Szeto v The Owners - Strata Plan No 1418 [2023] NSWCATAP 105

Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Szeto v The Owners - Strata Plan No 1418 [2023] NSWCATAP 105 Hearing dates: 3 April 2023 Date of orders: 12 April 2023 Decision date: 12 April 2023 Jurisdiction: Appeal Panel Before: G Blake AM SC, Senior Member D Fairlie, Senior Member Decision: (1) The appeal is dismissed. (2) The appellants are to pay the costs of the respondent of the appeal on the ordinary basis. (3) If the respondent wishes to vary order (2) above and the parties are in agreement, then they are to file proposed consent orders with the Registry within 14 days of the date of this decision. (4) If the respondent wishes to vary order (2) above and the parties are not in agreement, then: (a) the respondent is to file and serve within 14 days of the date of this decision: (i) an application setting out the orders sought; (ii) any evidence in support which is to be by affidavit; (iii) written submissions in support which are not to exceed three pages and are to address the questions of whether the Appeal Panel should entertain the application and whether a hearing should be dispensed with; (b) the appellants are to file and serve within 28 days of the date of this decision: (i) any evidence in opposition which is to be by affidavit; (ii) written submissions in opposition to the orders sought by the respondent which are not to exceed three pages and are to address the questions of whether the Appeal Panel should entertain the application and whether a hearing should be dispensed with; (c) the respondent is to file and serve within 35 days of the date of this decision any written submissions in reply which are not to exceed two pages. Catchwords: LAND LAW — Strata title — Owners corporation — Liability of owners corporation – Whether loss of rent of the owners was caused by the failure of the owners corporation to repair the common property Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW), ss 80, 81 Civil and Administrative Tribunal Rules 2014 (NSW), rr 25, 38A Civil Liability Act 2002 (NSW), s 5D Strata Schemes Management Act 2015 (NSW), s 106 Cases Cited: Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 Chappel v Hart (1998) 195 CLR 232; [1998] HCA 5 Huang & Giang v The Owners Strata Plan No. 65865 [2021] NSWCATCD 15 Grundt v Great Boulder Pty Ltd Gold Mines Ltd (1937) 59 CLR 641; [1937] HCA 58 Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390; [2010] HCA 32 March v Stramare (E & MH) Pty Ltd (1991) 171 CLR 506; [1991] HCA 12 Orr v Cobar Management Pty Limited (2020) 103 NSWLR 36; [2020] NSWCCA 220 Ryan v BKB Motor Vehicle Repairs Pty Ltd [2017] NSWCATAP 39 Smith v Owners - Strata Plan No. 3004 [2022] NSWSC 1599 The Owners Strata Plan No 30621 v Shum [2018] NSWCATAP 15 The Owners – Strata Plan No 74232 v Tezel [2023] NSWCA 35 The Owners - SP 80881 v Gregg [2022] NSWCATAP 172 Thomas v R (1937) 59 CLR 279; [1937] HCA 83 Thomas and Naaz Pty Ltd (ACN 101 491 703) v Chief Commissioner of State Revenue [2022] NSWCATAP 220 Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40 Vickery v The Owners Strata Plan 80412 (2020) 103 NSWLR 352; [2020] NSWCA 284 Texts Cited: NCAT Procedural Direction 3 - Expert Evidence Category: Principal judgment Parties: Robyn Szeto (First Appellant) Kevin Brinsmead (Second Appellant) The Owners – Strata Plan No 1418 (Respondent) Representation: Counsel: P Horobin (First and Second Appellants) C Purdy (Respondent)

Solicitors: Cordato Partners Lawyers (First and Second Appellants) Holman Webb (Respondent) File Number(s): 2023/00002315 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: N/A Date of Decision: 30 November 2022 Before: M Tyson, Senior Member File Number(s): SC 22/10613

REASONS FOR DECISION

Overview 1. This is an internal appeal from the decision of the Consumer and Commercial Division of the Tribunal made on 30 November 2022 in proceedings between Robyn Szeto (Ms Szeto) and Kevin Brinsmead, who are the owners of a lot in SP1418, and The Owners - Strata Plan No 1418, which is the owners corporation responsible for the management of the strata scheme related to strata plan no 1418 (SP1418) at Cremorne Point in New South Wales, in which the owners sought damages and a work order under the Strata Schemes Management Act 2015 (NSW) (SSM Act). The Tribunal dismissed the proceedings (the Tribunal Decision). 2. We have decided to dismiss the appeal and to order the owners to pay the costs of the owners corporation of the appeal on the ordinary basis.

The factual background 1. SP1418, which is comprised by six lots and common property, is a residential building. 2. Since 2006, Ms Szeto and Mr Brinsmead have been the owners of lot 3 in SP1418 which they have used as an investment property. 3. Between 2009 and April 2020, Jenny Symes (Ms Symes) was the occupier of lot 3 as the tenant of the owners at a rent of $3,867.26 each month from 2012. 4. Disputes arose between the parties as to whether the owners corporation had breached the statutory duty under s 106(1) of the SSM Act and the owners had suffered loss by way of loss of rent as a result of this breach.

