This question was answered by the NSW Court of Appeal in The Owners – Strata Plan No 74232 v Tezel  NSWCA 35.
The Respondent in this case was an owner of a residential lot in the scheme. In 2013, the Respondent noticed water leaking into her lot when it rained heavily. The Respondent stopped residing at the lot due to the water, smell and discomfort. In 2016, the Respondent decided to rent out the lot but was unable to do so and as such, the lot was unoccupied since 2016. In November 2020, the Respondent commenced proceedings against the Owners Corporation and (among others), sought to recover loss of rent from November 2018 (being two years prior to date of action) pursuant to s106(5) of the Strata Schemes Management Act 2015. She did not seek loss for the entire period for which the lot was unoccupied, which was from 2016.
The Applicant contended that the Respondent’s claim for loss of rent was out of time, relying on s 106(6) of the Act, which provides that “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.”
At first instance, the Tribunal dismissed the claim concluding it was barred by s106(6) of the Act because the relevant time frame was from the time Respondent first became aware of the rental loss in 2016.
An appeal was upheld by the Appeal Panel. The Appeal Panel construed the term “loss” in s106(6) of the Act as referring to the loss occasioned only when an ongoing breach ceases.
Subsequently, the NSW Court of Appeal held:
- The two-year limitation period under s106(6) started to run when the Respondent first became aware of the loss of rent. As such, the claim was out of time.
- “first becomes aware of the loss” in s106(6) does not require the loss be reasonably foreseeable, nor refers to a particular loss.
- The loss does not occur on a “rolling basis” until the breach of s106 is remedied.
This is general information and should not be considered to be legal advice. You should obtain legal advice specific to your individual situation.
Authors: James Webster & Jasmin H.Singh