The Body Corporate for the Anchorage One v Huang

Case •

[2024] QDC 60

•

17/05/2024

DISTRICT COURT OF QUEENSLAND

CITATION:

The Body Corporate for The Anchorage One v Huang [2024] QDC 60

PARTIES:

THE BODY CORPORATE FOR THE ANCHORAGE ONE – COMMUNITY TITLE SCHEME 35311
Plaintiff
v

YUE HUANG

Defendant

FILE NO/S:

TD213/2020

DIVISION:

Civil

DELIVERED ON:

17/05/2024

DELIVERED AT:

Brisbane

HEARING DATE:

24 - 26 July, 4 September, 27 - 29 September 2023, 31 January 2024

JUDGE:

Barlow KC, DCJ

ORDERS:

1.   By 7 June 2024, the parties:

(a)   agree on, and if agreed the plaintiff’s solicitors email to my associate, a draft judgment reflecting my conclusions in these reasons, together with details of the calculation of interest on the principal judgment sum or sums; or

(B)  IF NOT AGREED, EACH SERVE ON THE OTHER AND EMAIL TO MY ASSOCIATE A DRAFT JUDGMENT, DETAILS OF CALCULATION OF INTEREST AND SUBMISSIONS ON THE JUDGMENT AND INTEREST SOUGHT, LIMITED TO 3 PAGES; AND

(C)   AGREE ON ANY ORDER FOR COSTS OF THE PROCEEDING, OR SERVE ON EACH OTHER AND EMAIL TO MY ASSOCIATE SUBMISSIONS ON COSTS, LIMITED TO 3 PAGES; AND

(D)  INFORM MY ASSOCIATE BY EMAIL, COPIED TO THE OTHER PARTY, WHETHER THEY WISH TO HAVE A HEARING ON THE ABOVE ISSUES OR ANY OTHER MATTERS ARISING FROM THESE REASONS AND IDENTIFIED BY THEM IN THE EMAIL.

2.   THE PROCEEDING BE ADJOURNED TO A DATE TO BE FIXED.

3.   LIBERTY TO APPLY ON 3 CLEAR DAYS’ NOTICE.

CATCHWORDS:

REAL PROPERTY – STRATA AND RELATED TITLES AND OCCUPANCY – MANAGEMENT AND CONTROL – BODY CORPORATE – POWERS DUTIES AND LIABILITIES – contributions by lot owners – manner of service of contribution notices – the body corporate claimed payment of contributions levied on the defendant lot owner – the lot owner denied receiving some or all of the contribution notices – whether the contribution notices had been posted to the lot owner’s address – the body corporate did not call direct evidence that notices had been posted – whether the court should infer that they had been posted - whether service proved and effective

TORTS – NEGLIGENCE – ESSENTIALS OF ACTION FOR NEGLIGENCE – DUTY OF CARE – SPECIAL RELATIONSHIPS AND DUTIES – OTHERS –– during a significant rainfall event, rainwater entered the premises of a ground floor lot – whether the body corporate had adequately maintained the pavers outside the lot – whether there was adequate drainage – whether the absence of drainage or the unevenness of pavers caused or contributed to the entry of rainwater into the lot - whether the body corporate breached its duty of care – whether any breach had caused or contributed to the entry of rainwater into the lot – whether the lot owner had proved any loss as a consequence of the entry of rainwater into the lot

TORTS – NUISANCE – PRIVATE NUISANCE – WHAT CONSTIUTES AND GENERALLY – during a significant rainfall event, rainwater entered the premises of a ground floor lot – whether the body corporate had adequately maintained the pavers outside the lot – whether there was adequate drainage – whether the absence of drainage or the unevenness of pavers caused or contributed to the entry of rainwater into the lot – whether the flow of rainwater into the lot was a nuisance caused or contributed to by the body corporate – whether the lot owner had proved any loss as a consequence of the entry of rainwater into the lot

LEASES – damage to leased premises – rent abatement clause – during a significant rainfall event, rainwater entered the premises of a ground floor lot that the owner leased to another person – whether the entry of water into the lot required the owner to abate the rent, fully or partially and for what period

Acts Interpretation Act 1954, s 39(1)(a)(ii), s 39A(1)(b)
Body Corporate and Community Management Act 1997 ss 150, 242A, 243(1)
Body Corporate and Community Management (Accommodation Module) Regulation 2008 ss 139, 140, 142, 143, 157, 192
Body Corporate and Community Management (Accommodation Module) Regulation 2020 ss 152, 153, 155, 156, 206, 208,
Civil Liability Act 2003 ss 9, 11
Civil Proceedings Act 2011 s 58

Dwyer v Canon Australia Pty Ltd [2007] SASC 100, cited

Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87, applied

Flack v Chairperson, National Crime Authority (1997) 80 FCR 137, cited
Gales Holdings Pty Ltd v Tweed Shire Council [2011] NSWSC 1128, cited
Goldman v Hargrave [1967] 1 AC 645, cited
Gratrax Pty Ltd v T D & C Pty Ltd [2014] 2 Qd R 261, cited
Herridge v Electricity Networks Corporation t/as Western Power (No 4) [2019] WASC 94, distinguished
Jones v Dunkel (1959) 101 CLR 298, considered
Pearlburst Pty Ltd v Summers Resort Group Pty Ltd [2007] NSWSC 1126, applied
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, applied
Ramzy v Body Corporate for GC3 (CTS 38396) [2012] QDC 397, distinguished.
Re Green Global Technologies Ltd [2009] QSC 262
Southern Properties (WA) Pty Ltd v Executive Director of the Department of Conservation and Land Management (2012) 42 WAR 287, considered
Northumbrian Ice Cream Co Ltd v Breakaway Vending Pty Ltd [2006] NSWSC 1216, applied

Wallace v Kam (2013) 250 CLR 375, applied

COUNSEL:

T Schmidt for the plaintiff (24 July to 26 July 2023)

J Hastie for the plaintiff (4 September to 29 September 2023, 31 January 2024)

Yue Huang, self-represented defendant

SOLICITORS:

SLF Lawyers for the Body Corporate

Yue Huang, self-represented defendant

Contents

Summary

The relevant legislation

The Body Corporate’s claims

The defence and the counterclaim

The Body Corporate’s lay evidence

Evidence about the claim

Evidence about the counterclaim

Ms Huang’s lay evidence

Evidence in defence of the claim

Evidence on the counterclaim

Ms Huang

Mr Vanjak

The expert evidence

Credit of witnesses

Ms Huang

Mr Vanjak

Ms Messer

Consideration – the Body Corporate’s claim

Consideration – the counterclaim

Legal principles

Negligence

Nuisance

Factual issues

The state of the pavers - evidence

The state of the pavers – discussion

What caused the water ingress to lot 17?

Was there negligence or a nuisance by the Body Corporate?

Damages

Did the restaurant cease to trade or reduce its trading hours and, if so, why?

Was Ms Huang obliged to reduce or suspend rent under the lease?

Did Ms Huang lose employment income?

Conclusions on damages

Conclusions and the result of the proceeding

Summary

  1. The plaintiff (the Body Corporate) is the body corporate for a community title scheme in Townsville.  The defendant (Ms Huang) is the owner of the only commercial lot in the scheme, which she lets out for use as a restaurant (lot 17).  Many (if not all) of the residential apartments in the scheme form a pool of lots that are managed as a hotel, known as the Park Regis.

  2. The Body Corporate sues to recover administrative and sinking fund contributions levied against Ms Huang in respect of lot 17 and that were allegedly payable by her between October 2016 and April 2022, totaling $54,620.05.  It also claims the costs incurred by it in recovering those unpaid contributions.  These, the Body Corporate contends, total around $71,000.  Thirdly, it claims statutory penalties akin to interest on those amounts.  The total amount claimed is around $141,000 plus costs.

  3. Ms Huang alleges that the Body Corporate failed to serve her any (or at least most) of the contribution notices prior to 16 June 2022 and that she was only able to view notices issued between January 2022 and June 2022 on a mobile telephone application.  She also contends that the amounts the Body Corporate claims are owing, both in respect of the contributions and the recovery costs, have been incorrectly calculated.

