VIC: Q&A Damage caused by a water leak from above

These Q&As are about damage caused by a water leak from the apartment above. These questions have been submitted by VIC unit owners living in strata apartments.

Table of contents:

• QUESTION: If a common property leak causes lot damage, can the owners corporation apply the benefit principle to the defects and damage?
• QUESTION: If there is water ingress from the apartment above’s defective balcony waterproof membrane, what can the owners corporation do?
• QUESTION: A tenant’s overflowing basin caused a major water inundation problem in our building. Owners are unhappy that the OC paid for repairs. Can the money be recovered?
• QUESTION: An owner’s apartment flooded and damaged adjacent lots. The OC paid to find the cause of the leak. Although the cause was attributed to the owner, they refused to pay. Where does OC stand?
• QUESTION: If repairs are needed in our lot due to water ingress from above, is it the responsibility of whoever owns the upstairs lot? If the ingress is partly due to the age of the building, who is liable?
• QUESTION: If a water leak from one unit causes water to flow through the floor into the ceiling of the downstairs unit, does the owners corporation get involved in arranging the repair or is that up to that lot owner?
• QUESTION: If the pipe only services one lot, is that lot owner responsible for any repairs? Because the pipe is outside the boundary of the unit, our strata manager says it’s common property. Is this correct?
• QUESTION: There is a leak between a top and bottom unit. The OC says it is an owner issue but the insurance company sites the problem is a building issue. Who is responsible?
• QUESTION: Is water ingress due to a communal drainage overflow classed as flooding? Resolving this will likely involve up to four insurers.
• QUESTION: Due to a faulty roof, mould is growing on the plaster ceiling. What are the health impacts and should the ceiling be replaced?
• QUESTION: A plumber cut a hole in our ceiling during repairs to a leak in the upstairs apartment. If the leak was from their apartment, who is responsible for repairs to my ceiling?

Question: If a common property leak causes lot damage, can the owners corporation apply the benefit principle to the defects and damage?

Answer: An owners corporation may be able to apply the benefit principle to the costs of rectifying the originating defect if the issue mainly benefits the lot rather than all of the lots.

An owners corporation (OC) may be able to apply the benefit principle to the costs of rectifying the originating defect if the issue mainly benefits the lot rather than all of the lots. An example might be where there is water ingress from a defective window in a lot. The costs of rectifying the window may be applied using the benefit principle.

However, if the OC was on notice of the defect and did nothing to fix the issue and as a consequence of that failure, water ingress occurred for a while and damaged say, the carpet, the OC might be required to pay to fix the carpet. The costs cannot be apportioned according to the benefit principle because they are damages that arise from the OC’s breach of a statutory duty.

Phillip Leaman
Tisher Liner FC Law
E: [email protected]
P: 03 8600 9370

This post appears in the April 2025 edition of The VIC Strata Magazine.

Question: If there is water ingress from the apartment above’s defective balcony waterproof membrane, what can the owners corporation do?

Answer: This is a dispute between private lot owners. The OC may serve a notice on the lot owner above, requiring them to repair their balcony.

Whilst this is a dispute between private lot owners, the OC may (but has no obligation to) serve on the lot owner above, a Section 48 notice requiring the lot owner to make repairs to their balcony. If the notice is not complied with (the lot owner has 28 days to fix the issue), the OC can fix the issue and charge the lot owner the full cost of rectification.  Any consequential damage occurring to the bottom apartment needs to be fixed and dealt with as between the two lot owners and the OC has no power to fix the consequential damage arising from the private lot defects.

Phillip Leaman
Tisher Liner FC Law
E: [email protected]
P: 03 8600 9370

This post appears in the April 2025 edition of The VIC Strata Magazine.

Question: A tenant’s overflowing basin caused a major water inundation problem in our building. Owners are unhappy that the OC paid for repairs. Can the money be recovered?

Over a year ago, a tenant caused a major water inundation problem in our building. They left a tap running in a blocked laundry trough, and water leaked into common property and apartments four floors below. The tenant vacated, and the owner now lives in the lot.

Many owners are unhappy that the owners corporation paid the high cost of repairs. Can the owners corporation recover the amount? Is insurance the only solution? Is the owner responsible? What about the tenant?

