Water Damage and who pays

Sorry, slight correction to that. Under Section 81 of the Act permanent floor coverings such as a floating floor form part of the “Building” and come under the OC’s building insurance policy.

Whether the actual cause of the water damage is covered by the OC’s insurance policy is another matter that would have to be determined.

If the damage to your lot is due to a defect or defects in the common property, and from what you have said it sounds like that is the case, then the Owners Corporation is responsible for the cost of repairing the damage.

To that extent it is irrelevant whether the things in your lot form part of the common property, or whether strata insurance covers it.  Even if their insurance doesn’t cover it they are responsible.

For example:

– leak in roof which is common property causing damage to inside of unit – OC responsibility to fix damage.

– a fire caused by a fault in something that forms part of your lot, e.g. wiring installed by you, causing damage – your responsibility.

@pmo said:
Not correct sorry. If a water leak from OC pipe for example causes damage to your carpet then you have to claim on your insurance. OC does not pay and does not claim on their insurance. See 

https://www.fairtrading.nsw.gov.au/Tenants_and_home_owners/Strata_schemes/Repairs_and_maintenance.html

I have heard so many versions of this  and every time I think we have a definitive answer, something else pops up.

Here is one of the scenarios in the Fair Trading document quoted by PMO.

There is damp and mould in my unit.

The owners corporation is responsible for water penetration problems coming in through external walls or the floor. The owner is responsible for the mould on their walls.

That seems to suggest that the Owner’s Corp has to fix the problem that’s causing the damp but the owner has to fix the internal damage caused by the problem.

Then there’s the famous Who’s Responsible memorandum which says …

1.5 …major considerations have been:
a. all internal and external waterproofing is the responsibility of the Owners Corporation (including the function of any structure) except where a lot owner causes damage to waterproofing,

Later it says …

2.12 Floor – Owners responsibility
c. Internal carpets and unfixed floating floors.

And then we have

2.13 General – OC responsibility
b. Dampness in a unit coming from outside.

And then …

2.17 Plumbing (includes bathroom, kitchen and laundry) – OC responsibility

a. Blocked floor drain or sewer in common property.

b. Burst pipe in common property.

c. Burst pipe outside the lot.

d. Damage to unit after water leak when OC effecting a repair.

i. Water leaking through tiles or from one lot and affecting another lot or common property.

Hmmm, clear as mud? A lot of that seems contradictory to me but there are three things you need to remember with regard to this document.

1. It has no legal standing unless is has been adopted as part of your by-laws.

2.  Even so, if you find yourself at Fair Trading or the CTTT arguing a point not covered by your by-laws, the adjudicator will reach for the Memorandum as a guide.

3.  There are principles of common law that mean if A’s actions or negligence costs B in some way,  then A can theoretically be held accountable. 

The question then arises, is it worth pursuing a claim for say, the excess on your insurance, or an increased insurance premium? The answer, more often than not will probably be ‘no’. 

If your insurance is happy to pay for the carpet and it doesn’t affect your premiums, go with the flow.  But if it’s going to cost you substantially, I’d be looking for compensation from the Owners Corp becasue of their negligence.

I seem to recall the last time we had this discussion the word from on high was that if, for instance, a common property water pipe leaked and damaged the paintwork inside a unit, the Owners Corp would pay for the repainting required after the work done to fix the pipe but the owner would have to pay for the repainting required because of the original leak.
Didn’t make sense then and it doesn’t make sense now. Except for this … I believe strata managers, lawyers and insurers all had considerable input into the Memorandum and they may have helped decide where the lines were drawn. For instance, if insurance companies said, ‘look, we’ll wear the costs of the internal stuff rather than it having to be an Owner’s Corp issue’ (which, collectively, they would have to have paid for anyway), it could have been a way of simplifying the process without the individual owner suffering unduly. It might also be a way of preventing opportunistic owners remodelling their apartment based on a tiny leak in their living room.
That may not be the interpretation under common law but then the Memorandum is not a legal document – it’s a guide. And it’s really no different from your car insurer paying out on minor damages caused by another driver rather than having the additional expense of pursuing them through the courts to prove that they were at fault.