The applicable provisions of the SSM Act 1. Part 6 Division 1 (ss 106-108) contains provisions dealing with the management of common property. Section 106 deals with the duty of an owners corporation to maintain and repair property, and relevantly provides: 106 Duty of owners corporation to maintain and repair property (1) An owners corporation for a strata scheme 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. … (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. (6) An owner may not bring an action under this section for breach of a statutory duty more than 2 years after the owner first becomes aware of the loss. …

The proceedings between the parties in the Tribunal 1. On 7 March 2022, the owners as the applicants commenced proceedings SC 22/10613 against the owners corporation as the respondent by filing a strata and community schemes application containing the following details under the heading "WHAT ORDERS ARE ASKING THE TRIBUNAL TO MAKE?": "1. Pursuant to Section 106(5) Strata Schemes Management Act 2015 (the Act), the Owners SP 1418 (the Respondents) are ordered to pay damages to the owners of Lot 3 in SP 1418 (the Applicants) in the sum of $3,867.26 per month from April 2020 until the date of decision for loss of rent consequent upon the Respondent's failure to a. properly maintain and keep in a state of good and serviceable repair the common property and any personal property vested in the owners corporation pursuant to Section 106(1); and b. renew or replace any fixtures or fittings comprised in the common property and any personal property vested in the owners corporation pursuant to Section106 (2). 2. In the alternative, pursuant to Section 232 of the Act, the Owners SP 1418 (the Respondents) are ordered to pay damages to the owners of Lot 3 in SP 1418 (the Applicants) in the sum of $3,867.26 per month from April 2020 until the date of decision for loss of rent consequent upon the Respondent's failure to a. properly maintain and keep in a state of good and serviceable repair the common property and any personal property vested in the owners corporation; and b. renew or replace any fixtures or fittings comprised in the common property and any personal property vested in the owners corporation. 3. Pursuant to Section 232 of the Act, an order that the Owners comply with its statutory duty pursuant to Section 106 of the Act (Duty of owners corporation to maintain and repair property) by exercising all of the functions necessary to do so within 28 days of this order being made. 4. Pursuant to Section 232 of the Act, an order that the Respondent pay the Applicants costs of these proceedings." 1. On 20 July 2022, the Tribunal conducted the hearing. 2. On 30 November 2022, the Tribunal made the following orders (the 30 November 2022 orders) and published reasons for its decision in the Tribunal Decision: "(1) The application is dismissed. (2) If the parties are in agreement as to costs of the proceedings, then they shall provide proposed consent orders to the Tribunal within 14 days of the date of these reasons for decision. (3) If the parties are not in agreement as to the costs of the proceedings, then (A) If any party seeks a costs order, the applicant for costs (the costs applicant) must file and serve a costs application, submissions which shall be limited to three pages, and any evidence in support by way of affidavit, within 14 days of the date of these reasons for decision; (B) The respondent to the costs application is to file and serve any submissions, which shall be limited to three pages, and any evidence in opposition by way of affidavit, within 14 days thereafter; (C) The costs applicant is to file any submissions in reply limited to two pages within 14 days after receipt of the submissions and any evidence of the respondent to the costs application."

