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Maintenance of common property (s.62) becomes Section 106 of the new Act. Section 106(5) gives owners the explicit right to seek damages if the owners corporation fails to maintain common property. That principle was originally established in the Supreme Court in Seiwa in 2006, overturned by the ruling in Thoo in 2013, and will shortly be enshrined in law. Quote:
“106(5) An owner of a lot in a strata scheme may recover from the owners corporation, as damages for breach of statutory duty, any reasonably foreseeable loss suffered by the owner as a result of a contravention of this section by the owners corporation.”
The failure to maintain common property is generally the fault of the committee. s.225 of the new Act prevents the committee members from being sued personally, unless they act in bad faith. The liability for their negligence falls on the owners corporation.
Section 138(3)(d) of the current Act prevents NCAT from awarding damages. That provision has been removed from the equivalent section in the new Act which is s.232. That means owners will be able to seek damages via NCAT for loss that they suffer due to breaches of s.106. The new Act is RETROSPECTIVE covering the previous 2 years.
The most common situation would be where an owner suffers a direct loss, for example if their property is damaged or they lose rent because the owners corporation fails to maintain common property.
There is another situation that is a much bigger stick hanging over the heads of recalcitrant committees. Say the committee fails to fix a problem and an owner is awarded damages of $150,000, as in the original Seiwa case. That owner is exempt from paying any of the damages or legal fees under section 104 of the new Act (230 of the old Act) meaning all other owners have to pay the damages.
Each other owner will suffer a loss as a result, namely their share of the $150,000 in damages. That loss results from a contravention of the Act by the owners corporation and is “reasonably foreseeable”. Each owner can therefore seek an NCAT order against the owners corporation under s.106(5) to recover their share of the damages. Once again if they win they will be exempt from paying any of the damages or legal fees under the new s.104.
In the end the only owners left standing will be the committee members who failed to maintain common property. Being on the committee they can hardly sue the owners corporation for a loss they themselves caused.
The committee is exempt from liability in general by virtue of the new s.225, assuming they acted in good faith. That does not protect them in this situation however as damages are not being awarded against them directly. They are merely facing increased levies as a result of an owners corporation debt which all other owners have managed to avoid.
If you are a member of a committee that is currently ignoring its obligations to maintain common property, especially if safety risks or possible damage to a lot owner’s property are involved, then you need to either resign or else address the problems immediately. If you don’t you could shortly be facing some very large expenses. You have been warned!