Anderson v Holden Peel Projects Pty Ltd (Building and Property) [2020] VCAT 538 (5 May 2020)

Anderson v Holden Peel Projects Pty Ltd (Building and Property) [2020] VCAT 538 (5 May 2020)

Last Updated: 6 May 2020

VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL

CIVIL DIVISION

BUILDING & PROPERTY LIST                                                               VCAT REFERENCE NO. BP1534/20

CATCHWORDS

Claim by apartment owner for damages arising from water entering her apartment made against the builder and the Owners Corporation – issues with expert evidence when multiple authors of one report – Dura (Aust) Constructions Pty Ltd v Hue Boutique Living Pty Ltd (No 3) [2012] VSC 99 – VCAT Practice Note PNVCAT2: Expert Evidence – the causes of the water entry – whether a breach by the builder of the s8 warranties under the Domestic Building Contracts Act 1995 – whether conduct of Owners Corporation was in breach of s4(b)(i), s5, s46 of the Owners Corporation Act 2006 – liability of builder and Owners Corporation under s16 of the Water Act 1989 – heads of loss and damage – diminution in value of property or rectification costs – claims in the nature of personal injury – whether the Tribunal has jurisdiction – logistics of hearing by video link.

 

 

APPLICANT Margaret Anderson
FIRST RESPONDENT Holden Peel Projects Pty Ltd (ACN 006 727 073)
SECOND RESPONDENT Owners Corporation PS603262H
JOINED PARTY Capco Industries Pty Ltd (ACN 115 035 811)
WHERE HELD Melbourne
BEFORE Senior Member S. Kirton
HEARING TYPE Hearing
DATE OF HEARING 1, 3-17 April, 15-17 July, 19 July, 4 September, 7-10 October 2019, submissions dated 12
November and reply submissions 6 December 2019
DATE OF ORDER 5 May 2020
CITATION Anderson v Holden Peel Projects Pty Ltd (Building and Property) [2020] VCAT 538

ORDER

 

  1. The claim against the first respondent is dismissed.
  2. The second respondent must pay to the applicant damages in the sum of $135,316.86.
  3. If the applicant wishes to pursue her claim for damages for loss of future income under the Owners Corporation Act 2006 in the Tribunal, she must advise the Principal Registrar in writing by 30 June If such advice is received, the proceeding is to be referred to a judicial member of the Tribunal for consideration under section 77 of the Victorian Civil and Administrative Tribunal Act 1998 as to whether the County Court or Supreme Court would be a more appropriate forum to deal with the claim.
  4. There is liberty to apply on the question of interest and costs and reimbursement of In light of the Covid-19 situation, any application(s) will be dealt with on the basis of written submissions and affidavits, without a hearing, unless the parties request otherwise. I direct the Principal Registrar to refer any application(s) to me for consideration of any necessary orders.

 

SENIOR MEMBER S. KIRTON

APPEARANCES:

 

For the Applicant Ms M. Anderson in person
For the First Respondent Mr B. Reid of counsel, instructed by McMahon Fearnley Lawyers
For the Second Respondent Mr J. Wilkinson of counsel, instructed by Nevett Ford Lawyers
For the Joined Party Mr B. Hall, solicitor, Carter Newell Lawyers, on 1 April 2019, and excused from further attendance

 