The Tribunal Decision 1. In the Tribunal Decision, the Tribunal relevantly provided the following reasons: 1. it summarised the claims of the owners in the strata and community schemes application, and the principal issues in, and the outcome of, the proceedings (at [1]-[5]); 2. it noted the representation and the nature of the evidence of the parties at the hearing and the provision of written submissions by the parties following the hearing (at [6]-[10]); 3. it summarised the written and oral evidence of Ms Szeto, the correspondence relied on by the owners corporation, and oral evidence of Ms Symes (at [11]-[22]); 4. it summarised the factual background including the tenancy between the owners and Ms Symes, the ingress of water to lot 3, the history of dealings with respect to the repair and maintenance of the common property of SP1418, the reports of expert engineers and the denial of liability of the owners corporation for the owners' claim for loss of rent (at [23]-[44]); 5. it summarised the submissions of the parties (at [45]-[63]); 6. it found that the claim was brought within the period of two years specified in s 106(6) of the SSM Act and the Tribunal had jurisdiction to determine the strata and community schemes application (at [64]-[66]); 7. it set out the matters that were not in dispute between the parties (at [67]-[69]); 8. set out its reasons and findings on the issue of causation (at [70]-[104]) including: "71 Based on the evidence before me, the main issue that I see that the applicants must overcome, is establishing that the rent which the applicants have not derived from lot 3 since May 2020 is reasonably foreseeable loss "suffered by the owner as a result of a contravention of this section by the owners corporation": see s. 106(5) of the Act. 72 If the Tribunal cannot be satisfied that there is reasonably foreseeable loss "suffered by the owner as a result of a contravention of this section by the owners corporation" the applicants cannot succeed in their application. 73 I reject the submission that in the circumstances of this case, the applicants do not have to bear the legal burden of convincing the Tribunal that there is reasonably foreseeable loss suffered by the owner as a result of a contravention of s. 106 of the Act by the owners corporation. The text of s. 106(5) of the Act requires an owner of a lot in a strata scheme to establish a causal connection between the claimed breach of statutory duty and his or her loss. It is the applicants who are seeking to "recover" "as damages" for breach of statutory duty, "loss" under that provision, by their application in these proceedings. I see nothing in the language and purpose of all the provisions in the Act, by reference to the language used in the Act as a whole (see Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28), to qualify the grammatical meaning of the text of s. 106(5) of the Act. 74 Causation is a question of fact on which the applicants bear the legal burden of proof and it is not an insubstantial burden: Chappel v Hart (1998) 195 CLR 232; [1998] HCA 55 at [93] para 4; and see also Castle Constructions Pty Ltd v Fekala Pty Ltd (2006) 65 NSWLR 648; [2006] NSWCA 133 at [24]. 75 Causation is a question of fact to be answered by common sense and experience: March v Stramare (E & MH) Pty Ltd (1991) 171 CLR 506; [1991] HCA 12 per Mason CJ at [17]. 76 The authorities dealing with causation recognise that there may be a class of case where notwithstanding the legal burden of proving causation, the evidential burden can shift to the respondent or defendant. I do not regard this case as a case where a breach of duty on the part of the respondent has occurred (being of course the duty imposed by s. 106(1) of the Act and where the evidence suggests that the respondent has breached that duty) which has been closely followed by damage, such that a prima facie causal connection will have been established, which circumstance has led some courts to accept that the evidentiary onus may shift during the hearing: e.g. Betts v Whittingslowe (1945) 71 CLR 637 at 649; [1945] HCA 31." "86 The Tribunal is not satisfied that the applicants have established that the rent which the applicants have not derived from lot 3 since May 2020 is reasonably foreseeable loss "suffered by the owner as a result of a contravention of this section by the owners corporation": s. 106(5) of the Act. 87 The principal matter relied upon in reaching that conclusion is that the Tribunal does not have before it any satisfactory or compelling evidence about how the water penetration through the common property has impacted the condition of lot 3, to such an extent or by its nature, that lot 3's condition in turn has caused the applicants' claimed loss of rent. 88 There is no expert opinion evidence before the Tribunal, that complies with NCAT Procedural Direction 3, about for example, whether there is mould in lot 3, caused by water penetration through the common property, at such an extent or level that the mould would cause risks to the health or safety of a tenant of lot 3. There is no expert opinion evidence before the Tribunal, that complies with NCAT Procedural Direction 3, about for example, whether there is a structural safety issue pertaining to the bay window within lot 3, or any other structural issue pertaining to lot 3, which portends a risk of physical injury or health or safety risk for any tenant. There is no expert opinion evidence before the Tribunal, that complies with NCAT Procedural Direction 3, about for example, the rent that might be derived from lot 3, if any, taking into account lot 3's condition, at relevant times. 89 Within the applicants' evidence there is the letter dated 13 September 2021 from Mr. Hart to the strata manager which, as mentioned above, states amongst other things that lot 3 "is quite simply, unfit for occupation." Under his signature, there is a reference which suggests that Mr. Hart might have a qualification as an architect but the Tribunal does not have details about Mr. Hart's depth of experience or qualifications or field of expertise. Mr. Hart does not disclose his reasoning process in reaching conclusions recorded in the letter about the bay window in lot 3 apparently needing significant work to make it "structurally sound." There is no evidence to suggest that Mr. Hart has approached the giving of his opinions recorded in the letter in accordance with the Experts' Code of Conduct in NCAT Procedural Direction 3. 90 Within the applicants' evidence there is the letter dated 11 August 2021 from Mr. Dunn to the applicants which, as mentioned above, states amongst other things that it "would be very hard (and we would not recommend) trying to secure a suitable tenant at any reasonable market rental due to the current building issues. Our advice is that the water penetration, window issues and main bedroom floor & wall issues (structural) would need to be resolved first." The letter goes on to express an opinion about the level of rent that could be obtained once the matters raised therein were addressed. The signature block suggests Mr. Dunn is involved in "property management" but the Tribunal does not have details about Mr. Dunn's depth of experience or qualifications or field of expertise. Mr. Dunn does not disclose his reasoning process in reaching conclusions recorded in the letter. There is no evidence to suggest that Mr. Dunn has approached the giving of his opinions recorded in the letter in accordance with the Experts' Code of Conduct in NCAT Procedural Direction 3. 91 In the case of both Mr. Hart and Mr. Dunn, what instructions or information was given to them about lot 3 before they inspected lot 3 is not clear. Mr. Dunn's evidence seems to assume facts which have not been proven (e.g. that there are "structural" wall issues affecting lot 3)." "94 The other matter relied upon by the Tribunal in reaching the conclusion that the applicants have not established that the rent which the applicants have not derived from lot 3 since May 2020 is reasonably foreseeable loss "suffered by the owner as a result of a contravention of this section by the owners corporation" (s. 106(5) of the Act) relates to Ms. Symes' tenancy. 95 I am not satisfied that there is a causal nexus between any damage within lot 3 caused by water penetration through the common property and loss in the form of loss of rent, because of the length of Ms. Symes' tenancy after water penetration issues first emerged and her evidence. The evidence before the Tribunal was that there were some 'water penetration issues' affecting lot 3 from November 2013. But notwithstanding those issues, Ms. Symes remained as a tenant in lot 3 for many years, paying rent to the applicants, until she left lot 3 in 2020 because she had bought a property. Ms. Symes's evidence suggested that water penetration was a relatively minor issue and in some areas of lot 3, were easily wiped-up. ... The Tribunal therefore is left with Ms. Symes' evidence, which was not undermined during the cross-examination, in my assessment of that cross-examination. Moreover, for their part, the applicants were content to lease lot 3 for many years after water penetration issues had emerged." "98 I do not agree with the applicants' submission that what has been described in the written submissions as the "issue of habitability" is one that arises only at the stage of "mitigation of loss". It seems to me that this issue arises at the causation stage. I have sought above to explain the Tribunal's reasoning as to why and how the Tribunal has approached the issue of causation in the circumstances of this case. That is also because, it seems to me, that what s. 106(5) of the Act requires the Tribunal to consider, in that provision's application in this case, is whether the water penetration through the common property had such an impact on the condition of lot 3 which condition in turn, gave rise to the loss the subject of the application, being loss in the form of rent foregone or lost by the applicants. 99 The applicants' alternative submission is that if they have the onus of proving that lot 3 was not fit for habitation, then they have established that matter by reference to s. 52 of the RTA." "102 The applicants submit that the respondent is estopped by its conduct from now asserting that lot 3 was habitable. This is because, it will be recalled, Mr. Resnekov's 17 July 2020 notice of annual general meeting, which included an explanatory note "… lots 3 and 4 not fit for habitation due to internal water damage, leaking windows." Mr. Resnekov was chair of the strata committee at the time and there are minutes of the respondent, the applicants submit, whereby these minutes were approved. 103 The Tribunal rejects the estoppel submission. As Dixon J explained in Grundt v Great Boulder Pty Ltd Gold Mines Ltd (1937) 59 CLR 641 (at 674-5), a common law estoppel case, the basal purpose of the estoppel doctrine is to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting. The real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted that led to it. (See also Walsh v Walsh [2012] NSWCA 57 at [13] per Meagher JA). There is no evidence from the applicants about a change in their position based on Mr. Resnekov's explanatory note in the notice. 104 Further, Mr. Resnekov's personal opinion about whether or not lot 3 was not fit for habitation cannot be determinative of the question of fitness for habitation for the purposes of s. 52 of the RTA. That question involves the application of a legal standard to facts. There is no suggestion that Mr. Resnekov is legally qualified and had applied the proper standard or test to the question. The Tribunal also struggles to see how a notice prepared by one of the Strata Plan's lot owner's before an annual general meeting, even if it made its way into minutes approved by the other lot owners, can operate as an estoppel against the respondent in these proceedings." 1. set out its reasons and finding that it was not satisfied that the owners failed to act reasonably in minimising their loss, if it was assumed that they had established loss caused by the owners corporation's breach of its statutory duty (at [105]-[113]); 2. set out its reasons and findings on the issue of calculation of damages (at [114]-[120]) including: "115 The applicants' case on damages is that the Tribunal should allow damages calculated by reference to the monthly rent Ms. Symes was paying ($3,867.26), multiplied by 27, to account for the number of months from April 2020 through to July 2022 or alternatively, through to April 2023 as the applicants anticipate the respondent's breach of statutory duty will continue until at least that time. 116 I have difficulty in understanding why the monthly rent previously paid by Ms. Symes is relevant. There is no evidence that the applicants lost Ms. Symes as a tenant for any reason connected with the respondent's breach of statutory duty. The evidence of Ms. Symes was to the contrary of that proposition. 117 I do not see how in any principled way, the Tribunal can find, or perhaps infer, that the rent payable by Ms. Symes is the appropriate measure of the applicants' loss. 118 There is not before the Tribunal any expert opinion valuation evidence about what the market level of rentals for comparable properties in the locality of lot 3 might be. I do not have before the Tribunal any expert opinion valuation evidence about what the market level of rentals for comparable properties in the locality of lot 3 might be for any part of the period from April 2020 through to April 2023." "120 The applicants are rightfully entitled to damages, on the assumption that my conclusion on the causation question is wrong. But there is no evidence proving the applicants' actual loss and the authorities are clear that if a plaintiff or applicant seeks more than nominal damages, it bears the burden of proof, including that a particular figure should be awarded to it: see JD Heydon on Contract at [26.130]. Nominal damages may be awarded where there is no evidence on the subject of the plaintiff or applicant's loss: e.g. Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd (1938) 61 CLR 286. That burden on the calculation of damages has not been discharged. The Tribunal would award the applicants $1.00 in damages if my conclusion on causation were wrong." 1. it summarised the orders made (at [121]).