  4. Ms Huang also makes a counterclaim.  She claims that the Body Corporate failed to maintain the common area of the scheme outside her lot and it constructed an office on the common area.  As a result of these actions (and inaction), water was channeled from the common property into lot 17 during a period of substantial rain in February 2019, thus causing damage to lot 17 and consequent loss of income.  She is seeking some $459,000, comprising partly lost rental income (as lessor) and partly lost employment income (as an employee of the lessee).

  5. For the reasons that follow, I find that:

    (a)Ms Huang is indebted to the Body Corporate, on its claim, in the amount of $54,620.05, plus penalties on the individual contributions amounting to that sum, which I shall ask the parties to calculate; and

    (b)Ms Huang is entitled to damages of $13,404.63 from the Body Corporate, together with interest to judgment under the Civil Proceedings Act 2011. Again, I shall ask the parties to agree, or to make submissions on, the appropriate rate or rates and the calculation of that interest.

  6. I shall also ask the parties to agree, or to make submissions on, whether the amount awarded on the counterclaim should simply be set off against the amount awarded on the claim, with judgment for the balance.

The relevant legislation

  1. The Body Corporate’s financial arrangements, as a body corporate, at all relevant times have been subject to s 150 of the Body Corporate and Community Management Act 1997 (BCCMA), which remained relevantly unchanged through the course of the relevant period. Specifically, s 150(2)(b) provides that a regulation module which applies to a community title scheme may provide for the financial arrangements about:

    Levying lot owners for contributions, including contributions of an interim nature for the period from the end of a financial year to 30 days after the annual general meeting for the next financial year…

  2. The applicable regulation was originally the Body Corporate and Community Management (Accommodation Module) Regulation 2008 (2008 Regulation).  That regulation was replaced, with effect from 1 March 2021, by the Body Corporate and Community Management (Accommodation Module) Regulation 2020 (2020 Regulation).   The relevant sections do not differ in material respects.

  3. Section 139 of the 2008 Regulation and s 152 of the 2020 Regulation provide:

    (1)    The body corporate must, by ordinary resolution —

    (a)fix, on the basis of its budgets for a financial year, the contributions to be levied on the owner of each lot for the financial year; and

    (b)decide on the number of instalments in which the contributions are to be paid; and

    (c)fix the date on or before which payment of each instalment is required.

  4. Section 140 of the 2008 Regulation and s 153 of the 2020 Regulation require a body corporate to give a lot owner notice of a contribution at least 30 days before the contribution is payable. Under the respective provisions of the two regulations, such a notice may be served on the lot owner at the owner’s address for service or in the way directed by the owner. An address for service is the address provided by the lot owner to the body corporate or the residential or business address last notified to the body corporate by the lot owner.[1]

    [1]2008 Regulation, s 192(1); 2020 Regulations ss 153(3), 206, 208.

  5. A body corporate may, by ordinary resolution, fix a penalty to be paid for late payment of contributions, comprising simple interest of not more than 2.5% per month.[2]

    [2]2008 Regulation, s142; 2020 Regulation, s 155.

  6. Where a contribution is unpaid, a body corporate may recover from the lot owner, as a debt, the amount of the contribution, any penalty for not paying it and any costs reasonably incurred by the body corporate in recovering the amount.[3]  A body corporate is required to start a proceeding for recovery of unpaid contributions within two years and two months after the contribution becomes outstanding.[4]

    [3]2008 Regulation, s 143, 2020 Regulation, s 156.

    [4]2008 Regulation, s 143(2), 2020 Regulation, s 156(2).

The Body Corporate’s claims

  1. The Body Corporate contends that, from June 2016 to June 2021, it set, by resolution, amounts of contributions to be paid by the lot owners.  The contributions in respect of lot 17 were levied on Ms Huang in accordance with those resolutions and having regard to Ms Huang’s lot entitlement.  The Body Corporate claims that it notified her each time by posting a levy notice to her at the address for service that had been nominated by her.

  2. The Body Corporate claims that, apart from a payment of $1,483.86 made in October 2016, Ms Huang has made no payments towards the relevant contributions levied on her in respect of lot 17 during that period.  The total claimed debt is $54,620.05.  That sum is mostly made up of quarterly contributions, but it includes two other sums: a special contribution for fire penetration rectification ($4,205.85)[5] payable on 1 October 2016 and a special contribution for payment of legal costs ($4,737.62) payable on 22 April 2022.[6]

    [5]All the fees and levies referred to include GST.

    [6]A body corporate may raise special contributions for liabilities not sufficiently provided for in the budget, under the 2008 Regulation, s 139(2); 2020 Regulation, s 152(2).

  3. The Body Corporate also sought “recovery costs,” being costs it alleges that it incurred in attempting to recover the amount owing to it by Ms Huang.  This amounted to $71,000.59.  However, during the trial I made a ruling to exclude the evidence relied on to prove this part of the claim, essentially because the Body Corporate had failed to disclose the relevant documents, nor had it informed the court or Ms Huang that they had not been disclosed when the Body Corporate initially tendered them as evidence in the trial.[7]  I subsequently gave the Body Corporate leave to amend its claim and statement of claim to seek costs of the proceeding in the usual manner.[8]

    [7]Transcript 5-34, [14]-[45].

    [8]The Body Corporate for The Anchorage One v Huang [2023] QDC 191.

The defence and the counterclaim

  1. In her defence, Ms Huang denied that the Body Corporate served all of the contribution notices on her.  She went on to allege that the claimed debts were not calculated in accordance with the contribution schedule.  As to the latter defence, she was unable to pursue it in this proceeding as, under the BCCMA, such disputes must be determined elsewhere.[9]

    [9]As I determined in an earlier interlocutory decision in this proceeding:  The Body Corporate for The Anchorage One v Huang [2022] QDC 119.

  2. In her counterclaim, Ms Huang claims damages for negligence and nuisance.  She alleges that the Body Corporate failed to maintain the pavers on the common property outside her lot.  She also contends that the Body Corporate built an office on the common property and installed air conditioners outside the building which were not properly plumbed.  These actions and inaction by the Body Corporate resulted in the pavers directing water toward and into her lot on occasions of substantial rain.

  3. In early February 2019, heavy rain fell in Townsville.  Ms Huang claims that, as a result of the pavers redirecting water runoff on 3 February 2019, lot 17 was damaged and rendered unfit and unsafe for use as a commercial restaurant.  The heavy rain also caused further damage to the pavers on the common property, causing them to rise up and block the fire exit door of the restaurant.  As a result, the restaurant was largely unable to operate from February 2019 to June 2020.  That resulted in the suspension of the lessee’s obligation to pay her rent.  Also she, as an employee of the restaurant, lost her source of income.  From July 2020, she alleged, the restaurant could trade, but its ability to do so safely was reduced because of the blocked door.  That problem was not fixed until October 2022.

  4. Ms Huang claims that she lost rental income, between 3 February 2019 and 30 June 2022, totaling $265,434.  She also claims that she lost employment income of $89,400 between 1 July 2020 and 30 June 2022.  She seeks damages in those sums.[10]

    [10]These figures are in paragraphs 28 (negligence) and 31 (nuisance) of her amended counterclaim.  The lost rental is calculated on a base rental of $78,000pa.  The lost employment income appears to be based on a contracted salary of $52,000pa plus $5,200pa superannuation, although she does not claim that she lost all her salary during that period.

  5. The Body Corporate denies that it was negligent or caused a nuisance.  It also denies that the restaurant was unable to trade or that Ms Huang suffered any loss of income.  It contends that any lost trade from 2020 onwards was as a result of restrictions and other effects of the Covid-19 pandemic or of a decision made by the restaurant owner (the lessee), with Ms Huang’s concurrence, not to resume trading seven days a week.  As a result, Ms Huang’s agreement not to charge rent was outside her obligations under the lease and not as a result of any action or inaction on the part of the Body Corporate.

The Body Corporate’s lay evidence

Evidence about the claim

  1. The Body Corporate called two witnesses in respect of its claim and tendered a number of documents.  The witnesses were employees of Body Corporate Services Pty Ltd (BCS), which was the body corporate manager throughout the relevant period.

  2. The first witness was Ms Susan Blair, who described herself as a strata manager for BCS.  She said that, in the relevant period, BCS provided administrative services to the Body Corporate and she was involved in the issuing of contribution notices that she said were sent to Ms Huang.  She said that each of the contribution notices was given to Ms Huang (although she did not say how that was done).  She confirmed the amount that, she said, Ms Huang owes the Body Corporate.

