitted that first, the cross claim did not plead such a cause of action; secondly, no evidence was led differentiating the damage said to have been suffered pre and post the limitations period. According to the defendant had the case been pleaded and conducted properly, evidence could have been obtained and relied upon by the defendant on the issue; thirdly, there was no admissible evidence as to the cause or quantum of the lot property damage; fourthly, no application was made to amend the cross claim; and fifthly, the defendant has been denied any opportunity to lead evidence on the issue.

31 I accept that the issue of continuing breach of duty of care was not raised by the cross claimant until her counsel made submissions in the Local Court. This did not permit the defendants to adduce evidence on this topic.

32 Counsel for the plaintiff referred to Balkin & Davis, The Law of Torts, 2^nd ed (1996) Butterworths at 807-808 where the learned author discussed continuing torts. He says:

“(h) Continuing torts. A continuing wrong is one in which the defendant’s act or omission causes injury or damage recurrently to the plaintiff, day by day until the wrong is remedied or rendered irremediable. It differs from the notion of aggravation of damage, in that a continuing wrong does not necessarily increase the harm suffered by the plaintiff; it differs from the idea of successive occurrences of damage in that the defendant who commits a continuing wrong is guilty of more than one isolated wrongful act. (For a discussion of the differences between the various types of injury, see Harrington (Earl of) v Derby Corporation [1905] 1 Ch 205 at 226-8 per Buckley J.”

33 Ms Stanton’s evidence was that in 2000 she moved into unit 27. Within two months of moving in she noticed water damage in the unit. She observed that there was a wet patch on the ceiling of the combined lounge and dining area evidenced by a darkened stain. When she touched that dark patch it felt wet and damp. It was not a consistent circle shape rather it was an odd shape. The dark patch on the ceiling was very close to the wall and there were drips down the walls. Ms Stanton says that some of the water would run all the way from the ceiling to the floor where there was some water damage to the wooden skirting boards. Along the length of the sliding doors was discolouration on the floorboards.

34 In early May 2001, Ms Stanton returned to unit 27 after being away for a time. When she returned she found that water had again entered her apartment through the ceiling, dripped down the wall and onto the floorboards. She says that rather than being confined to the original patch of water in the lounge/dining room, this time the water had advanced to the middle of the room towards the kitchen and into the kitchen. The water had travelled from the original dark patch towards the main bedroom. The water went through a down light in this direction and at times she saw water dripping from the down light onto the coffee table. The water also travelled from the original corner along the corner of the wall and ceiling above the sliding doors towards the study. Within the study she saw water damage in the north west and north east corners and that these patches of water were separate patches to the original one in the living/dining room. In 2003, the plaintiff returned to live in unit 27. At this time she observed water stains in the corner of the living and dining room where the original leaking had been. She did not see damage to the floorboards or actual drips of water during this time while living in the unit. (Aff, 27.10.08 [11], [13], [18]).

35 On 1 July 2007, the plaintiff visited unit 27 to allow Greg Young access to the unit to prepare a damage report. While he was there the plaintiff saw him touching the ceiling in the living room close to the down light. She saw water drip from the ceiling onto his finger and down his hand. She noticed drips down the wall and that the patch on the ceiling was more noticeable and darker. She saw water dripping down the wall in the study area. The plaintiff lifted a picture away from the wall in the kitchen and found water droplets on the wall behind the picture. (Aff, 27.10.08 [27])

36 In so far as the test of negligence is concerned, in Scarcella v Lettice [2000] NSWCA 289, Handley JA stated that time only runs from when the plaintiff suffers actual damage for only then is the plaintiff’s cause of action complete. In Scarcella the appellant pleaded that the claim in tort was statute barred under the Limitation Act. This required the court to determine when the plaintiff first suffered actual damage. Their cause of action would then be complete even if further damage continued to accrue. In order for the plaintiff’s cause of action to be complete, the plaintiff’s actual damage must be “measurable” – Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514 at 531. Handley JA in Scarcella continued that the general principle is that time runs from when the cause of action is complete, whether or not this is discovered or discoverable. The exceptions to the rule are latent defects in buildings, latent defect in title, and prospective and contingent losses. They depend in each case on a finding that the particular form of economic loss had not been suffered when the plaintiff became committed to the risk, but only later when the risk actually occurred.