Answer: Accidents can happen, which is precisely why strata insurance exists.

Strata insurance typically covers damage to the building caused by sudden and accidental events. Believe it or not, an accidental event, such as an owner or tenant leaving a tap on, is something that many insurers will cover. Accidents can happen, and this is precisely why strata insurance exists.

In situations where a tenant has left a tap on, they may be considered legally responsible for the resulting damage. However, pursuing the tenant directly for damages can present challenges, including delays in repairs, potential exacerbation of the damage, and no guarantee of recovery.

The recommended approach is first to lodge a claim under the strata insurance policy. This allows for repairs to commence promptly, minimising disruption and further damage. Once repairs are completed and the full costs are known, the insurer may decide to pursue the tenant for recovery if they believe there are grounds to do so.

It is important to note that in recent years, some insurers have chosen not to pursue tenants for damages, particularly in cases of significant losses where the tenant does not have insurance. This shift follows public concern about the fairness of such recoveries. Even when recoveries are pursued, there is no guarantee of success.

Accidents like this are an unfortunate reality of strata living, where the unintended actions of one individual can affect others, including claims history and insurance premiums for all owners.

Tyrone Shandiman
Strata Insurance Solutions
E: [email protected]
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.

This post appears in the February 2025 edition of The VIC Strata Magazine.

Question: An owner’s apartment flooded and damaged adjacent lots. The OC paid to find the cause of the leak. Although the cause was attributed to the owner, they refused to pay. Where does OC stand?

An owner in our Melbourne unit complex flooded their apartment, causing damage to adjacent lots. The owners corporation paid for plumbers to check common pipes and find the cause of the leak. No leaks were detected, and the cause was attributed to overflow from an internal sink or bath.

The owner states they will not pay for any assessment work or damage reclamation. Where does owners corporation stand?

Answer: See Section 49 of the Act.

In our view, it is always prudent for an owners corporation to investigate water ingress issues if there is a potential a common property defect causes the issue.

Section 49 of the Owners Corporations Act 2006 provides that:

1. An owners corporation may recover as a debt the cost of repairs, maintenance or other works carried out wholly or substantially for the benefit of one or some, but not all, of the lots affected by the owners corporation from the lot owners.
2. The amount payable by the lot owners is to be calculated on the basis that the lot owner of the lot that benefits more pays more.
3. The works referred to in this section may be to the common property or a lot.’

Investigations can be included in the above. There is an argument that the owners corporation can pass on the cost under the above section to the relevant lot owner who has the water ingress defect.

Phillip Leaman
Tisher Liner FC Law
E: [email protected]
P: 03 8600 9370

This post appears in Strata News #706.

Question: If repairs are needed in our lot due to water ingress from above, is it the responsibility of whoever owns the upstairs lot? If the ingress is partly due to the age of the building, who is liable?

In this video, ‘VIC: Water Act Claims and Building Defects in Owners Corporations | LookUpStrata‘, the concrete slabs are treated as common property. I live in a building with an old strata plan. The concrete slabs are not common property. They are solid slabs with no pipes or wiring. The lot owner owns the bottom half of the concrete slab. However, it forms part of the structure of the building. I need some clarification.

If repairs are needed due to water ingress from above, is it the responsibility of whoever owns the upstairs lot? If it’s discovered that the ingress is partly due to the age of the building, who is liable? Is it the lot owner or the owners corporation?

Answer: Generally, the person responsible is the owner of the land that has the defect.

The position of legal boundaries will be different for each plan of subdivision. In some cases, the slab will be wholly within common property, sometimes, it will be a median boundary and sometimes wholly private lot property.

In order to ascertain which applies to your development, a careful reading of the plan of subdivision is required.

Generally, if there is a defect to one’s property (whether it is an original building defect, a defect due to age or a defect due to a failure to properly repair and maintain), generally, the person responsible is the owner of the land that has the defect. Sometimes, liability can be passed to the builder (or other parties) if it is an original building defect, subject to certain limitation periods.

Phillip Leaman
Tisher Liner FC Law
E: [email protected]
P: 03 8600 9370

This post appears in Strata News #706.

Question: If a water leak from one unit causes water to flow through the floor into the ceiling of the downstairs unit, does the owners corporation get involved in arranging the repair or is that up to that lot owner?