  3. The second witness was Ms Lisa Barrett, who is the branch manager for BCS in Townsville.  She had only been in the Townsville office for about four weeks when she gave her evidence, but she had worked in its Cairns office for five years before then and she was familiar with its procedures, which she said were common to both offices.

  4. Ms Barrett identified the Body Corporate’s records of Ms Huang’s purchase of lot 17[11] and its strata roll records for the lot during her ownership of it.[12]  The roll recorded Ms Huang’s address for service, her email address and her “delivery preference” and changes to those details.  Ms Barrett explained that the “delivery preference” refers to the way in which the lot owner had directed the Body Corporate to serve notices, including contribution notices.

    [11]Exhibit 18.

    [12]Exhibit 19.

  5. The strata roll, as explained by Ms Barrett, records that Ms Huang’s delivery preference has consistently been by Australia Post.  The address for service of documents was, from the time she became the owner of lot 17, a street address in North Ward.[13]  On 22 February 2019, that address was changed to the address of lot 17 itself and, on 4 March 2019, it was changed again to a street address in Mysterton.  Ms Barrett said that it was BCS’s practice to record such changes of address on the instructions of the owner of a lot.

    [13]The street address recorded in the strata roll was correct notwithstanding that, when Ms Huang’s solicitors informed the Body Corporate that she had purchased the lot, the solicitors recorded an incorrect address, namely lot 13, 17 [name of street] instead of lot 13, 1-7 [name of street]: exhibit 18.

  6. Ms Barrett gave evidence that the address shown on a contribution notice was the address to which the notice should be sent.  In cross-examination, she said that notices of contribution are printed by BCS with the correct address on them.  They are then sent to a third party “to send them out.”  She accepted that it was possible that the third party or Australia Post might mistakenly send notices to an incorrect address, but the notices are sent to the third party with the address for service in the Body Corporate’s records printed on them.  BCS does not send them out itself.  She does not know how to confirm that the notices were actually posted.[14]

    [14]T6-56; T6-60; T6-67.

Evidence about the counterclaim

  1. In defence of the counterclaim, the Body Corporate called two non-expert witnesses.

  2. The first was Marc Dille.  He was the general manager for the Park Regis from April 2017 to April 2019.  Among his responsibilities were the maintenance of the grounds and reporting any issues to the Body Corporate. 

  3. Mr Dille said that, in the days leading up to 3 February 2019, there was quite a lot of rain in Townsville.  He said there was no significant water around the Anchorage property and he did not recall any water pooling on the paved area outside the restaurant.  He could not remember whether, in February 2019, he saw any water entering or inside the restaurant, saying “I can’t remember that far back I’m afraid.”  He said he recalled that there was an “ongoing issue in regards to the paved area with the restaurant owners and the strata management company,” but he was not able to recall what that issue was.  When asked how he would describe the condition of the paved area, he said there were one or two loose, but generally the rest of it was even.[15]

    [15]T7-66:17-40.

  4. The plaintiff’s last witness was Lewis Bazeley.  He had been employed as “maintenance man” at Anchorage for 10 years, working from 7am to noon Monday to Friday, until he retired the week before he gave evidence.  He was responsible for keeping the place tidy, looking after swimming pools and gardens and looking after the common areas.  When asked if that included the paved area outside the restaurant, he said that he did look after that area, but the owners wouldn’t let him, saying it was their area.  However, he did observe that area and its condition in the course of his job.

  5. When asked what he observed about the condition of the pavers, Mr Bazeley said they were fine.  Now and again, there were uneven pavers, including four or five in front of the restaurant.  He said that Mr Vanjak (Ms Huang’s domestic partner) had planted a tree years ago, the roots of which had uprooted “all these pavers.”

  6. Mr Bazeley said that, on 4 February 2019, he arrived at 7am and walked around the property with Mr Dille.  He said the paved area was dry.  He did not see inside the restaurant. 

  7. He was asked if he observed whether the restaurant stopped trading.  He said they did at one stage, he thought a couple of months after they said it was flooded, perhaps in late 2019.

  8. Mr Bazeley said that he could recall the doors into the restaurant.  Customers usually used the single door closest to the Park Regis office.  He remembered Mr Vanjak putting weather seals on the doors after the 2019 rains.  There were no weather seals on them before then.

  9. Mr Bazeley said that, more recently, in 2022, he had been asked by the Body Corporate to check on the pavers after contractors had fixed a lot of the area and had “ripped them all up and cleaned them and put them all down again.”  He said that he lowered about 10 or 15 pavers and saw that there were plant roots underneath them.

  10. Mr Bazeley also recalled contractors installing a drain along the wall, he thought a couple of months before the pavers were lifted and relayed.  He identified the drainage works from photographs shown to him.[16]

    [16]Exhibit 24.

Ms Huang’s lay evidence

  1. Ms Huang gave evidence herself, both for her defence of the Body Corporate’s claim and for her counterclaim. 

Evidence in defence of the claim

  1. Ms Huang said that, until October 2016, she always paid the contributions on time, but from that time she took issue with the calculation of the contributions for her lot.  She considered that some of the budgeted expenses on the basis of which the contributions were calculated should have been excluded from the calculation for lot 17 because some of the services for which the budget was prepared were not provided to her lot.  For example, a budgeted expense that was included in the calculation of the administrative fund contribution was a subscription for Austar, but her lot did not receive Austar.  In fact, the first item that she refused to pay was a fire protection rectification levy that was included in the contribution notice issued on 12 August 2016 and payable on 1 October 2016.

  2. As I made clear in my judgment on jurisdiction, it is not open to Ms Huang, in this court, to challenge the basis for the calculation of the levies.  That must be done in another forum.  But I took Ms Huang’s evidence in this respect to be an explanation for why she stopped paying her contributions.  It does not, though, affect whether she is liable to pay the contributions that are claimed by the Body Corporate in this proceeding.

  3. Ms Huang also said that she never received the contribution notices on which the Body Corporate relies.  She appeared to suggest that they were delivered to the wrong address, at least on some occasions.[17]  She later said that she did receive two notices and then she said she did receive some.[18]  She said that she could, for a while, see the contribution notices on a telephone application called “CommunityHub”, but, at least more recently, it did not show her the actual contribution notices but only individual items.  It now appears to show a form of account ledger for her account with the Body Corporate.  She tendered a print out of a page from that application as an example.[19]  She said that, earlier, she could see “the levy” (which I take to mean the contribution notices) “from the beginning” (which is how she saw the August 2016 invoice with the fire protection levy), but then something changed and she could no longer see them.  She said she was locked out of the application at some stage and subsequently got access in 2020 by re-registering, since when she has not been able to see contribution notices themselves.

    [17]For example, T1-85 to T1-86; T6-130 to T6-132.

    [18]T6-133:16-18.

    [19]Exhibit 7, p 111.  Ms Huang actually explained the purpose of the tender on day 4 of the trial, when dealing with objections to evidence (T4-27).  She gave evidence about the CommunityHub on day 1 (T1-56, T1-84 – T1-85) and day 6 (T6-66 – 67, T6-130, T6-131 – 132, T6-141 - 142).  This summary is an amalgam of her evidence over those occasions.

  4. In cross-examination, Ms Huang said that she knew, during the relevant period, that the Body Corporate would levy contributions quarterly.  She then said that she did receive some of the contribution notices, but not all of them, although she could see some on the telephone application when she re-installed it in about 2020.  But she could not recall writing to the Body Corporate complaining that she was not receiving contribution notices.[20]  Later, she said that she was receiving notices inconsistently, but she did receive some notices.[21]

Evidence on the counterclaim

[20]T6-138 to T1-139.

[21]T6-142:44-45; T143:19.

Ms Huang

  1. Ms Huang gave evidence herself about her counterclaim and tendered a bundle of documents in support of it.  She also called Mr Denis Vanjak, who is the director of Vanjak Family Investments Pty Ltd (Vanjak Investments), the lessee of lot 17 and the owner of the restaurant business.  He was also Ms Huang’s domestic partner at relevant times, although they have separated in more recent times.