37 However, later in Argyropoulos v Layton [2002] NSWCA 183 Handley JA considered a continuing duty of care stated at [7], [50], [52] and [64]:

“[7] The further breaches of the respondents' duty of care after 11 June 1993 resulted in the appellant suffering new and different damage, namely the loss of the chances of obtaining an extension of the limitation period and then of recovering damages on the original cause of action against the motorist. In Hawkins v Clayton (1986) 5 NSWLR 109, at 124-125 Glass JA said:

"Assuming a continuing duty of care, a fresh cause of action will only arise if a fresh breach causes loss going beyond the loss resulting from the barred cause of action. Such a fresh cause of action was established in Adams v Ascot Iron Foundry Pty Ltd (1968) 72 SR (NSW) 120 where the plaintiff being statute barred in respect of a lung disease caused by negligence before the limitation period was able to prove subsequent negligent exposure to dust which rendered his condition worse than it would have been as a consequence of the statute barred negligence".

[50] Moreover, one cause of action is rendered distinct from another, if there is any ingredient of the respective causes of action which is distinctive, though that ingredient be simply the repetition of a continuing breach by a negligent architect on successive days; Sheldon v McBeath (1993) ATPR 81-209 at 62,073. The mere fact that the ingredient comprising "damage" might be similar or that "each cause of action may be identical for practical purposes" does not preclude the inference that the causes of action are distinct (per Priestley JA).

...

[52] In relation to any tort which is actionable without proof of injury, or in relation to a tort such as nuisance, where there is a continuing duty to abate, if the act which constitutes the tortious conduct is a continuing act, every continuance of that act gives rise to a fresh cause of action. Here though the cause in negligence is not actionable without damage as its gist. The failure to seek leave in time involves a continuing accretion to the damage suffered. This is as the chance or prospect of successful leave diminishes with each day's delay in seeking leave, till it becomes a practical impossibility.

...

[64] It may be granted that a cause of action in tort accrues when measurable damage is first suffered, even though further damage continues to accrue (Wardley Australia Ltd v Western Australia [1992] HCA 55; (1992) 175 CLR 514, 531; Scarcella v Lettice [2000] NSWCA 289; (2000) 51 NSWLR 302, 306, Cartledge v Jopling & Sons Ltd [1963] AC 758). But that result is here confessed and avoided. This is either on the basis of there being a separate and distinct cause of action giving rise to its own damage, or because there is a separate breach brought about by each further day of delay, until application for leave became impossible. Each day's delay in seeking leave diminished the chance of obtaining it. That augmented the damage, till the point was reached in this case that there was no longer any prospect of leave being granted. On either basis the Appellant must succeed on the statutory prescription point.”

38 As the cross claim is not statute barred it is not necessary for me to decide where there is a continuing breach of duty of care. Even though the Magistrate made an error of law in relation to the cross claim being statute barred, her Honour gave other reasons why the cross claim failed. They are that the cross claimant did not prove what caused the damage or statutory breach. There was no evidence as to quantum or damage.

Did the defendants breach their statutory duties and does a lack of evidence lead to a finding that no breach occurred?

39 Counsel for Ms Stanton submitted that as the Magistrate made a finding that the common property had been damaged her Honour ought to have held that the defendants breached their statutory duty under the Act and/or was negligent. Counsel further submitted that given the concession and evidence about the damage to the common property the Magistrate had no choice but to find that the defendant breached their statutory duty, regardless of how the damage to the common property was caused.

The Strata Schemes Management Act

40 Sections 62, 64 and 65 of the Strata Schemes Management Act reads:

“62 What are the duties of an owners corporation to maintain and repair property?

(1) An owners corporation must properly maintain and keep in a state of good and serviceable repair the common property and any personal property vested in the owners corporation.

(2) An owners corporation must renew or replace any fixtures or fittings comprised in the common property and any personal property vested in the owners corporation.

(3) ...