The history of the appeal 1. On 29 December 2022, the owners as the appellants commenced proceedings 2023/00002315 against the owners corporation as the respondent by filing a notice of appeal in which they appealed against order 1 of the 30 November 2022 orders, and sought orders that this order be set aside and orders be made as set out in the strata and community schemes application (the notice of appeal). 2. On 31 January 2023, the owners corporation filed its reply to appeal in which it supported order 1 of the 30 November 2022 orders. 3. On 8 February 2023, the Appeal Panel constituted by a Principal Member relevantly made orders (the 8 February 2023 orders) granting leave to the parties to be legally represented and for the filing and service of evidence and submissions for the appeal. The Appeal Panel also relevantly made the following notations: "8 NOTES: … (2) If any party wishes to make an application for costs of the appeal, that party is to lodge with the Appeal Registry and give to the other party any submissions on costs at the same time as their submissions in relation to the appeal. … 1. On 6 March 2023, the owners filed their appeal book (the owners' appeal book) which included: 1. the witness statement of Ms Szeto dated 31 March 2022 (the Szeto statement); 2. their submissions containing proposed amended grounds of appeal (the owners' appeal submissions). 1. On 21 March 2023, the owners corporation filed a bundle of documents (the owners corporation's documents) which included its submissions (the owners corporation's appeal submissions).

