Owners Corporations and Lot Owners alike should be aware when agreeing to settle legal claims that settling with one liable party may prevent you from pursuing others later down the track...

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A Sneak Peek at the Latest VCAT Strata Decisions
Owners Corporations and Lot Owners alike should be aware when agreeing to settle
legal claims that settling with one liable party may prevent you from pursuing others
later down the track…
In April 2013, VCAT issued a decision suggesting that owners corporations or lot owners
settling legal proceedings with one liable party should include an express clause in their
settlement agreement reserving their rights to pursue other parties that may be liable.
The case involved a claim by lot owners against their owners corporation for lost rent and the
cost of replacing their damaged flooring, caused by the owners corporation’s failure to
maintain the common property. In separate proceedings against the Builder, the same lot
owners had earlier agreed to settle their claim against the builder for a certain sum of money.
Their settlement agreement with the builder did not include an express clause that the lot
owners reserved their rights to pursue any other liable parties (in this case, the owners
corporation).
The VCAT Member decided that the settlement agreement with the builder extinguished the
lot owners’ claim against the owners corporation under the principle of ‘double recovery’.
The decision suggests that if there had been an express clause in the settlement agreement
reserving the lot owners’ rights to pursue other liable parties, the lot owners may have
recovered some damages from the owners corporation.
Case Reference: Taylor v Owners Corporation No. 2 PS426141G (Owners Corporations)
[2013] VCAT 623
3 June 2013
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Nicole Wilde, Senior Solicitor, TEYS Lawyers Melbourne (03) 9600 1128
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