NSW: Who is responsible for pipe repairs inspection and compensation for damage and loss?

Question: Sewer water from the unit above has leaked and caused damages to the unit below. Pipes are concealed in the wall and not visible. Can we ask the owners corporation to facilitate professional inspection to determine the exact damages to pipes and get them repaired appropriately to prevent leaks in the future?

Sewer water from the unit above has leaked and caused damages to the unit below. Pipes are concealed in the wall and not visible.

Can we ask the owners corporation to facilitate professional inspection to determine the exact damages to pipes and get them repaired appropriately to prevent leaks in the future?

Previous seepage of sewer water has caused damages including loss of rents due to Tenant moving out due to this problem. Who compensates for the past and ongoing damages ( loss of rent, amending repair etc)?

Answer: The first point of consideration would be a claim for water damage and loss of rent under the strata insurance.

Leanne Habib, Premium Strata

Yes, this would be the prudent course, as in the process of that inspection it could be definitively determined what the source and cause of the damage was. If the damage is caused by a defect in or malfunction of the common property an owner may recover damages from the Owners Corporation as per subsection (5) below:

Division 1 – Common property

106 Duty of owners corporation to maintain and repair property

1. An owners corporation for a strata scheme must properly maintain and keep in a state of good and serviceable repair the common property and any personal property vested in the owners corporation.
2. An owners corporation must renew or replace any fixtures or fittings comprised in the common property and any personal property vested in the owners corporation.
3. This section does not apply to a particular item of property if the owners corporation determines by special resolution that:
   1. it is inappropriate to maintain, renew, replace or repair the property, and
   2. its decision will not affect the safety of any building, structure or common property in the strata scheme or detract from the appearance of any property in the strata scheme.
4. If an owners corporation has taken action against an owner or other person in respect of damage to the common property, it may defer compliance with subsection (1) or (2) in relation to the damage to the property until the completion of the action if the failure to comply will not affect the safety of any building, structure or common property in the strata scheme.
5. An owner of a lot in a strata scheme may recover from the owners corporation, as damages for breach of statutory duty, any reasonably foreseeable loss suffered by the owner as a result of a contravention of this section by the owners corporation.
6. 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.
7. This section is subject to the provisions of any common property memorandum adopted by the by-laws for the strata scheme under this Division, any common property rights by-law or any by-law made under section 108.
8. This section does not affect any duty or right of the owners corporation under any other law.

Tyrone Shandiman, Strata Insurance Solutions

In relation to the second question, the first point of consideration would be a claim for water damage and loss of rent under the strata insurance.

Generally speaking (subject to the terms conditions and exclusions of the policy), the policy will cover “water damage” resulting from the leak but will exclude costs associated with finding and fixing the leak if the cause of damage relates to an exclusion such as lack of maintenance, rust, oxidation, wear & tear, corrosion, gradual deterioration, developing flaws, building defects etc. Long term water damage or rot may be something that the insurer does not cover depending on the circumstances as strata policies are designed to cover sudden and accidental damage.

In relation to Loss of Rent, a claim can be considered where the damage makes the property uninhabitable or unfit to be occupied for its intended purpose. You will need to discuss the process for claiming loss of rent with the insurer.

For losses that are not covered by an insurance claim, the owners corporation can only consider compensation where you can demonstrate they were legally liable for the damages and financial loss. Things that you may consider is first whether the owners corporation are responsible to maintain the damaged pipe and if so, whether they were negligent in their maintenance of pipes for example knowledge of leaks and failure to take reasonable actions to fix the leaking pipes etc.

This post appears in the March 2021 edition of The NSW Strata Magazine.

Leanne Habib
Premium Strata
E: info@premiumstrata.com.au
P: 02 9281 6440

Tyrone Shandiman
Strata Insurance Solutions
E: tshandiman@iaa.net.au
P: 07 3899 5129

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 Advisernet Australia AFSL No 240549, ABN 15 003 886 687.