Water ingress issues are commonplace when dealing with strata. In this podcast, Partner Anne Fernando discusses the obligations owners’ of corporations have when it comes to water ingress issues and other strata concerns.
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Dan Toombs: It probably comes at no surprise that in matters relating to strata, water ingress issues are commonplace. It therefore follows what are the obligations of owners corporations when it comes to resolving the issue? Well in today’s podcast, I’m with Anne Fernando, partner at Sachs Gerace Lawyers and we’re discussing all things strata and water ingress. So Anne, how common are reports from water ingress into units?
Anne Fernando: Well, as a result of the recent heavy rains, our owners corporations are finding that they are subject to more and more reports from lot owners complaining of water ingress into their units. Some of the more common reports we’re seeing is water entering through the ceiling and through sliding doors. That’s usually a result of a failure of common property. So for instance, where water enters through a sliding door, it could be caused by unsealed frame joints in the sliding door. Water ingress is also commonly caused by failed waterproofing.
Now an owners corporation should remember that it has a strict duty to keep in a state of good and serviceable repair the common property in order to comply with the Strata Schemes Management Act. When water ingress occurs due to a failure in common property, the owners corporations immediately in breach of that strict duty.
DT: And I suppose it follows, owners’ does the owners corporation have to carry out those repairs immediately to fix the water ingress?
AF: I would definitely advise that an owners corporation carry out the repair straight away. If an owners corporation finds out that a lot is suffering from more to ingress, it should carry out repairs to the affected unit or affected units as soon as possible to comply with its strict duty that I just mentioned under the Strata Schemes Management Act.
If there’s multiple units affected and it would take a bit of time before the repairs can commence, then the owners corporation should at the very least consider if there’s some kind of temporary repairs they could carry out to prevent the water ingress in the short term.
The New South Wales Civil and Administrative Tribunal does not look too favourably upon owners corporations. We put off rectification for a number of months or in some occasion years whilst a lot owner lives with water coming into their unit.
DT: And what are the consequences for the owners corporation if they don’t carry out those repairs?
AF: Well, I think one of the reasons that owners corporation often put off doing repairs is because it often costs a lot of money. But the problem is if the owners corporation doesn’t carry out the repairs immediately, then the water ingress is likely to get worse, which is likely to make it even more costly to rectify than if they’d done it straight away.
Now there’s also a risk that if the owner’s corporation doesn’t carry out the repairs the affected lot owner will commence legal proceedings against the owner’s corporation in the New South Wales Civil and Administrative Tribunal to obtain orders to force the owners corporation to fix the cause of the water ingress.
In such circumstances, it’s likely that the lot owner will also seek their damages and costs as well.
DT: So when we speak of litigation, as you mentioned, damages can follow. But what can a lot owner actually seek damages for in the case of ingress?
AF: Well, it depends on whether the lot owner lives in the unit. Now if a lot owner lives in a unit, they can seek damages for any period where they’ve had to move out of the unit and, for instance, live in a hotel. In that case, a lot owner may be entitled to claim alternative accommodation costs if they are able to successfully prove that the unit is uninhabitable due to the water ingress.
Similarly, if the unit is an investment property and the lot owner is able to prove that the unit is unrentable due to the water ingress they can claim lost rent. In both of those scenarios, the Tribunal has in the past awarded damages to the lot owners starting from the date that the unit was uninhabitable or unrentable and only ending on the date that the owners corporation fixes the cause of the water ingress and makes the unit habitable or rentable again. Now that can be quite a lengthy period depending on the extent of the repairs required.
Another thing to keep in mind is that the tribunal often makes orders for the lot owner who brought the proceedings to not be levied in respect of the payment of damages to that lot owner. So that means that the other owners will each contribute a larger portion towards the payment of the damages and they would have had the affected lot owner been levied.
DT: And just in relation to those costs, can you explain just a little more about what those costs may be and how likely it is that the owner will be awarded costs?
AF: Yeah, well, the lot owner can seek the legal costs in the proceedings. They can also seek expert costs if they obtained any expert evidence in the course of the legal proceedings. For instance, to identify the cause of the water ingress as being common property or in relation to determining whether a lot is uninhabitable or unrentable.
The Tribunal doesn’t award costs unless there are special circumstances which weren’t the award of cost. But in the past, the Tribunal has awarded costs to a lot owner where the owners corporation didn’t take any action for two years to rectify the cause of the water ingress into that lot owners unit and the lot remained unrentable during that time.
Now, it’s also important for an owner’s corporation to keep in mind that if a lot owner is successful in legal proceedings then the owners corporation also can’t levy that lot owner for the owners corporation’s legal costs. Practically speaking by the time the owners corporation receives a decision of the tribunal it’s likely that the owners corporation will have already levied the lot owner so it will need to refund the levies to that owner upon receipt of the decision.
DT: Smart owners corporations would obviously be concerned about legal proceedings in particular the exponential costs that might sort of derive from that. How can Sachs Gerace Lawyers assist owners corporation if a lot owner for example reports water ingress?
AF: Well we can assist the owners corporation to resolve the dispute with the lot owner in a cost-effective and timely manner making sure that the owners corporation also complies with its obligations under the Strata Schemes Management Act. We can also assist owners corporation in avoiding legal proceedings unless they are absolutely necessary. I mean sometimes people come to us and legal proceedings have already been commenced against you and a corporation.
We can also assist in such a circumstance because sometimes you can still settle those legal proceedings. They don’t have to continue if that’s the right thing to do but if it’s necessary to defend it, we’ve got a lot of experience with that as well because we’ve acted for both owners and lot owners and owners corporation in water ingress cases. We’re well placed to assist and can provide advice about how the Tribunal is likely to view particular claims by lot owners.
DT: Anne, thanks for joining me.
AF: Thank you very much, Dan.
Outro: Thanks for listening. If you have any questions or need more information simply call Sachs Gerace on 02 9331 5177.