› Flat Chat Strata Forum › Common Property › Damage to Unit because of common property defect – Insurance Excess › Current Page
I have no problems with an OC being responsible for damage to Lot Owner’s property when that damage (or loss) is caused by a failure to maintain the common property. Siewa v SP35042 clearly established an OC has a legal and absolute responsibility to maintain the CP and failure to do so can result in severe financial penalties and in Seiwa’s case $400,000 was awarded against the OC. And that is as it should be – every member of an EC, if they know nothing else, should understand 100% the responsibilities imposed on an OC through Section 62 of the SSMA. Section 62 states clearly that an OC must maintain and repair the CP and in my opinion this is its principal responsibility.
However I would argue that a burst internal pipe in a common property wall would not normally constitute a “failure to maintain the common property”. Burst pipes can result from many other things other than a “failure to maintain”. For example a sudden external increase in water pressure, building movement, freezing of water, stress fractures etc. most being events which cannot be foreseen even by the most fastidious and conscientious OC. A burst water pipe is an accident or a “defined event” as insurers like to say. And as such it is insurable.
In Hasabean’s situation if we are saying damage caused any fault in the CP (such as a burst water pipe) legally should be paid for by the OC then this exposes every CP to an uninsurable risk because no entity (or individual for that matter) can insure against the loss or damage to another entity’s or individual’s property.
Hasabean, for example could have had a $100,000 sound system or a Brett Whitely hanging on his wall, loss of or damage to which could not be covered under any insurance policy taken out by the OC. So even though the burst pipe was not caused by a failure to maintain the argument is that OC would still be legally liable to Hasabean’s loss. I think that is very onerous and could potentially bankrupt an OC even if it were committed to Section 62.
I would agree however if the leak from the CP pipe was due to the faulty pipe about which the OC was aware and did nothing to address – then Siewa comes into play.
One last thought. Does the reverse apply to Lot Owners regarding faulty property – for example if Hasabean’s pipes underneath his kitchen sink burst (and burst kitchen and dishwasher pipes is a common event) while he was at work and thousands of litres of water flooded and damaged the CP and lot owner’s property below I think he would be pretty miffed if the OC and lot owner came knocking on his door seeking restitution.
The lesson here is that everyone (including OC’s) should insure their own property and take out the excess with which they are prepared to pay in the case of an event. And of course OC’s must have as their number one priority repair and maintenance of the CP.