Water World Pure Drinking Water Pty Ltd v The Owners - Strata Plan No. 69536

[2025] NSWCATCD 83

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Water World Pure Drinking Water Pty Ltd v The Owners – Strata Plan No. 69536 [2025] NSWCATCD 83

Hearing dates:

14 May 2025

Date of orders:

07 July 2025 (Amended 07 July 2025)

Decision date:

07 July 2025

Jurisdiction:

Consumer and Commercial Division

Before:

R. Alkadamani, Senior Member

Decision:

The Tribunal makes the following amended orders under section 63 of the Civil Administrative Tribunal Act 2013:

(1)   The respondent is to pay the applicant $81,669.52 within 14 days.

(2)   Reserve the question of costs.

(3)   The applicant is to file any submissions on the question of costs and on whether the question of costs can be determined on the papers without a further hearing within 14 days, such submissions not to exceed 4 pages.

(4)   The respondent is to file any submissions on the question of costs and on whether the question of costs can be determined on the papers without a further hearing within 28 days, such submissions not to exceed 4 pages.

(5)   The applicant is to file any submissions strictly in reply within 35 days, such submissions not to exceed 2 pages.

Catchwords:

LAND LAW - Strata title - Duty of owners corporation to maintain and repair common property – Breach - Damages

Legislation Cited:

Civil and Administrative Tribunal Act 2013 (NSW)

Strata Schemes Management Act 2015 (NSW)

Cases Cited:

The Owners - Strata Plan No 33368 v Gittins [2022] NSWCATAP 13

Texts Cited:

None

Category:

Principal judgment

Parties:

Applicant: Water World Pure Drinking Water Pty Ltd
Respondent: The Owners – Strata Plan No. 69536

Representation:

Mr Koumoulas (Applicant)
Ms Grant (Respondent)

File Number(s):

2024/00403905

Publication restriction:

None

REASONS FOR DECISION

1. The applicant is the owner of lot 12 (lot 12 or the lot) in a strata scheme comprising commercial lots located at ** Northumberland Road, Caringbah, NSW 2229. The respondent is the owners corporation (the OC). The applicant seeks monetary compensation for loss and damage which it says was caused by the OC’s breach of its statutory obligation pursuant to s 106(1) of the Strata Schemes Management Act 2015 (NSW) (SSMA) to “properly maintain and keep in a state of good and serviceable repair the common property”.

2. The matter was heard on 14 May 2025. Mr Koumoulas represented the applicant. Mr Kouloulas is a director of the applicant. Ms Grant represented the OC. Ms Grant is a member of the strata committee.

3. During the hearing the parties tendered evidence as follows:

1. Exhibit 1, tendered by the applicant, which comprised a 116 page bundle of documents lodged with the Tribunal on 31 January 2025;

2. Exhibit 2, tendered by the respondent, which comprised a 28 page bundle of documents lodged with the Tribunal on 25 February 2025;

3. Exhibit 3, tendered by the applicant, which comprised a 28 page bundle of documents lodged with the Tribunal on 9 April 2025;

4. Exhibit 4, tendered by the applicant, which was an invoice dated 28 February 2023 issued by MP Roofing Services Pty Ltd (MP Roofing) in the amount of $9,700.48;

5. Exhibit 5, tendered by the applicant, which was an invoice dated 28 March 2023 issued by MP Roofing Services Pty Ltd (MP Roofing) in the amount of $4,266.90;

6. Exhibit 6, tendered by the applicant, which comprised photographs taken in February 2023 depicting damage within the lot after water penetration; and

7. Exhibit 7, tendered by the respondent, which comprised an email dated 8 December 2023 from Ms Abbott, an employee of the OC’s strata manager, to Mr Koumoulas.

4. During the hearing it became apparent that the applicant had not tendered all invoices which were available to it and which were relevant to proving its loss. Consequently, at the conclusion of the hearing on 14 May 2025 the Tribunal made the following orders:

1. The decision is reserved.

2. The applicant is to provide the respondent and lodge with the Tribunal by 21 May 2025 any further invoices on which it intends to rely.

3. The respondent is to advise the applicant and the Tribunal in writing by 29 May 2025 whether it objects to the further invoices provided pursuant to order 2 and/or the contents of the USB provided by the applicant during the hearing being admitted into evidence and, if it objects, its reasons for objection.

4. In the event that any objection is taken by the respondent pursuant to order 3, the applicant is to advise the respondent and the Tribunal in writing by 5 June 2025 its position or contentions in response to the respondent’s objections.