  2. Ms Huang’s evidence was that she and Mr Vanjak decided to buy the restaurant business in 2013.  They did so through Vanjak Investments, paying rent to the owner at the time of the freehold of lot 17.  At the time, she was the sole shareholder and director of that company, but Mr Vanjak took over as both director and sole shareholder in February 2019.[22] 

    [22]Exhibit 16 shows that Ms Huang resigned and Mr Vanjak was appointed as director on 28 February 2019 (notice of which was given to the Australian Securities and Investments Commission (ASIC) on 1 March 2019), while notices of the change of shareholding from Ms Huang to Mr Vanjak were only given to ASIC on 13 and 27 June 2022.

  3. Ms Huang subsequently bought the freehold in 2014.  She did so in her capacity as trustee of the Huang Family Trust.[23]

    [23]This is also recorded in the strata roll kept by the Body Corporate for lot 17: exhibit 19.

  4. Ms Huang said that she and Mr Vanjak agreed, when he took over the company and its business, that the company would employ her as restaurant manager on a salary of $52,000 pa.  She identified the employment contract, dated 30 June 2019.[24]

    [24]Exhibit 9.

  5. Ms Huang said that, on 3 February 2019, she and Mr Vanjak were at the restaurant when it rained extremely heavily.  Rainwater entered the restaurant while she was there.  The next day, they started cleaning out the remaining water, but the carpet was ruined.  They were unable to open the restaurant.  However, as they had agreed to provide room service to guests at the hotel, some of whom had prepaid for their stay, they continued to provide breakfast, by room service, for a short period.  They also opened for dinner on 14 February 2019 in order to honour pre-bookings for Valentine’s Day.

  6. Ms Huang also said that, when the building was first constructed, the plan was that the office for the hotel would be in unit 1.[25]  But at some stage, the Body Corporate built an office outside the restaurant.[26]  In that process, the Body Corporate also installed an air conditioning unit on the wall outside the restaurant, alongside an existing air conditioning downpipe from units on one or more upper floors of the building.[27]  Both the upper floor air conditioner and the office air conditioner discharged water onto the pavers outside the restaurant.[28]

    [25]The plan is at exhibit 7, p 883.

    [26]The new office is shown on a subsequent plan: exhibit 7, pp 894-895.  In her cross-examination, she agreed that it was present there when she bought lot 17: T6-47.

    [27]Exhibit 8, p 10 contains a photograph of the unit and downpipe.

    [28]At some stage between December 2020 and December 2022 a drain was installed under these air conditioners and further alongside the wall of lot 17 to discharge points on the driveway:  compare exhibit 8, p 10 and p 50.  A quote for the work is at exhibit 7, pp 1959-1960.  In her evidence, Ms Huang agreed that it was installed in August or September 2021: T6-48.  Ben Lancini, an engineer who gave evidence, recorded that, during his inspection on 4 November 2022, the outlets from the air conditioners discharged about 2 litres of water an hour.

  7. Ms Huang’s evidence was that the pavers outside her restaurant were uneven for a long time, both before and after February 2019.  She said she had made many attempts to have the Body Corporate fix the pavers, both before and after February 2019.  She was also aware that the pavers had previously needed repairs, as shown by the minutes of the annual general meeting of the Body Corporate held on 13 June 2012, at which the Body Corporate had resolved (on a motion submitted by the committee) that it agree to paving repairs on the common property area adjacent to lot 17 and that it accept a quote for carrying out those repairs, to be paid from the sinking fund.

  8. Ms Huang said that her efforts to have the pavers repaired included attending the annual general meeting held on 25 June 2019.  At that meeting, she submitted a resolution to the effect that the Body Corporate have the pavers repaired.[29]  The resolution was lost.[30]

    [29]Exhibit 7, p 1451. The full resolution is set out at [185] below.

    [30]As were four other motions submitted by Ms Huang, with a sixth motion ruled out of order by the chair.

  9. Notwithstanding Ms Huang’s efforts, nothing was done until October 2022.  This was despite the fact that, in 2021, she applied to the office of the Commissioner for Body Corporate and Community Management (CBCCM) for orders requiring the Body Corporate to carry out repairs.  That application led to a conciliation agreement dated 31 May 2021 between her and the Body Corporate, under which the Body Corporate agreed to have a suitably qualified contractor carry out works that had been recommended in an engineer’s report obtained by Ms Huang in 2020.  The Body Corporate did not carry out those works, so she applied again in 2021, which led to an adjudicator, on 1 June 2022, ordering the Body Corporate to restore the paved area to good condition within four months.[31]

    [31]The agreement and the order are in exhibit 7A.

  10. Ms Huang said that, during the rain on 3 February 2019, the water entered the restaurant through the door to the office and the next door.[32]  She maintains that that occurred because the pavers were uneven and directed the water toward the building.

    [32]These doors are shown on a plan in exhibit 8, p 5.  See also exhibit 15.

  11. Ms Huang said that another door of the restaurant, which had been the main entrance to the restaurant and was the designated fire access door, was, for a time, blocked by the pavers in the common area, which had become uneven and were raised in places.[33]  That door – one of two that opened outwards – was often used as the disabled access door because the designated door was a single door that was sometimes difficult for wheelchairs to get through.  In cross-examination, she said that, before 1 July 2020, she could open it by pushing very hard and scraping it on the pavers, but when they reopened the restaurant she could not open it due to the raised pavers.  That situation continued until the pavers were re‑laid in October 2022.[34]

    [33]The door is depicted in the same plan, marked “exit”, and a photograph of it is exhibit 13.  Photographs of the pavers and the blocked door are at exhibit 7, pp 1034-1037.  Ms Huang’s evidence about these photographs is at T5-78 to T5-82.

    [34]T6-23 to T6-24.

  12. She went on to say that she and Mr Vanjak were concerned by the problems they were having with doors and they decided to open the restaurant only two days a week (having previously opened seven days a week) from July 2020.  She did not accept that the restaurant’s operations were affected by regulatory restrictions imposed in 2020 during the Covid-19 pandemic because, she said, it was closed until July 2020.

  13. Ms Huang accepted, in cross-examination, that, when they did re-open the restaurant, she and Mr Vanjak decided to open only for two evenings a week.  However, she did not accept that they could have opened more frequently.  She said that was because they were concerned that the unopenable door was a fire exit that could not be used, which was contrary to her understanding of relevant fire regulations.

  14. The lease between Vanjak Investments and Ms Huang provides for the lessee to pay $70,909.10 per annum rent since 1 August 2016.[35]  The lease also relevantly provides, in clause 15, that if the premises are destroyed or damaged so as to be unfit for carrying on the business, the rent shall be suspended and cease to be payable.  If the premises are substantially damaged but not so as to be unfit to carry on the business, a fair proportion of the rent according to the nature and extent of the damage shall be suspended and cease to be payable until the lessor has rebuilt or reinstated the premises so as to be in substantially the same state or condition as before the destruction or damage.  For the purpose of that clause, rent is deemed to accrue from day to day.

    [35]Exhibit 7, p 907ff is a copy of the lease.  The rent was increased by variations, to $50,505.20pa from 1 August 2011 – pp 952-954 - and to $70,909.10pa from 1 August 2016: pp 956-958.

  15. Ms Huang said that it took 17 months or so, from 3 February 2019 to 30 June 2020, to repair the restaurant and to make it fit for use, but then they still could not open the door.  That meant that the rent under the lease had to be suspended.  Ms Huang described the delays that occurred before substantial works could be undertaken.  Eventually, she and Mr Vanjak did most of the repairs themselves, which took until June 2020.  They decided to reopen the restaurant from 1 July 2020.[36]  They then discovered that the door would not open properly, so they decided to open the restaurant only two days a week.

    [36]T5-75 to T5-77.

  16. The state of the pavers outside the restaurant persisted for a long time.  Ms Huang took photographs of the pavers and the blocked door in June 2022.  They were not repaired until October 2022.[37]

    [37]Exhibit 7, pp 1034-1038.

  17. So Ms Huang blamed the state of the pavers in February 2019 for flooding the restaurant, which led to it being mostly inoperable for more than 2½ years, first while it was being repaired and then until the pavers were repaired.  That, she claims, led to loss of employment income for herself personally and loss of rental income for herself as trustee.