Answer: Initially, it’s prudent for the owners corporation to seek expert advice to ensure common property is not the cause or that common property is not being affected.

If you’re the unit owner downstairs, your first action should be to advise the owners corporation or the strata manager of what has occurred.

The owners corporation does not need to get involved in matters that are disputes between lot owners for water ingress. It is up to the lot owner downstairs to make a complaint directly with their upstairs neighbour to get the matter rectified. However, it is prudent for the owners corporation to seek expert advice to ensure common property is not the cause or is not otherwise being affected if it is unclear. Water ingress going between floors can affect the slab between lots (by affecting the steel reinforcement which causes rust/concrete cancer). If the slab is common property then the owners corporation has a duty to ensure that it is not damaged and to take action if it is. If the slab is private lot property and the water ingress is a defect from private lot property only then the owners corporation need not get involved.

It is important that the owners corporation consider the source of the leak and the impact of that leak.

If the owners corporation says, “It’s not our problem. It’s private lot property,” the owners corporation needs to be careful if years later someone engages an expert and finds out that it is actually common property that is defective and letting water through. This may mean that someone has not been able to rent out their property for two years and has a massive loss of rent claim against the owners corporation. The owners corporation would have saved themselves a lot of money if they had investigated initially and determined the true source of the water ingress. It also allows the owners corporation to make an assessment on the likely damage (if any) to common property that lies between the two private lots.

Otherwise, if it’s definitely private lot property, the strata manager really does not need to get involved. The owners corporation does have powers under section 48 of the owners corporations Act to deal with lots not properly managed in some situations. However, that power should be used carefully and usually only when there is a risk to common property. The power of the owners corporation to undertake repairs for a failure to comply with a section 48 notice can lead to other problems particularly if the works do not resolve the issue. Water ingress rectification can be a complicated and prolonged process. It can take many attempts at fixing water ingress issues before the water is stopped. An owners corporation taking over what is effectively a private lot matter can expose the owners corporation to substantial costs being incurred which they are left to seek from the defaulting lot owner.

Phillip Leaman
Tisher Liner FC Law
E: [email protected]
P: 03 8600 9370

This post appears in the July 2024 edition of The VIC Strata Magazine.

Question: If the pipe only services one lot, is that lot owner responsible for any repairs? Because the pipe is outside the boundary of the unit, our strata manager says it’s common property. Is this correct?

A leak has been identified in unit A. A leak detection service investigated and determined the leak was under the slab of the unit located across from unit A. The pipe services hot water only to unit A, and unit A is the only lot impacted.

Because the pipe is outside the boundary of unit A on the Plan of Subdivision, our strata manager and her line manager both say it’s common property. If the pipe only services one lot, is that lot owner responsible for any repairs?

The owners corporation doesn’t have enough in our sinking fund to cover the repair. We have raised a special levy to pay for the works.

We are concerned that insurance will not cover the repair as it may be determined as wear and tear.

Is the owners corporation responsible for repairs? We don’t want to waste owners corporation’s money unnecessarily, especially in these times.

Answer: The sole purpose of the pipe will determine the responsibility to repair and maintain it in this situation.

The sole purpose of the pipe will determine the responsibility to repair and maintain it in this situation.

If you have not already done so, we suggest you obtain a copy of the plumber’s report which should confirm the location of the pipe and any lot(s) which it services.

In accordance with the Act and as noted on the Consumer Affairs website, “The owners corporation is responsible for the common property – the Owners Corporations Act 2006 states that the owners corporation must, among other things, manage, administer, repair and maintain the common property.”

You have noted above that the pipe exclusively services lot A, and only lot A is impacted by the issue.

Section 129 of the Act states:

A lot owner must—

1. properly maintain in a state of good and serviceable repair any part of the lot that affects the outward appearance of the lot or the use or enjoyment of other lots or the common property; and
2. maintain any service that serves that lot exclusively.

We suggest that, if the plumber’s report fails to confirm the location/purpose of the pipe, contact the plumber to confirm the usage/service and to include that with the report.

It might be possible for you to claim this under insurance; however, this would depend on the excess payable and whether that outweighs the cost of the repairs. Further, the insurer will require a report from the plumber as to what caused the pipe to crack/burst. You would then need to check this against your policy to determine whether coverage is provided.

