Question: A bathroom leaked into the apartment below. The plumber had to access pipework via the downstairs apartment and identified asbestos in the ceiling. Who pays for this removal and replacement once the repairs have been carried out?
There is a leak in the ceiling of the 2nd-floor apartment, coming from the 3rd-floor bathroom directly above it. The plumbing for the 3rd-floor apartment’s bathroom was accessed via the 2nd-floor bathroom ceiling. Asbestos was identified in the 2nd-floor bathroom ceiling and was removed so the plumber could access the pipes and fix the leak.
The works have been completed.
Strata paid for the removal of the asbestos and the bathroom ceiling in the 2nd-floor apartment bathroom so that the plumber could access and fix the leak in the 3rd-floor bathroom. The plumber confirmed that the pipes were the responsibility of the 3rd-floor apartment owner as they are the sole use of that apartment, therefore, the plumbing leak is that lot owner’s responsibility. The replacement of the 2nd-floor bathroom ceiling is now needed.
Who is responsible for replacing the bathroom ceiling of the 2nd-floor apartment? Is this the owners corporation or the lot owner of the 3rd-floor apartment? Can the owners corporation claim back the cost of the asbestos removal required to access the leaking pipe from the lot owner?
I’ve watched a webinar with Tyrone Shandiman from Strata Insurance Solutions: Water Damage Insurance Claims to see if the information could be applied to my situation.
Interestingly, the issue is not so much the insurance payout, but who pays what between the owners corporation and the lot owner of the 3rd-floor apartment. My Strata Manager said Tyrone is wrong and the owners corporation is responsible for repairs in case study 1 of the webinar, where he says the lot owner is liable for the Gyprock repair.
Answer: Removal and replacement of the 2nd floor ceiling would only be considered if it was water damaged by the leak.
In this instance, I think there are three considerations:
- Insurance: What is and is not covered by insurance?
- Ownership: Who is the owner of the property and therefore responsible for maintaining that property?
- Legal Liability: Is someone else legally responsible for damage to the property other than the owner in the apartment above?
We will look at these questions in more depth.
Insurance
Best professional to give advice: Insurance Broker or Insurance Company
Water damage claims are our most contested claims with insurers because there is often a component of maintenance and also repair of water damage. Insurers cover the cost to repair water damage to insured property but generally exclude repairs costs related to finding and fixing the leak, as it generally considered the owners responsibility to maintain their property and such repairs relate to general maintenance or wear and tear. Insurers have exclusions such as lack of maintenance, rust, oxidation, wear and tear, corrosion, gradual deterioration, developing flaws, building defects, rectification of faulty workmanship etc. Generally, leaks are only covered if the leak is caused from “sudden and accidental damage”, such as impact damage, storm damage etc. However, the consequential water damage (to insurable property) should be covered as water damage.
In this instance, fixing the leak would likely be excluded. Removal and replacement of the 2nd floor ceiling would only be considered if it was water damaged by the leak, otherwise removing and replacing the ceiling would solely be for the purpose of fixing the leak which is excluded. You would also need to consider any asbestos exclusions in the insurers policy wording.
Ownership/Responsibility
Best professional to give advice: Strata Manager or Strata Legal Practitioner
The most qualified person to get advice on who is responsible for what property is the strata manager.
Strata Community Association NSW have released a Guide to Common Property. It states: Owners Corporation must repair anything in the ceiling. However, there may be circumstances where the owner is liable if they have made improvements to the ceiling. If it is inside the lot it is the Owners responsibility. If it is mounted within “Structural cubic space” e.g. communal ducting or a false ceiling which is designed to carry communal pipes etc. or outside the lot, then it is the responsibility of the Owners Corporation.
Legal Liability
Best professional to give advice: Legal practitioner
Despite the fact the 2nd floor Lot Owner or Owners Corporation may be responsible for the repair of the ceiling, the 3rd floor owner may still be legally liable for the damage associated with their leaking pipe.
Legal Liability claims are considered on a case-by-case scenario by insurers, solicitors & judges (if the claim ends up in court). Claims are never black and white and legal liability will vary based on the circumstances.
While Strata Insurance Solutions does not give advice on legal issues, there is possibility the 3rd floor owner is liable due to their negligence in maintaining property so as not to cause damage to others property or they are otherwise legally responsible under common law.
The 2nd floor Lot Owner or Owners Corporation has the option of seeking legal advice or alternatively submitting a written letter of demand to the 3rd floor owner. If the 3rd floor owner has contents or landlords insurance there will likely be a legal liability (Public Liability) cover in their insurance policy which may respond to this claim meaning it will not come at a cost to the 3rd floor owner.
Claims of this nature can be very complex and we recommend getting advice from various parties including the insurance broker and strata manager – if circumstances are appropriate also a legal practitioner (which will involve a cost).
This post appears in Strata News #610.
Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 1300 554 165
This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Shandit Pty Ltd T/as Strata Insurance Solutions strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances. Shandit Pty Ltd T/As Strata Insurance Solutions is a Corporate Authorised Representative (No. 404246) of Insurance Advisenent Australia AFSL No 240549, ABN 15 003 886 687.
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