  18. As to her own employment income, she said that she had a written agreement with Vanjak Investments that she would be manager of the restaurant and would be paid $1,000 a week in that role.[38]  But after the restaurant was flooded and did not operate as it had before, from 1 July 2020 she and Mr Vanjak agreed that she would be paid only for the work she did, which was much reduced given that the restaurant has opened only two evenings a week since then.[39]  Mr Vanjak said that he “cancelled” the agreement. 

    [38]The employment agreement, dated 30 June 2019, is exhibit 9.

    [39]Her evidence about this is at T6-7.

  19. Ms Huang attempted to explain how it was that the agreement was executed on 30 June 2019 and commenced with effect from 1 July 2019 even though, by then, the restaurant was already not operating – according to her and Mr Vanjak.  She said that, after the restaurant was flooded and stopped operating, she became aggressive and would lose her temper and smash plates.  She and Mr Vanjak agreed to separate (as a couple) and, in that context, he agreed that she should be paid $1,000 a week.  That occurred for one year, after which they agreed that Vanjak Investments could not afford to continuing paying her that amount, so instead she would be paid for the times she worked.[40]

    [40]T6-7:15-30.

  20. Ms Huang tendered her personal tax notices of assessment for the financial years 2014 to 2019.[41]  She said that, during those years, she did not earn very much as director of Vanjak Investments, but she anticipated earning $1,000 a week under the agreement from 1 July 2019.[42]

    [41]Exhibit 12.

    [42]T6-11.

  21. In cross-examination, Ms Huang was reminded of her allegation in the counterclaim that, before 1 July 2020, she had earned from the restaurant employment income of $52,000, but then earned substantially less up to 30 June 2022.  She was then taken to her income tax assessments comprising exhibit 12, which demonstrated that her income in the years from 1 July 2013 to 30 June 2019 ranged from $1,600 to $17,000.  She accepted that that was so, but insisted that she earned $52,000 “in 2019” (which I take to mean in the year to 30 June 2020).[43]  She was not challenged about that and neither she nor counsel for the Body Corporate referred to her income tax returns for the 2020 to 2022 financial years.[44]  Those returns showed the following income:

    (a)in 2020, she earned $9,000 in wages from Vanjak Investments, in the position of Administration Assistant, and $43,000 in “allowances, earnings, tips, director’s fees etc” for bookkeeping;

    (b)in 2021, she earned $15,000 from Vanjak Investments as an Administration Assistant; and

    (c)in 2022, she earned $14,021 from Vanjak Investments as an Administration Assistant.

    [43]T6-44.

    [44]Those returns, but not the assessments, are included in exhibit 7.

  22. As for her income as trustee, she tendered the trust income tax returns and Australian Taxation Office records of those returns.[45]  She was cross-examined, by reference to those records and returns, about the amount of her claim for lost rental stated in the counterclaim.  In particular, she alleged in the cross-claim that, before 3 February 2019, she had received $78,000 annually in rental, but the trust returns show that, in each of the 2015 to 2018 financial years, the trust had income of a little over $49,000.  When tested about this, Ms Huang accepted that the income under the lease in those years was as stated in the returns but, she said, the restaurant was also paying outgoings and rates for which she as landlord and trustee was liable, so she added together the amounts being paid by the lessee in reaching the approximate figure of $78,000.[46]

    [45]Exhibits 10 and 11.

    [46]T6-41 to T6-43.

Mr Vanjak

  1. Ms Huang’s former domestic partner, Dennis Vanjak, also gave evidence.  He said that on 3 February 2019, during the rain, he went home to get his pets.[47]  He took them back to the restaurant, by which time only one corner was dry.  He and his pets stayed in the restaurant overnight.  The next day, there was “so much gunk, so much mess” inside the restaurant.  He arranged for some friends to help him clean up with squeegees and an aqua-vac and one person lent him a carpet dryer.

    [47]He described them as a chihuahua, a maltese shih tzu, a little cattle dog and a goldfish.

  2. He managed to clean up the restaurant enough to open for Valentine’s Day 2019, as people had booked for then.  But after that there were long delays in fixing things due to a shortage of tradespeople, so he spent months, apparently until about June 2020, trying to fix up the restaurant, in which the carpet and the plaster developed mould.  Nothing was put to him, in cross-examination, about door seals and whether, for example, there were none on the restaurant doors before February 2019 and whether he later installed them (as Mr Bazeley later said in his evidence), so he had no opportunity to agree or to disagree with those propositions.

  3. Mr Vanjak said that he could not pay the rent under the lease while the restaurant was closed and so he agreed with Ms Huang to suspend it until he could reopen the restaurant 6½ days a week, as before.  But when he was ready to reopen, he found that he could not open the main entry door that he had always used, due to the raised pavers.  He identified the main entry door from a diagram of the restaurant already in evidence.[48]  Later, he said that he is still not using that door because, after the repair works in October 2022, the pavers can be slippery when wet.  He also contended that the pavers are still uneven.  At one stage, he said, “I even now could open six and a half days but I not believe the job is still being done how it should be done in a safe …”.[49]

    [48]Exhibit 8, p 5, figure 2.

    [49]T7-17:30-31.

  4. Mr Vanjak said that he replaced the carpet in the restaurant, having been paid by his insurance company, six to eight months “later” (which I take to mean after the rain incident in February 2019).

  5. Mr Vanjak said that, in the few days after 3 February 2019, he provided breakfasts for hotel guests who had pre-paid for breakfasts, but he delivered them by room service.  He disagreed that the restaurant was open, with customers inside, throughout 2019, although he agreed that it was open on Valentine’s Day 2019 and also lunch on Christmas day 2019.

  6. One issue that occupied some time in the evidence was which door to the restaurant was used for disabled access.  The plan of the restaurant appearing on page 4 of exhibit 8 (an engineer’s report that was tendered) shows paving in a particular area outside the restaurant where a plan on page 2 shows a single inward-opening door.  Mr Lancini – an engineer called by the Body Corporate to give expert evidence – said that that door was the designated disabled access door.[50]  Ms Huang[51] and Mr Vanjak[52] both appeared to agree that that was the designated disabled access door, but they both said it was too narrow for easy access, especially for people in modern wheelchairs, so they tended to use the outward-opening double doors next along the wall of the restaurant (which were also the fire exit).  The relevance of this evidence, as I understood it, was that they mostly relied on the double doors as the main entrance to the restaurant, including for people in wheelchairs.  Those doors became blocked by raised pavers by the time they re-opened the restaurant in July 2020 and they remained blocked until October 2022.

    [50]T6-93:29.

    [51]T5-66:41-45; T5-79:31-43.

    [52]T7-22:23-40.

  7. Mr Vanjak was shown a number of posts from the Facebook page for the restaurant, which included a number of reviews posted between January 2019 and January 2020, and it was put to him that the restaurant was in fact trading, at least from time to time, throughout 2019.  He said that he did not serve customers inside the restaurant, although he did serve breakfasts at tables outside.  He also said that several of the posts (which he identified) were by friends of his who did not in fact eat at the restaurant on the dates of the posts, or who had eaten outside.  He also said that, in his experience, some people will place posts on Facebook at different times to when they actually ate there.

  8. He was also shown a number of reviews posted on Tripadvisor, which included comments posted from February 2019 to August 2022.  He said that his daughter had organised for some of her friends to post reviews.  He said that he continued to do room service breakfasts.  He was not taken to each review, but several purported to have been at the restaurant for dinner and others for breakfast.  He denied, however, that he was trading as normal.

  9. Mr Vanjak accepted that, in the first half of 2020, restaurants could not provide meals in house, but only takeaway, due to the Covid-19 pandemic.  He disagreed that that was what forced him to shut the restaurant in 2020.  He said that it was already shut, although he would sometimes serve some customers outside.

The expert evidence

  1. Two expert engineers gave evidence concurrently.  Karen Messer was called by Ms Huang and Benjamin Lancini by the Body Corporate.  Ms Huang obtained two reports with which Ms Messer was involved, while the Body Corporate obtained one report by Mr Lancini.  Additionally, Ms Messer and Mr Lancini combined in a joint report.[53]

    [53]All the reports were tendered without objection in one volume that became exhibit 8.