Table of Contents

REASONS

BACKGROUND

    1. Ms Anderson’s apartment (apartment 10) has suffered extensively from water entry. In her words:I bought a beautiful sun-filled apartment in Carnegie … in June 2011. Soon after the purchase I discovered that water was leaking into my home from many entry points… I vacated lot 10 due to it being uninhabitable and filling with mould. My beautiful apartment first became uninhabitable in 2013 when the balcony surrounds collapsed to the ground. In 2015 the water ingress became so bad that my heating, cooling, extraction fans, and kitchen facilities stopped working.[1]
    2. She has brought this proceeding against the builder of the apartment complex (HPP) and the Owners Corporation (the OC) seeking There is no dispute that Ms Anderson’s apartment is uninhabitable at present, nor that she is entitled to some form of remedy. The dispute turns on the cause of the damage, those responsible and the amounts claimed.
    3. The apartment building was constructed by HPP in or about 2007 and 2008, under a major domestic building contract entered into with the developer. The building includes 19 residential apartments, three retail premises and a basement The OC is managed by a committee of some of the lot owners, who employed a commercial management company, Strata Plan. The chairperson of the committee at the relevant times is no longer involved with the building and did not attend the hearing to give evidence.[2]SUMMARY OF MY FINDINGS
    4. For the reasons set out below, I find that the amount of loss and damage suffered by Ms Anderson, which I have power to award, is $135,316.86, that the OC is liable to her for this amount and that HPP has no liability to her. In summary, I have decided that while some of the works carried out by HPP in 2008 may have breached the warranties given by HPP under sections 8 and 9 of the Domestic Building Contracts Act 1995, it was the subsequent conduct of the OC which caused Ms Anderson’s loss and damage.
    5. It was the OC’s failure over many years to maintain and clean the building which has caused the water to enter the The building defects alone would not have had this effect. In particular, pigeons were allowed to overrun the roof plumbing and grass was allowed to grow in the roof gutters. This was described by numerous witnesses as follows:“[In 2012] the box gutters were full of pigeon droppings to the top of the chutes…. all of the downpipes and rainwater heads were blocked with pigeon droppings.”[3]“[In 2016] I observed grass growing in the gutters and there were pigeon droppings in the gutters and over part of the roof area. There were also cigarette butts in thedrains and on the balconies.”[4]“[In 2018] I observed excessive pigeon droppings, pigeon nests and nesting materials including dead pigeons on the tiled and metal roofs, eave gutters, box gutters, side chutes, rain heads, balconies and flashings. I also observed pigeons had blocked up some rain head outlets, roof pan including the side chutes in various locations.”[5]
    6. However the failure to maintain the property was not the OC’s most egregious conduct: the committee was aware of the damage to Ms Anderson’s apartment since at least 2014, it received legal advice that it would be liable to Ms Anderson, yet it failed to appropriately address her complaints for five years and, instead, gave preferential treatment to other lot This conduct constitutes a breach of sections 5 and 46 of the Owners Corporation Act 2006. Moreover, the OC is liable for the flow of water under s16 of the Water Act 1989.
    7. Three interrelated proceedings were commenced:
      1. BP1534/2016 (the first proceeding), is a claim by Ms Anderson for damages related to her apartment against:
        1. HPP for breaches of the warranties implied by sections 8 and 9 of the Domestic Building Contracts Act 1995 (the DBC Act) and for an unreasonable flow of water under s16 of the Water Act 1989 (the Water Act); and
        2. the Owners Corporation for breaches of the Owners Corporation Act 2006 (including s4(b)(i), s5, s46) (the OC Act) and for an unreasonable flow of water under s16 of the Water Act.
      2. BP1093/2018 (the second proceeding), is a claim by the OC against HPP in respect of the common property, for breaches of the DBC Act warranties.
      3. BP1407/2018 (the third proceeding), is a claim by several of the apartment owners (other than Ms Anderson) against HPP in respect of the damage to their own lots, for breaches of the DBC Act warranties.
    8. Joined to the first two proceedings was Capco Industries Pty Ltd, the original roof plumber for the However the claims against Capco were resolved before the commencement of the hearing, although it remained a party for the purposes of the apportionment defence raised by HPP.
    9. I commenced hearing the three proceedings together, however during the hearing the second and third proceedings were resolved and orders were made by consent on 18 April 2019 striking each As a result, the only matters left to me for determination are Ms Anderson’s claims for her loss and damage.
THE HEARING
    1. The hearing commenced on 1 April 2019, and continued on various dates until the conclusion of the evidence on 10 October Written submissions and submissions in reply were then filed.[6]
    2. Throughout the hearing, Ms Anderson appeared for She had been legally represented during the first few years of the proceeding, but by the time of the hearing said she could no longer afford a lawyer. HPP was represented by Mr B Reid of Counsel, instructed by Ms J Dymond of McMahon Fearnley Lawyers. Mr D Noble, solicitor, appeared on several occasions for the owners in the third proceeding. Mr B Hall, solicitor appeared for Capco on the first morning and was excused from further attendance.
    3. On the first day, Ms B Haydon, who is the current chairperson of the OC, advised that she appeared to represent the OC in the first pr She requested an adjournment of the hearing on the grounds that its solicitors had ceased to act and she needed time to prepare to run the case. I refused this application, for the reasons given at the time.[7]
    4. However, in order to allow the chairperson of the OC time to prepare the OC’s case, and because the Tribunal Book was not ready, it was agreed that the hearing would be adjourned until 3 April 2019, when I met the parties and their experts on site for a view of the property. In the meantime, the OC engaged a barrister, Mr J Wilkinson, to appear for it. He initially appeared without an instructing solicitor, but by the resumption of the hearing in July, the OC had retained Nevett Ford Lawyers. Mr G Doran instructed Mr Wilkinson throughout the remainder of the hearing.
Logistical Issues
    1. The hearing ultimately occupied 20 days between April and October 2019. There were also directions hearings held in June, July, August and September and numerous orders made in chambers to manage the matter. It was protracted largely due to Ms Anderson’s ill-health. I make no criticism of her for this. She attributes much of her ill-health to the stress caused by the damage to her apartment, her past dealings with the OC and its representatives, and these proceedings. I acknowledge the sensitive way in which all respondents and their representatives dealt with these health issues during the hearing. Although I have found much to condemn the OC and its representatives for in the earlier stages of this proceeding (set out in my Reasons of 31 May 2019[8]), those presently representing the OC are to be commended. I also particularly wish to mention the instructing solicitors and Counsel for the builder, who took on much of the burden of running the applicant’s case when she was unable to do so.
    2. The hearing on 4 September 2019 and many of the directions hearings proceeded with Ms Anderson attending by telephone from her The final 4 days of evidence in October was conducted via a Skype connection with Ms Anderson at her home. These methods of conducting the hearing were agreed to by the respondents and the Tribunal, based on the medical advice provided by Ms Anderson. The solution was not ideal, and had certain logistical difficulties because the Skype connection was by way of a laptop sitting on the bar table. The applicant’s image was projected onto a screen in the hearing room, but she had a limited field of view. For her to see me, I had to sit at the bar table. When witnesses were giving evidence they sat at one end of the bar table, or in the witness box, with the laptop pointed at them, so that the applicant could see them. However that meant that she could not see me or Counsel. Despite these restrictions, all parties agreed to Ms Anderson’s request to conduct the hearing in this manner, having experienced the reality of losing many of the earlier hearing days because she was physically unable to remain at the Tribunal.
Procedural issues and rulings during the hearing
    1. During the hearing in April 2019, the OC applied for leave to file out of time its proposed Points of Defence to Further Amended Points of Claim, a proposed witness statement and a bundle of For the reasons given in my decision of 31 May 2019 I refused the application. Accordingly the OC called no evidence other than its experts, and relied only on the documents in the Tribunal Book prepared by the builder and Ms Anderson.
    2. Also during the hearing I prepared and provided the parties with a draft decision on a discrete question about the extent of the Tribunal’s One of the issues that occupied much discussion during the hearing was whether the Tribunal has jurisdiction to address Ms Anderson’s claims for losses arising out of a personal injury. From the time she amended her claim to include an allegation of loss of future income due to psychological trauma, I raised my concern with her that the Tribunal may not have power to deal with such a claim. I referred her to s19(1) of the Water Act and s54(2) of the DBC Act which contain express exclusions. In response, Ms Anderson suggested she may have rights in negligence and under the OC Act which the Tribunal could hear. As she was not legally represented I considered it appropriate to set out my concerns, recommend that she obtain legal advice and ask for the parties’ submissions on the questions identified in my draft decision. The parties provided their submissions and my findings in respect of jurisdiction are set out below when I discuss the personal injury claims.
THE EXPERT EVIDENCE
    1. By the time the hearing commenced, voluminous expert reports had been filed by each party. Further reports were filed during the The expert evidence ultimately relied on (and on which I have based my decision) was as follows:
      1. As to the building defects and cost to rectify:
        1. Mr Peter Mackie and Mr Andrew Smith of Cracks in the Wall for Ms Anderson,
        2. Mr Peter Leitner of Build-Plumb Consultancy Pty Ltd for HPP,
        3. the OC relied on Mr George Pulikkottil and Mr Paul Cummaudo of Roscon Property Services, and
        4. the owners in the third proceeding called Mr Andrew
      2. As to mould (written reports as to mould were filed but the experts were not called):
        1. Dr Cameron Jones of Biological Health Services Pty Ltd for Ms Anderson,
        2. Dr Wesley Black of Biotopia Environmental Assessment Pty Ltd for HPP
      3. Valuation evidence
        1. Deborah Leshinsky & Associates (written report only) for Ms Anderson,
        2. Mr Peter Buchanan of Buchanan and Company Pty Ltd for HPP,
        3. Mr Ian Clayton of Opteon Property Group Pty Ltd for the OC.
    2. Expert evidence was given concurrently, arranged according to subject matter. In April 2019 Mr Mackie and Mr Leitner gave evidence together about the damage to apartment 10, Mr Smith and Mr Leitner gave evidence together about the damage to apartment 15 (which claim was later settled), Mr Pulikkottil and Mr Leitner gave evidence together about the common property defects[9] (which claim was later settled). Then in October 2019, Mr Leitner and Mr Cummaudo together gave evidence about the structure of the balconies, and the following day Mr Buchanan and Mr Clayton gave evidence about their valuations of apartment 10.
    3. Generally speaking, there was no real contest between the experts about the cause of the damage to Ms Anderson’s All agreed on the factors that were likely to be involved; there was a difference in emphasis on which factor had the greater effect. I will discuss their evidence further below, under the heading ‘Defects’, but at this point I make the general comment that where there was a discrepancy between the evidence of Mr Leitner and the witnesses for Roscon, I prefer the evidence of Mr Leitner, for the reasons discussed at paragraphs 21-36 below.
Issues with Roscon’s Expert Evidence
    1. The reports provided by Roscon, and the evidence given at the hearing by Mr Pulikkottil and Mr Cummaudo, have led me to conclude that their expertise to comment on plumbing defects was not as persuasive as Mr Leitner’s, for reasons including the following:
      1. Each of the Roscon reports listed multiple None of the authors were qualified plumbers, while Mr Leitner is.
      2. Roscon performed a visual inspection only, and did not carry out any water testing, while Mr Leitner performed testing of roof tiles, wall apron flashing, rain heads, downpipes, lead flashing, eave gutters and balconies.
      3. The Roscon reports contain the following disclaimer:
        1. Plumbing, Gutters & Downpipes and Roofs
          We have carried out a thorough visual inspection of the common property and assets visible from the common property areas. If there are any visible plumbing, gutters and downpipes or roof issues they have been included in this section of the report. We have not carried out a thorough inspection of the plumbing, gutters and downpipes and roofs as we are not qualified to do so, please ensure that a suitable qualified plumbing contractor (who is qualified to undertake roof inspections) carries out a thoroughly thorough [sic] regular inspection. We will recommend a qualified plumber to inspect if an issue is found.
    2. Further, and of greater concern, is the method by which Roscon prepared its r Each of the Roscon reports listed multiple authors. For example, the 21 June 2018 report was prepared by Jack Hill (who holds a Bachelor of Engineering), reviewed by George Pulikkottil (automotive engineer) and approved by Paul Cummaudo (domestic builder). It was not established which author prepared which part of each report. There is no identification within the body of the reports which person was responsible for the opinions expressed. The various reports are provided under cover of a letter signed by Mr Cummaudo, each relying upon the same phrase: “I have attached a copy of the report that has been compiled by an experienced auditor”.
    3. The Victorian Supreme Court in Dura (Aust) Constructions Pty Ltd v Hue Boutique Living Pty Ltd set out four rules that will usually be considered to determine whether expert evidence is admissible in the context of the Evidence Act 2008. Each of the Roscon reports fail the ‘expertise rule’, the ‘expertise basis rule’ and the ‘relevance rule’, described by Dixon J as follows:
      1. Is the opinion relevant (or of sufficient probative value) (the relevance rule);
      2. Has the witness properly based ‘specialised knowledge’ (the expertise rule);
      3. Is the opinion to be propounded ‘wholly or substantially based’ on specialised knowledge (the expertise basis rule);
      4. Is the opinion to be propounded ‘wholly or substantially based’ on facts assumed or observed that have been, or will be, proved, or more specifically (the factual basis rules):
        1. are the ‘facts’ and ‘assumptions’ on which the expert’s opinion is founded disclosed (the assumption identification rule);
        2. is there evidence admitted, or to be admitted before the end of the tendering party’s case, capable of proving matters sufficiently similar to the assumptions made by the expert to render the opinion of value (the proof of assumptions rule);
        3. is there a statement of reasoning showing how the ‘facts’ and ‘assumptions’ relate to the opinion stated to reveal that that opinion is based on the expert’s specialised knowledge (the statement of reasoning rule)? [10]
    4. While the Tribunal is not normally bound by the Evidence Act 2008[11], the rules stated by Dixon J are consistent with VCAT’s Practice Note PNVCAT2: Expert Evidence, which does apply to this proceeding. The Practice Note defines an ‘expert witness’ as ‘A person who has specialised knowledge based on the person’s training, study or experience’ (at paragraph 4). Paragraph 1 provides:
      1. Expert witness evidence may be relied upon by the Tribunal to form an opinion about a specialised or technical matter that is relevant to the issues to be determined in a proceeding. Where expert evidence is provided in the form of a written report and/or the expert being called as a witness, it is important that the expert’s opinion is soundly based, complete, impartial, dispassionate, and with in the scope of his or her expertise. [emphasis added]
    5. In my view, Dixon J’s ‘relevance rule’ is the same as the PNVCAT2 requirement that the opinion be ‘relevant’; the ‘expertise rule’ is the same as the PNVCAT2 requirement that the opinion be ‘within the scope of his or her expertise’; and the ‘expertise basis rule’ is the same as the PNVCAT2 requirement that the opinion be ‘soundly based’.
    6. Because none of the authors of each of the Roscon reports are identified as plumbers, and in light of the express disclaimer that they are not qualified to comment on plumbing matters, any plumbing evidence they give fails the ‘expertise rule’. Their evidence also fails the ‘relevance rule’, in light of the express disclaimer that “We have not carried out a thorough inspection of the plumbing, gutters and downpipes and roofs as we are not qualified to do so”.
    7. Further, as stated, it is also unclear as to which person is providing the opinion expressed in the various reports, given the multiple As a result, it is impossible to establish who has the requisite expertise and who applied their relevant experience to the assumed set of facts, thus failing the ‘expertise basis rule’.
    8. For example, the Roscon report on the balcony 16 substrate named three authors, Oliver Morton (Advanced Diploma of Engineering Technology (Civil)), Matthew Stephens (no qualification) and Paul Cummaudo (domestic builder). Only Mr Cummaudo attended at the Tribunal to give In cross examination he admitted that Mr Morton had drafted the report, while Mr Stephens had obtained the core sample. The report fails to identify these roles, or the process Mr Cummaudo undertook to approve the report.
    9. When giving expert evidence, each of the authors of a report should make it clear which opinions are held by each expert, they should identify any dependency on the reports or opinions of others and where staff members have assisted in the preparation of the report’s underlying analysis, that the opinions expressed are those of the expert based on the application of their specialised knowledge and experience[12]. No such statement was made here, either in the written report or when it was adopted by Mr On the contrary, when it was put to him in cross-examination that it was difficult to tell whether the opinions contained in the report were “yours or Mr Hill’s or Mr Pulikkottil’s or the Owners Corporation’s”, Mr Cummaudo was only able to answer “It’s not the Owners Corporation’s”. He was unable to distinguish between the others.
    10. The difficulty for Roscon in providing reports and oral evidence in the manner it did, is exemplified by the contradictory evidence given in relation to the core sample removed from the balcony The author of page 8 of the written report (presumably Mr Morton or Mr Stephens) examined the core sample and expressed the conclusion “The layers of substrate appear to be as follows, from bottom to top: plywood sheeting, layer of liquid applied waterproofing membrane, tile adhesive, tile”. However in oral evidence, the person who had signed off on the report (Mr Cummaudo) asserted that no waterproof membrane was observable from the core sample. This contradiction between the nominated 3 authors of the report means that I am not prepared to give it any evidentiary or persuasive weight.
    11. I also have concerns about the independence and impartiality of the Roscon r At its 2018 AGM the OC committee told the members:Roscon Property Services engineers attended the site on 15 February 2018 to inspect private lots and common property in order to prepare a Holistic Building Report. The purpose of this report is to document the building defects and propose rectification methodology to provide evidence at VCAT.The first version of the report was provided to the Committee on 14 April. The Committee invested more than three days’ work in reviewing the document, to ensure that the extent of all defects and issues reported by owners and residents were documented. A number of revisions were negotiated, and an additional site visit was conducted to perform water testing and destructive testing. The final report was filed at VCAT… [13]
    12. The first version of the report was not discovered, nor were any emails or drafts evidencing the “number of revisions [which] were negotiated”. The report that was filed is headed ‘V2’. Interestingly, page 2 of the report is headed ‘version 3’. It states that the report was inspected and compiled by Mr Hill on 19 June, Mr Pulikkottil on 20 June and Mr Cummaudo on 21 June It does not mention the draft report in April 2018, nor the “number of revisions [which] were negotiated”.
    13. In his evidence, Mr Cummaudo was unable to advise on the process of compiling the reports, advise why the “negotiations” occurred, who was involved or the substance of them, or how many previous reports Roscon had prepared for the In cross examination Mr Cummaudo said that he reviews and “signs off” an average of ten reports a week. He had no direct recollection around the June 2018 report. For example, he “could not say” if there had been any reports on this property prior to June 2018, and he was not aware of the report dated 14 April 2018 until shown it at the hearing. He could not recall whether Roscon had been instructed by the OC directly or by solicitors. He “did not know” if Roscon had sent the OC any invoices, or if they had been paid. He was unable to say whether Roscon had carried out any building maintenance for the OC. As for the changes to the June report, Mr Cummaudo said it was “quite normal” for Roscon to “add or remove things from a report in discussions with an owners corporation”. He said usually an OC just asks Roscon to provide a list of defects and does not say if a report is to be used for the Tribunal. “It is only later, if the matter does not settle, that an OC asks us for a VCAT compliant report.
