Claims by Owners for Damages caused by Water Ingress under S106(5)

Posted 27 November 2022

Category: Strata

As a result of recent heavy rainfall, many lot owners have suffered significant water ingress/penetration issues and consequential water damage within their lots. These include, but are not limited to:

• damage to plasterboard in the form of blistering/bubbling paint
• water penetration through entry doors causing damage to floorboards
• additional deficiencies found/evident with waterproofing
• damaged drywalls
• resultant damage to carpet (such as mould and mushroom growth)
• need for mould treatment

These can be a result of a building defect, or poorly maintained common property.

As a result of the above, lot owners have suffered financially including loss of rent, or the cost of renting when the unit becomes uninhabitable, notwithstanding the cost to replace fixtures and fittings including furniture, cabinets, curtains and carpets (in the absence of the owners corporation effecting the repair and maintenance).

In addition to the adverse impact of the amenity of the building and the subsequent decrease of market and rental values of lots, if an owners corporation has failed to repair and maintain common property, the consequences can be serious in Court and/or Tribunal proceedings.

The recent storms have opened an array of insight for an individual owner to consider the next cause of action.

Recovery of damages

In accordance with Section 106 of the Strata Schemes Management Act 2015 (NSW) (“SSMA”), the owners corporation has a strict duty to repair and maintain the common property of a strata scheme. However, if the owners corporation fails to fulfil its strict duty of repair and maintenance, the lot owner is entitled to recover reasonably foreseeable loss as a result of the owners corporation breaching its statutory duty pursuant to Section 106(5) of the SSMA.

Circumstances that may give rise to a lot owner claiming damages (compensation) include:

• An owners corporation’s failure to rectify water penetration issues originating from the common property that consequently damage the lot property which then renders the lot uninhabitable.
• An owners corporation’s failure to rectify essential fire safety equipment which consequently leads to the issuance of a fire safety order that may potentially restrict the occupation of the building.
• An owners corporation’s failure to repair and maintain defective balustrades on a lot’s balcony which consequently leads to the lot’s balcony to be unsafe and unusable.

Following the decision handed down by the NSW Court of Appeal in Vickery v The Owners – Strata Plan No 80412 [2020] NSWCA 284, the Court determined that the Tribunal can award a lot owner for significant damages as a result of the owners corporation’s failure to repair and maintain common property under section 106(5) of the SSMA.

Currently, there is no jurisdictional limitation on the amount that can be awarded by the Tribunal for the damages resulting from an owners corporation contravening its statutory duty under subsection 106(1) of the SSMA.

This means lot owners will now get a greater chance at having their disputes determined by the Tribunal for significant damages in a less formal and cost effective jurisdiction.

Some successful cases include:

If you have suffered or believe that you may have suffered losses (financial or otherwise) as a result of an owners corporation’s failure to repair and maintain the common property, please contact our experts at Bannermans Lawyers at enquiries@bannermans.com.au or call us on 02 9929 0226.

***The information contained in this article is general information only and not legal advice. The currency, accuracy and completeness of this article (and its contents) should be checked by obtaining independent legal advice before you take any action or otherwise rely upon its contents in any way.