5. On 21 May 2025 the applicant lodged with the Tribunal a bundle of ten pages, comprising a cover sheet, a copy of the 14 May 2025 orders and 8 invoices. The respondent lodged a document indicating it did not object to the documents being tendered. Consequently, the Tribunal will receive into evidence those documents and they are marked exhibit 8.

6. Further, as evident from the orders dated 14 May 2025, during the hearing the applicant also provided a USB storage device to Ms Grant and the Tribunal. The applicant’s evidence served prior to the hearing had included documents containing a QR code which, when scanned, linked to videos that the applicant sought to rely on. Ms Grant had sought to open the videos through the QR code but was required to sign in through OneDrive or a similar sign in process. Due to concerns about signing in and providing credentials, Ms Grant was understandably concerned to proceed. Consequently, during the luncheon adjournment on 14 May 2025 Mr Koumoulas downloaded two videos onto USB storage devices and provided one to Ms Grant and one to the Tribunal. Those are the USB’s referred to in order 2 of the 14 May 2025 orders. The respondent lodged a document pursuant to order 3 of the 14 May 2025 orders indicating that it did not object to the tender of the USB. Consequently, the Tribunal will receive the USB into evidence and mark the USB exhibit 9.

7. The document lodged by the OC pursuant to order 3 of the 14 May 2025 orders made submissions to the effect that the OC had not been provided with prior access to inspect the items of claimed loss and that it had not been previously been provided with information such as the invoices. I will take those submissions into account. However, the OC did not apply for an adjournment or to file more evidence in response. Although I can understand some of the evidentiary difficulties which this may have created for the OC, this decision will be determined on the evidence adduced before the Tribunal.

Jurisdiction

8. The applicant is a lot owner and consequently an interested party within the meaning of s 226 of the SSMA. The OC is also an interested party within the meaning of s 226 of the SSMA.

9. The issue in dispute is whether the OC has failed to discharge its statutory duties prescribed by s 106(1) and, if it did fail to do so, whether the applicant has suffered reasonably foreseeable loss as a result. Disputes of this kind between a lot owner and an owners corporation are regularly determined by the Tribunal pursuant to s 232 of the SSMA and I find that the Tribunal has jurisdiction to hear and determine this dispute.

Findings of Fact

10. The Tribunal makes the following findings of fact.

11. The lot comprises commercial premises from which the applicant has conducted a water bottling business for the past 25 years.

12. The building in which the lot is located is a two storey building. The lot also has two levels. The lower level is the factory floor, where the water is bottled and packaged. There is also a mezzanine level from which the administration functions are of the business are conducted. The computers, cabinets and office furniture used by the applicant are located primarily on the mezzanine level.

13. The strata scheme comprises a number of discrete buildings. It was common ground that the OC has replaced the roof on some, but not all, of the buildings in the scheme. That is due to the OC’s financial constraints. The roof over lot 10 has been replaced. The roof area over lot 10 is adjacent to the roof area over lot 12. As at February 2024, the roof area over lot 12 was the original roof.

14. At the beginning of November 2020 there was a water penetration event in which rain entered into the lot (Ex 1, p. 28). It appears this was because the main roof gutter failed to discharge the rain water (Ex 1, p. 28). The water penetration caused damage to fixtures and furniture in lot 12. Some photographs depict ceiling tiles having fallen out of their place and crashed to the floor of the office (Ex 1, pp. 30 and 31).

15. Throughout 2022 there was correspondence between Mr Koumoulas and the strata manager, Body Corporate Services Strata Managers (BCS) in relation to work on the roof, including the potential need for the installation of a box gutter (see Ex 1, pp. 39-64). From the period approximately October 2022 until the end of 2022 the correspondence also indicates a disagreement between Mr Koumoulas and BCS, on behalf of the OC, as to the liability of the applicant for some of the roof work. In short, the OC required the applicant to meet the costs of a portion of the contemplated roof work and the OC would meet the balance of the costs.

16. The contemplated work included installation of a box gutter (Ex 1, p. 61) as well as flashing and penetrations around a wind turbine and air conditioning unit that the applicant had installed on the common property roof. The OC’s position was that the applicant should pay for certain work. The applicant’s position was that issues concerning the wind turbine were not a cause of any water penetration (see Ex 1, p. 60).

17. During 2022 the applicant advised BCS on a number of occasions that its furniture and fixtures were being damaged due to water ingress into the lot from the box gutter area (eg Ex 1, pp. 44 and 53).