    14. This is a failure to comply with PNVCAT2 which provides at paragraph 11:[11] The report of an expert witness must include the following matters…[e] all instructions that define the scope of the report (original and supplementary and whether in writing or oral)[f] the facts, matters and all assumptions upon which the report proceeds;…
    15. Moreover, each of the three authors have made the declaration required by the Practice Note that “I have made all enquiries that I believe are desirable and appropriate and that no matters of significance which I regard as relevant have to my knowledge been withheld from the T” In my view, the original draft report and the substance of the “negotiations” which led to the creation of a “final report” are significant and relevant matters that should not have been withheld from the Tribunal.
    16. The failure to comply with the requirements of PNVCAT2, together with the lack of expertise to give plumbing evidence, the lack of testing of plumbing issues, the inability to identify which Roscon employee held which opinion, and the contradictory opinions provided, has led me to the conclusion that the evidence given by the witnesses for Roscon should be given little weight, and that where it was contradicted by Mr Leitner, I prefer the evidence of Mr Leitner.
THE CAUSE OF THE WATER ENTRY
    1. As stated above, Ms Anderson’s apartment (apartment 10) has suffered extensively from water Ms Anderson has been affected physically, psychologically and emotionally by the damage, and she provided a folder of medical reports to that effect. She has had to vacate the apartment and find and pay for accommodation elsewhere, while undergoing medical treatment and attempting to continue to work. This is part of her claim for damages which will be considered further below.
    2. The damage to her apartment can be described as follows:1. Living room: plaster damage to ceiling and bulkhead, carpet damage, mould, crack in wall adjacent to air-conditioner, air-conditioner not working due to water damage,2. Kitchen: plaster damage in north-east corner, kitchen cupboards and appliances, ceiling plaster and light fitting all water damaged, mould,3. Main Bedroom: plaster damage, carpet damage, window leaks, mould,4. Bedroom 2: bulkhead and ceiling damage, window leaks, mould.
    3. Further water problems and other defects in other parts of the apartment complex (including the common property) were identified in the Roscon report and were claimed in the related proceedings by other lot owners and by the These claims were settled during the hearing, after the first round of concurrent expert evidence had been heard. Accordingly, although I heard extensive expert evidence about the building generally, I do not need to make any particular findings about the cause or extent of the damage, other than in respect of apartment 10. Having said that, as noted above, by the time the expert evidence was concluded, there was very little difference between the experts about the causes of the water problems in the building.
    4. In summary, they agreed that the following combination of factors are affecting the building, and especially apartment 10:
      1. The lack of maintenance: Most significantly, a lack of maintenance, with gutters blocked over many years by dead birds, pigeon excrement, grass and
      2. The roof plumbing issues, which include:
        1. The eave gutter issue: The back side of the eave gutter running along the roof of the balcony, kitchen and the bedrooms of apartment 10 is lower than the front side, allowing water to flow behind the fascia when the gutter is full.
        2. The rain head and chute issues: The chutes into the rain heads are not sealed and allow water to run back inside the walls of the building if they become The rain heads contain undersized and incorrectly positioned overflow holes which do not work effectively if the downpipe is blocked.
        3. The ‘bush plumbing’: The attempted repairs carried out by HPP in early 2016 by extending two downpipes discharging into the eave gutters pushes water along the gutter to a rain head which is unable to cope with the extra volume of water and overflows. This, combined with the height of the eave gutters, allows water to flow back into apartment 10.
      3. Balcony leaks: There are leaks from the balconies of apartments 15 and 16 above apartment 10.
      4. The kitchen beam issue: The flashing around the protruding beam above apartment 10 appears to have failed in the localised area of the kitchen.
      5. Other issues: A lack of appropriate flashing below the apartment 16 balcony where it meets the roof A lack of sarking under the roof tiles above apartment
      6. A cracked roof tile repaired with silicon.
    5. I will discuss the evidence about each of these issues in turn.
The Lack of Maintenance
    1. All experts agreed that the significant lack of maintenance was an overwhelming cause of or contributor to the water problems in the For example, in 2018 Mr Leitner observed:I was surprised to see excessive amounts of pigeon droppings and debris on the roofs, including grass still growing in the gutters because I had seen these issues in past photos and reports dating back as far as 2015, that depict the state of the roofs due to lack of maintenance…I observed excessive pigeon droppings, pigeon nests and nesting materials including dead pigeons on the tiled and metal roofs, eave gutters, box gutters, side chutes, rain heads, balconies and flashings. I also observed pigeons had blocked up some rain head outlets, roof pan including the side chutes in various locations. The infestation of the pigeons and their activities can cause significant blockages externally and internally to the Roof Stormwater Drainage System. Furthermore, can cause significant water inundation to the interior ceiling and wall cavities within the unit complex.In my opinion, the pigeon infestation has undoubtedly contributed to or directly caused a lot of the leaks reported. The pigeons must be irradiated immediately to mitigate any further loss or damage to the building structure and internal linings, including the prevention of serious diseases and health risks…
    2. The photos taken by Mr Leitner at that time showed debris, grass, pigeon nests, pigeon droppings, dead birds, and mesh obstructions, and he concluded:                                                                                                                      The current condition of the roof drainage system is appalling, many dead pigeons, nesting materials, excessive pigeon droppings. Flood test shows any blockages will cause a leak, prevent water flowing away, and cause water to overflow into the wall and ceiling cavities.
    3. Mr Mackie said in his report:It is It is my opinion that birdlife (pigeons) has an impact on the free-flowing rain water flow in this building. Blockages to rain water drains and rain heads, obstructed drain outlets would contribute to the backflow in concealed voids behind bulkheads.
    4. He confirmed this opinion in his oral evidence:“any type of blockage would cause water to go back into the building” and “if any obstruction in the gutter, it would affect the gutter working”.
    5. Roscon noted:The voids either side of the box gutters has led to the infestation of pigeons in the rooftop of the building as pigeons have nested in the voids either side of the box gutter. The infestation of pigeon throughout the property has led to maintenance issues due to pigeon excrement clogging guttering of the roof stormwater drainage system in localised areas.
    6. In the Scott Schedule prepared by Roscon for the OC, they say Roscon agree with [Leitner] – recommendations and conclusions – Eradicate pigeon infestation and undertake regular maintenance.
    7. The OC itself finally admitted the problems with the lack of cleaning in the AGM report of 25 August 2018, where it reported, under the heading, ‘Maintenance – roof and gutter cleaning’:A program of regular roof and gutter cleaning has continued at the building over the last year or so. This program has helped to deter pigeons from the building and prevented blockage of drains and overflow of gutters and rain heads which has previously resulted in water ingress to some apartments during heavy rains.
    8. While the roof was relatively clean during my inspection of the property, I was able to observe the ‘Plimsoll line’ in the gutters and rain heads recording the height to which faeces and other debris had been allowed to accumulate in the past.
The Roof Plumbing Defects
    1. These defects include the rain head and chute issues and the eave gutter In summary, the expert opinion in respect of the roof plumbing was as follows:
      1. The back side of the eave gutter running along the roof of the balcony, kitchen and the bedrooms of apartment 10 is lower than the front side, allowing water to flow behind the fascia when the gutter is full (Mackie, Leitner, Roscon).
      2. Rain heads and the side outlet chutes generally allow water to run back inside the wall of the building if the rain head, chute or outlet become blocked causing damage to the common property (Leitner, Roscon).
      3. No overflows installed in the box gutters and the overflows in the rain heads are too high to be effective (Leitner, Roscon Mackie).
      4. Chutes should have been patched or replaced sooner; this would have prevented nearly all water leaks into internal cavities (Leitner, Mackie, Roscon).
      5. Chute outlets and rain heads are sufficient in size but are not sealed and are blocked (Leitner).
      6. Bird wire installed over rain heads and over the inlet sides of the side chutes outlets contribute to leaks and prevent cleaning and removal of blockages (Leitner).
      7. The apartment 15 and apartment 16 rain heads/side outlet are overflowing or leaking (Leitner).
    2. As discussed above, all the experts acknowledged that the height of the eave gutter, the lack of sealing and the location of the outlets would not have caused the level of damage suffered if the storm water system had not been blocked, and if rain water had not been allowed to back up in the eave gutter and the rain heads.
The “Bush Plumbing” Repairs
    1. In 2015 the OC had obtained a report from a roof expert, Robert During his evidence, the director of HPP, Mr Michael (Mick) Holden, said that in early 2016 he had directed his son Paul Holden (a licensed plumber) to carry out those works which had been recommended by Mr Coghlan. These included:
      1. Replacing, sealing, refixing or reworking existing roof flashings, skirts, and penetrations,
      2. replacing or fixing damaged or broken tiles, trimming tiles, installing mechanical fastenings to tiles,
      3. rectification of cracks in cladding,
      4. sealing of expansion joints.
    2. As well, Paul Holden replaced two spreaders on the downpipes discharging onto the tiled roof above apartment 10 with two extended downpipes. One now discharges into the eave gutter above Ms Anderson’s balcony (called ‘Downpipe Extension 1’) and the other into the eave gutter outside Ms Anderson’s kitchen (called ‘Downpipe Extension 2’). Mr Holden said the intention of this work was to remove water from the tiled roof, as Mr Coghlan had said that area was leaking. Having channelled the water into the eave gutter, it then became apparent that the eave gutter was overflowing. Mr Holden said this was because the downpipes draining that eave gutter were blocked. His solution was to have Paul supply and install a new rain head and overflow pop in the eave gutter outside apartment 10. Mr Holden described this work as ‘bush plumbing’ and said it was necessary to bypass the storm water system as the downpipes below level 2 were blocked.
    3. In its closing submissions, the OC described all the works carried out by Paul in 2016 as ‘bush plumbing’. However Mr Holden’s evidence was that it was only the downpipe extensions and rain head and overflow pop in the eave gutter which was ‘bush plumbing’.
    4. Mr Leitner’s opinion was that while this work was technically not compliant, it served the purpose of removing a source of water from above Ms Anderson’s apartment. He said:[14]The upper roof catchment areas are very large compared to the lower roof areas. In my opinion causing the downpipes to be over the capacity to be discharged adequately onto the lower roof’s tiled and metal roofs. Therefore, leaving no option but to drain the upper roof downpipes and overflows directly down to a rain head that is needed to be installed into the eaves gutters below.
The Balcony Leaks
    1. All experts agreed that there is now a leak from the apartment 15 balcony above apartment 10 into the living r This was visible from the inspection hole cut into Ms Anderson’s ceiling. Mr Leitner, Mr Mackie and Roscon all agreed there was likely to be a localised split in the membrane under the balcony tiles, and this was either caused by or exacerbated by movement in the substrate.
    2. There is also a leak from the apartment 16 balcony above apartment 10 into one or both of the bedr Mackie, Leitner, Roscon and Smith thought this leak was likely to be caused by leaks around the window and/or the air-conditioning penetration. Mr Leitner also suggested the four cracked floor tiles were likely sources as well. Roscon and Smith also suggested the parapet to apartment 16 as a source, as it was not appropriately sealed.
    3. Mr Holden’s evidence was that he undertook water testing of the balconies of apartments 15 and 16 in April 2016. He found one leak where water was entering Ms Anderson’s property, revealing itself in the bulkhead of the main bedr He suspected the leak was coming from the air-conditioning pipe penetration through the wall of the balcony of unit 16. Later in 2016 Mr Holden inspected the balcony of unit 16 with his plumber and observed that either the air conditioning pipe penetration had not been sealed, or the seal had broken down and no maintenance had been done. This confirmed his suspicion about the origin of the leak into apartment 10. Mr Holden arranged for sealing works to both balconies in June 2016.
    4. In July 2017 Mr Smith water tested both balconies while Mr Holden and his consultant Mr Glenn Jones were pr They found no leak to the balcony of 16, and a small leak to 15. Mr Holden also noted that some work appeared to have been carried out to apartment 15, since his last visit.
    5. In its June 2018 report, Roscon stated that eight balconies were leaking, although it was only able to view the underside of five balconies, and it did not actually carry out any water testing to support this opinion.
    6. In October 2018, Mr Leitner water tested all balconies alleged by Roscon to be His testing showed that only lots 1, 15 and 16 were leaking. Mr Leitner and Mr Holden did observe that water was continuing to leak into Ms Anderson’s ceiling through the penetration for the air conditioner on the apartment 16 balcony. Mr Holden said he was surprised as he had paid to have that sealed the previous year.
    7. The OC suggested that the balcony substrate had not been built according to the approved drawings and this was the cause of movement which may have caused the unit 15 membrane to fail. Roscon said that the original design required HPP to construct the balcony using ‘19mm Structafloor’ and ‘6mm CFC sheet’, whereas instead, HPP had used 19mm ‘Formply’. Roscon also alleged that perhaps no waterproofing layer had been applied by HPP when installing the balcony. These suggestions were contained in a report and core sample prepared by Roscon on 4 October 2019 (the final week of the hearing), being the report and sample referred to in paragraph 30 above.
    8. HPP objected to the late tendering of the r I reserved the question of leave and allowed HPP and the applicant to call evidence in response. I now allow the report and core sample to be formally tendered, but for the reasons previously given, I do not accept either the opinion in the written report or the opinion of Mr Cummaudo at the hearing. As discussed at paragraph 30 above, I do not accept the suggestion that a membrane had not been installed, as the authors of Roscon’s report gave different interpretations of the core sample.
    9. As for the change from ‘Structafloor’ to ‘Formply’, I accept the evidence of Mr Leitner that 19mm Formply is in fact a better product than that which was specified. His evidence was that Structafloor is a particleboard product, predominantly meant for internal It will degrade if exposed to moisture, as in this case. On the other hand, Formply is stronger and does not rot. From his observations on site and of the core sample, Mr Leitner was satisfied that there were no signs of degradation in the Formply, and that the membrane was well bonded to it. This opinion was confirmed by a statement from the project engineer, Peter Felicetti, dated 1 November 2018, that Formply was acceptable for use provided it was waterproofed with Tremproof 100 applied according to the manufacturer’s instructions. Mr Holden provided evidence that this was done. I accept these opinions and reject the OC’s contention that the change in design was a breach of HPP’s warranties.
    10. Mr Mackie and Roscon also suggested there may have been a lack of waterproof membrane attached to the puddle flange in the drain, as they could not see a membrane when looking into the I do not accept this suggestion, given the evidence of Mr Leitner, which I accept, that the membrane would not be visible from just looking. It would need a destructive test to see a membrane around the puddle flange. Mr Mackie also suggested a possible cause could be a failure to glue the joint in the drainpipe. I accept the results of the water test carried out by Mr Leitner which indicated that there was no leak from the drainpipe, with the result that I do not accept these hypotheses about the drain.
    11. Instead, I accept Mr Leitner’s opinion as to the source of the balcony He said that as well as the air-conditioner penetration, gaps had opened up in the fibre cement sheet balcony wall of apartment 16 and these have not been properly sealed. Also, four floor tiles on the balcony have cracked, which has allowed water to penetrate. At the view I noted the crack in the vertical wall of the balcony of apartment 16, the cracked tiles and the unsealed air-conditioner penetration which would have allowed water to enter into the substrate.
    12. As for apartment 15, Mr Leitner noted that cracks had also appeared in the fibre cement sheet wall, although it appeared that these had been repaired. That balcony was better maintained than apartment 16. Mr Leitner said that the localised leak in the floor of the apartment 15 balcony was consistent with moisture getting into the frame through a crack in the fibre cement sheet, leading to movement in the substrate, leading to the membrane giving way on its edge. He concluded[15]:Unit 15 – leaked at the northern external side of the rebated tiled gutter… It leaked only when I pressure sprayed the hose into the horizontal/vertical junction of the tiles, in line with the fibre cement sheet joint. Instantly the water travelled upwards behind the tile from the base of the skirting tile and discharged out the top of the tile… I had observed that there had been maintenance or remedial works undertaken on this balcony area. I noted that the fibre cement joints had been neatly sealed and the walls had been painted over. In my opinion, the movement in the fibre cement sheeting joint had caused the membrane below the tile to separate…
    13. I also note Mr Smith’s comment[16] that the Guide to Standards and Tolerances (published by the VBA) indicates that cracking in lightweight external cement sheeting is only a builder’s responsibility for two years from Although the Guide to Standards and Tolerances is a guide and is not prescriptive, I am satisfied that HPP is not liable for cracking in the balcony walls which was first identified seven or eight years after they were constructed.
    14. As well as this, Mr Leitner said that the rain heads above apartment 10 were water tested and both found to leak back into the wall cavity when they were blocked. The rain head above apartment 16 also leaked with water running down the inside of the walls, when blocked. This water would dissipate into the framework of apartment 10. He added, when the rain heads were not blocked, they did not overflow. He concluded that this adds to the difficulty in identifying the source of the moisture in the substrate under balconies. It is impossible to differentiate between water entering via the air-conditioning penetration, cracks in the fibre cement sheet walls, a crack in the membrane or via the wall cavities from the blocked rain heads.
CLAIMS AGAINST THE BUILDER
    1. Ms Anderson has alleged that HPP is liable to her for breaching the warranties implied into its work by the DBC Act, as well as, or alternatively, for damage caused by an unreasonable flow of water under the Water Act.
Has the builder breached the DBC Act warranties?
    1. It was agreed by all parties that the works carried out by HPP were subject to the warranties implied by s8 of the DBC Act and that as a subsequent owner, Ms Anderson could rely on these warranties by reason of The warranties she relies on[17] are that:
      1. the builder will carry out the works in a proper and workmanlike manner and in accordance with the plans and specifications set out in the building contract,
      2. all material supplied by the builder for use in the works will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the building contract, those materials will be new,
      3. the builder will carry out the works in accordance with, and will comply with, all laws and legal requirements including, without limiting the generality of this warranty, the Building Act 1993 (Vic) and the regulations made under that Act, and
      4. the works will be carried out with reasonable care and skill.
    2. Having considered the expert evidence set out above, I am satisfied that the following defects constitute breaches by HPP of the warranties given to Ms Anderson to carry out the works in a proper and workmanlike manner, to carry out the works with reasonable care and skill, and to comply with all laws and legal requirements:
      1. the initial installation of the eave guttering outside apartment 10, with the rear side lower than the front, and
      2. the initial non-compliant design and installation of the side chutes and the undersized rain heads and incorrectly positioned overflow holes.
    3. However I am not satisfied that these breaches have caused the loss and damage claimed by Ms While the failure to seal the rain heads and chutes, the overflow heights and the height of the rear wall of the eave gutter may have provided the access for water to travel back into the wall cavities, I am satisfied that these breaches did not cause the water problems currently complained of. All experts were unanimous that the reason the water ran into the building from the gutters and chutes and rain heads was because they were blocked. The lack of maintenance by the OC was the direct cause of the water entry.
    4. Mr Leitner, whose evidence I accept, described the cause of the damage as follows (underlining added):In summary, the main issues causing the current water leaks are as follows:
      1. The 100 mm deep by 200 mm wide and non-compliant side chutes are not enclosed, allowing birds to access the roof The side chutes only appear to lea from water overflowing the sides of the chute, as a result of blockage from debris, bird dropping, dead birds.
      2. The unmanaged roof maintenance and cleaning of the roof drainage system are allowing excessive debris, bird dropping, dead birds to block up the drainage system internally and externally, combined with the installation of the wire mesh guards that are installed to the inlet sides of the side chutes outlets.
      3. The undersize drain head and incorrectly positioned overflow holes constructed on both sides of the rain The installation only appears to leak over the sides of the side outlet chute as a result of a blockage in the downpipe outlet pipe, caused by debris, bird dropping, dead birds.
      4. There are only a couple of rain heads that leak between the silicon joint that is between the rain head and the side of the outlet chute. The splits appear to cause the leak by allowing water between the two surfaces. Under the regular water testing I could not get these joints to leak, only when I simulated a blocked downpipe outlet, the water quickly rose up and leaked between the joint, just before it overflowed over the side chute..
      5. Excessive upper roof catchment areas that discharge into downpipes, that discharge onto the lower tile and metal roofs
      6. The eave gutters have been installed too high in some locations. Without adequate overflow contingencies..
      7. Some balcony leaks.
    5. While Roscon agreed that the blockages had caused many of the current problems, it attempted to say that the failure to seal the outlets and the defective overflow provisions in the rain heads in the first place were matters for which the registered plumber or roof plumber were r This is a legal conclusion, which is a matter for me to determine, not an expert witness. For the reasons set out above I prefer the opinions of Mr Leitner to the opinions of Roscon where they differ. I accept Mr Leitner’s conclusion that:… the side outlet chutes combined with debris blocking on the inlet side of the chute or the rain head outlet pipe blocked, have caused nearly all of the reported leaks. In some cases, being the direct cause of other misidentified leaks. Less the balcony leaks over unit 10.
    6. Moreover, I am not satisfied that any of the other issues identified constitute a breach of HPP’s While the lead flashing over the beam above the kitchen of apartment 10 may have been a source of water entry, there was no evidence that the initial method of construction was defective. I note also that more than 10 years have passed since it was flashed, with no maintenance having been carried out.
    7. As for the ‘bush plumbing’ repairs, I accept Mr Leitner’s view that these were an attempt to ameliorate the pr Although they caused water to back up in the eave gutter above apartment 10, they achieved the purpose of moving water from the roof above the apartment. The reason the eave gutter overflowed was that the downpipes below were blocked. That is not something for which HPP is liable.
    8. Further, I am not satisfied that any balcony leaks from apartments 15 or 16 can be attributed to HPP. A lack of maintenance, the failure to seal penetrations and the blocked rain heads have allowed water to leak directly into the ceiling of Ms Anderson’s apartment and/or to damage the balcony substrate, causing a localised split in the I do not accept there was a lack of membrane (at all or around the puddle flange), given the evidence of Mr Leitner.
    9. Moreover, the history of testing shows that any balcony leaks were only a minor contributor to the water entering Ms Anderson’s She had been complaining of significant leaks since before 2014. One leak from the air conditioning penetration was observed in 2016. This was sealed and was not observed again until 2018. The leak from apartment 15 first appeared in 2017.
    10. Mr Holden’s evidence, which was not challenged and which I accept, was that there was no evidence of water damage from the roof plumbing between its completion in August 2008 and During 2012, evidence of water entry was identified at apartments 3, 12 and 19. The apartment 12 issue was the junction between the outlet pipes, and not the roof. The other two locations concerned leaks caused by blocked box gutters, downpipes and rainwater heads.
    11. In those circumstances, I am not satisfied that the breaches of warranties described at paragraph 71 caused any actual The damage only occurred when the gutters and downpipes became blocked, or when the lack of maintenance to the balconies became manifest. I am satisfied that the chain of causation between HPP and Ms Anderson has been broken by the actions or inactions of the OC (or the owners of apartments 15 and 16).
    12. One further defence was raised by the OC: that the locations of the balcony leaks were not in common property, but in the property privately owned by the owners of lots 15 and For example, in their closing submissions the OC contended that any cracks in a balcony wall which may have allowed water to enter were in private property. I note the Plan of Subdivision shows the boundaries of apartments 15 and 16 include their balconies, and states:“Location of boundaries defined by building: Interior face: all boundaries”
    13. On that basis, a penetration or crack in the rendered skin of the internal face of a balcony wall may be the responsibility of the owners of apartments 15 and 16, not the However Ms Anderson gave evidence that when the wall of her balcony collapsed, it was the OC’s insurer which arranged and paid for the repairs, indicating that the OC at that time at least had considered itself responsible. In any event, whether the property is privately owned or common property, HPP is not liable to Ms Anderson.
    14. Moreover, I note the opinion of Mr Leitner that water may have entered the walls (at least of apartment 16) via the blocked rain head, and this would have caused the balcony substrate to As I do not consider the balcony leaks to be causative of the loss and damage for the reasons discussed above, and as there is no claim between Ms Anderson and the owners of apartments 15 or 16[19], I do not need to determine the ownership question.
If the builder has breached the warranties, can it apportion responsibility?
    1. As a result of the finding that any breach by the builder of the warranties is not the cause of Ms Anderson’s loss and damage, I do not need to address HPP’s apportionment defence under Part IVAA of the Wrongs Act (Vic) 1956 (Wrongs Act) as against the subcontracting roof plumber, Capco Industries Pty Ltd, or the waterproofer, Duckback Water Proofing Services Pty Ltd (deregistered).
Is the builder liable s.16 of the Water Act
    1. In her Further Amended Points of Claim Ms Anderson alleged that HPP is liable to her under s16 of the Water Act for an unreasonable flow of water. However she has made no submissions about this allegation in her closing submissions.
    2. In its closing submissions, the OC suggested that Ms Anderson could rely on s16(2) of the Water Act, submitting that HPP interfered with a flow of water onto land by carrying out what it describes as the ‘bush plumbing’ It said that HPP was a person who by negligent conduct interfered with a flow of water onto land (apartment 10) which was not reasonable.
    3. Section 16 provides:[16]Liability arising out of flow of water etc.
      1. If-
        1. there is a flow of water from the land of a person onto any other land; and
        2. that flow is not reasonable; and
        3. the water causes –
          1. injury to any other person; or
          2. damage to the property (whether real or personal) of any other person; or
          3. 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…
      2. If-
        1. a person interferes with a reasonable flow of water onto any land or by negligent conduct interferes with a flow of water onto any land which is not reasonable; and
        2. as a result of that interference water causes–
          1. injury to any other person; or
          2. damage to the property (whether real or personal) of any other person; or
          3. any other person to suffer economic loss–
            the person who interfered with the flow is liable to pay damages to that other person in respect of that injury, damage or loss.
    4. I agree with HPP’s submission that HPP can have no liability to Ms Anderson under s16(1), as the builder was not an ‘owner of the land from which there was a flow of water’ into her property.
    5. In respect of liability under s16(2), the relevant factors to be considered were described by Balmford J in Di Clemente v Small as follows:
      [22] Section 16(2)(a) may be paraphrased, for ease of understanding if not of interpretation, as:*if a person interferes with a reasonable flow of water onto any land; or*if a person negligently interferes with an [sic] flow of water, which is not reasonable, onto any land;.
    6. Senior Member Vassie described the effect of s16(2)(a) as follows in James & Phillip Woollard Pty Ltd v Kinson (my emphasis added):By virtue of s 16(2)(a) there are two circumstances in which interference with a flow of water onto land may expose to liability the person who interferes when the interference causes injury, damage to property or economic loss. The first circumstance is where the flow interfered with is reasonable. In that circumstance, any interference creates the exposure to liability: a strict liability.a strict liability. These cond circumstance is where the flow interfered with is not reasonable. In that circumstance, there is exposure to liability only if the interference takes the form of negligentc onduct.[21]
    7. Applying those statements to the present case, the OC says that it is the second limb of ss(2)(a) which is r It submits that the flow of water onto Ms Anderson’s property is not reasonable and that by installing the downpipe extensions HPP has “by negligent conduct interfere[d] with a flow of water…”. While I agree that the flow of water is not reasonable, I do not accept that HPP’s conduct in installing the ‘bush plumbing’ was negligent. The expert evidence was that while the addition of the downpipe extensions and pop may not have strictly complied with plumbing regulations, it was done to serve a purpose (see paragraph 55). There was no evidence to say it was negligent. Accordingly I do not accept the OC’s submission.
    8. In any event, if I am wrong about the application of s16(2)(a), HPP has a complete defence by reason of ss(5) and (6) as discussed at paragraph 164 below.
CLAIMS AGAINST THE OC
    1. Ms Anderson submitted that the conduct of the OC and the OC Committee constituted breaches of the OC Act, for which it should pay her damages, as well as being liable to her under the Water Act.
What was the conduct of the OC?
    1. Much of the material in the 4000 page Tribunal Book and much of the evidence of Ms Anderson went to the question of whether the actions (or inaction) of the OC and/or the OC committee and/or the OC manager, Strata Plan, caused or contributed to the loss and damage she suffered. I will not set out all the evidence, but it is overwhelmingly clear that the OC, by its then Committee and manager, has either caused or contributed to the damage and to Ms Anderson’s suffering. The most egregious examples include that the OC failed to maintain the building between at least 2012 and 2018, failed to put in place a maintenance plan or maintenance budget at all, was aware of its liability to Ms Anderson since 2015, gave preferential treatment to other lot owners, and failed to appropriately address her complaints, first made in 2014. Examples of such conduct are set out below.
Failure to maintain the building
    1. The lack of maintenance has been obvious since Ms Anderson took a photo of grass growing in the gutter on the south side of the building on her way to the AGM in 2012.
    2. The evidence presented by Ms Anderson includes numerous emails from members of the OC committee and minutes of meetings which identify their frustrations with the lack of maintenance and Strata Plan’s failure to act. For example:
      1. Widespread pigeon problems were identified in October 2013 and October 2014. The OC was made aware that gutters were not clean on 27 June 2013, 2 December 2014, 13 May 2015.
      2. The OC records of 15 October 2014, 11 January 2015 and 20 September 2015 state that the gutters were not cleaned. In September 2015 the OC Committee noted that the gutters are full of grass and bird droppings.
      3. On 25 February 2015 the OC was made aware that the gutters were not cleaned and blocked gutters had led to water leaks in the building. In May 2016 the builder advised the OC that the bird droppings were the cause of the blocked rain heads and downpipes. This advice was again given to the OC by Ausbuilt Plumbing and Maintenance Group when it provided a quotation to undertake repair works on 7 November 2016, the quotation stating that the rain heads were blocked by pigeons.
      4. The records show that by July and August 2015 the OC knew that their previous gutter cleaning service provider was not cleaning the gutters and was The committee report of September 2016 acknowledged that the gutters had not been cleaned properly in the past and that pigeon droppings were causing issues.
      5. In September and October 2015 the OC stated that it was obtaining quotes to undertake pigeon repairs and clean the gutters, however this work was not actually undertaken until December 2017, a year after Ms Anderson commenced this proceeding.
      6. The OC cancelled roof cleaning due to alleged safety concerns on 11 May 2016, however these concerns were not substantiated, given that the OC was in possession of a quote to provide access anchor points on the property in late 2015 and subcontractors had identified that all roof areas could be accessed by ladder.
      7. The OC was again made aware on 12 July 2017 that the gutters needed to be cleaned, the mesh on gutter boxes removed and pigeons removed.
      8. Although the OC reported at the 2018 AGM that “a program of regular roof and gutter cleaning has continued at the building over the last year or so”, I am not satisfied this work was done effectively, if it was done at all. I note the photographs taken by Mr Leitner in October 2018 and his comments set out at paragraph 42.
    3. In its 2018 report Roscon concluded in respect of the rain head issues that the OC should have taken steps earlier to mitigate or prevent the damage. For example:The OC knew that the rain heads did not have adequately sized overflow provisions due to the [Coghlan] report since 31/08/2015. The owners corporation could have engaged a roof plumber to install adequately sized overflow provisions within the rain heads, as this is not a huge project and is within the scope of an owners corporation’s budget. [22]
    4. The OC failed to put in place a maintenance plan or set aside funds for maintenance between 2011 and 2018:
      1. The minutes of the Annual General Meetings in 2011, 2012, 2013 and 2014 record positive resolutions that the OC would not implement a maintenance plan, or would defer consideration of a maintenance plan to the following year.
      2. In May 2015 the committee obtained a maintenance report from BIV which recommended the amount budgeted for maintenance was low and it should increase the maintenance fund. However this recommendation was not acted upon, no gutter cleaning was done, no maintenance was performed and no progress was made in investigating and stopping the water entry.
      3. At the 2015 AGM, the OC resolved to obtain a maintenance plan report, and for the first time set a total budget for maintenance of $20,750, as part of an overall budget of $60,000.
      4. Surprisingly, at the next AGM in 2016, it then resolved to defer any maintenance plan until the 2017 AGM and decreased the overall There was no allocation for maintenance.
      5. At the 2017 AGM (nearly one year after this proceeding had commenced) it was noted that the annual budget was in surplus by $22,824. The meeting discussed raising a levy to cover expenditure relating to defect rectification works and legal fees but decided to first use the It was resolved to arrange a maintenance plan for consideration by the Committee.
      6. Despite this resolution, at the 2018 AGM (nearly two years after this proceeding had commenced), it was resolved to consider a maintenance plan at the next Further, contrary to the advice received from Strata Plan, the committee r
        esolved to approve an annual budget of $149,606, which allowed $90,000 for legal fees and $19,800 for minor building maintenance. Strata Plan had proposed allowing $250,000 for legal fees.
      7. The annual financial statements for each of the financial years 2014/15, 2015/16, and balance sheets of 2016, 2017 and 2018 confirm that there was no money in the maintenance fund. The first time a payment for pigeon eradication was recorded was in the annual financial statement of 2017/18.
        The OC was aware of its liability to Ms Anderson
    5. The OC had knowledge of the water leaks into Ms Anderson’s apartment since at least July 2014. In July 2015 an employee of Strata Plan advised the committee that as the OC was aware of water ingress issues, the committee had a duty of care to investigate and seek repairs or solutions.
    6. On 17 March 2016 the OC obtained legal advice from its then solicitors (‘the previous solicitors’), who advised that HPP had agreed to rectify 12 out of 18 defect claims addressed in the Coghlan report and had refused to undertake works to 6 items because these were design items for which the developer was r The previous solicitors recommended the OC do the following:
      1. accept the rectification works proposed by HPP rather than litigate the matter in VCAT (after clarifying the scope of work and timetable), and
      2. pass a special resolution for power to liaise with HPP in order to rectify the interiors of the
    7. The previous solicitors provided a further letter of advice to the OC on 29 March Their advice included the following statement:The OCs default obligation to lot owners is to make sure that no unreasonable amount of water flows from common property to private property, whether or not the water damage is caused by a building defect…I note that the resultant damage to private properties (e.g. unit 10) is caused by the defects. That said, the OC must maintain its obligation to take all reasonable action to stop the water from flowing into the private property.Hence, I have recommended that the OC undertake temporary rectifications to stop water from flowing from common property into private property so as to avoid any Water Act claims from being instigated against the OC…Please note that I only became aware of the extent of the resultant damage to unit 10 when I was copied in unit 10’s emails… In effect, I have an obligation to recommend to the OC to undertake temporary works to unit 10 to avoid any legal proceeding from being issued against it while it is negotiating the defects rectification with the builder.
    8. Despite this advice, Ms Anderson’s evidence was that nobody from the OC committee or Strata Plan contacted her, or advised her of the legal advice, or actually undertook any temporary works to stop the water flow.
The OC’s failure to respond to Ms Anderson
    1. Ms Anderson’s unchallenged evidence was that since 2012 she had contacted the OC approximately 150 times about her water ingress, the lack of maintenance and other 46 times were via email, others were via text message, personally to the OC Committee, at AGMs and at meetings with Strata Plan. I will not set out all the communications between them; some examples will suffice to explain my conclusion that the OC failed to act in good faith and to exercise due care and diligence in their dealings with her.
    2. Ms Anderson’s initial frustrations with the management of the OC centred on the delays with the repairs to her balcony, after it collapsed on 1 October She raised her concerns with Strata Plan about the integrity of all balconies and on 17 December 2013 the chairperson of the OC instructed Strata Plan to check all balconies. This led Ms Anderson to ask the perfectly reasonable question in her closing submission: Why in 2019 is water still leaking from the balcony of apartments 15 and 16 into her apartment, when the OC committee resolved in 2013 that all balconies in the building should be checked?
    3. On 7 January 2015 Ms Anderson wrote to the committee to tell them her air-conditioner was not working and a crack had developed due to water She followed up this email five days later asking the committee to get Strata Plan to take action. The following day she told the committee about water in her ceiling. Neither Strata Plan nor the OC responded, or arranged for anyone to inspect her apartment.
    4. The minutes of the committee meeting held on 11 January 2015 record water leaks, including to apartment 10, as an item under the heading “defect report”. The committee apparently also discussed whether to replace Strata Plan but decided not to at that point in They discussed their concerns about the adequacy of the gutter cleaning.