  2. In the first report tendered by Ms Huang, dated 2 December 2020,[54] it identifies the author of the report as Dale Callaghan and it states that Ms Messer approved it for issue.  In her oral evidence, Ms Messer said that it was jointly authored:  Mr Callaghan undertook the site inspection and wrote his observations and Ms Messer “completed and finalized the report as the RTQ engineer.”  Nevertheless, Ms Messer confirmed that the facts stated in the report were true to the best of her knowledge and the opinions expressed in it were her own. 

    [54]To which I shall refer as the first NCE report (Northern Consulting Engineers).

  3. Mr Callaghan himself did not give evidence and was not, apparently, required to attend for cross-examination even though Ms Huang clearly intended to rely on the first NCE report authored by him (and adopted by Ms Messer).  The Body Corporate’s counsel did not challenge Ms Messer as to the reliability of this report, despite the fact that she said that she had not attended the site and seems principally to have approved the report’s issue.  Having been tendered without objection, I can clearly take account of the facts and opinions stated in it.  However, I note at this stage that, in the joint report, both Mr Lancini and Ms Messer disagreed with many of the opinions expressed in the report.  I shall set out their opinions when dealing with the joint report.  In the circumstances, I shall be careful in deciding whether to accept any of the contents of the first NCE report except where one or both of the expert witnesses who gave evidence agreed with it or where this report or other evidence satisfies me of the correctness of what was said by Mr Callaghan (and adopted by Ms Messer).  I also keep in mind that Mr Callaghan inspected the property in November 2020, while Mr Lancini and Ms Messer did not inspect the site until October and November 2022, by which stage the pavers had been substantially relaid.

  4. Ms Messer’s second report, dated 9 December 2022 (the 2nd NCE report), identifies its author as Dale Kasper and Ms Messer having approved it for issue.  Despite that, Ms Messer said that she was in fact the author, although she was not asked (and did not say) whether she had attended on site before writing the report.  In the absence of evidence to the contrary, I shall assume that she did.

  5. The first NCE report was based on an inspection by Mr Callaghan on 6 November 2020.  In that report, he expressed the observation that the pavers at the locations where the water had entered the restaurant either directed water toward the building or were above the internal finished slab height, trapping water internally.[55] 

    [55]Section 2.0, exhibit 8, p 5.

  6. Mr Callaghan went on to discuss the external masonry block wall, recording that:[56]

    It was observed at multiple locations that the door opening height or slab height was within 50mm of the external ground level, with the front actually lower than the external finished ground level.

    [56]Section 2.1, exhibit 8, p 5.

  7. He went on to record his inspection of the external pavers. He recorded that the ground in the area of the water discharge outlets of the air conditioners on the wall outside the restaurant was saturated at the time of inspection and directly underneath the units the pavers were undulating, indicating that there was uneven settlement in that area (as shown in photograph 2 to his report).[57]  He also recorded that:

    The pavers to the main entrance were observed to be ‘raised’ above the internal slab height, which was not allowing the doors to open (Photograph 4).

    [57]Section 2.2, exhibit 8, p 5.

  8. Mr Callaghan concluded that the air conditioning units had contributed to some extent to the uneven pavers and the condensate drain discharge points, but the primary cause of the moisture problems was the incorrect height and gradient of the paved area more generally.  He opined that the additions of exposed external paved sections, with a gradient falling towards the habitable floor level, would result in rain (particularly wind‑driven) easily entering the building.  He also contended that modifications to the unit complex (which I infer refers to the addition of the office and the air conditioning), the garden beds and the paving had resulted in “poor drainage outcomes” and the primary cause of the “moisture problems” was the incorrect height and gradient of the paved areas.  He concluded that the “moisture ingress” was the direct result of incorrectly installed external paved areas.

  9. Ms Messer inspected the property on 14 October 2022[58] and then produced the 2nd NCE report.  The majority of this report deals with other sources of dampness in the restaurant at the time of her inspection, which are mostly irrelevant to the issues in this proceeding.  Relevantly, she observed localised areas of “heave” and subsidence in the pavers.  She stated that, during periods of high seasonal rain or flooding, soils under pavers can move, resulting in the pavers moving unevenly.  This is a common occurrence with external paving.  To avoid that, pavers would need to be on a bed of concrete slab substrate.  She concluded that the movement of the pavers was a result of stormwater flows and fluctuations in moisture content of the bedding soils and had occurred over a long period of time.  However, she did not address whether the pavers, as they reportedly were in 2019, were or might have been a cause of substantial amounts of water entering the restaurant.

    [58]That is, a week after the pavers had been repaired.

  10. Mr Lancini inspected the property in November 2022 (that is, in the month after the paved area outside the restaurant had been repaired).  In his report, Mr Lancini recorded that the paved area was generally graded to Palmer Street and the driveway to achieve the free draining design intent for surface water.  However, undulations in the pavers resulted in some uneven surfaces, which he considered to be caused by tree roots exerting upward pressure on the pavers.  The resulting uneven surfaces caused issues with compliant access to lot 17.  The roots were principally from a large foxtail palm that had been present but had recently been removed (at the time of his inspection).[59]

    [59]Exhibit 8, pp 28-29.

  11. Mr Lancini considered that the air conditioning discharge did not affect the property, although at the time he inspected the premises a drain had been installed under those outlets, draining to the driveway.  He also concluded that the construction of the office did not affect the flow of water on the paved area, nor adversely affect lot 17.  He reiterated that the undulations in the pavers were caused by tree roots under them.

  12. In answer to the question what was the cause of any water penetration into lot 17, Mr Lancini noted that two of the four doorway thresholds (apparently referring to the single door comprising the designated disabled access door and the double doors comprising the main entrance to, and the fire exit from, the restaurant) met the requirements for disabled access at the time of construction, with minimal steps into the restaurant (less than 30mm) and the segmented pavers abutted the doorways.  As such, water from wind-driven rain must be blocked by door seals.  He considered that leakage through the door seals of those doors was likely.

  13. Mr Lancini and Ms Messer inspected the property again on 17 May 2023.  In their subsequent joint report, they reviewed each paragraph of each earlier report.  They disagreed with many of the statements in the first NCE report.  For example, they disagreed with Mr Callaghan’s opinion in section 2.0,[60] agreeing instead that a correct description was:

    Localised settlement and/or bulging(?) in the proximity of the Water Ingress locations nominated in Figure 2; which has potential to trap wind driven rain … or air conditioner condensate adjacent the doorway openings.[61]

    [60]See [77] above.

    [61]Exhibit 8, p 72.  In this and all subsequent quotes from the experts’ respective reports, I have kept all typographical or grammatical errors as in the originals, except where I have inserted words [in italics and square parentheses].

  14. Mr Lancini and Ms Messer made the following comment on Mr Callaghan’s observation about the external masonry wall and the air conditioner discharge:[62]

    Both experts agreed that referenced disabled access entry, refer Figure 3 (Section 3.2.1) has a level of FFL 2.9m being generally higher than the external finished ground level (segmental pavers).  However, understand that at the time of the inspection paver undulations had in a local around raised the paver edges above the finished floor level of 2.9m.[63] 

    [62]See [78] above.

    [63]Exhibit 8, pp 72-73.

  15. They agreed that Mr Callaghan’s description of the state of the external pavers[64] was correct.  But they disagreed that the pavers had a gradient falling towards the building.  They had been constructed with fall away from lot 17 and towards Palmer Street and the common driveway.  They agreed that segmental pavers were appropriate for the area, but required ongoing maintenance to ensure that localised undulation was minimised.[65]  They also said that a correct description of the reasons for water ingress was:[66]

    The external segmental pavers of and surrounding the office on common property generally grade away from all buildings (refer figure 3) towards the common driveway and Palmer Street. However, localised undulation of the segmental pavers due to organic plant growth and subsidence has occurred.  The subsidence is a result of over wetting of the paver sub-grade, caused by post-building completion installation of air-conditioners and their associated concentrate drains discharging directly onto the pavers.  [Blank][67] was observed in the proximity of the water ingress locations nominated in figure 2 [of the first NCE report], which has potential to trap wind driven rain and maintenance water (washdown or air-conditioner condensate) adjacent the doorway openings.  With prolonged exposure to wind driven rain or direct maintenance water, water penetration under door exterior weather seals appears to be the cause of the water ingress.

    [64]See [79] above: the quote there is the last sentence of section 2.2.