The hearing of the appeal 1. On 3 April 2023, we heard the appeal. Mr P Horobin, a barrister, represented the owners. Mr C Purdy, a barrister, represented the owners corporation. 2. At the commencement of the hearing, we granted leave to the owners to amend the notice of appeal to rely on the following grounds: "1. The Tribunal erred in its interpretation of the duty under s 106 of the Strata Schemes Management Act. 2. The Tribunal erred in finding that causation of loss was not established. 3. [Not pressed] 4.The Tribunal erred in taking into account an irrelevant consideration, being Ms Symes' willingness to remain in the property. 5. The Tribunal erred by misapplying the doctrine of estoppel. 6. The Tribunal erred in failing to apply relevant principles in calculating the applicants' loss (in the alternative). 7. The Tribunal erred in applying NCAT Procedural Direction 3." 1. When counsel for the owners indicated that the appeal was confined to questions of law we drew his attention to the principles that a notice of appeal is required to properly identify the questions of law which are the subject matter of the appeal and it is not enough to simply assert (as the appellant did), that the Tribunal erred: Thomas and Naaz Pty Ltd (ACN 101 491 703) v Chief Commissioner of State Revenue [2022] NSWCATAP 220 at [58]-[59]; Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40 (Thomas and Naaz CA) at [26] (Leeming JA) (with Meagher JA at [1] and Griffiths AJA at [75] agreeing). 2. Counsel for the owners then indicated that amended grounds of appeal 1 and 4 were not pressed and the owners were appealing in respect of the following questions of law: 1. amended ground of appeal 2: what is the proper test for causation under s 106(5) of the SSM Act? 2. amended ground of appeal 5: what is the proper test for the application of the doctrine of estoppel by conduct? 3. amended ground of appeal 6: was there no evidence of loss of rent by the owners? 4. amended ground of appeal 7: does NCAT Procedural Direction 3 apply to the proceedings? 1. The owners relied on the documents in the owners' appeal book. 2. The owners corporation relied on the owners corporation's documents: 3. Counsel for the owners and the owners corporation each made oral submissions. 4. At the conclusion of the hearing, we reserved our decision.

The scope and nature of internal appeals 1. Internal appeals may be made as of right on "a question of law", and otherwise with leave (that is, the permission) of the Appeal Panel: s 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act). 2. An appeal does not provide a losing party with the opportunity to run their case again except in the narrow circumstances specified in s 80(2)(b) of the NCAT Act: Ryan v BKB Motor Vehicle Repairs Pty Ltd [2017] NSWCATAP 39 at [10]. 3. Whether there was no evidence to support a factual finding is a question of law, not a question of fact: Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390; [2010] HCA 32 (Kostas) at [91] (Hayne, Heydon, Crennan and Kiefel JJ). 4. In Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 (Azzopardi) at 155-157, Glass JA, with Samuels JA at 157 agreeing, said: "It is clear from these extracts that numerous pejorative expressions in common usage possess a single meaning and are interchangeable. To say of a finding that it is perverse, that it is contrary to the overwhelming weight of the evidence, that it is against the evidence and the weight of the evidence, that it ignores the probative force of the evidence which is all one way or that no reasonable person could have made it, is to say the same thing in different ways. Upon proof that the finding of a jury is vitiated in this way, it will be set aside because it is wrong in fact. Since the Act does not allow this Court to correct errors of fact, any argument that the finding of a Workers' Compensation Commission judge is vitiated in the same way discloses no error of law and will not constitute a valid ground of appeal. … Errors may be committed by a Workers' Compensation judge at any one of three points viz determining the facts by way of primary findings and inferences, directing himself as to the law and applying the law to the facts found. At the first stage the determination of facts by a reasoning process marred though it be by patent error, illogicality or perversity will, as has been said, never be vulnerable to attack as an error of law by an applicant for compensation. At the second stage any error made will by definition be an error of law. At the third stage when the law correctly stated is applied to the facts found in order to produce a conclusion error may intrude again. An erroneous conclusion that facts properly determined fail to satisfy a statutory test, for example, injury arising out of the cause of employment, substantial interruption to journey, or failure to provide suitable employment will ordinarily be an erroneous conclusion of fact. It is only in marginal cases that the statutory test is satisfied or not satisfied as a matter of law, because no other application is reasonably open. Accordingly this Court will not entertain unexplained perversity of result as a ground for intervention although it will correct perverse or unreasonable applications of law to the facts found." (citations omitted) 1. In Orr v Cobar Management Pty Limited (2020) 103 NSWLR 36; [2020] NSWCCA 220 (Orr) at [60] Bathurst CJ and Bell P (with Johnson J at [128], Garling J at [136] and Lonergan J at [137] agreeing) cited with approval the note of Dixon J in Thomas v R (1937) 59 CLR 279 at 306; [1937] HCA 83 (Thomas) that a "mistake as to the existence of a compound event consisting of law and fact is in general one of fact and not a mistake of law". 2. The Appeal Panel may make such orders as it considers appropriate in light of its decision on the appeal, including an order that the appeal is to be dismissed: s 81(1)(a) of the NCAT Act. 3. Rule 25(4)(c) of the Civil and Administrative Tribunal Rules 2014 (NSW) (NCAT Rules) relevantly provides that in the case of an appeal from a decision of the Tribunal in proceedings under the SSM Act an internal appeal must be lodged within 28 days from the day on which the appellant was notified of the decision to be appealed or given reasons for the decision.