64 What power does an owners corporation have to carry out work at its own expense?

(1) An owners corporation may carry out such work as is necessary to rectify any of the following defects:

(a) any structural defect in any part of a building comprised in a lot that affects or is likely to affect the support or shelter provided by that lot for another lot in the building or the common property,

(b) any defect in any pipe, wire, cable or duct that provides, or through which passes, any water, sewage, drainage, gas, electricity, garbage, artificially heated or cooled air, heating oil or other service (including telephone, radio or television services) within a lot.

(2) An owners corporation may carry out work referred to in this section at its own expense if the cost of the work cannot be recovered from some other person.

65 Can an owners corporation enter property in order to carry out work?

(1) An owners corporation may, by its agents, employees or contractors, enter on any part of the parcel for the purpose of carrying out the following work:

(a) work required to be carried out by the owners corporation in accordance with this Act,

(b) work required to be carried out by the owners corporation by a notice served on it by a public authority,

(c) work required to be carried out by the owners corporation by an order under this Act.

(2) An owners corporation may, by its agents, employees or contractors, enter on any part of the parcel for the purpose of determining whether any work is required to be carried out by the owners corporation in accordance with this Act.

...

(6) An owners corporation is liable for any damage to a lot or any of its contents caused by or arising out of the carrying out of any work, or the exercise of a power of entry, referred to in this section unless the damage arose because the owners corporation was obstructed or hindered.”

41 In Seiwa Pty Ltd v Owners Strata Plan [2006] NSWSC 1157, Brereton J stated at [3] – [6]:

“[3] There is no suggestion in this case that subsection (3) is applicable. It is subsection (1) that is relevant. Section 62(1) imposes on an owners corporation a duty to maintain, and keep in a state of good and serviceable repair, the common property. That duty is not one to use reasonable care to maintain and keep in good repair the common property, nor one to use best endeavours to do so, nor one to take reasonable steps to do so, but a strict duty to maintain and keep in repair.

[4] The duty to maintain involves an obligation to keep the thing in proper order by acts of maintenance before it falls out of condition, in a state which enables it to serve the purpose for which it exists [Hamilton v National Coal Board [1960] AC 633 at 647 (Lord Keith of Avonholm); Haydon v Kent County Council [1978] QB 433 at 464 (Shaw LJ); Ridis v Strata Plan [2005] NSWCA 246, [161]]. Thus the body corporate is obliged not only to attend to cases where there is a malfunction, but also to take preventative measures to ensure that there not be a malfunction [Greetings Oxford Koala Hotel Pty Ltd v Oxford Square Investments Pty Ltd (1989) 18 NSWLR 33 (Young J); Ridis, [162]–[163]. The duty extends to require remediation of defects in the original construction of the common property [Proprietors Strata Plan No 6522 v Furney [1976] 1 NSWLR 412 at 416 (Needham J); Ridis [164]–[165]]. And it extends to oblige the owners corporation to do things which could not be for the benefit of the proprietors as a whole or even a majority of them [Proprietors Strata Plan 159 v Blake (1986) CCH Strata Titles Cases 30–068 (Yeldham J); Ridis, [166]].

[5] It follows that as soon as something in the common property is no longer operating effectively or at all, or has fallen into disrepair, there has been a breach of the s 62 duty [cf Ridis [177]]. Insofar as Ridis held that s 62 did not oblige an owners corporation to conduct or procure the conduct of an expert assessment of every possible source of danger in the common property, personal property vested in it, and fixtures and fittings comprised in the common property, that was in the context of a submission that by imposing the statutory duty to maintain and repair, s 62 had the ancillary effect of extending the common law duty of care of an owners corporation as an occupier of the common property to include rigorous duties of inspection. The Court of Appeal rejected the submission that s 62 expressly or implicitly resulted in the imposition of such a common law duty. But that is beside the point; in this case, unlike in Ridis, the plaintiff relies on a statutory cause of action said to arise on s 62, rather than a duty of care said to arise consequentially from s 62 [cf Ridis, [87]–[88]].

