• Industry

The liability of owners corporations and their managers


In the recent decision of Borg v The Owners – Strata Plan 64425 [2010] NSWDC 203, the District Court of New South Wales found that both the caretaker of an owners corporation, and that owners corporation itself, were liable for an injury suffered by a lawful entrant to property that was effectively under their management and control.

In a significant development for both caretakers and strata managing agents, the Court—when apportioning liability between the caretaker and the relevant owners corporation—held the caretaker liable for 80% of the total damages, and the owners corporation for only 20%.

 The case

Ms Borg, a guest at the Quest Apartments at Cronulla, suffered various injuries when she fell after the heel of her shoe became caught in a broken tile on a flight of stairs at the property. The Court awarded Ms Borg over $517,000.00 for her injuries, apportioned between three owners corporations (who collectively formed the Building Management Committee for the property), the operator of the hotel, and the caretaker (to whom one of the owners corporations had delegated its functions in respect of maintenance of the property).

Liability of the owners corporation The Building Management Committee for Quest Apartments comprises 3 separate Strata Plans, known as the Investment Apartments, Tourist Apartments and the Residential Apartments. Whilst the broken tile on which Ms Borg fell in fact formed part of an encroachment onto the Council footpath—and accordingly was neither common property in any of the strata schemes, nor a shared facility under the Strata Management Statement—the Court found all 3 Owners Corporations liable due to their effective “occupation” of the set of stairs of which the broken tile formed part. The Court said (at 41):

Because the question of control is a question of fact, attempts to evaluate the question by reference to notions of legal rights are flawed, such as whether the encroachment gave rise to any equitable interest, or whether the effecting of repairs might constitute an unauthorised technical trespass. What matters is the exercise of immediate supervision and control.

And further:

In this case, that exercise is demonstrated by the continuing assumption of possession and the representation of control, by reason of the continuing retention of the encroachment, and the invitation that the configuration of the tiles relative to the footpath represented to users of the stairs to cross that land with a view to accessing or egressing the entranceway.

Whilst this finding does not mean that an owners corporation will necessarily be liable for all injuries sustained outside its premises, it makes clear that the touchstone of liability in these circumstances is not ownership of the land or the legal right to repair it, but the factual issue of exercise of immediate supervision and control.

Liability of the caretaker

The agreement in place between the owners corporation responsible for the Tourist Apartments and the caretaker effected a delegation to the caretaker of the owners corporation’s functions in respect of the maintenance, repair and replacement of the common property, of which the tiled stairs formed a part. Again, in the Court’s view this was sufficient to ground a finding that the caretaker was an “occupier” of the broken tile, despite it actually lying beyond the boundaries of the common property as discussed above.

The owners corporation and the caretaker filed mutual Cross Claims against each other. The Court carefully considered the wording of the caretaker agreement, having particular regard to the obligations on the caretaker to “care take” the common property, to conduct regular inspections and arrange for repairs to the common property, and to immediately report to the owners corporation hazards or dangers in the common property that came to the caretaker’s attention.

The Court concluded that the owners corporation had delegated to the caretaker responsibility for minor handyman repairs, which the Court considered would include temporary repairs to the hole in the cracked tile (such as were later carried out) as well as to inspect and report on more serious defects and arrange for their repair (including replacement of the tile itself).

Thanks to Mills Oakley Lawyers for providing this article