    5. In May 2015 Ms Anderson advised the chairperson of a new leak in her kitchen, which had made her kitchen unusable. She listed the defects with her apartment as at that date, including:Lounge room: Ceiling has been leaking for more than a year. Damage to ceiling, walls, and split-system…Bedroom: Significant leak ‘repaired’ by plumber sent by Strata Plan in 2014, is still leaking and has now caused more damage to ceiling walls and carpet…Kitchen:… peeling paint has now formed into a significant leak last night. Damage to ceiling, walls, cupboards, electrical (power point), stove-top, contents of cupboards, and water poured straight into my toaster…Bedroom and spare bedroom windows:… Significant damage to the window surrounds causing water and wind to blow into those rooms…Gutter cleaning: My gutters have never been cleaned since I bought this property in June 2011…
    6. In that email she also listed all her attempts to have Strata Plan respond to her, and then advised the committee that she was stopping paying the OC fees as Strata Plan had failed to provide the service they were paid for. The OC committee’s response was to take proceedings against Ms Anderson for failure to pay the fees.
    7. On 18 June 2015 Ms Anderson wrote again to Strata Plan asking to know when the leaks would be rectified. Its response was that the roof was repaired back in October… We have since had another roof specialist out who confirmed there was no issue with the roof itself but said the leak would most likely be coming from the balcony above [apartment 10]. I am currently talking with the agent of the above apartment to see if an inspection of the balcony above can occur to confirm where exactly the leak is coming from.
    8. Ms Anderson’s response was justifiably furious. She had met Mr Coghlan, the roof specialist referred to by Strata Plan, on-site and he had advised her that there were four problem areas with the roof. These were “tiles patched up with silicon…, inadequate downpipe, loose tiles…, and possible balcony leaks from two balconies/roof outside their balconies”. She correctly said that the email from Strata Plan had misrepresented the advice given by Mr Coghlan. Ms Anderson responded to Strata Plan, sayingThe roof was not repaired last October. Your account of specialist report is also not true… I am absolutely furious with the appalling service from Strata Plan… If it is a defect you should be following it up with the builder and the building insurance… Get this fixed or I will sue you.
    9. By July 2015 it appears that Strata Plan had finally understood Ms Anderson’s complaints, as they asked the OC chairperson to confirm her instructions to obtain a quote in respect of the leaks at apartment The chairperson replied that the inspection of number 10 must go ahead and quotes should be obtained for bird spikes. As at July 2015, no pigeon control measures had been put in place.
    10. At this point, it seemed the committee was going to At the committee meeting held on 26 July 2015 they resolved to instruct Strata Plan to engage Mr Coghlan to inspect the roof and seek clarification on inspection of the balconies. They discussed obtaining further building reports. They agreed to dismiss the previous contractor who had been engaged to clean the gutters and deal with the pigeons. They also resolved that a letter of demand should be sent to the builder.
    11. In October 2015 the OC obtained a quote from Mr Coghlan to project manage the roof repairs and a quote from Buildspect to project manage the balcony r On 21 October 2015 the OC approved Mr Coghlan to commence work, with his first task being to prepare a scope of work and obtain four quotes to have the roof repaired. Strata Plan formally engaged Mr Coghlan on 4 November 2015.
    12. As for the balcony repairs, the committee decided to seek a second quote to project manage the balcony works, but noted that if Strata Plan could not manage this within one week, they would go ahead with An email from the chairperson sent on 9 November 2015 suggested that the OC had issued a work order to Buildspect, but this was not discovered. No evidence was led that Buildspect was ever actually engaged.
    13. On 9 November 2015 the chairperson advised the committee that it looked like things were finally On 30 November Ms Anderson asked for an update on the progress of obtaining quotes and commencing repairs. The chairperson acknowledged her frustration with how long the OC was taking.
    14. However this progress was short Having heard nothing further from the OC by mid December, Ms Anderson asked the chairperson for an update. The chairperson replied that everything had been put on hold until the builder responded to a letter of demand which had been sent to it. She said that the OC’s solicitors had agreed to allow HPP to inspect the property and that the builder would provide a proposal by 15 February 2016.
    15. Ms Anderson was understandably frustrated by these further delays, and on 20 December wrote to the insurer, the committee and Strata Plan to ask them to at least fund a portable air-conditioner for her through the summer. She said                                                                                                                                                                                                                                                                                                                                      This email is to remind everyone that every minute of every day that passes; adds another dimension to my stress levels. Last night it was 42° inside my apartment! This morning it dropped to 38°! There is no respite when it rains because that causes more damage from the many roof leaks!
    16. On 21 December 2015 the OC resolved to put Mr Coghlan’s work on According to an email from Mr Coghlan’s office, Strata Plan failed to notify him he was no longer required. He only found out his retainer had ended when his office phoned Strata Plan for payment. This is another example of Strata Plan’s failure to act.
    17. By November 2015 Ms Anderson had contacted HPP directly. On 25 November, Mick and Paul Holden investigated the leaks at apartment 10 and in February 2016 carried out Mr Coghlan’s scope of works as described
    18. On 1 March 2016 Ms Anderson became She resigned from the OC committee but asked them to continue to update her about the repairs. She said that they did not do so. Throughout 2016 she only lived in her apartment occasionally, as her ongoing medical treatments meant she lacked the resilience needed to cope with the condition of her apartment.
    19. In March 2016 the OC received the legal advice from its previous solicitors set out at paragraphs 101 and 102. The Committee rejected the solicitors’ recommendation to let the builder rectify the common property and to pass a special resolution to liaise with the builder in order to rectify the interiors of the Ms Anderson’s evidence was that nobody from the OC committee or Strata Plan contacted her, or advised her of the legal advice, or of the decision to reject the advice.
    20. Meanwhile, on 18 March, Ms Anderson had sent an email to Strata Plan and the committee to tell them there had been more water entering her apartment from rain the previous A letter was also received from the OC’s insurer in which it advised the committee, Strata Plan and Ms Anderson that it would not assess Ms Anderson’s loss and damage until the leaks had been stopped.
    21. Curiously, the next step taken by the OC, as recorded in the minutes of its committee meeting on 11 May 2016, was to resolve to accept HPP’s offer to fix. No evidence was given by the OC to explain why it had reversed its March decision to reject the advice of its previous
    22. Ms Anderson’s evidence was that they did not advise her of this r She was not told of any proposed repairs to her apartment. In fact she was not contacted at all. She followed up the OC again on 21 June 2016. The response from Strata Plan included an acknowledgement that the OC had an obligation to maintain and repair the common property, but said words to the effect “your apartment is your responsibility”.
    23. Ms Anderson then asked Strata Plan what steps they were taking to repair the Surprisingly, the response from Strata Plan was that the OC was in the process of taking legal action against the builder. That advice contradicts the resolution recorded in the minutes of 11 May 2016. The OC has not provided any evidence to explain why they again reversed their strategy.
    24. Ms Anderson was again not advised of any progress by the OC until 2 August 2016, when she contacted Strata Plan and was told that the OC’s lawyers and HPP were attempting to arrange a meeting to discuss further the steps the builder would be taking to rectify the outstanding
    25. Then on 25 August 2016 Strata Plan advised Ms Anderson that the OC had decided to look at other avenues to pursue the builder, in consultation with Consumer Affairs V That advice contradicts the email of 21 June 2016, and again no evidence was provided by the OC to explain the change.
    26. The 2016 AGM was held on 29 September. Ms Anderson disputes that the minutes are accurate or complete. Her uncontradicted evidence, supported by her contemporaneous email sent following the meeting, was that the Committee failed to explain why it was “pursuing the builder through BACV”[23], and had not instructed its previous solicitors to continue the negotiations with the builder. Ms Anderson then asked why the committee was not acting on its May 2015 resolution to pursue the builder through VCAT. The chairperson responded that the previous solicitors had said going to VCAT would be too expensive and that they probably would not win. Ms Anderson pointed out that that was not the advice given in the letters from previous solicitors dated 17 and 29 March 2016. She said she asked again why she had not been kept updated on the progress of negotiations nor sent copies of documents. The chairperson of the OC committee told Ms Anderson that “she would not speak or communicate with lot owners, only committee members” and that she “yelled at Lot 10 owner saying ‘I’m sick of your emails and texts and I have forwarded them on’ ” to Strata Plan.
    27. On 14 October 2016 Ms Anderson told Strata Plan that she now had pigeons inside her Their response was that they were in the process of getting quotes for pigeon eradication. I agree with Ms Anderson’s submission that Strata Plan’s response shows they still had not appreciated the issues she was facing. As she wrote back to them, and as they should have been aware, the reason she had pigeons in her apartment was because holes had been cut in her ceiling to check for water damage. A decision to eradicate pigeons on the roof did not address her water problems.
    28. The OC committee appears to have met on 25 October 2016, although the minutes do not record who was pr By this stage Ms Anderson had ceased paying her OC fees due to its failure to act to stop the flow of water into her apartment. The minutes note that the OC does not owe Ms Anderson any money. I find this surprising in circumstances when they had already received legal advice on multiple occasions that they would be liable to the lot owners for water damage from common property. The minutes also record that the OC was obtaining quotes for roof cleaning. As well, they record that the OC committee discussed the problems with leaking at apartment 9, 16, 17 and 19, yet there is no mention of apartment 10.
    29. On 26 October 2016 HPP provided a written response to an investigation which had been carried out by the Victorian Building Authority (VBA) as part of the BACV process. The builder advised that:
      1. HPP had been dealing with the OC’s previous solicitors between December 2015 and June 2016,
      2. the builder had investigated the property and on 29 April 2016 it had made an offer to the OC’s previous solicitors,
      3. on 1 June 2016 the previous solicitors had made an offer on behalf of its client the OC, to pay HPP to do the maintenance work on the building,
      4. HPP had heard nothing further since that time from the previous solicitors or the OC, and it appeared that the previous solicitors were no longer acting for the OC,
      5. HPP was waiting for CAV to arrange a conciliation date in order to pick up the negotiations where the previous solicitors had left off.
    30. Ms Anderson said that she had not been informed that this offer had been made to the builder, nor that the builder had offered to undertake the maintenance work, nor that CAV was proposing a meeting with the As she was unaware of any progress, she lodged her own complaint with the VBA. On 7 November 2016 she received their response, which stated that the builder had offered to fix the hole in the ceiling and the defective plumbing work and that the VBA is “unable to progress the complaint as it has not identified breaches or offences of the building legislation that warrant further action”.
    31. A further committee meeting was held on 4 November 2016, at which time the OC committee considered four options, described as follows:
      1. go back to lawyer,
      2. continue with BACV,
      3. ditch BACV and proceed with VCAT,
      4. wipe hands of builder and proceed with repairs.
    32. They resolved to proceed with the repairs themselves and to notify the owners of this. They also resolved to request Mr Coghlan to provide a quote to act as a project manager including to obtain quotations, to prepare a scope of works and to supervise the subsequent works. I find it surprising that the OC made this resolution in November 2016, when 12 months earlier it had already engaged Mr Coghlan to carry out the same functions. This is another example of the OC continuing to tread water and its inability to effectively address the problems with the building.
    33. On 7 November the OC received a quote from Ausbuilt Plumbing and Maintenance Gr The quote identified “multiple defects in all the roofing joins in the box gutters/rain heads. In order to manage these building defects you will need to reseal all individual roofs and also apply chicken wire to all rain head and also pressure wash all box gutters…. The pigeons have caused quite some damages also to the rain heads being blocked… These defects need to be addressed ASAP to avoid any more major damages.” I agree with Ms Anderson’s rhetorical question put during her evidence: How many times did the OC need to be told about the lack of maintenance on the roof? The quote also noted that the roof was accessible by ladder, which appears to contradict the OC’s statement in May 2016 that it could not have the roof cleaned because there was no access.
    34. On 14 November 2016 the OC formally advised all lot owners that it would not be suing the builder, that negotiations through BACV had failed and that it was in the OC’s best interests to undertake the r It foreshadowed that it would engage a project manager and call an extraordinary general meeting in order to raise a levy to fund the works. While it appears that this advice to lot owners is evidence of the OC finally taking steps to address the problem, in fact they failed to actually implement the plan. While the OC requested Mr Coghlan to provide a new quote to again provide the services for which he had been engaged in 2015, there was no evidence that he (or any other project manager) was actually then engaged, there was no evidence of any further discussion about the raising of a levy to fund repairs, and no extraordinary general meeting was called.
    35. Curiously, also on 14 November, the chairperson of the OC wrote to Strata Plan and said that the OC “would investigate” moving forward with r She also acknowledged the risk to the OC of claims being made from the lot owners and she acknowledged that time was of the essence in having the roof repaired. From that letter, I conclude that at its highest, the resolution on 4 November 2016 was to investigate the cost of carrying out the repairs independently of the builder and then to consider what steps to take at a later date.
    36. Ms Anderson commenced this proceeding against HPP on 26 November 2016, she said because she had lost all hope that the OC would stop the water leaking into her She said that the letter of 14 November 2016 was the final straw, in that all it said was the OC would go back to where they had been in
    37. The OC was joined to this proceeding in June The OC was legally represented in the proceeding by HWL Ebsworths (HWLE) from August 2017 until they filed a Notice Ceasing to Act on 27 March 2019. Despite having the benefit of legal advice, the OC continued to tread water during the proceeding.
    38. The committee meeting minutes of January 2017 recorded that they were consulting with a new project manager for a quote to project manage the repairs (which is surprising since they had twice resolved to engage Mr Coghlan). However, the May and June 2017 balance sheets show there was still no money allocated for the maintenance In August 2017 the committee resolved again to continue to seek quotes and reports, from yet other contractors.
    39. The OC was aware the Tribunal had ordered it to file expert reports and Points of Defence by 8 August 2017, yet they did not engage HWLE until late August
    40. By 12 July 2017 the committee had received a report from Andrew Smith of Cracks in the Wall advising that roof cleaning was needed “ASAP and mesh on box gutters needs to be changed/removed”. They noted they were waiting on a quote to repair the roof and prevent further By 3 August 2017 they had resolved to commence pigeon removal and Mr Smith had advised them that “the repairs to the roof are straightforward and reasonably inexpensive”.
    41. On 24 October 2017 they obtained a quotation from Chadoak Building & Maintenance to clean gutters and rain heads (described as being “completely full of pigeon poo and nests”) and to carry out prescribed repairs to the roof for a total of $51,591.62.
    42. At the AGM on 4 December 2017 it was noted that Chadoak had completed a roof clean, without pressure washing. The financial statements for the year  2017/18 recorded payments for cleaning and pigeon eradication for the first time. At the AGM it was resolved to arrange a maintenance plan “for consideration by the committee”. Despite this, the balance sheet for January 2018 showed $0 in the maintenance fund. The committee also advised that they had engaged Roscon to prepare a report on the building defects. I note that that was 12 months after proceedings were first commenced by Ms Anderson.
      I also note there was a delay of nearly 12 months by the OC in commencing the second proceeding. On 28 August 2017 the OC resolved at an Extraordinary General Meeting to issue proceedings against HPP and any concurrent wrongdoer. At the directions hearing on 26 October 2017 (11 months after Ms Anderson commenced her proceeding) Mr T Graham, solicitor with HWLE, advised the Tribunal that the OC was considering bringing a claim against HPP in respect of the common property. That proceeding was not issued until 24 July 2018. The cause of the delay has not been explained.
    43. I also note there was a delay of nearly 12 months by the OC in commencing the second pr On 28 August 2017 the OC resolved at an Extraordinary General Meeting to issue proceedings against HPP and any concurrent wrongdoer. At the directions hearing on 26 October 2017 (11 months after Ms Anderson commenced her proceeding) Mr T Graham, solicitor with HWLE, advised the Tribunal that the OC was considering bringing a claim against HPP in respect of the common property. That proceeding was not issued until 24 July 2018. The cause of the delay has not been explained.
    44. Similarly, no explanation has been given about why the OC failed to carry out any repair works until their new solicitors came on board in mid-2019 (see paragraph 188), in circumstances where the rectification required to solve Ms Anderson’s problems was “straightforward and reasonably inexpensive”, and less than $52,000 according to Ausbuilt Plumbing and Maintenance Group in 2016. Even the OC’s expert, Roscon, said in 2018 that carrying out all the roof plumbing repairs they recommended would cost approximat[24]y $110,00024. In comparison with the undoubted costs of this litigation and the effect it has had on Ms Anderson, that amount divided by 19 lot owners is minor.
Evidence of preferential treatment given to other lot owners
    1. The most significant example of the OC committee preferring other lot owners over Ms Anderson is shown from the following conduct:
      1. The minutes of the 25 October 2016 OC committee meeting record that the committee discussed problems with leaking into apartments 9, 16, 17 and 19 at that meeting, yet there is no mention of apartment 10. Ms Anderson said that these apartments were owned by members of the committee and to her it seemed that they were looking after themselves, but no other lot owners.
      2. An email was discovered from the chairperson of the OC to CAV dated 22 November 2016, as part of the BACV process. In the email, the OC acknowledged that it needed to mitigate the losses suffered by the owner of Lot 9 due to water coming through their ceiling, and that it had in fact done so by paying for the repairs to Lot 9.
      3. The committee meeting minutes of January 2017 confirmed that the ceiling of apartment 9 had been repaired and paid for by the OC. The only mention of apartment 10 in those minutes was that Ms Anderson was in arrears of payment of levies.
      4. Ms Anderson was justifiably horrified when she was shown this evidence during her cross examination. She had been complaining of water leaking into her apartment since 2014. The OC knew she had had to move out of her apartment because of the damage. By this date she had even commenced this proceeding against the OC. However it had done nothing to assist her; yet it had paid for the repairs to Lot 9.
    2. Other more minor examples include the following:
      1. Despite spending at least a year attempting to negotiate a settlement with HPP through CAV, at no time did the OC represent Ms Anderson’s interests in the Instead, they told her she would have to commence her own applications to CAV and the VBA.
      2. The then chairperson of the committee refused to communicate with Ms Anderson after she resigned from the
      3. By November 2016 Ms Anderson had made a formal grievance complaint to the OC. She received a reply from Mr Rashleigh at Strata Plan that he would meet with her to discuss the grievance; however he gave her only one meeting time, which was when she was working, and he refused to change the date of the meeting. He said that he had been instructed by the OC Committee to agree to only one time. Not surprisingly, Ms Anderson found that hard to understand, given the OC committee was not attending the meeting.