The issues 1. We are satisfied that the appeal was commenced within the time of 28 days prescribed under r 25(4)(c) of the NCAT Rules. 2. We are satisfied that amended grounds of appeal 2, 5, 6 and 7 each raise a question of law and that the owners can appeal as of right in respect of these grounds for the following reasons: 1. as to amended grounds of appeal 2, this is a question of law within the principles of Azzopardi at 155-157; 2. as to amended grounds of appeal 5, this is a question of law within the principles of Azzopardi at 155-157; 3. as to amended grounds of appeal 6, this is a question of law within the principles of Kostas at [91]; 4. as to amended grounds of appeal 7, this is a question of law within the principles of Azzopardi at 155-157. 1. The following issues arise for consideration and determination in this appeal: 1. whether the Tribunal made an error of law in respect of amended grounds of appeal 2, 5, 6 and 7; 2. the costs of the appeal.

Whether the Tribunal made an error of law in respect of amended grounds of appeal 2, 5, 6 and 7

Amended ground of appeal 2: what is the proper test for causation under s 106(5) of the SSM Act?

Introduction 1. Before considering this issue, it is convenient to set out the submissions of the parties.

The submissions of the owners 1. In the owners' appeal submissions, the owners: 1. submitted that the Tribunal did not identify the basal principle governing causation in s 106(5) of the SSM Act; 2. referred to Smith v Owners - Strata Plan No. 3004 [2022] NSWSC 1599 (Smith), The Owners - SP 80881 v Gregg [2022] NSWCATAP 172 (Gregg) and Huang & Giang v The Owners Strata Plan No. 65865 [2021] NSWCATCD 15 (Huang & Giang). 1. In his oral address counsel for the owners made the following submissions: 1. the Tribunal in the Tribunal Decision at [95] incorrectly identified the relevant causal nexus as between any damage within lot 3 caused by water penetration through the common property and loss in the form of loss of rent, rather than the breach of the statutory duty in s 106(1) of the SSM Act by the owners corporation and loss in the form of loss of rent; 2. he referred to Smith at [3]; 3. he referred to the Szeto statement at [70], [71], [79], [80], [92], [93], [106], [109] and [114]; 4. disclaimed the "but for" test as the correct test for causation; 5. submitted that causation is established where the breach of duty results in loss which is reasonably foreseeable.

The submissions of the owners corporation 1. In the owners corporation's appeal submissions, the owners corporation: 1. submitted that Smith at [3] deals with remoteness of damage, a limiting factor on recovery of damages, and has nothing to do with causation; 2. he referred to Smith at [34] and The Owners – Strata Plan No 74232 v Tezel [2023] NSWCA 35 (Tezel) at [42]; 3. the reasons of the Tribunal in the Tribunal Decision at [72]-[76] were entirely consistent with orthodox principle. 1. In his oral address counsel for the owners corporation made the following submissions: 1. the Tribunal in the Tribunal Decision at [70]-[106] posed and applied the correct test for causation under s 106(5) of the SSM Act; 2. the common law principles in March v Stramare (E & MH) Pty Ltd (1991) 171 CLR 506; [1991] HCA 12 (March) and Chappel v Hart (1998) 195 CLR 232; [1998] HCA 5 are applicable in determining causation under s 106(5) of the SSM Act; 3. section 5D of the Civil Liability Act 2002 (NSW) (CL Act) which provides that a determination that negligence caused particular harm comprises the elements of factual causation and scope of liability reflects common law principles.