    [65]Exhibit 8, p 74.

    [66]Exhibit 8, pp 73-74.

    [67]In the report, a word was missing at the start of this sentence.

  16. Mr Lancini and Ms Messer disagreed with Mr Callaghan’s opinion on the causes of water ingress into the restaurant.  They said:[68]

    … as reviewed and agreed under Section 3.2 water ingress in the locations nominated in Figure 2 is not as a result of stormwater but trapped wind driven rain and maintenance water (washdown or air-conditioner condensate) adjacent the doorway openings.  With prolonged exposure to wind driven rain or direct maintenance water, water penetration under door exterior weather seals appears to be the cause of water ingress.

    [68]Exhibit 8, pp 74-75.

  17. They also agreed that the recommendation in the first NCE report to install the grated drain under the air conditioning outlets had assisted in the drainage of wind driven rain and maintenance water that may have been previously trapped by localised paver undulations.[69]

    [69]Exhibit 8, p 75.

  18. As to the conclusions in the first NCE report (summarised at [80] above), both Mr Lancini and Ms Messer said, in the joint report, that they disagreed with them. They said that:[70]

    (a)the absence of weather seals on the doors was the cause of water ingress;

    (b)surface water generally had a grade to drain away from the building;

    (c)the pavers did require ongoing maintenance, which had been completed by the time of their inspection in May 2023;

    (d)the pavers as originally constructed had suitable drainage away from the building but, prior to installation of the drain and removal of tree roots under the pavers, localised paver undulation may have held water at the doorway thresholds.  Wind driven rain or maintenance water in combination with the lack of an external weather seal were the most likely causes of water ingress.

    [70]Exhibit 8, p 75.

  19. In discussion of Mr Lancini’s report during their oral evidence, he and Ms Messer agreed with the matters I have summarised at [82] and [83] above.  They recorded that, at the time of their inspection, there were pavers within the required path of travel that did not meet the criteria for tolerances for level surfaces[71] and they would require ongoing maintenance.

    [71]Pavers with square edges had a tolerance from even of 3mm between pavers and those with 5mm bevelled edges had a tolerance of 5mm.  At exhibit 8, p 79, they recorded that on site measurements showed, at the time of their inspection, that isolated pavers had up to 10mm in height difference to adjacent pavers.  They repeated that they need ongoing maintenance.

  20. They also agreed with Mr Lancini’s opinion as to the cause of water penetration.[72]  They added that there were two mechanisms for the water ingress:  maintenance leaks identified in Mr Lancini’s report and wind driven rain.  Water ingress would be under weather seals and no seal was present under the disabled access door at the time of their inspection.[73]

    [72]See [84] above.

    [73]Exhibit 8, p 78.

  21. Finally, in their report, Mr Lancini said that he disagreed with Ms Messer’s final statement in her report.[74]  Ms Messer agreed with him that it is not accurate.

    [74]That is, in the 2nd NCE report: see the penultimate sentence in paragraph [81] above.

  22. Both experts said, in their oral evidence, that the condition of the pavers in February 2019 would not have influenced the ingress of water into the restaurant during the rain event on 19 February.[75]  Most of the pavers sloped away from the building and there was no stormwater or other flooding up to the floor level that could have entered the restaurant.  Wind-driven rain could enter the restaurant even if the pavers were still new and had been laid in accordance with the plans, with a slope away from the building.  The condition of the pavers does not affect wind-driven rain ingress into the building.

    [75]Mr Lancini at T6-95 and T6-96 - 97.  Ms Messer at T6-96 and T6-97 - 98.

  1. Ms Huang also said that they continued to serve breakfasts, either by room service or at tables outside on the paved area, for “a very short time” to honour their prior commitments.

  2. Ms Huang went on to say that, when they decided to open the restaurant from July 2020, after all the repair works had been done, they found that the fire exit doors were blocked from opening properly by raised pavers.  She and Mr Vanjak decided that that was not safe and so they did not feel they could open every day and they decided to open only for Friday and Saturday night dinners.  At the same time, they reviewed the lease and agreed that, in the circumstances, the lessee’s obligation to pay rent should be suspended.[184]

    [184]T5-76 – 77.

  3. I find that, having been flooded by rain water, the carpet in the restaurant was damaged and had to be replaced and the restaurant needed to be thoroughly cleaned and, possibly, repainted.[185]  I also find that, until those things happened, it was appropriate not to open the restaurant dining room.  I do not accept that that damage was sufficient to force the restaurant to close for more than a few weeks or months (perhaps until the carpet was replaced).  It may also have been necessary to close on occasions after that period, in order to undertake some repairs or the replacement of the carpet, but it was not closed for the entire period the subject of the claim.  Nor do I accept that any ongoing mustiness or mould, as Mr Vanjak complained about, was caused by the ingress of rain under the doors on 3 February 2019.  Rather, it seems to have been caused by other leaks from the roof above the restaurant which, as I have said, were identified and discussed in the second NCE report but are not subjects of this claim.

    [185]Ms Huang referred to painting the walls at T5-76.

  4. I find that the fire exit doors were blocked, probably from shortly after February 2019 but at least from some time before July 2020 until the pavers were relaid in October 2022.  But that did not stop Mr Vanjak and Ms Huang deciding to open the restaurant two days a week from July 2020.  Either it was unsafe (and potentially illegal) to trade at all or it was unnecessary to close the restaurant other than for two days a week.  Mr Vanjak and Ms Huang were prepared to open it notwithstanding the blocked door and there is no logical reason, in the circumstances, why they could not then, or soon thereafter, have reopened to trade as they had before February 2019.  They still had available to them, as alternative exits, the disabled access door and the double doors next along from the fire exit doors.

  5. Mr Vanjak also said that he still opens only for two days a week, even though the pavers were relaid in October 2022, because he does not consider the pavers to be safe.  That decision does not result from the Body Corporate’s conduct the subject of this litigation.

  6. I do not accept that the decision to open only two nights a week was a consequence of the condition of the tiles.

  7. The Covid-19 restrictions did prevent restaurants serving customers in their premises between 23 March and 14 May 2020,[186] following which:

    (a)from 15 to 31 May 2020, it was limited to having 10 patrons at any one time with a maximum of one patron per 4m2;[187]

    (b)from 1 June to 1 July 2020, it was limited to having 20 patrons at any one time with a maximum of one per 4m2.[188]

    [186]Chief Health Officer, Non-Essential Business Closure Direction (23 March 2020); Chief Health Officer, Non-Essential Business Closure Direction (Nos 2 to 9).

    [187]Chief Health Officer, Non-Essential Business Closure Direction (No 10).

    [188]Chief Health Officer, Restrictions on Businesses, Activities and Undertakings Direction (31 May 2020)

  8. As the Body Corporate’s counsel submitted, those restrictions must also be taken into account in deciding whether the alleged continued closure of the restaurant during that period was a result of the water ingress in February 2019.

  9. Mr Bazeley was asked whether the restaurant stopped trading at any point after the 3 February event.  He said they did stop trading for a couple of months, although he thought that was in late 2019.[189]

    [189]T7-71.

  10. I do not accept that the restaurant was closed from February 2019 to March 2020 due to the event on 3 February 2019.  Clearly it was open, at least on quite a number of occasions, during that period.  The first occasions on which it was clearly open (other than for Valentine’s Day dinner) (according to Facebook posts and a Tripadvisor post) were in April 2019.  One Facebook post clearly shows that it was open for dinner on Saturday 27 April 2019.[190]  Tripadvisor posts show that it was open for breakfast (even though possibly only at tables outside for a period) on or before 16 April 2019 and continued to be open for breakfasts (possibly 7 days a week) thereafter.[191]  Many of the posts after that indicate that it was likely to have been open mostly, if not wholly, on Friday and Saturday nights.  The inference I can draw from this evidence is consistent with Mr Bazeley’s evidence that the restaurant closed for a couple of months (I consider that he was mistaken in saying this happened in late 2019).  As it was possible to open it, at least on some occasions, during that period, both for breakfast and dinner, I do not accept that it remained closed, as a result of the event, after mid-April 2019.

    [190]Exhibit 22, p 8, 2nd post from top.  It appears to be supported by the last post on that page and the top post on page 9, which are both dated 27 April 2019 but do not expressly state when the author was at the restaurant. 