      4. One of the complaints raised in the grievance process was that Ms Anderson had been living without heating or cooling as these had been damaged by the water entry. The then chairperson of the OC refused to acknowledge that fact, on the grounds that she had lent her a heater. As Ms Anderson said “loaning me an oil  heater hardly replaces a split-system”.
    3. Ms Anderson describes the OC’s continuous disregard of her situation as discrimination. While their conduct may not meet the legal definition of discrimination, I accept that the evidence vindicates Ms Anderson’s view that the OC had chosen to prioritise the claims of some owners over hers, and to ignore her complaints.
Summary of Conduct
    1. Based on the evidence set out above, as well as the many other examples in the more than 4000 pages of Tribunal Book, I am satisfied that the OC, by its Committee and/or manager, has failed to maintain and clean the common property (including the roof and roof plumbing), failed to put in place a maintenance plan or maintenance budget, failed to investigate the defects in the common property, failed to take steps to repair the common property, was aware of its liability to Ms Anderson, gave preferential treatment to other lot owners, and failed to appropriately address Ms Anderson’s more than 150 complaints made to them.
    2. Ms Anderson submits that the conduct described above and summarised at paragraph 151 constitutes breaches of sections 4(b)(i), 5 and 46 of the OC Act (among others). These sections provide as follows:
      4  Functions of owners corporation
      a. An owners corporation has the following functions—a. to manage and administer the common property;b. to repair and maintain—c. the common property;
      4  Owners corporation must act in good faith
      An owners corporation in carrying out its functions and powers—a. must act honestly and in good faith; andb. must exercise due care and
      46 Owners corporation to repair and maintain common property
      An owners corporation must repair and maintain—a. the common property; andb. the chattels, fixtures, fittings and services related to the common property or its enjoyment.
    3. The effect of s46 was described in Sevenco Pty Ltd v Victoria Body Corporate Services & Anor[25] by Senior Member Steele as follows:In my view, section 46 imposes a statutory duty of care on the owners corporation, so that it may be liable for any loss or damage caused to a lot owner by its failure to carry out that duty… In order to succeed in most of its claim, the applicant company needed to show that either the owners corporation or the manager (or each of them) had breached its duty and that the breach had caused loss or damage to the applicant.
    4. I also repeat what I said in Davies v Owners Corporation 1 PS414649K[26], that an owners corporation has a power under s48 and a duty under s46 of the OC Act, which when combined, create an obligation on the owners corporation to actively repair and maintain the common property. In that case the owners corporation:… was aware of either the actual leaks or the potential for leaks since at least 2008…, but has failed to repair and/or adequately address the defects in the common property, including by failing to exercise any of its powers in respect of the level 9 owners. As a result, the unreasonable flow of water has continued unabated and the OC1 is in breach of its duty to repair (s46). Further, by reason of its obligations to act honestly and in good faith, and exercising the duty and due care and skill (s5) in managing the common property, it should have taken all necessary steps to prevent the flows from occurring, including exercising its powers against the level 9 owners (s48), which it has failed to do.
    5. I agree with Ms Anderson’s In the present case, the OC should have taken all necessary steps to repair and maintain the common property. This includes keeping the roof plumbing clear of vermin. It did not do so. There can be no question that the OC had been aware of the problems since at least July 2014. I am satisfied that this is a breach of its statutory obligations under s46.
    6. In respect of the claim under s5, the meaning of the words “act in good faith and “exercise due care and diligence” was explained by SM Dea in Babray & Ors v Whittles Australia Pty Ltd[27] as follows:
      [18] The words “in good faith” must mean more than honesty as otherwise the phrase would be redundant. In other contexts, the requirement of good faith is understood to import notions of not acting capriciously and of not acting to further an ulterior purpose. An example of such action might be if a majority acted in such a way as to further their own interests over the legitimate interests of the minority.
      [19] As to the phrase “due care and diligence”, in Giurina v Owners Corporation No 1579 & Ors,[28] Lansdowne AsJ noted that similar words in relation to the duties of directors imposed an objective standard, being what an ordinary person, with the knowledge and experience of the director, might be expected to have done in the circumstances if he was acting on his own behalf.
    7. In light of the evidence set out above of preferential treatment being given to other lot owners, the failure to act on the legal recommendation made by the OC’s previous solicitors despite the OC’s acknowledgement that it was likely to be unsuccessful in a claim against the builder at VCAT, the unexplained reversals of strategy, and the prolonged failure to respond to Ms Anderson’s complaints, even after this proceeding was commenced, I am satisfied that the OC has failed to act in good faith or with due care and diligence, in breach of the statutory duty imposed by s5.
    8. Ms Anderson also refers to alleged breaches of procedural requirements in the OC Act, including sections 90, 92 and 114, and acting without power to increase the levy in breach of sections 5, 23, 24 and I make no findings about these matters as they are not relevant to the issue I need to decide, which is liability for the water entering her apartment.
Is the OC liable under s.16 of the Water Act?
    1. Subsections 16(1) and (2) of the Water Act are set out above. In summary, if there is a flow of water from the land of a person onto any other land, and that flow is not reasonable, and the water causes injury, property damage or economic loss to another person, then the person who caused the flow is liable to pay damages to that other person.
    2. It is a strict liability cause of action, per Deputy President Macnamara (as he then was) in Turner v Bayside City Council[29]:
      Reference in section 16(1) to ‘the person who caused the flow’ is presumably to be read as meaning the person whose acts or omissions caused the flow…
      Where the necessary facts are made out, the cause of action under section 16(1) appears to be one of strict liability; that is, it is not necessary to demonstrate any want of reasonable care. The mere proof of causation appears to be enough.
    3. The OC concedes that there has been an unreasonable flow of water from common property which has caused damage to Ms Anderson’s However it says that this flow was not caused by the OC’s actions or inaction. Instead it was caused by the original defective building work, the subsequent ‘bush plumbing’ carried out by the builder, and by leaks from the balconies above which are privately owned.
    4. I do not accept that As discussed above, I am satisfied that the overwhelming cause of water entering apartment 10 is the fact that the box gutters, eave gutter, rain heads and downpipes were blocked. While the OC has broken up the defects on common property into five separate items, three of those items were directly caused by the lack of maintenance (the eave gutters, the rain head 2, and the rain head in eave gutter). One defect (the flashed member) had only minimal impact and was isolated to the kitchen. The fifth so-described defect was the downpipe extensions 1 & 2, which were installed by HPP in an attempt to stop water entering  Ms  Anderson’s  apartment.
    5. Further, the OC alleges that “water into U10 is almost entirely originating from U15 and U16 balconies, with a small amount from common property”. I reject As set out above, I am satisfied that most of the water entering apartment 10 has flowed from the gutters and rain heads, which are common property.
    6. If I am wrong about these findings, I am nevertheless satisfied that the OC is liable by reason of ss16(5) and (6) of the Water Act. Any liability that HPP may have had under s16(2) has been extinguished by the operation of these These subsections provide as follows:
      [5] If the causing of, or the interference with, the flow (as the case requires) was given rise to by works constructed or any other act done or omitted to be done on any land at a time before the current occupier became the occupier of the land, the current occupier is liable to pay damages in respect of the injury, damage or loss if the current occupier has failed to take any steps reasonably available to prevent the causing of, or the interference with, the flow (as the case requires) being so given rise to.
      [6]The existence of a liability under subsection (5) extinguishes the liability under subsection (1) of the person who caused the flow or the liability under subsection (2) of the person who interfered with the flow (as the case requires).
    7. Senior Member Young in Connors v Bodean International Pty Ltd[30], set out the appropriate way to apply ss(5) and (6), as follows:[46]A plain reading of the words leads to the immediate impression that the current occupier is thereby liable for all of the damage caused by the unreasonable flow whether occurring within the time of their occupation or outside of that time…[52] In relation to subsection 16(6)… the impact of this subsection is much fairer and more readily understandable if it is interpreted to mean that whatever is the extent of liability of a subsequent occupier, to that extent the liability of the original creating occupier is extinguished.
    8. Applying those principles, I am satisfied that:
        1. the OC is the current occupier,
        2. it has failed to take reasonably available steps to prevent the causing of, or the interference with, the flow (by omitting to address the roof plumbing blockages and failing to rectify the blockages when they occurred),
        3. as a result, any liability of HPP under s16(2) has been completely extinguished, and the current occupier is liable for all of the damage caused by the unreasonable flow. In other words, even if HPP had a liability under s16(2) of the Water Act, for negligently interfering with a flow, that liability is extinguished by the OC’s subsequent conduct.
LOSS AND DAMAGE
    1. For the reasons set out above I have determined that the OC is liable to pay damages to Ms Anderson as a result of its breaches of its statutory duty under the OC Act,[31] and pursuant to the Water Act. The Tribunal’s powers to award damages are found in sections 16 and 19 of the Water Act and s165(1)(c) of the OC These will be discussed further below.
    2. Ms Anderson has set out her claims for loss and damage in a table headed ‘Particulars of Loss and Damage’. Immediately prior to the commencement of the hearing, the amount of the claim was $1,076,045.[32] At the commencement of the hearing in April, Ms Anderson indicated that she wished to add a claim for loss of future income. She filed a series of updated tables, culminating in the final version on 4 October 2019, in which she claimed a total of $2,953,013.96. The items claimed fall within the following categories:
      1. alternative accommodation costs due to having had to vacate the apartment and live elsewhere,
      2. wasted outgoings due to the apartment being uninhabitable,
      3. furniture removal and storage costs,
      4. insurance excess,
      5. loss of value of lot 10,
      6. alleged loss of income past and future,
      7. damage to the interior of Lot 10 (withdrawn during the hearing),
      8. items replaced by Ms Anderson for which, she said, HPP had provided a warranty,
      9. general damages “incorporating anxiety, stress, inconvenience and loss of amenity”, and
      10. legal fees and experts costs.
    3. Ms Anderson has already received payments from various insurers, which she has listed in her table of loss and damage. I will not refer to those payments, other than to note that the amounts discussed below are her alleged losses after the insurance payments she has received.Alternative Accomodation Costs and Wasted Outgoings – General Comments
    4. Throughout the proceeding, Ms Anderson has alleged that the apartment became uninhabitable from a variety of dates since the balcony collapse in As a result, she claims for alternative accommodation and wasted outgoings from 2012 or 2013 to approximately mid-2020, when she says the apartment is likely to be repaired.
    5. I appreciate that throughout 2015 and 2016 living in the apartment was difficult, with heating, air-conditioning and cooking appliances working only intermittently at A pigeon flew in to the bedroom through the inspection hole in October 2016 (although this hole was subsequently patched). Ms Anderson was very worried by the risks associated with mould and her ill health compounded these concerns. However I find that the date Ms Anderson actually vacated the apartment was 8 January 2017. This was the date given by Ms Anderson during cross-examination and in her Further Amended Points of Claim. HPP and the OC have accepted this was the date she actually moved out.
    6. As for future outgoings, Ms Anderson has provided evidence or estimates of likely expenses for the next 6 months or She said she has calculated this based on the time it will take to fix the apartment so she can move back. I do not accept that this is the appropriate way to calculate her future losses. As discussed further at paragraphs 198-200 below, Ms Anderson was given the opportunity to claim for rectification costs, but chose instead to claim for the loss in value of her apartment. Her loss and damage has been assessed on the basis that she[33]ill sell it unrepaired33, and so, in my view, the relevant period of time to take into account is the time needed to sell the apartment. Allowing for losses incurred until it is rectified is not appropriate. Taking judicial notice of common timeframes for sale and factoring in the current state of emergency which is like[34] to extend those times34, my view is that it is appropriate to allow a further six months following the date of this decision, being four months to market and sell the apartment and a further 60 days for settlement of the sale.
    7. The individual items claimed are discussed further below.
Rental Costs (item A3 in the Particulars of Loss Damage): $16,899.96 Plus $1408 per month ongoing
    1. Ms Anderson has claimed for the costs of renting elsewhere from 9 October 2018 to 8 January 2020 “or until lot 10 is made habitable again”. The OC does not dispute the claim or the amount of $1408.33 paid monthly from 9 October 2018 until 8 January 2020. Accordingly I will allow Ms Anderson $16,899.96.
    2. As discussed at paragraph 172 above, I will also allow rental costs from 9 January 2020 to the date of this decision (three months), and a further six months into the future to cover her rental elsewhere while she sells the apartment. That is a further nine months in total, at $1408.33 per month, totalling $12,674.97.Council Rates to be Reimbursed (item A4): $7456
    3. Ms Anderson has claimed a complete reimbursement of all the rates she has paid to the Glen Eira Council from May 2012 to June 2020, on the grounds that her apartment is She says that although she did not actually move out of the apartment until January 2017, the apartment was actually uninhabitable before that time.
    4. The OC denies that she is entitled to be compensated for this It submits that the applicant’s liability to pay Council rates “exists by virtue of her ownership in title of the property, regardless of its condition. Rates are applied by the local Council to community services such as childcare, libraries, fire services, waste services, parks and gardens, planning, roads and footpaths etc”. The requirement to pay rates is not a head of damage attributable to the respondents.
    5. The OC also relies on s156 of the Local Government Act 1989, which provides that the owner of the land is liable to pay the rates and charges on that I accept that in normal circumstances an OC has no liability to pay the rates for a lot owner, but that is not relevant to an assessment of a person’s loss and damage caused by a breach of a statutory duty or as would be assessed in negligence (as is required by s19(9) Water Act). The question is whether, by moving out of her apartment and moving to a different municipality, Ms Anderson has received no benefit for the rates she has paid.
    6. I do not accept that paying rates is a head of loss and I agree with the OC that rates are used for a variety of things within a municipality. Every property owner is required to pay rates, whether or not they live in the property or in the municipality. Whether Ms Anderson chooses to rectify and live in her apartment or to sell it, the rates she has paid to date are not wasted. Accordingly I reject this claim.
Owners Corporation Levies and Interest to be Reimbursed (item A5): $45,737
  1. Ms Anderson seeks the reimbursement of all levies and interest she has paid to the OC since 2012 on the ground that her apartment has been uninhabitable all that time. The OC disputes this item, alleging that s23(1) of the OC Act allows an OC to set annual fees to cover general administration, maintenance and repairs, insurance and other recurrent obligations of the OC. Pursuant to s28(1), a lot owner is liable to pay these fees. In the present case, it says that the OC passed numerous AGM resolutions (with Ms Anderson’s vote) which permit them to recover outstanding levies and fees, and to charge inter
  2. The OC relies on my comments in Davies v Owners Corporation 1 PS414649K which support that view:[35]… Had their apartments not been affected by water, they would be living there and paying those fees. I have allowed the cost of living elsewhere by way of rent, but can see no reason why they should not continue to pay the Owners Corporation fees. I note that the fees are used for the ongoing expenses of the building, including insurance, cleaning, maintenance and management, and that these expenses and the benefit derived from these expenses continue even while the apartments are being re-instated.
  3. While I maintain that view, I distinguish the present case from the fact situation in Davies. The conduct of the OC in the present case is more egregious than the OC in Davies. In this case I have found that the OC, by its committee and/or manager, gave preferential treatment to other members over Ms Anderson, failed to respond to her repeated complaints in circumstances where the committee had known for more than four years of the conditions in which she was living, failed to undertake any cleaning of the roof until six month after it was joined to this proceeding despite being on notice since at least February 2015 that the lack of maintenance had caused much of the water problems, and failed to take any steps to rectify the building despite having received legal advice in March 2016 that it was at risk of not doing so. In those circumstances, I am not satisfied that Ms Anderson has received much benefit for the fees and levies she has paid to the OC for a considerable period of time.
  4. I find that she received benefits for the years 2012, 2013, 2014 and During that period, the problems with the building were universally shared and not so significant that they could not have been easily remedied (as stated in the Ausbuilt Plumbing and Maintenance Group quote of November 2016). However from early 2016 there was no evidence that any of the fees or levies paid by Ms Anderson (apart from the payment of insurance premiums) were used to benefit her or the OC as a whole. Further, I am not prepared to make such an assumption, in circumstances where at the start of 2016 the OC Committee was given legal advice that its best option was to negotiate with the builder to allow it to return as its chances of being successful at VCAT were limited, the Committee resolved to accept an offer from the builder in May 2016, but then inexplicably ceased negotiating with the builder and instead spent another year doing nothing (as evidenced by the resolution in November 2016 which was identical to that passed in November 2015). By this time many members of the committee had expressed their personal frustrations that its manager Strata Plan was failing to act appropriately.
  5. Each case is determined on its own facts. As noted above, at least in respect of claims under the Water Act, s19(9) requires me to apply to the questions of causation and remoteness of damage the same tests as a court would apply to those questions in an action based on negligence. Section 51 of the Wrongs Act provides that in determining whether negligence has caused particular harm, I must look at ‘factual causation’ and at ss(3) that:If it is relevant to the determination of factual causation to determine what the person who suffered harm (the injured person ) would have done if the negligent person had not been negligent, the matter is to be determined subjectively in the light of all relevant circumstances.
  6. In other words, it is a subjective test, and takes into account all the facts which I consider are r As a result, I am satisfied that (apart from insurance premiums) the OC is not entitled to recover from Ms Anderson the unpaid fees and levies, or interest on those amounts, for 2016, 2017, 2018 and 2019, and must repay to her any fees, levies and interest on those amounts which she has actually paid.
  7. As for insurance premiums, I am satisfied that Ms Anderson should pay her share of the premiums paid by the OC throughout 2016-2019. She has already received benefits from the insurance payments made to her to date (and she may receive a benefit in the future if her personal injury claim is successful). I have ascertained from the financial reports provided at each annual general meeting that the OC has paid the following premiums in 2016 – 2019:
FY 2015-2016[36] $3,833.25
FY 2016-2017[37] $10,958.95
FY 2017-2018[38] $18,272.44
FY 2018-2019[39] $19,206.20
Total $52,270.84