[6] The duty of an owners corporation under s 62 is owed to each lot owner, and its breach gives rise to a private cause of action under which damages may be awarded to a lot owner for breach of statutory duty. This conclusion was reached by Young J, as his Honour the Chief Judge then was, in respect of the predecessor of s 62, namely Strata Titles Act 1973, s 68, in Lubrano v Proprietors Strata Plan No (1993) 6 BPR 97,457, at 13,310–13,311, upon a thorough consideration of earlier authorities to like effect [Jaklyn v Proprietors Strata Plan No [1975] 1 NSWLR 15 at 24 (Holland J); Proprietors Strata 464 v Oborn (1975) 1 BPR 9623 at 9624 (Holland J); Proprietors Strata Plan 159 v Blake, 50,654 (Yeldham J); Proprietors Strata Plan 30234 v Margiz Pty Ltd (NSWSC, Brownie J, 30 June 1993). Gzell J has since followed it in the context of the 1996 Act [Lyn v Owners Strata Plan No [2004] NSWSC 88, [90]].”

42 As soon as something in the common property is not operating effectively or at all, there has been a breach of the s 62 duty. The duty of an owners corporation under s 62 is owed to each lot owner and its breach gives rise to a private cause of action under which damages may be awarded to the lot owners for breach of statutory duty. But this raises the question, did Ms Stanton establish that some part of the common property was not operating effectively or at all?

43 On the issue of negligence, the Magistrate stated:

“... with respect to water damage to her unit, she failed to properly or satisfactorily have investigations done to ascertain the cause of the problems. She did in fact call in a plumber who carried out some minimal inspection, but it was clear that he simply vented an opinion as to where or what might have caused or be causing water leakage into the property and consequent damage. It would seem from the terms in which he drew his statement, which purported to be by way of expert evidence, that he expected the placement of pot plants, I think it was, on the balcony above Ms Stanton’s unit. He did not observe any appropriate drainage from the planter boxes. He did not actually state what was the extent of his inspection of the drainage system. He simply stated that he could not observe any appropriate drainage. He simply then formed the opinion, more strictly he simply jumped to the conclusion, that as a consequence of a lack of drainage from the planter boxes water would then leak into the property below, which as I have already indicated, was the unit that is owned in part by Ms Stanton. That is as much as he could say. It was certainly simply not sufficient.”

44 However, in relation to whether there was a breach of statutory duty, Ms Stanton failed to identity what part of the common property was not operating effectively or at all. In order for the Owners Corporation to fix the part of the common property that is not working that part of the common property needs to be identified. In both Seiwa and Lin v Owners of Strata Plan No 50276 [2004] NSWSC 88 damages were awarded for breach of s 62(1). In Seiwa, defective part of the common property was identified as the waterproof membrane. In Lin, the exhaust ventilation was identified as not operating effectively. In these circumstances, the Magistrate could not have found that there was a breach of s 62 of the Strata Schemes Management Act. So far as negligence is concerned the Magistrate was correct in saying that the cross claimant did not prove the cause of the water damage.

45 In regard to the unauthorised repairs, the Magistrate stated:

“... given that there was a tenant in possession of the premises at the time and that there was no evidence that that person had not authorised the installations, then clearly that is not sufficient evidence to establish her claim in respect of those so-called unauthorised repairs.”

46 There is no error in this finding.

Rejection of evidence

47 The cross claimant’s counsel submitted that her Honour made several decisions to reject the cross claimant’s evidence during the hearing but did not identify them in the written submissions. However, the cross claimant’s counsel submitted that the evidence that was rejected was not strictly necessary as evidence to the common property is sufficient to base a finding that the Owners Corporation had not complied with its duties under the Act. Alternatively, the cross claimant submitted that her Honour’s decisions to reject evidence were errors of law. There were paragraphs of affidavits that were rejected. Leave needs to be granted to appeal these decisions but the cross claimant has not shown that they were of such importance that leave should be granted. Hence leave is not granted.

48 If the cross claimant is referring to the evidence of the plumber that evidence was allowed but the Magistrate stated that, “he simply jumped to the conclusion...”. An affidavit of Mr Young was rejected on the basis that there was no expert’s code of conduct statement and the report was prepared for Nicole Stanton. During the hearing, counsel for the cross claimant agreed that Mr Young’s report was not prepared for the purposes of the proceedings. There is no error of law here.

