This issue has been raised many times in the forum and I am surprised that many owners and occupant's have the view that the OC's liability is unlimited even if damage caused to lot owner's or occupant's property has not been due to negligence on the part of the the OC but has been an unfortunate accident. In Anajr's case I have assumed that the burst water pipe occurred without notice and did not result from a lack of maintenance on the part of the OC.
A question I would ask Anajr is that suppose the burst water pipe destroyed his Bang & Olfsen $25,000 sound system or $15,000 entertainment setup (or both) would he expect the other owners to pay for replacement when the burst pipe was an unforeseen accident.
That's why all owners should insure contents, which includes the painted surfaces and carpeted areas in the lot.
I would agree however that if the OC knew there was a problem with the water supply system AND did nothing to address the problem and the water supply system ruptured then that is another matter entirely. That may be construed as negligence by the OC and I would suggest Anajr's insurer in these circumstances could or would pursue the OC for recompense. if he isn't insured or did not wish to claim on his insurance then he may well have a case for recovery of costs provided he could prove the OC was negligent.
Pretty straight forward and it puts the onus on:
1. The OC to maintain the CP and react to problems as soon as they come to its notice and
2. All owners and occupants to take out the necessary insurance to cover the lot owner's or occupant's property.
The current inquiry into Strata Insurance is a good reference for issues such as Anajr's.