Consideration 1. Mitchelmore J in Smith at [34]-[36] held that the cause of action under s 106(5) of the SSM Act is analogous to a claim in negligence or nuisance and the approach to assessing damages in tort is to be applied. Her Honour noted at [34]: "34 In its terms, the right of recovery in s 106(5) of the SSM Act is dependent upon characterisation of the loss as "reasonably foreseeable" and "suffered by the owner as a result of a contravention of this section". …" 1. The New South Wales Court of Appeal in Tezel said that the requirement in s 106(5) of the SSM Act that the loss be reasonably foreseeable is a form of remoteness limitation on what damages may be recovered: at [42] (Mitchelmore JA) (with Gleeson JA at [1] and Kirk JA at [58] agreeing). 2. The reliance by the owners on Smith at [3], Gregg, Huang & Giang is misconceived. None of the cases are concerned with causation under s 106(5) of the SSM Act. The issue discussed in Smith at [3] and Gregg was the remoteness limitation on what damages may be recovered under s 106(5) of the SSM Act. The issue discussed in Huang & Giang was the date at which foreseeability of loss is to be assessed. 3. The test of causation articulated by counsel for the owners that causation is established where the breach of duty results in loss which is reasonably foreseeable does no more than repeat the terms of s 106(5) of the SSM Act. 4. In March at 515-516 Mason CJ said (Toohey at 524 and Gaudron J at 525 agreeing): "The common law tradition is that what was the cause of a particular occurrence is a question of fact which "must be determined by applying common sense to the facts of each particular case" … Commentators subdivide the issue of causation in a given case into two questions: the question of causation in fact - to be determined by the application of the "but for" test - and the further question whether a defendant is in law responsible for damage which his or her negligence has played some part in producing … However, this approach to the issue of causation (a) places rather too much weight on the "but for" test to the exclusion of the "common sense" approach which the common law has always favoured; and (b) implies, or seems to imply, that value judgment has, or should have, no part to play in resolving causation as an issue of fact. … That said, the "but for" test, applied as a negative criterion of causation, has an important role to play in the resolution of the question. … … The "but for" test gives rise to a well-known difficulty in cases where there are two or more acts or events which would each be sufficient to bring about the plaintiff's injury. The application of the test "gives the result, contrary to common sense, that neither is a cause" …" 1. In The Owners Strata Plan No 30621 v Shum [2018] NSWCATAP 15 (Shum) at [132]-[134] the Appeal Panel identified the following principles for causation to be established under s 106(5) of the SSM Act: 132 First, causation is a question of fact to be answered by common sense and experience: March v Stramare (E & MH) Pty Ltd [1991] HCA 12; (1991) 171 CLR 506 per Mason CJ at [17]. 133 Secondly, as long as a cause of the loss is the breach about which complaint is made, the fact there are multiple causes for the loss will not prevent a claimant recovering damage. 134 In Simonius Vischer & Co v Holt and Thompson [1979] 2 NSWLR 322 the Court said: It was, of course sufficient for the plaintiffs to establish that the defendants' breaches were a cause of the loss notwithstanding that there may have been other concurrent causes. Hence, the defendants' argument must show that the plaintiffs' lack of care was the sole cause of the loss, to the exclusion of any causative influence exerted by the defendants' breaches. I take the correct principle to be that stated in Chitty on Contracts, General Principles, 23rd ed.; p. 670, par. 1448: "If a breach of contract is one of two causes, both cooperating and both of equal efficacy in causing loss to the plaintiff, the party responsible for the breach is liable to the plaintiff for that loss." This statement is supported by the authority of Devlin J., as he then was, in Heskell v Continental Express Ltd [1950] 1 All ER 1033 at 1046-1048, and the cases there cited. In particular, I refer to what was said by Lord Wright with whom Lord Atkin agreed, in Smith Hogg & Co Ltd v Black Sea and Baltic General Insurance Co. Ltd [1940] AC 997 at 1007. His Lordship's remarks, although delivered in a context different from that which obtains here, are of undoubted application. Lord Wright said: "The sole question apart from express exception, must then be: 'Was that breach of contract "a" cause of damage." 1. In Vickery v The Owners Strata Plan 80412 (2020) 103 NSWLR 352; [2020] NSWCA 284 Leeming JA said at [82] noted that's 5D of the CL Act had modified the test of causation stated in March. 2. We are satisfied that the Tribunal in the Tribunal Decision at [74]-[76] correctly identified the test for causation under s 106(5) of the SSM Act in referring to the statement of principles of Mason CJ in March at 515-516. This statement of principles has been applied to s 106(5) of the SSM Act in Shum at [132]. The owners did not advance any argument as to why the Tribunal and the approach of the Appeal Panel was incorrect. 3. We do not accept the submission of the owners that the Tribunal in the Tribunal Decision at [95] incorrectly identified the relevant causal nexus. The Tribunal was dealing with the application of the causation test in circumstances where the breach of the statutory duty in s 106(1) of the SSM Act had caused water penetration to lot 3. The Tribunal correctly identified that it was necessary that there be a causal nexus between water penetration to lot 3 resulting from the breach of the statutory duty and the loss of rent claimed by the owners. 4. We do not accept the submission of the owners corporation that s 5D of the CL Act reflects common law principles and is to be used in establishing causation under s 106(5) of the SSM Act. 5. Most of the submissions of the owners contended that the test for causation had been incorrectly applied by the Tribunal. This error, if it occurred, was an error of fact, and as the owners' appeal was limited to questions of law it is unnecessary to consider this issue. For this reason we have not summarised the evidence in the Szeto statement at [70], [71], [79], [80], [92], [93], [106], [109] and [114] so far as it relates to the fact of causation. 6. For these reasons we reject amended ground of appeal 2.

