On 6 March 2023, the NSW Court of Appeal (Court of Appeal) delivered its decision in The Owners – Strata Plan No 74232 v Tezel [2023] NSWCA 35 confirming that the limitation period under s 106(6) of the Strata Schemes Management Act 2015 (NSW) (SSMA) commences at the time an owner ‘first becomes aware of the loss’. The loss does not need to be reasonably foreseeable, nor does it need to refer to a particular loss an owner is seeking to recover.
Background
Feride Tezel (Tezel) was the owner of a residential strata unit in Bondi Beach. In 2013, Tezel observed water leaking into her unit and decided to stop living there on a permanent basis. In 2016, Tezel unsuccessfully attempted to lease out the unit. The unit was unoccupied since 2016.
On 6 November 2020, Tezel commenced proceedings in the NSW Civil and Administrative Tribunal (Tribunal) against The Owners – Strata Plan No 74232 (Owners Corporation) seeking remediation work orders and loss of rent from 6 November 2018. Tezel did not seek to recover loss for the entire period for which the unit was unoccupied, dating back to 2016.
At first instance, the Tribunal made orders for remediation and rectification works but dismissed Tezel’s claim for loss of rent. According to the Tribunal, Tezel first became aware of the rental loss in 2016, therefore her claim was time barred by s 106(6) of the SSMA.
Tezel appealed against the Tribunal’s decision, and the Appeal Panel upheld the appeal.
Dissatisfied with the outcome, Tezel subsequently appealed to the Court of Appeal contending that the Appeal Panel erred in its construction of the term ‘loss’ in s 106(6) of the SSMA as referring to the loss occasioned only when an ongoing breach ceases, such that her claim for rental loss was not time barred.
Judgment
The Court of Appeal held that Tezel’s claim was out of time because the two-year period in which she could bring an action under s 106(6) commences from when she first became aware of the loss of rent, being 2016. The Court of Appeal considered that the purpose of the two-year time period was to prevent a lot owner from delaying proceedings in circumstances where the people having to make good the loss are also lot owners and the passage of time may affect their ability, through the owners corporation, to recover that loss from other persons.
Implications
This decision clarifies that the two-year limitation period for lot owners to bring proceedings does not recur on a rolling basis until the breach under s 106 of the SSMA is remedied but rather, commences to run on the date the lot owner ‘first becomes aware of the loss’. Lot owners need to act promptly to commence proceedings when dealing with losses that might arise from an owners corporation’s failure to maintain and repair the common property.
It is worth noting that, despite the above, there are circumstances in which the Tribunal can extend time to commence proceedings for a breach of section 106(6). We explore this further in our article concerning Hua Nan Trading Pty Ltd v The Owners – Strata Plan No 32396 [2023] NSWCATAP 66, which can be accessed here: NCAT empowered to extend time to commence proceedings for a breach of an owners corporations duty to maintain and repair common property.
The contents of this publication are for reference purposes only. This publication does not constitute legal advice and should not be relied upon as legal advice. Specific legal advice should always be sought separately before taking any action based on this publication.
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Author: Maysaa Parrino, Matt Armota & Ericka Pham
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