Water ingress claims against OCs set to skyrocket after marathon VCAT case

Tom Bacon

After a hearing spanning 11 days, more than 2000 documents, and extensive legal arguments on both sides, the Victorian Civil and Administrative Tribunal (VCAT) has ordered an owners’ corporation (OC) on St Kilda Rd to carry out $58,000 worth of rectification works to an apartment.

Furthermore, VCAT ordered the OC to pay around $60,000 in compensation and damages to the lot owners, as well as a loss of rent claim of $775 per week up until the completion of the rectification works.

The proceeding was commenced after years of inaction by the OC after countless complaints were raised by the lot owner spanning a decade, regarding water ingress issues to their apartment on the fifth floor of the building. The OC was said to be aware of the water ingress issues and had taken expert advice on how to rectify those issues but had failed to act in a timely manner or at all.

The VCAT Member found against the OC and criticised it for not acting on legal and expert advice to carry out repairs to the common property that would have potentially rectified the issues suffered by the lot owner at a much earlier juncture.

Under the Water Act 1989 legislation as well as the Owners’ Corporation Act 2006, there is an avenue for lot owners to bring a proceeding against an OC if water has unreasonably escaped from the common property into lot property.

In making such findings, the law treats this as “strict liability” offence, meaning that it matters little about any supervening factors that might prevent an OC from organising repairs. So, factors such as inclement weather, lack of access due to the COVID lockdown, non-availability of engineers and contractors etc are never held as valid excuses available to an OC to escape or reduce its liability.

Interestingly, this was a case where VCAT was prepared to award damages in favour of the lot owner for “loss of amenity”. This decision contrasted an earlier decision of VCAT where it was found that there was no such jurisdiction to do so.

It therefore appears to be the case that if the right factual circumstances are found, then VCAT might be prepared to make orders of this nature in the future.

Another interesting feature of this case was that the lot owners claimed that they had paid $27,000 in OC fees since they had moved out to alternative accommodation. They claim they have had to pay these fees but were deprived the benefit of being able to live in the building during this time. VCAT accepted this and permitted the lot owner to recover those fees from the OC.

This whole sorry saga is a timely reminder for OCs all over Melbourne to take these complaints of water ingress seriously, and to take timely action to investigate the issues, and carry out repairs promptly. Otherwise, these types of cases shall spring up all over Melbourne, and the lawyers will no doubt have a bonanza.  •

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