    [191]Exhibit 23, p 8 (top post) and p 7 (top 2 posts).

  11. I find that the restaurant closed for dinners (apart from on 14 February 2019) and for dine-in breakfasts from 4 February to 14 April 2019 inclusive,[192] but thereafter it was capable of being opened and serving customers in the dining area.  The closure was a consequence of the rain water ingress on 3 February 2019.  Any closures thereafter and any decision by Mr Vanjak to open on fewer than seven days a week were not consequences of the February water ingress under the doors, even though they may have been consequences of other leaks into lot 17.

    [192]I select this date as the end of the week before the 16 April Tripadvisor review was posted.

Was Ms Huang obliged to reduce or suspend rent under the lease?

  1. Ms Huang claims that, as a consequence of the flooding, the restaurant was forced to close because it was not fit for use as a restaurant until it reopened on 1 July 2020.  As a consequence, as lessor she was obliged to suspend the rent while it was unfit for use.  She claims lost rent from 3 February 2019 to 30 June 2020 as a result of damage caused by the rain on 3 February leading to the suspension of the lease and thereafter from 1 July 2020 to 30 June 2022 due to reduced trading hours caused by the blocked fire access doors.  The total of her claim, as pleaded, is $109,434 to 30 June 2020 and then a further $156,000 to 30 June 2022.  Both sums are based on annual rental of $78,000.

  2. Clause 15 of the lease relevantly provides:

    15.     DAMAGE AND DESTRUCTION

    15.1  If the Demised Premises shall at any time during said Term be destroyed or damaged by any means without any default or neglect on the part of the Lessee the covenant to keep and yield up the Demised Premises in good and tenantable repair shall be suspended and if the Demised Premises shall be destroyed or damaged so as to be unfit for carrying on the use permitted by this Lease the whole of the rent for the time being payable under this Lease shall be suspended and cease to be payable and if the Demised Premises shall be substantially damaged but not so as to be unfit for carrying on the permitted use then a fair proportion of the rent according to the nature and extent of the damage sustained shall be suspended and cease to be payable until the Lessor has rebuilt or reinstated the Demised Premises so as to be in substantially the same state and condition as before the destruction or damage …

    15.2  Accrual of Rental

    For the purposes of this clause, rent shall be deemed to accrue from day to day.

  3. I have found that the restaurant was closed (apart from in-room breakfasts and Valentine’s Day dinner) due to the water damage from 4 February to 14 April 2019 inclusive, a total of 69 days.  Thereafter it traded, at least intermittently (although the Facebook and TripAdvisor posts indicate the likelihood that it traded regularly, even if not every day), from April 2019 to March 2020 and then two days a week from July 2020.

  4. The closure period to which I have referred was, in my view, because the premises were damaged and, for that period, were not fit for carrying on use as a dine-in restaurant, as a result of the entry of rain water under the doors on 3 February 2019.  There is no suggestion that that damage was the fault of the lessee. 

  5. The restaurant was able to be opened on 14 February.  One might conclude that, given that fact, it was no longer incapable of use as a dine-in restaurant.  However, for a period from then it did not have a carpet (or the carpet was damp and became smelly – that is, musty) and I am prepared to accept that it continued not to be fit for ongoing use as a restaurant for a period of time beyond that date: that is, to 14 April 2019.

  6. Ms Huang claims lost rental based on annual rent of $78,000.  However, the Body Corporate submits that the court ought not find that the rent payable to Ms Huang as trustee was that sum.  The Body Corporate relies, in this respect, on the terms of the lease itself and the income tax returns for the trust for a number of years up to and beyond 30 June 2019. 

  7. The annual rent payable under the lease, as amended with effect from 1 August 2016, was in fact $70,909.10.  As I have recorded above in considering Ms Huang’s credit,[193] the trust returns show income from rent in the financial years ending on 30 June 2015 to 2018 of about $49,000 and, in the return for 2019, $50,182 (in a financial year in which the restaurant was allegedly closed for some 5 months).  In the subsequent three financial years the rental income dropped considerably, but those returns show that some rent was still being paid in those years, in which Ms Huang claims not to have been paid any rent.

    [193]At [103], [105].

  8. I have also recorded Ms Huang’s explanation for the discrepancies between her claim and these figures.[194]  But, as I have said, there is no evidence of the amounts other than rent payable by the lessee under the lease.  In the circumstances, the starting point for lost rent appears to be $70,909.10 per annum.  Although that sum does not appear to have been paid in any year and the figure of $50,182 for the 2019 year is unexplained,[195] the rent payable under the lease is, in my view, the appropriate basis on which to calculate the loss to the trust.

    [194]At [105].

    [195]If that were 7 months’ rent, then the annual amount would have been $86,026, which also does not accord with the lease.  Of course, it may have included payment of other fees and simply have been an incorrect characterisation of the income in the tax return.

  9. Under clause 15.1, the rent under the lease was wholly suspended and ceased to be payable for 69 days, from 4 February to 14 April 2019 (apart from 14 February).  On the basis that the annual rent under lease was $70,909, the daily rent in 2019[196] was $194.27.  Consequently, the total amount of rent that was wholly suspended and not payable under the lease was $13,404.63.  Whether or not Ms Huang and Mr Vanjak decided that rent would not be payable thereafter was by agreement between them, but not as a consequence of the event of 3 February 2019.  Similarly, I have found that the decision to open for only two nights a week was not caused by that event, nor by the blockage of the fire exit door from July 2020.  She is not entitled to any damages for a reduction in rent after 14 April 2019.

    [196]Which was not a leap year, of course.

  10. Therefore, Ms Huang as trustee is entitled to damages in the sum of $13,404.63 as a consequence of the rain damage stemming from the Body Corporate’s negligence and nuisance.

Did Ms Huang lose employment income?

  1. Ms Huang claims that, as a further consequence of the Body Corporate’s negligence and nuisance resulting in the closure of the restaurant, she has personally lost wages that she otherwise would have earned as manager of the restaurant.  She bases her claim on an annual salary of $52,000.  That is the salary payable under the employment agreement that she and Vanjak Investments entered into on 30 June 2019 with effect from 1 July 2019.

  2. Ms Huang’s claim for lost income is for the period from 1 July 2020 to 30 June 2022.  There are several problems with this claim.  First, the employment agreement was not in existence at the time of the event: it was created despite the fact that (on Ms Huang’s case) the restaurant was closed.  There is no suggestion in the evidence that Ms Huang and Mr Vanjak had agreed, before that event, that she would be paid that salary from 1 June 2019.  While she may have lost income, in the circumstances I do not accept that the level of income lost was the amount that she subsequently agreed at a time when the restaurant was closed.

  3. Secondly – and perhaps more importantly – I have found that the restaurant was not closed as a result of the rain event by the time of the 2021 and 2022 financial years.  Also, the decision to open on only two days a week was not a necessary consequence of the fire exit doors being blocked.  In the circumstances, any drop in her income in those years was not a consequence of the Body Corporate’s negligence and nuisance.

  4. Consequently, I find that Ms Huang has not proved any loss of employment income for which she should be compensated by damages.

Conclusions on damages

  1. Therefore, I shall order that the Body Corporate pay damages to Ms Huang, as trustee of the Huang Family Trust, in the sum of $13,404.63.  I shall also allow interest on that sum from 15 April 2019 to the date of judgment.

Conclusions and the result of the proceeding

  1. The Body Corporate is entitled to judgment for $54,620.05 plus interest at 2.5% per month on the amount outstanding from time to time and to the date of judgment.

  2. Ms Huang, as trustee, is entitled to judgment for $13,404.63 plus interest under s 58 of the Civil Proceedings Act 2011 from 15 April 2019 to the date of judgment. I shall ask the parties to agree, or otherwise to provide submissions, on the appropriate rate or rates of interest to apply and the calculation of interest to be included in the amount of the judgment.

  3. Under rule 184, instead of giving judgment on each of the claim and the counterclaim, the court could give judgment for the Body Corporate for the balance after setting off the counterclaim.  I shall hear from the parties about whether or not to take this course.


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Cases Cited

2

Statutory Material Cited

6

The Body Corporate for the Anchorage One v Huang [2023] QDC 191
The Body Corporate for the Anchorage One v Huang [2022] QDC 119