For most of us our homes are our castles. Given the emotional and financial stresses associated with them it is understandable that when there is a problem such as water penetration, a unit owner wants someone else to be responsible for any financial loss caused. In a recent ACAT case we successfully defended a claim made against an owners corporation in just such a situation.

What happened?

Like many new developments, this particular building contained building defects. As part of the process of identifying the defects, investigating the cause and engaging in a collaborative repair process with the original builder, the owners corporation had arranged for several inspections of both common and lot property. During this process no one notified the owners corporation, its building manager or experts that the unit suffered from water penetration. Sometime later the unit was inundated with water and the owners corporation was notified. An inspection was promptly arranged however due to the lack of previous issues and the cause was believed to a failure to clear the drainage system of debris. Some months later, the unit again flooded as a result of which the tenant left. After testing the cause was found to be defective building.

The unit owner then sued the owners corporation for loss of rent, compensation for damage to property and cleaning costs. Under section 24 of the Unit Titles Management Act 2008 (ACT) there is a strict duty upon the owners corporation to maintain the common property. However, the unit owner’s ultimately asserted negligence. The key question was had the owners corporation acted reasonably in the circumstances and was it therefore responsible for the unit owners loss?

The decision

ACAT found that the owners corporation had acted reasonably in undertaking building defect inspections and that this was an unfortunate situation where no one was to blame for the unit owner’s losses. The unit owner’s claim was dismissed

Although this is an ACAT decision it is of interest to NSW based owners corporations. This is because the decision of the NSW Court of Appeal in The Owners Strata Plan 50726 v Thoo [2013] NSWCA 270 which concerned the ability (or inability as it was ultimately decided) of a lot owner to claim for damages, including loss of higher rent, left open the possibility of a claim against an owners corporation in negligence.

What should I do if my unit is affected by a common property issue?

  • Notify your strata manager and your building manager in writing if you believe your unit is affected by a building defect or a common property issue;
  • If you receive notifications of inspections by building experts you should make your unit available and advise the building expert of any suspected defects or areas of concern;
  • If you believe your unit is affected by common property building defect or maintenance issue, seek legal advice on your options.

Kerin Benson Lawyers

Author: Allison Benson


Date: 14 October 2014