Amended ground of appeal 5: what is the proper test for the application of the doctrine of estoppel by conduct? 1. In Grundt v Great Boulder Pty Ltd Gold Mines Ltd (1937) 59 CLR 641 at 674-675; [1937] HCA 58 (Grundt) Dixon J said (with McTiernan J at 682 agreeing): "The principle upon which estoppel in pais is founded is that the law should not permit an unjust departure by a party from an assumption of fact which he has caused another party to adopt or accept for the purpose of their legal relations. This is, of course, a very general statement. But it is the basis of the rules governing estoppel. Those rules work out the more precise grounds upon which the law holds a party disentitled to depart from an assumption in the assertion of rights against another. One condition appears always to be indispensable. That other must have so acted or abstained from acting upon the footing of the state of affairs assumed that he would suffer a detriment if the opposite party were afterwards allowed to set up rights against him inconsistent with the assumption. In stating this essential condition, particularly where the estoppel flows from representation, it is often said simply that the party asserting the estoppel must have been induced to act to his detriment. Although substantially such a statement is correct and leads to no misunderstanding, it does not bring out clearly the basal purpose of the doctrine. That purpose is to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting. This means that the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted that led to it. So long as the assumption is adhered to, the party who altered his situation upon the faith of it cannot complain. His complaint is that when afterwards the other party makes a different state of affairs the basis of an assertion of right against him then, if it is allowed, his own original change of position will operate as a detriment. His action or inaction must be such that, if the assumption upon which he proceeded were shown to be wrong and an inconsistent state of affairs were accepted as the foundation of the rights and duties of himself and the opposite party, the consequence would be to make his original act or failure to act a source of prejudice." 1. The Tribunal in the Tribunal Decision at [103] referred to the statement of principles in Grundt at 674-675 in an abbreviated form. 2. The submissions in the owners' appeal submissions and counsel for the owners in his oral address focussed on the failure of the Tribunal to correctly apply these principles. 3. It is unnecessary to consider this issue of whether the Tribunal erred in correctly applying the principles in Grundt at 674-675, as this error, if it occurred, was a mixed question of fact and law and so does not give rise to a question of law within the principles of Orr at [60] and Thomas at 306. 4. For these reasons we reject amended ground of appeal 5.

Amended ground of appeal 6: was there no evidence of loss of rent by the owners?

Amended ground of appeal 7: does NCAT Procedural Direction 3 apply to the proceedings? 1. As we have rejected amended grounds of appeal 2 and 5 and so determined that the breach of the statutory duty under s 106(1) of the SSM Act by of the owners corporation was not causative of the loss of rent claimed by the owners, then amended grounds of appeal 6 and 7 do not arise for determination.

Conclusion 1. As we have rejected amended grounds of appeal 2 and 5 and amended grounds of appeal 6 and 7 do not arise for determination, it follows that the appeal should be dismissed.

The costs of the appeal 1. Counsel for the owners conceded that r 38A of the NCAT Rules applies to this appeal and that if the appeal is dismissed the owners should pay the costs of the owners corporation of the appeal. 2. Counsel for the owners corporation conceded that r 38A of the NCAT Rules applies to this appeal and submitted that if the appeal is dismissed the owners should pay the costs of the owners corporation of the appeal. He also said that the owners corporation wished to apply for costs on the indemnity basis, but contrary to note 8(2) of the 8 February 2023 orders did not adduce any evidence or make any submissions in support of indemnity costs. 3. We are satisfied that the parties correctly conceded that r 38A of the NCAT Rules applies to this appeal and that the owners should pay the costs of the owners corporation of the appeal on the ordinary basis.

The disposition of the appeal 1. We have decided to make orders dismissing the appeal, and ordering the owners to pay the costs of the owners corporation of the appeal on the ordinary basis. 2. However, as the owners corporation did not adduce any evidence or make any submissions in support of an order for indemnity costs, we have decided to make the following procedural directions to provide an opportunity for the owners corporation to make an application to vary the order for the costs of the appeal: 1. if the owners corporation wishes to vary the order for the costs of the appeal and the parties are in agreement, then they are to file proposed consent orders with the Registry within 14 days of the date of this decision; 2. if the owners corporation wishes to vary the order for the costs of the appeal and the parties are not in agreement, then: 1. the owners corporation is to file and serve within 14 days of the date of this decision: 1. an application setting out the orders sought; 2. any evidence in support which is to be by affidavit; 3. written submissions in support which are not to exceed three pages and are to address the questions of whether the Appeal Panel should entertain the application and whether a hearing should be dispensed with within 14 days of the date of this decision; 1. the owners are to file and serve within 28 days of the date of this decision: 1. any evidence in opposition which is to be by affidavit; 2. written submissions in opposition to the orders sought by the owners corporation which are not to exceed three pages and are to address the questions of whether the Appeal Panel should entertain the application and whether a hearing should be dispensed with; 1. the owners corporation is to file and serve within 35 days of the date of this decision any written submissions in reply which are not to exceed two pages.

Orders 1. We make the following orders: 1. the appeal is dismissed; 2. the appellants are to pay the costs of the respondent of the appeal on the ordinary basis; 3. if the respondent wishes to vary order (2) above and the parties are in agreement, then they are to file proposed consent orders with the Registry within 14 days of the date of this decision; 4. if the respondent wishes to vary order (2) above and the parties are not in agreement, then: 1. the respondent is to file and serve within 14 days of the date of this decision: 1. an application setting out the orders sought; 2. any evidence in support which is to be by affidavit; 3. written submissions in support which are not to exceed three pages and are to address the questions of whether the Appeal Panel should entertain the application and whether a hearing should be dispensed with; 1. the appellants are to file and serve within 28 days of the date of this decision: 1. any evidence in opposition which is to be by affidavit; 2. written submissions in opposition to the orders sought by the respondent which are not to exceed three pages and are to address the questions of whether the Appeal Panel should entertain the application and whether a hearing should be dispensed with; 1. the respondent is to file and serve within 35 days of the date of this decision any written submissions in reply which are not to exceed two pages.

********** I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 12 April 2023