New OC legislation substantially amends the legal position in water ingress cases

 

By Tom Bacon - Principal, Strata Title Lawyers

A lot has been written and said about the new amendments to the owners’ corporation (OC) legislation, set to begin at the end of 2021.

I’d like to focus this article on an area which hasn’t got much traction and attention as yet, but which represents a big change to how an OC must respond to complaints about water ingress from lot owners and occupiers.

Firstly, the law. The new Act sets to introduce a new Section 17A into the Act, to clarify that any rainwater or other water that falls, occurs or flows on the common property (otherwise than in a waterway or a bore) is taken to be part of the common property.

Subsection (2) further provides that, for the purposes of section 8(4)(c) of the Water Act 1989, an OC is the occupier of land to the extent that the land is common property, meaning that it will have the right to take and/or use water referenced in subsection (1).

The above wording might seem innocuous, and certainly the passage of water is not a very sexy subject, and it didn’t really attract many comments and objections at the public consultation stage, but consider the following …

Under this new legislation, if there is a burst pipe that causes water to escape onto the common property, then that water is considered to be common property water, and if that water causes damage to anyone else’s property, then the OC will be responsible.

Hypothetically speaking, if a pipe were to burst from within an individual unit (say from a dishwasher, shower drains, bathroom sinks etc.) and if that were to cause damage to multiple units below, then the OC is prima facie, the responsible party to account for all of the loss and damage.

True enough, the OC might well be able to claim back from the lot owner or occupier a portion of the costs if it could be proven that the cause of the burst pipe was from lack of maintenance or some other form of mischief as a contributory act. However, the responsibility and the costs of chasing the lot owner or occupier for that contribution might well be economically impractical or unfeasible to do so.

I am not sure that the insurers of OCs will be thrilled by this legislative change. I would say that the insurers are changing the terms of their policies as we speak. Therefore, all OCs should be aware upon the renewal date of their policies to check the policy wording to see whether they are still covered for these types of claims.

In addition, if an OC has the ability to pass special resolutions without too much expense, then my advice would be to pass updated additional rules to pass responsibility to lot owners for any acts where water is permitted to escape their own internal services and cause damage to other lots and the common property, and to provide a mechanism for the debts to be paid upon demand. It may also be of benefit to consider passing a rule to ensure that owners and occupiers are responsible for any insurance excess in the event that an insurance claim needs to be made.

OCs need to be careful to protect themselves, because left unchecked, this updated legislation put the OC squarely “in the gun” for future water ingress claims •

Docklands voters turn green and sexy

Docklands voters turn green and sexy

August 3rd, 2022 - Docklands News
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