Without viewing the report and based on your comments above, this is likely a private lot owner responsibility, and all costs of rectification should be borne by lot A. Provide the owner of this lot with the report from the plumbers and relevant sections of the Act to advise that they are responsible for the repairs.

This is also stipulated under section 16(1) of the Water Act 1989, which states:

1. If—
   
   1. there is a flow of water from the land of a person onto any other land; and
   2. that flow is not reasonable; and
   3. the water causes—
      
      1. injury to any other person; or
      2. damage to the property (whether real or personal) of any other person; or
      3. any other person to suffer economic loss—
         
         the person who caused the flow is liable to pay damages to that other person in respect of that injury, damage, or loss.

Should you still require further clarification, we strongly encourage you to obtain independent legal advice.

Sim Firns
The Knight
Email
P: 03 9509 3144

This post appears in the August 2023 edition of The VIC Strata Magazine.

Question: There is a leak between a top and bottom unit. The OC says it is an owner issue but the insurance company sites the problem is a building issue. Who is responsible?

In our 25 unit complex, there is water leaking between the open terrace of one lot and the inside unit of the lot beneath. The strata plan shows lot boundaries as ‘median’.

The OC says this is a lot issue between the two lots concerning private property and as it is not common property, it is not their responsibility.

Neither lot owner’s insurance will cover the damage. They site that the problem is a building issue and comes under the owners corporation’s strata insurance.

How do we resolve this?

Answer: based on the limited information, the water damage that has resulted from the leak may be considered, but fixing the leak may not.

The strata insurance policy is the most appropriate policy to respond to this claim as a lot owners “contents” policy does not cover the building.

Whilst the “building” is covered by the policy, we need to understand whether the “event” itself is covered or excluded.

We expect that some (or all) of the claim may not be covered. Water damage claims are our most contested claims with insurers because there is often a component of maintenance and also repair of water damage. Strata insurance is designed to cover the cost to repair water damage to insured property but generally excludes repair costs related to finding and fixing the leak, as it is generally considered the owner’s responsibility to maintain their property and such repairs relate to general maintenance or wear and tear. The insurer has exclusions such as lack of maintenance, rust, oxidation, wear and tear, corrosion, gradual deterioration, developing flaws, building defects, the rectification of faulty workmanship etc.

So based on the limited information, the water damage that has resulted from the leak may be considered but fixing the leak may not. If the cost of the water damage component of the claim exceeds the excess, a claim can be lodged.

For anything not covered by the insurance claim, the owner of the property is responsible for the maintenance and upkeep of the property unless they can demonstrate another party is liable for the damage (for example the bottom unit may be able to demonstrate the top unit is liable).

Tyrone Shandiman
Strata Insurance Solutions
E: [email protected]
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.

This post appears in the February 2023 edition of The VIC Strata Magazine.

Question: Is water ingress due to a communal drainage overflow classed as flooding? Resolving this will likely involve up to four insurers.

Is water ingress from communal drainage issues, in this case a faulty sump and pump, flooding? We’ve had issues as a result of stormwater overflow in a combination of water tanks that have overflowed from our next door neighbour. What is this classed as?

Water overflow is a reoccurrence and strata won’t cover us. The neighbour issues occurred at the same time. Resolving this will likely involve up to four insurers.

Answer: Unless the water has come from a lake, river, dam, canal, watercourse or other body of water in the exclusion, the flood exclusion isn’t operable.

Does this fit the definition of flood? Unless the water has come from a lake, river, dam, canal, watercourse or other body of water in the exclusion, the flood exclusion isn’t operable.

Obviously, we don’t know the full circumstances but on face value I would say that this is a claim that does not have the flood claim that is operable. You are going to need a good insurance broker to help you navigate this claim because if the insurer is saying it’s not covered, you’d want to understand why it’s not covered and know what the exclusions in the policy are that they’re referring to.

For a lot of these hypothetical scenarios, without knowing the full details and seeing hydrologist reports that might be 55 pages long, I can only give you a general overview of my thoughts. But obviously, the devil might be in the detail of those reports.

Tyrone Shandiman
Strata Insurance Solutions
E: [email protected]
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.