Ms Anderson’s liability is 80 shares of 1590, according to the Plan of Subdivision[40], making her share of the insurance premiums paid $2629.60.

    1. It appears from the Owners Corporation Fee Statements[41] that Ms Anderson has actually paid $9,360.17 since 1 January As at the end of 2015 she owed the OC $1025.79, which remains payable in light of my findings at paragraph 183. She is also liable to pay the insurance premiums of $2,629.60. I will allow her a refund of $5,704.78, being the balance of these amounts, with liberty to apply if my arithmetic is incorrect.
    2. Ms Anderson has also sought to be excused from paying any levies into the futur During the hearing in late 2019 the OC advised, through its Counsel, that it had started rectifying the roof plumbing issues and had taken steps to appropriately manage the building. In March 2020 the solicitors for the OC advised that the repairs to the common property were complete. On that basis, I am satisfied that my reasons for accepting this claim for 2016-2019 are no longer relevant, and Ms Anderson should again be liable to pay the OC’s fees from 1 January 2020. For the avoidance of doubt, this will include being liable for any levies raised from that date to repair the common property, but not levies for the legal costs and disbursements of this proceeding. Ms Anderson has already been compensated for the loss in value of her apartment; if she chooses not to sell and to remain a member of the owners corporation, then she must be liable for the cost of maintaining and repairing the common property. Otherwise she would be ‘double dipping’. If she sells, then it is a matter for Ms Anderson and the purchaser to negotiate any outstanding fees and levies from 1 January 2020. Costs of this proceeding are dealt with in the next item.
Estimated Lot 10 Portion of the OCs Legal Fees and Expert Reports (item A6): $37,500
    1. This item is put as a claim for “estimated Lot 10 portion of the OC payments for legal fees and expert reports on behalf of the OC against the applicant in BP1534/2016”. The amount sought is $37,500, “based on estimate of $750,000 divided by 20 lots”. The OC contends that this claim is double dipping with item A5, in that if item A5 succeeds, item A6 must I agree. As item A5 has succeeded (in part at least), this claim is not allowed.
    2. One further note: if any levies are raised after 1 January 2020 for the payment of the legal costs and expert reports used in this litigation, this item will be considered further after the costs of the proceeding are determined.
15 nights Hotel Accommodation (item A7): $1815
    1. Ms Anderson gave evidence that on 8 January 2017 she had to move to the Adina Apartment Hotel for 15 nights, until she could find alternative longer term The cost of this was $1815. The OC does not dispute the amount paid but does dispute liability. On the basis of my findings above, I am satisfied that the OC must pay this amount to Ms Anderson
Southeast Water May 2012 to December 2019 (item A8): $3743
    1. Ms Anderson’s evidence was that after she left her apartment, she stayed first at the Adina Apartment Hotel, then with family and friends for a period of time, until she obtained her current rental property. During that period, she has continued to pay her water and electricity bills for apartment 10 as these cannot be cancelled or suspended with those
    2. She has sought a complete refund of the money she has paid to South East Water since As with her claim for Council rates, I am not satisfied that the service charges imposed by South East Water are a head of loss or damage. The only valid claim would be for usage costs from the date Ms Anderson vacated the apartment, as any usage must have been by others. The South East Water statements on which Ms Anderson relies do not show any usage charges from January 2017. Moreover, it is hard to see what water would have been used when no one was living in the apartment. Accordingly this claim is not allowed.
Lumo Electricity May 2012 to December 2019 (item A9): $6394
    1. The consideration of the claim for electricity charges is similar to that for the water char From the invoices tendered, and the calculations provided in the OC’s closing submissions, I am satisfied that the electricity usage between January 2017 and March 2019 (being the latest date in the statement) was $209.65. I will allow this amount.
Return of Furniture and Personal Items to Lot 10 (item A10a): $5000
    1. The cost of removing her furniture and personal items from apartment 10 was covered by an insurer. However Ms Anderson says the insurer will not cover the cost of returning these items to her She estimates the cost to do so will be $5000. The OC does not dispute this amount, although it does dispute liability. I am satisfied that this is an item for which the OC is liable, as it was its failure to appropriately deal with the water entry that has led to the need for her furniture and contents to be removed. I will allow $5000.
Storage Costs April 2019 to June 2020 (item A11a): $2512.50
    1. Ms Anderson claims the cost of storage from April 2019 to June 2020. Prior to April 2019 the cost of storage was covered by insurance. For the same reason as the removal costs, I am satisfied that the ongoing storage is a cost for which the OC is liable. On the theoretical premise that Ms Anderson will sell the property with settlement in July 2020, I am satisfied that the storage costs should be allowed until June 2020 as claimed. I will allow $2512.50
Insurance Excess paid by the Applicant (item B2 ): $500
    1. CGU has paid the applicant for replacement of personal contents due to water ingress and vermin damage. She had to pay an excess of $500 on the claim. She seeks that amount from the respondents. The OC does not dispute the amount, and appropriately notes authority for the proposition that such an order may be made.[42] I will allow $500.
Damage to Property / Loss of Value (item B3) – general comments:
    1. In the first three versions of her Particulars of Loss and Damage, Ms Anderson claimed “damage to property”, which she described as both the cost of rectification as well as the alleged loss in value of the apartment as it “is uninhabitable for the applicant due to cancer treatment”. On several occasions during the hearing, I explained to her that she would need to elect which head of loss and damage she was claiming, as to recover both amounts would be ‘double dipping’.
    2. Several days of the hearing were spent hearing evidence from the experts about the reasonable costs of rectifying inside apartment 10, the roof plumbing issues and the leaking balconies of apartments 15 and There was also much discussion about the appropriate scope of works for mould remediation, although ultimately neither mould expert was called to give evidence. Ultimately, this evidence and discussion was unnecessary, because, after it had been given, Ms Anderson elected not to claim for rectification costs, but instead to claim for an alleged loss in value of her apartment (which she did on 7 October 2019). Accordingly, I make no findings about the appropriate scope of work or reasonable costs of rectification.
    3. Instead, her claim for “damage to property” is now based on an alleged loss in value of her Ms Anderson claims that her apartment has lost $165,000 in value. She has elected to claim her loss and damage on this basis, rather than for rectification costs, because she says the mould, combined with the trauma she has suffered living in the building and her medical treatment mean it is uninhabitable for her and she intends to sell her apartment. There are two questions to be answered when considering this claim: is she entitled to claim a diminution in value, and if so, what is the amount of the loss?
Is the applicant entitled to claim diminution in value?
    1. The respondents contend that a claim for diminution in value is not permissible under the law, because diminution damages are only available in exceptional circumstances. They rely on cases including Tabcorp Holdings Ltd v Bowen Investments Pty Ltd, Radford v De Froberville and Willshee v Westcourt Ltd[43] as authorities for the proposition that where a building is damaged, the owner of the building will generally be entitled to damages covering the cost of rectifying the damage, and not to a diminution in value. They say that this general principle will apply in almost all circumstances, unless it is unreasonable to do so. The test for unreasonableness is narrow, meaning there must be ‘fairly exceptional circumstances’, or that the applicant is relying on a technical breach of contract to secure an uncovenanted profit, or where the cost of the proposed rectification is out of all proportion to the benefit to be obtained.
    2. The test was explained as follows in D Galambos & Son Pty Ltd v McIntyre[44] where Woodward J stated:Where it would be reasonable to perform remedial work in order to mend defects or otherwise to produce conformity with the plans and specifications which were part of the contract, the measure of damages is the fair cost of that remedial work. Where the defect is such that repair work would not be a reasonable method of dealing with the situation (usually because the cost of such work would be out of proportion to the nature of the defect); then the measure of damages is any diminution in value of the structure produced by the departure from plans and specifications or by defective workmanship.
    3. The respondents say that in the present case, there are no ‘fairly exceptional circumstances’, and no evidence that the rectification cost would be out of all proportion, with the result that Ms Anderson’s loss and damage must be assessed on the basis of the cost to rectify and the Tribunal should reject the claim for diminution in The practical effect of this submission would be that Ms Anderson would receive no award for the damage to her apartment, because she has elected not to claim the cost of rectification.
    4. While I accept the general propositions set out in Willshee and the other cases provided, I do not accept the respondents’ The cases relied on by the respondents all refer to claims for building damage brought as a breach of contract or a duty of care owed at common law. In the present case, the claims are brought under the Water Act and the OC Act.
    5. Section 19(5)(a) of the Water Act expressly allows an order for ‘compensation for damage to land’. In my view the use of the word ‘compensation’ is broad enough to include recompense for any loss in value of that land which has been caused by the damage. Section 19(5)(a) provides as follows:19 Jurisdiction of Tribunal[5]The Tribunal may in respect of any works that give rise to a cause of action of a kind referred to in subsection (1) make any order with respect to
      [a] compensation for damage to land; …
      that it considers appropriate.
    6. Further, I have awarded Ms Anderson damages for the OC’s breach of the statutory duty owed to her under the OC Act. The tort of breach of statutory duty is separate and distinct from the tort of negligence.[45] While the measure of damages for breach of a statutory duty is the ordinary measure of damages applicable to all torts,[46] the duty of the OC to act honestly and in good faith and to exercise due care and diligence in carrying out its functions as an OC is not the same as the duty owed by a building practitioner in respect of a building contract. Accordingly I am satisfied the cases relied upon are distinguishable, as they are all premised on a duty of care owed specifically in relation to the carrying out of building works.
    7. If I am wrong about that, and I should apply the test set out in Willshee and other cases, then I am nevertheless satisfied that there are exceptional circumstances in the present case and that rectification is not a reasonable course to adopt in assessing Ms Anderson’s damages. This is because the rectification works to the common property are beyond the control of the applicant. Even if the Tribunal were to award her an amount to rectify the cause of the water ingress, she would be unable to do so. It is a matter for the OC to arrange and contract for the repairs and ongoing maintenance to the common property. Further, I am satisfied that Ms Anderson is not relying on a technical breach of contract to secure an uncovenanted profit. I have detailed the extent of the damage to her apartment and the failures of the OC above, and I am satisfied that these go beyond a technical breach.
The valuation evidence
    1. Ms Anderson relied on a written report prepared by Deborah Leshinsky & Associates. No-one from that business was called to give evidence or to be challenged. It is not clear who authored the report, and whose opinions are set out, as although it appears to have been signed by Deborah Leshinsky, all statements in the report are made by “we” or “our”. For example: “In undertaking our valuation assessment herein, we have taken into consideration…” and “We are of the opinion that the Market Value of the subject property … is assessed at $300,000”. Further, an assumption was made in the report that the cost to repair the damage would be $50,000-$60,000. No evidence was given of the basis for that assumption. Based on these concerns, where there is a difference of opinion between the expert valuation witnesses, I prefer the opinion of the witnesses called by the respondents.
    2. Leshinsky’s valuation was made as at 3 April They took into account comparative property sales including three residential apartments in the subject building, the average of which was $471,000. They estimated the cost to repair apartment 10 was between $50,000 and $60,000 and concluded that the current market value was $300,000. Presumably this is on the basis that the apartment were sold ‘as is’; that is, without being repaired.
    3. Mr Buchanan and Mr Clayton provided valuations of apartment 10 on a series of dates over four years. The high point of these valuations was $460,000 as at 1 September 2017 (by Mr Buchanan). Ms Anderson claims the difference between that figure and $300,000 is the diminution in value. Although arithmetically this equals $160,000, her Particulars of Loss and Damage seek $165,000.[47]
    4. The respondents preferred to approach the assessment by comparing the latest valuation of the property ‘as is’ (i.e. affected by water damage) to what it would be valued at without water damage.
    5. In summary, Mr Buchanan concluded that the current ‘as is’ value of apartment 10 is $350,000, but would be $425,000 if repaired and the OC levies were within a usual In contrast to Mr Buchanan’s figure of $425,000, Mr Clayton concluded that the current value, assuming the apartment was not affected by water, is
    6. HPP contends that the loss in value is therefore $75,000 (being the difference between $425,000 and $350,000). The OC contends that it is $20,000 (being the difference between $370,000 and $350,000, as they accept Mr Buchanan’s figure is the best available evidence of the ‘as is’ value).
    7. Accordingly, I need to determine three questions:
      1. whether the method proposed by Ms Anderson is appropriate, or
      2. whether the appropriate test is the respondents’ method of comparing the current values with damage and without damage, and if so,
      3. what is the current value of each?
    8. I do not accept the method proposed by Ms Anderson for assessing the loss in value of her By choosing the highest valuation at any given point in time and comparing it with the lowest valuation at any given point in time, she is not comparing ‘apples with apples’. To make an equal comparison, she could have chosen the highest valuation (which was Buchanan’s unaffected value as at 1 September 2017), but then she should have provided an affected valuation as at that date.[49] She did not do so.
    9. Second, I accept the position of the respondents that the appropriate test is a comparison of the current values of the property with damage and without
    10. I accept that the current value of the apartment with water damage is $350,000. I prefer Mr Buchanan’s ‘as is’ valuation to Leshinsky’s estimate of $300,000, for the reasons set out at paragraph 208 and the evidence of both Mr Clayton and Mr Buchanan that they could not understand how Leshinsky had calculated a deduction of $50,000 – $60,000 for rectification costs. No evidence was provided about that calculation.
    11. What then is the value of her apartment if unaffected by water damage: $425,000 or $370,000? Ms Anderson challenged both experts, on the grounds that they did not take into consideration other recent sales of residential apartments within the building, the market specifically in Carnegie, or the potentially high fees and levies to rectify. Mr Buchanan said in response that he had recently spoken to the selling agent and was told those owners had sold “just to get out and cut their losses”. He said those two sales are reflected in the value he has placed on Ms Anderson’s apartment.
    12. I prefer the opinion of Mr Buchanan to Mr Clayton in respect of what would be the unaffected value of the property. The OC contended that if Mr Buchanan had taken into account the recent sales of apartments 9 and 12, the foreshadowed high OC levies and the known OC issues, he should have provided a valuation of less than $425,000, and closer to Mr Clayton’s figure of $370,000. However that argument is misconceived. The reduction in value suggested by the OC comes as a result of factoring in known issues which affect the value. Therefore to do so would result in an ‘as is’ value, and not the unaffected value.
    13. Accordingly I find that the breaches by the OC have led to apartment 10 being devalued by $75,000, being the difference between $350,000 and $425,000. I will allow that amount.
Damage to interior of Lot 10 (item C):
    1. The applicant withdrew her claim for rectification of the internal damage, upon her election to claim the diminution in value of the apartment instead.
Items Replaced by the Applicant (items E1-E5): $874.11
    1. Items E1 – E5 refer to items which Ms Anderson has spent money on repairing, but which she said should have been covered by HPP under the warranties provided by s8 of the DBC Act. These included replacing faulty smoke alarm, replacing faulty hot water system element, checking a faulty split system air- conditioner, repairing a dishwasher (later withdrawn), replacing a faulty sink mixer tap and clearing blocked drains.
    2. No evidence was given about these items during the hearing. There is no material to indicate that these were due to any action or inaction on behalf of the builder, or are anything other than maintenance items. There has been no invoices provided for some items. I do not accept these claims, as there is no evidence before me that they constitute breaches of the builder’s warranties.
Legal and Expert Fees (items F2-F11):
    1. At Part F of the Particulars of Loss and Damage, Ms Anderson has claimed a number of items under the above heading. Items F2 – F11 include legal costs and expert witness fees, totalling $119,904.43, and I will consider these claims as part of any application for costs.
Loss of Past Income (item B4b): $38,000
    1. Ms Anderson has claimed $38,000 in past income which she has foregone in order to prepare for and attend the VCAT hearing. This is a claim which I will determine at the time of determining the costs of the proceeding. However I draw the parties’ attention to the High Court decision of Cachia v Hanes where it was held thatThe “costs” provided for in the Rules do not include time spent by a litigant who is not a lawyer in preparing and conducting his case. They are confined to money paid or liabilities incurred for professional legal services.[50]
    2. Similar decisions have been made by the Tribunal[51] and I repeat what I said in JCM Builders Pty Ltd v Hicks General Construction Pty Ltd[52]:
    3. Ms Anderson will need to provide submissions addressing these matters in any application for costs if she wishes to pursue this claim…. [The respondent] finds itself in the unenviable position that it would have been better off by engaging lawyers than by appearing themselves. Despite this, I am not prepared to depart from the Tribunal’s previous decisions, even though it produces a most unsatisfactory result for the respondent. It was a deliberate policy  intention of government to frame VCAT’s costs powers as it did, and government has not changed these provisions in the more than 20 years the Act has been in operation.
    4. As stated above, during the hearing Ms Anderson advised that she had received medical advice that she should permanently stop work due to stress related illness. She sought to amend her Particulars of Loss and Damage to include lost future income of $2,460,000 (item B4 in her table). She provided medical reports in which she was advised to stop working due to stress related illnesses. She also handed up several statements from her employer as evidence of her earning capacity. I did not allow these unsworn reports and statements to be formally tendered at the time, and as a result, the medical opinions and the evidence of her alleged loss of earnings have not been tested.
Loss of Future Income (item B4): $2,460,000
    1. When Ms Anderson indicated that she wished to add these claims, I raised with her my concern about whether the Tribunal has jurisdiction to determine them, as they seemed to be claims in the nature of a personal injury. Among other things[53] I referred her to s19(1) of the Water Act which provides as follows:19 Jurisdiction of Tribunal
      1. The Tribunal has jurisdiction in relation to all causes of action (other than any claim for damages for personal injury) arising under sections 15(1), 16, 17(1) and 157(1) of this Act …
    2. She told me she had received legal advice to the effect that she should try to resolve all her issues in the one proceeding, which is why she wanted to include them in this pr I made orders on 18 April 2019 recommending that she discuss these claims further with her legal advisors.
    3. In June 2019, I gave Ms Anderson leave to amend her Particulars of Loss and Damage, on the proviso that the question of jurisdiction was still to be resolved. On 4 September 2019 I ordered:7. By 20 September 2019 the applicant must file and serve her submissions in writing as to whether the Tribunal has jurisdiction to consider her claims for loss of earnings, inconvenience and personal injury in this proceeding.
    4. Under cover of that order, the Tribunal also sent the applicant a copy of a recent decision I made in Davies v Owners Corporation 1 PS414649K,[54] which I considered is relevant to the question of the Tribunal’s jurisdiction, at least for claims under the Water Act.
    5. On 20 September 2019 the applicant filed a submission headed “VCAT Jurisdiction for Applicant claim for loss of earnings, inconvenience, and personal injury in this proceeding”. Attached to her submission were the following documents:
      1. further medical reports from two treating psychologists, and
      2. a copy of a paper apparently delivered by Justice Kyrou, Supreme Court of Victoria, to VCAT on 23 June 2010, headed “VCAT’s natural justice obligations”.
    6. Much of Ms Anderson’s submission repeated her evidence already given in the hearing, that, through no fault of her own, she had been forced to endure nearly three years of litigation, which she has found extremely distressing and difficult to deal with. She referred to the medical opinions she had provided as evidence of the adverse effect of the long-running litigation on her health.
    7. As an example, the gist of her submission on the Water Act was that because both respondents allowed the flow of water, they are both liable for her loss, and her loss is that she can no longer run her business from her apartment and has suffered severe psychological injury. She concluded by saying that if the Tribunal could not award her the personal injury damages she sought, she would commence proceedings in the Supreme She requested that the matter be settled by VCAT instead, in order to save costs for the Owners Corporation. Whilst this may be her view of the history of this dispute, it does not assist me in identifying where the Tribunal finds its jurisdiction.
    8. Having said that, I was able to distil three relevant contentions from her submissions. These were that if s19(1) of the Water Act prevents a claim for personal injury being brought in the Tribunal, then:
      1. the claim for loss of future income is a claim in the nature of a personal injury;
      2. in respect of the claim made under the Water Act, s19(1) provides the unequivocal answer that the Tribunal does not have jurisdiction to deal with this claim;
      3. the VCAT Act does not give jurisdiction to award personal injury damages;
    9. I prepared a draft ruling addressing many of the matters contended by Ms Anderson and invited the parties to make any further submissions, which they did. Having reviewed those submissions and the legislation, I am satisfied of the following matters, which I will discuss in further detail below:
      1. the claim for loss of future income is a claim in the nature of a personal injury;
      2. in respect of the claim made under the Water Act, s19(1) provides the unequivocal answer that the Tribunal does not have jurisdiction to deal with this claim;
      3. the VCAT Act does not give jurisdiction to award personal injury damages;
      4. insofar as Ms Anderson now suggests the claim could be made in negligence, I refuse her leave to amend her Points of Claim to raise such an allegation, as it would be bound to fail; and
      5. in respect of the damages claimed as a result of a breach of statutory duty owed by the OC, the Tribunal may have jurisdiction to hear this claim, but it has not yet been properly pleaded, the requirements of the Wrongs Act have not been met and no evidence has been If Ms Anderson takes these steps, I consider it will be appropriate to refer the claim to a judicial member for consideration under s77 of the VCAT Act as to whether the claim would be more appropriately heard in the County Court or the Supreme Court.
    10. I emphasise that I make no conclusion about whether her personal injury claim will succeed, whether in the courts or in the Tribunal. That is a matter she must discuss further with her solicitors. For her benefit, I note that there are time limits on the bringing of such claims under the Limitation of Actions Act 1958 and the Wrongs Act contains a cap on the amount that may be ordered (which seems to be much less than the amount she says she could have earned). She should obtain legal advice about these matters before deciding whether to pursue the claim.
Is the claim for loss of income a claim in the nature of a personal injury?
    1. The phrase “personal injury” is not defined in the Water Act, the VCAT Act or the OC However it is defined and dealt with in Part VB of the Wrongs Act, under the heading “Personal Injury Damages”. This Part sets out how a court or tribunal must approach an award of personal injury damages. The relevant sections are as follows:28B Definitions
      “injury” means personal or bodily injury and includes –
      [a]prenatal injury
      [b]psychological and psychiatric injury
      [c]disease;
      [d]aggravation or acceleration or recurrence of injury or disease;”non-economic loss” means any one or more of the following—[a] pain and suffering;
      [b] loss of amenities of life;
      [c] loss of enjoyment of life;“personal injury damages” means damages that relate to the death of or injury to a person caused by the fault of another person.
Does the Tribunal have jurisdiction under the Water Act
    1. In the present proceeding, Ms Anderson’s claim for loss of future earnings is based on the medical reports she has provided from her treating psychologists. Without disclosing details of the diagnoses, it is clear that Ms Anderson says her injury is a long term psychological condition. It is therefore unarguable that this is a claim for a personal injury as defined above: it is a claim for damages that relate to a “psychological or psychiatric injury”.
    2. As set out above, s19(1) of the Water Act expressly provides that the Tribunal does not have jurisdiction in relation to claims for “damages for personal injury”. As a result, I am satisfied that the Tribunal does not have jurisdiction to make an award in respect of the loss of future income claim. Ms Anderson should note that by s19(8), she is not prevented from bringing this claim before a court.
Does the Tribunal has Jurisdiction under the Water Act
    1. Ms Anderson says alternatively that the VCAT Act gives the Tribunal power to award her loss of future income. She relies on sections 78 and 109, which refer to ‘costs’, and says she seeks costs for the delays caused by both respondents, as she has been disadvantaged within the meaning of s109(3)(a) by the prolonged litigation. Further, she says she has been significantly prejudiced by the delays and has had her “right to fairness” under s97 of the VCAT Act removed by the actions of others. Her argument is that if both respondents had not breached s97, she would likely have not been so psychologically impaired by their delays and the strain of this long-term litigation. Further, she refers to the Tribunal’s obligations to accord parties natural justice, but has not identified which parts of Justice Kyrou’s paper she relies on.
    2. Ms Anderson has misconceived the effect of these sections and the rules of natural She is entitled to a fair hearing (by s97 and as described in Justice Kyrou’s paper), but that section does not impose a liability on the respondents to pay damages to her. Further, she may receive the benefit of an order for costs in her favour under s109, but costs means legal costs and disbursements, not damages. I will address the question of costs in due course if any application is made.
Can the applicant bring a claim in negligence?
    1. The applicant says she has suffered “by the negligence of the other parties by their continual delays and breaching of VCAT orders”. She refers to s51 of the Wrongs Act which sets out the general principles required for a determination of negligence. She then says that she has suffered by the negligence of both respondents since 2012 and has had her right to natural justice denied.
    2. Both respondents object to Ms Anderson now being allowed to raise a claim in negligence. It was not pleaded in her Points of Claim (which it is noted were prepared and amended when she was legally represented), nor has she addressed the elements needed to establish a claim in negligence.
    3. I agree with the respondents that it would be inappropriate to allow the applicant to now amend her claim, particularly when the claim is hopeless and bound to fail. As against HPP, it is statute barred by operation of s134 of the Building Act 1993, which provides that a building action, whether in negligence or contract, cannot be brought more than 10 years after the date of issue of the occupancy permit.[55]
      1. As against the OC, the Tribunal has previously found that it does not have jurisdiction to determine claims of common law negligence against an owners
    4. corporation. For example, in Boyes v Owners Corporation No 1 PS514665E Deputy President Steele held:
      [16] Under the Owners Corporation Act 2006 (“the Act”), VCAT has power to hear and determine an owners corporation dispute as defined in section 162 of the Act…
      [17] There are two elements to the above definition of an owners corporation dispute – it is a ‘dispute or other matter arising under the Act or the regulations or rules of an owners corporation’ (my emphasis) and it ‘affects an owners corporation.’
      [18] Section 162, besides defining an owners corporation dispute, confers power on VCAT to hear and determine an owners corporation dispute. VCAT has no other relevant jurisdiction to determine disputes involving owners corporations.
      [19] The Applicant relied upon nuisance, negligence and breach of statutory duty as causes of action. In my view, VCAT lacks the power to determine an action based on claims of private nuisance or common law negligence brought by a lot owner against an owners corporation. Such an action is not an owners corporation
      dispute. It ‘affects an owners corporation’ as required by the first limb of the definition in section 162, but it does not ‘arise under the Act, the regulations or the rules of the owners corporation’, as required by the second limb..
      [21] … An action in nuisance or negligence arises under the common law, in my view, not under the Act, regulations or rules. [56]
      (emphasis added)
    5. Accordingly I refuse Ms Anderson leave to amend her Points of Claim to include a claim in negligence.
Does the Owners Corporation Act Prevent VCAT from Awarding Damages for a Personal Injury?
    1. Although Ms Anderson says that the OC Act allows me to order the OC to compensate her for loss of future earnings, she has not pointed me to any specific provisions of the Act conferring such a power. She merely repeated her submission that by s5 of the OC Act, the OC is under a duty to act honestly and in good faith, and exercise due care and She said that discriminating against her is not acting honestly and in good faith.
    2. If the claim were only for psychological injury caused by the flow of water, s17(1) of the Water Act would act as a complete bar to any claim for personal injuries. This section provides that:
      17 Protection from liability
      (1) A person does not incur any civil liability in respect of any injury, damage or loss caused by water to which section 16 or 157 of this Act… applies except to the extent provided by this Act..
    3. However, Ms Anderson was clear in her submissions[57] that her claim is brought for a psychological injury caused by both the flow of water and the conduct of the OC and the committee towards her which was in breach of its statutory obligations under the OC Act. I do not think that s17(1) of the Water Act bars the second claim, as it is not an “injury, damage or loss caused by water”.
    4. The question then is what jurisdiction the Tribunal has in respect of damages in the nature of a personal injury which flow from a breach of the OC Act. Unlike s54(2) of the DBC Act and s19(1) of the Water Act, the Tribunal is not specifically prohibited from ordering such “damages” under the OC Act. Neither the parties nor I were able to find any authority having considered this question.
    5. One of the stated purposes of the OC Act is “to provide for appropriate mechanisms for the resolution of disputes relating to owners corporations” (s1(b)). The Act establishes two dispute resolution pr The first (contained in Part 10 Division 1) is an internal complaints handling system, whereby an Owners Corporation decides whether or not to take action when a lot owner, occupier or manager makes a complaint to the OC about an alleged breach by a lot owner, occupier or manager of an obligation imposed on that person by the OC Act, regulations or the rules of the owners corporation[58].
    6. The second process is contained in Part 11 of the OC This is the Part which gives VCAT its jurisdiction, and is headed ‘Applications to VCAT’. Sections 162-
      s162 VCAT may hear and determine disputes
      VCAT may hear and determine a dispute or other matter arising under this Act or the regulations or the rules of an owners corporation that affects an owners corporation an owners corporation disputeincluding a dispute or matter relating to—
      [a] the operation of an owners corporation; or
      [b] an alleged breach by a lot owner or an occupier of a lot of an obligation imposed on that person by this Act or the regulations or the rules of the owners corporation; or
      [c] the exercise of a function by a manager in respect of the owners corporation.
      163 Who may apply to VCAT in relation to a dispute?
      [1] Any of the following persons may apply to VCAT to resolve an owners corporation dispute—
      [a]…
      [b] a lot owner or former lot owner;
      [c] the owners corporation;
      [d] an occupier or former occupier of a lot;
    7. Section 165 of the OC Act sets out the orders which the Tribunal can make in determining an “owners corporation dispute” under that Act, including, relevantly, the following:s165 What orders can VCAT make?[1] In determining an owners corporation dispute, VCAT may make any order it considers fair including one or more of the following—….[c] an order for the payment of a sum of money—
      [i] found to be owing by one party to another party;
      [ii] by way of damages (including exemplary damages and damages in the nature of interest);
      [iii] by way of restitution;
    8. There is no reference to personal injury damages in this section at all. There are three references to ‘personal injury’ elsewhere in the Act. The first and second provide that a complaint in relation to a personal injury is expressly excluded from the internal complaints processes under Part10 Division 1 and Division 2. Section 152 (which is mirrored at s159A) provides:S152 Complaints
      [1] A lot owner or an occupier of a lot or a manager may make a complaint to the owners corporation about an alleged breach by a lot owner or an occupier of a lot or a manager of an obligation imposed on that person by this Act or the regulations or the rules of the owners corporation….
      (a) A complaint cannot be made under this section in relation to a personal injury
    9. The third reference is at s60, which obliges the OC to take out public liability insurance in respect of any bodily injury “which is sustained as a result of an occurrence or happening in connection with the common property”.
    10. The OC provided a number of authorities[59] in relation to the meaning of ‘damages’, the Tribunal’s role and the common law and concluded that “absent any
    11. I agree. In my view, Parliament’s decision to expressly exclude personal injury damages from the internal complaints process indicates that it had turned its mind to the question when drafting the Act. That it did not make the same provision at s165 leads me to conclude that Parliament did not intend to apply the same restrictions to the OC Act as it had under s54(2) of the DBC Act and s19(1) of the Water Act.
    12. I note also that Parliament has given express powers to the Tribunal to award personal injury damages under the Australian Consumer Law and Fair Trading Act 2012, although capped at $10,000. In American International Assurance v Skewes[60] Cavanough J referred to the Fair Trading Act Reference Panel Recommendations’ from 2000 which concluded:…the County Court is the primary forum for person injuries claims, but that the Magistrates’ Court’s civil jurisdiction allows personal injuries claims up to $40,000 (or higher by agreement of the parties)…The panel believes that given VCAT probably already has personal injury jurisdiction under other provisions of the FTA and under the Small Claims Act, there is no reason why its ‘fair trading dispute’ jurisdiction should exclude personal injuries claims. However the panel believes that VCAT should only deal with personal injuries that are attendant upon a fair trading dispute, and that it should not hear such claims separately. Further, it believes that if section 107(2) of the Act is amended to clarify that VCAT can hear personal injuries claims, training in this area should be provided for VCAT members.The Panel also believes that in keeping with the primary position of the County Court in personal injuries claims, VCAT’s personal injury jurisdiction should be limited to $10,000, at least on a trial basis.
    13. For those reasons, I find that in respect of the claim for damages following the breach of the statutory duty owed under the OC Act, the Tribunal is not prevented from awarding damages in the nature of a personal injury. Having said that, I consider it appropriate to refer any application to a judicial member of the Tribunal for consideration for transfer to the County Court under section 77 of the VCAT This section provides that the Tribunal may strike out all, or any part, of a proceeding if it considers that the subject-matter of the proceeding would be more appropriately dealt with by a court or other body.
General Damages (item F1): $15,000
    1. Item F1 is a claim for “general damages incorporating anxiety, stress, inconvenience and loss of amenity” of $15,000. In my view, based on the opinions expressed in Ms Anderson’s psychologists’ reports, the ‘anxiety’ and ‘stress’ complaints are related to Ms Anderson’s psychological injury. For the reasons provided above in relation to the loss of future income claim, s19(1) of the Water Act prevents such a claim being determined by this Tribunal, while the claim under the OC Act will not be determined in these Again, I urge Ms Anderson to obtain legal advice before continuing her claim for ‘anxiety’ and ‘stress’; as well as the matters raised at paragraph 238, a claim for pain and suffering may require an impairment assessment.
    2. On the other hand, claims for ‘inconvenience’ and ‘loss of amenity’ are not personal injuries. The question then is whether the OC is liable to Ms Anderson for such damages under either the Water Act or the OC Act. As an aside, I note that Ms Anderson did not provide any detail of what she means by ‘loss of amenity’ and how this is different from ‘inconvenience’. I will treat them the same.
How does the Water Act Apply to the Claim for Inconvenience?
    1. I considered this question recently in Davies v Owners Corporation 1 PS414649K, and I repeat what I said at paragraphs 129 to 134 therof. In summary, and following previous decisions of this Tribunal, I am satisfied that the Water Act does not allow me to order compensation by way of damages for inconvenience.
How does the OC Act Apply to the Claim for Inconvenience?
  1. On the other hand, the Tribunal has power to order damages for inconvenience under s165(1)(c)(ii) of the OC As SM Vassie said in Kanter v Milroy Investments Australia[61]:[The applicant] is entitled, however, to compensation for the inconvenience that I have found that he has suffered. In determining an owners corporation dispute I may make any order I consider fair, including an order for payment of a sum of money by way of damages, provided that in doing so I am otherwise acting according to law. Awards of damages for inconvenience are permissible in proceedings based upon a nuisance or upon a breach of a landlord’s covenant to allow a tenant quiet enjoyment, even when the proceeding is based upon a breach of a statutory duty, as this one is.
  2. I note that in Davies v Owners Corporation 1 PS414649K, I held at [134]:I also accept the submission of the OC1 that as a result of s17(1) of the Water Act, I have no power to make an order for damages for inconvenience under the OC Act.
  3. Although those comments appear to contradict the decision in Kanter, they were made in circumstances where the claim in Davies succeeded based on a flow of water. As stated above, if Ms Anderson’s claims were only made under the Water Act, s17(1) would act as a complete bar. However, Ms Anderson was clear in her submissions[62] that her claim is brought for damages caused by both the flow of water and the conduct of the OC and the committee towards her which is in breach of its statutory obligations under the OC Act. Accordingly I do not find it inconsistent to adopt the reasoning of Senior Member Vassie in Kanter.
  4. I am satisfied that the applicant has been inconvenienced by the conduct of the OC and its committee over many years. In Archibald v Powlett[63] the Court of Appeal considered that ‘inconvenience’ involved a physical imposition on the plaintiff, “whether by virtue of having to live with offensive odours or a leaking roof, or in unsanitary or dirty conditions, or being obliged to vacate the defective premises.” I am satisfied that Ms Anderson has suffered such an inconvenience. Her experience goes beyond the inconvenience of “time and trouble spent dealing with the breach” (which the Court of Appeal found would not lead to damages for the inconvenience). I will allow the amount claimed, namely $15,000.

