Strata Community Body Corporate Lawyers

Disputes between adjoining property owners due to damage caused by flowing water from one property to another is covered in the Water Act 1989 (Vic), (“The Act”) with s16 being the most relevant to home and apartment owners.

s16 – Liability Arising Out of Flow of Water

“(1)     If—

        (a)     there is a flow of water from the land of a person onto any other land; and

        (b)     that flow is not reasonable; and

        (c)     the water causes—

              (i)     injury to any other person; or

              (ii)     damage to the property (whether real or personal) of any other person; or

              (iii)     any other person to suffer economic loss—

the person who caused the flow is liable to pay damages to that other person in respect of that injury, damage or loss”

The definition for “flow” in the Act includes “discharge, release, escape, percolation, seepage and passage, and includes both surface and underground flow”.[1]

S20 of the Act gives the determining factors of whether a flow is reasonable, with account taken of all of the circumstances including the following matters:

“(1)     In determining whether a flow of water is reasonable or not reasonable, account must be taken of all the circumstances including the following matters—

        (a)     whether or not the flow, or the act or works that caused the flow, was or were authorised;

        (b)     the extent to which any conditions or requirements imposed under this Act in relation to an authorisation were complied with;

        (c)     whether or not the flow conforms with any guidelines or principles published by the Minister with respect to the drainage of the area;

        (d)     whether or not account was taken at the relevant time of the likely impact of the flow on drainage in the area having regard to the information then reasonably available about the cumulative effects on drainage of works and activities in the area;

        (e)     the uses to which the lands concerned and any other lands in the vicinity are put;

        (f)     the contours of the lands concerned;

        (g)     whether the water which flowed was—

              (i)     brought onto the land from which it flowed; or

              (ii)     collected, stored or concentrated on that land; or

              (iii)     extracted from the ground on that land—

and if so, for what purpose and with what degree of care this was done“.

Demonstrative Case Law

Damage caused to a property due to water flowing from another property will not always satisfy s16. In the case of Bhati v Pannu [2021] VCAT 946 some of these elements were considered. The Applicant and Respondent both owned land with a common boundary fence. Landscaping works had been undertaken by the previous owners of the Respondent’s land. The Applicant had also carried on some landscaping works, and the Applicant denied that their own works caused the damage.

The VCAT Member accepted that there was an unreasonable flow of water from the Respondent’s land to the Applicant’s land, it was held that other acts could have caused the damage during the landscaping works, and that it was unlikely that the unreasonable flow of water was caused by the works on the Respondent’s land. This decision was determined by the lack of photographic and video evidence to determine the extent of damage at the point when the issue was discovered. This case serves as a reminder of the importance of evidence when demonstrating the cause of damage of a s16 claim. [2]

Common property boundaries- who is liable for an unreasonable flow of water?

On strata plans, the common property is under the control of the Owners Corporation, therefore to establish a cause of action against the Owners Corporation it is necessary to demonstrate that the unreasonable flow has emanated from common property.

Case Law on Property Boundaries and Owner Negligence

In Davies v Owners Corporation 1 PS414649K [2019] VCAT 1159, VCAT was instructive about what elements of a building will be considered common and lot property under a typical plan of subdivision.

In this case, the two applicants owned apartments on level 8 of an apartment building. The proceeding was commenced against the Owners Corporation and the owners of the apartments above them. The question was whether the glazed units on the balconies were common property or within the property owned by the owners on level 9.

The Senior VCAT Member provided an analysis of a plan of Subdivision per the common approach used to define boundaries, which in the plans are shown as thick continuous lines which outline each apartment. The presiding Member rejected an argument that the relevant building is limited to those walls which are load bearing. This meant that the aluminium glazed panels which formed a wall and roof over part of the lot with sliding doors opening to a balcony are structural elements and therefore common property.[3]

Further clarification was also provided as to the location of the boundary between a lot and a common area balcony. It was held that the interstices between the ceiling of the lot below and the balcony surface above (an area which comprised of cables, pipes, etc), joists, cement sheeting, a painted waterproof membrane, screed with tiles and some decking. The Member decided that the membrane, screed, tiles and decking to be part of the lot [at 72], whilst the cement sheeting and joints together form part of the structure of the building are therefore common property [at 67].