This post appears in the July 2022 edition of The VIC Strata Magazine.

Question: Due to a faulty roof, mould is growing on the plaster ceiling. What are the health impacts and should the ceiling be replaced?

I have a couple of lots that regularly flood via faulty roofs.

There is a lot of pigeon mess and dirt that has flowed in through the floor above into the lot boundary and settled around the lighting ballasts and plaster.

Mould is growing on the plaster ceiling, behind the plaster wall and on the brickwork. These areas haven’t been flooded in a year or so. I’m wondering about the health impacts. Does the ceiling need to be ripped out and replaced?

Answer: Mould requires moisture, oxygen and a food source in order to grow. Generally, if you remove one out of the three, the mould will stop growing.

Obviously for a mould to be visually grown on the plaster ceiling, the water ingress issue will need to be addressed. Mould requires moisture, oxygen and a food source in order to grow. Generally, if you remove one out of the three, the mould will stop growing.

With regards to the mould growing behind the plaster I’m assuming they’re referring to the mould growing on the back of the plaster or the gyprock. If that is the case, the best form of mould remediation is the removal of the mould damaged plaster if it has been structurally compromised.

Sometimes surface mould on plaster can be just wiped down and decontaminated. It all depends on whether the mould is growing through the plaster or it’s just on the surface. If mould is growing on the brickwork, that can simply be decontaminated. Bricks are not a natural food source and if there’s any visual mould on the bricks, it’s likely growing on the dirt on the bricks, not the bricks themselves. Similar to mould on glass.

As we know, mould is everywhere in our environment, and everyone reacts differently to it.

In regards to the health conditions when exposed to different levels of mould, that’s different for every person. Unfortunately, the only person that can determine what health impacts there are is a doctor and it’s obviously dependent on the individual exposed to mould.

Sedgwick is more than happy to look at this situation further if there are some photos of the area to give a bit more advice. I’m going off of what the information has been provided.

Oh – and get rid of the pigeons!

Ryan Richards
Sedgwick
E: [email protected]
P: 1300 735 720

This post appears in the May 2022 edition of The VIC Strata Magazine.

Question: A plumber cut a hole in our ceiling during repairs to a leak in the upstairs apartment. If the leak was from their apartment, who is responsible for repairs to my ceiling?

The Owner of the apartment above us has fixed a leak that was caused by their internal washbasin drain pipe leaking. The plumber came and created a hole in our ceiling during the repair.

Our bathroom ceiling now has cracks, the light fitting is coming off, we have rot & mould and the hole has not been repaired. I am quite concerned that the ceiling may fall. Who should be responsible for fixing the damage caused by the leak?

In this instance, what legislation is applicable to apartment repairs? Is the owner of the apartment upstairs responsible for fixing our ceiling? They have been asking us to bear some of the cost and I am not sure where I stand.

Answer: If an insurance claim can be considered for the water damage component of this claim, this may help resolve some of the expenses without either lot owner needing to cover those costs.

The first consideration is whether an insurance claim can be considered for the water damage component of this claim. If so, this may help resolve some of the expenses without either lot owner needing to cover those costs. The precedent case Paisley v Owners Corporation PS52240 suggests the owner of the property where the leak originated (“the lot above”) may be liable for the excess.

For items not covered by insurance, the question of legal responsibility best fits a legal or strata management professional. Section 129 of the Owners Corporation Act outlines a lot owners maintenance obligations and this issue may be considered a breach of that section of the Act.

If the owner of the lot above has contents insurance, the lot owner with the damage may submit a letter of demand to the owner of the lot above and they can then refer this to their contents insurer for consideration of a claim under the public/legal liability section of the contents insurance policy. The contents insurer will consider if their lot owner is responsible for damage and if so make a payment to the damaged lot owner under that section of the policy.

Tyrone Shandiman
Strata Insurance Solutions
E: [email protected]
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.

This post appears in Strata News #546.

Have a question or something to add to the article? Leave a comment below.

Read More:

• If It Has a Balcony, It Will Leak
• VIC: What’s yours and what‘s common property?

Visit our Maintenance and Common Property OR Strata Title Information Victoria.

After a free PDF of this article? Log into your existing LookUpStrata Account to download the printable file. Not a member? Simple – join for free on our Registration page.