Should damages have been awarded?

49 Counsel for the cross claimant submitted that having proved a breach of the statutory duty, as distinct from proving negligence, the Magistrate was obliged to award damages in favour of the cross claimant. But as I have stated, the cross claimant did not establish that the Owners Corporation breached its statutory duty. Nor did she establish negligence. However, if I am wrong I shall consider whether the Magistrate ought to have awarded damages.

50 The cross claimant claimed damages under three general heads, namely “general damages” that comprised of the unsightly appearance and musty smell of the unit; for the loss of rental income; and finally for fixing aspects of the unit that are not common property such as replacement of power points on the wall, paint work and the replacement of an air vent and for the furniture and mattress because water dropped from the ceiling onto the furniture and then the water dripped onto the floating floorboards, if that has determined to be floating (t 5.3.09, 10-12). Ms Stanton gave evidence that she did not know if the floorboards were floating ones so the Magistrate could not have awarded damages for the floating floorboards.

51 There was no evidence before the Magistrate as to the quantum of any of these items, such as how much it would cost to get rid of the musty smell. While the court has a duty to do the best it can with the evidence (Commonwealth of Australia v Amann Aviation [1991] HCA 54; (1991) 104 ALR 1 there was no evidence from which the Magistrate could make any findings.

52 On damages for rents forgone, the Magistrate had this to say:

“... [Ms Stanton] called the agent who had handled the tenancies for the claimant. He was not qualified as an expert witness, but nevertheless purported to give evidence from his experience that the premises could not be rented at particular market rates available from time to time in respect of similar premises by reason of the poor condition of the premises. Once again, clearly that evidence was not sufficient to establish her claim in that respect. Once again, I would have to say, the evidence of that agent was not qualified as an expert witness. He did not give evidence of having made any extensive examinations of comparable properties. He apparently simply looked at what properties were available in the area, and even then he was somewhat superficial in his reference to such properties and he did not, in any event, give considered opinion.

He did give opinion, but it certainly was not based on anything that he had set out in his report, and therefore I say it was not a considered opinion, as to what rental rates might have been expected for properties of a similar nature and condition to that owned by Ms Stanton. I just repeat, clearly the evidence is not sufficient to establish her claim in respect of rents foregone. ...”

53 There is no error of law here. Nor did the Magistrate make an error of law in relation to the onus of proof.

54 While the Magistrate did err in finding the cross claimant statute barred, the cross claim was dismissed for a number of other reasons. They are that the cross claim failed to establish statutory breach or negligence and damages. Hence, the cross claimant could not succeed on her cross claim. The appeal should be dismissed.

55 Before I make orders, comment should be made about the approach of the parties to this litigation. The parties agree that unit 27 has water damage, but how this has occurred has not been ascertained. The result is that both parties have wasted legal costs in pursuing this litigation in both the Local Court and this Court. What is needed is co-operation between the parties to identify cause of the water damage. If the Owner Corporation has a duty to rectify it rather than waste more money on litigation they should do so expeditiously. To that end, it is hoped that the parties can reach some resolution in the CTTT.

56 The orders of her Honour Magistrate O’Shane dated 8 April 2009 are affirmed. The appeal is dismissed. The summons filed 6 May 2009 is dismissed. Costs are reserved.

The Court orders:

(1) The orders of her Honour Magistrate O’Shane dated 8 April 2009 are affirmed.

(2) The appeal is dismissed.

(3) The summons filed 6 May 2009 is dismissed.

(4) Costs are reserved.

**********

AMENDMENTS:


18/03/2010 - Paragraph 28 line 1 - "s 74(a)" amended to read "s 74(1)(a)"
Paragraph 28 line 3 - "s 74(b)" amended to read "s 74(1)(b)" - Paragraph(s) Paragraph 28 line 1 - "s 74(a)" amended to read "s 74(1)(a)"
Paragraph 28 line 3 - "s 74(b)" amended to read "s 74(1)(b)"


LAST UPDATED:
18 March 2010