The case provides some clarity as to how a plan of subdivision is to be interpreted in the context of a water leak and serves as a reminder of the difficulties faced by Owners Corporations where water leaks are either from a lot, or common property. Where there is disagreement as to the source of damage and that area’s ownership, this may cause further delays and damage to the lot owner’s property, which may expose an Owners Corporation to even further losses.

In Pennial Enterprises Pty Ltd v OC RN4160667X [2012] VCAT 943, it was held that an Owners Corporation was liable for damage, even though it was not found negligent. This case concerned water ingress in an apartment complex, which caused the owner to lose both rental income, and pay compensation for loss of amenity to the renter. In applying s16, the Tribunal said the Act “is concerned with the fact that a flow of water has occurred, and the question of fact over whether the flow was ‘unreasonable’. Section 16(1) does not concern itself with whether the particular respondent land owner had been negligent. It is not a question of whether the Owners Corporation has some moral blameworthiness”. [6]

It was held that “the flow of water from the common property into the owners property, in sufficient quantity to cause physical damage and the loss of the tenants, was not reasonable.” [7] This indicates that no matter how careful an OC and it’s managers are they may still be liable for water flows from common property.[8]

VCAT Determinations

Disputes under the Act are heard by the VCAT, except where claims involve personal injuries. Pursuant to s19(3) of the Act, VCAT:

“a) May by order, whether interim or final, grant an injunction if it is just and convenient to do so; or

ab) may make an order by payment of a sum of money awarding damages in the nature of interest; or

b) make an order that is merely declaratory.

19(5) The tribunal may in respect of any works that give rise to a cause of action of a kind referred to in ss(1) make any order in respect to-

a) compensation for damage to land; or

b) the continuation, removal or modification of works; or

c) payment of the costs of removal or modification of works –

that it considers appropriate.“

Conclusion

In conclusion, the common property boundaries are important factors in a s16 claim. Owners Corporations should be mindful of their potential liabilities when water causes damage which permeated the building envelope through common property. The complexity of identifying the access points of water into a building means that evidence can be extremely valuable in a VCAT proceeding.

This is a Lovegrove and Cotton publication, authored by senior paralegal Cameron Wade and Construction and Planning Lawyer Justin Cotton.

Disclaimer

This article is not legal advice and discusses it’s topic in only general terms. Should you be in need of legal advice, please contact Lovegrove & Cotton Lawyers and our experienced lawyers will assist you based on the facts and circumstances of your case.

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[1] http://classic.austlii.edu.au/au/legis/vic/consol_act/wa198983/s3.html#flow

[2] https://www.spectrumlaw.net.au/water-damage-who-is-liable/#:~:text=In%20particular%2C%20section%2016%20of,economic%20loss%2C%20then%20the%20person

[3] https://www.greenslist.com.au/greens-blog/common-property-boundaries-and-the-water-act-who-is-liable-for-unreasonable-flows-of-water-into-an-apartment

[4] https://www.ashurst.com/en/insights/limitation-periods-for-water-law-claims-down-the-drain/

[5] https://www.ashurst.com/en/insights/limitation-periods-for-water-law-claims-down-the-drain/#:~:text=The%20Water%20Act%201989%20(Vic)%20imposes%20liability%20on%20Authorities%20in,or%20economic%20loss%3A%20s%20157.

[6] Pennial Enterprises Pty Ltd v OC RN4160667X [2012] VCAT 943, [63].

[7] Ibid, [63].

[8] http://www.mckeanpark.com.au/wp-content/uploads/2015/10/OwnersCorporationWaterFlow-Part1.pdf