    SUMMARY OF AMOUNTS DUE TO THE APPLICANT
    Item No. Description Amount allow
    A3 Rental Costs 29,574.
    A5 Refund of OC levies and interest 5,704.
    A7 Adina Apartment Hotel accommodation 1,815.
    A9 Lumo Electricity 209.
    A10a Return of furniture and personal items 5,000.
    A11a Storage costs 2,512.
    B2 Insurance excess 500.
    B3 Diminution in value of lot 10 75,000.
    F1 Damages for inconvenience 15,000.
    Total $135,316
WHAT IS THE EFFECT OF THE TERMS OF SETTLEMENT BETWEEN THE BUILDER AND THE OC?
    1. I have not been provided with the terms of settlement entered into between HPP and the OC in the second pr There is liberty to apply if the terms affect these findings.

ORDERS

    1. The claim against the first respondent is
    2. The second respondent must pay to the applicant damages in the sum of $135,316.86.
    3. If the applicant wishes to pursue her claim for damages for loss of future income under the Owners Corporation Act 2006 in the Tribunal, she must advise the Principal Registrar in writing by 30 June If such advice is received, the proceeding is to be referred to a judicial member of the Tribunal for consideration under section 77 of the Victorian Civil and Administrative Tribunal Act 1998 as to whether the County Court or Supreme Court would be a more appropriate forum to deal with the claim.
    4. There is liberty to apply on the question of interest and costs and reimbursement of fees. In light of the Covid-19 situation, any application(s) will be dealt with on the basis of written submissions and affidavits, without a hearing, unless the parties request otherwise. I direct the Principal Registrar to refer any application(s) to me for consideration of any necessary orders.

 

 

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