18. On 16 September 2022 Mr Koumoulas sent an email to the strata manager as follows (Ex 1, p. 55):

Please see below. Have been waiting since March 2022. This is taking too long. FYI and as previously mentioned, my new office furniture beneath the box gutter and flooring has bloated and decayed from the water damage. I trust the Committee and yourselves will compensate, replace and repair.

19. Between September 2022 and February 2023 roof work was not undertaken by the OC in relation to the roof area over lot 12.

20. In February 2023 water penetrated into lot 12 through the common property. The water penetration began on 9 February 2023. The water penetration during this event is evidenced by a 28 second video in exhibit 9. Water is depicted in the video dripping down into the lot from numerous entry locations. Water is also depicted accumulating on the floor surfaces. Photographs tendered during the hearing (Ex 6) also show significant damage.

21. In a text message from Mr Koumoulas to the strata manager on 22 February 2023 Mr Koumoulas wrote (Ex 1, p. 91):

Yesterday afternoon a torrent of amount of water entered my office from the corner box gutter location. The same thing happened on Saturday afternoon during the storm. My office and floors are in ruin.

22. On 28 February 2023 MP Roofing issued a tax invoice for work carried out on the roof (Ex 4). The work is described as relating to “Unit 12” and I infer that means that the work related to the common property roof affecting lot 12. One item of work was removing “a section of box gutter” and re-sealing and riveting all box gutter joints (Ex 4). I infer that the work the subject of the 28 February 2023 MP Roofing tax invoice occurred after the water penetration event referred to in the preceding two paragraphs.

23. On 1 March 2023 MP Roofing provided BCS with a quote for further roof work. In the covering email MP Roofing advised that the quote “separates the steel structure re-flashing and the A/C pipe re-flashing” and that the “a/c pipe reflashing will now need some surrounding roof sheets replaced” (Ex 1, p. 67).

24. On 5 December 2023 Mr Koumoulas sent a text message to the strata manager as follows (Ex 1, p. 92):

When will my units (sic) roof get properly fixed ? All the past patch work and roofing incompetence has worsened the roofs (sic) integrity. Can you please reply and confirm the scope and date.

25. The strata manager responded (Ex 1, p. 92):

Hi con quote requests were sent out last week

26. On 8 December 2023 the strata manager sent an email to Mr Koumoulas as follows (Ex 7):

Hi Con

Thanks for your email, as I said on the phone that I had sent and sent another email to Tony Wade to get on the roof and make safe whilst the quotations were being gathered. In all the rain events we have requested photos of the damage and to date we have not received them. My understanding is that this is a new spot that is leaking and as soon as you have a leak you send me an email and take photos and send to me.

Under instructions from the committee we are gathering additional quotes for the committee to decide whom to proceed with.

In relation to your roof issues apparently going back to 2018 l cannot help you with that as I started with BCS in August 22.

I treat every matter urgently and have treated your matter seriously, as soon as Kris alerted me we jumped on this [to] organise a roofer. But what you should be doing is contacting myself directly by email and sending me pictures as that is a requirement.

27. On 11 December 2023 Mr Koumoulas sent a text message to the strata manager, together with 10 photographs of the roof depicting various matters of concern. The text message was as follows (Ex 1, p. 94):

Please see crimps, inappropriate use of silicones, unsatisfactory patchwork and unsealed box gutter. Please see email dated 11 December 2023.

28. The OC also installed a new roof over lot 10. The roof area above lot 10 is adjacent to the roof area above lot 12 (see Ex 1, p. 23).

29. There were a number of other text messages sent by Mr Koumoulas to the strata manager in December 2023. In a text message dated 20 December 2023 Mr Koumoulas advised that “there are multiple leaks” into the lot and that “[m]any are new and have popped up from areas that were previously dry” (Ex 1, p. 97). On that same day the strata manager responded by text message as follows (Ex 1, 97):

Hi Con. I have finished for the year but Brett has called me about your roof (sic) he cannot do a quick fix due to the rain. If your roof is leaking so badly then I suggest you call SES to tarp the roof

30. On 20 February 2024 there was significant water penetration into the lot from heavy rain.

31. The water penetration into lot 12 from the 20 February 2024 rain event was significant. One of the videos contained on the USB (Ex 9) was taken during the rain event which led to this water penetration. The video was about 3 minutes and 45 seconds. The video depicts water entering from multiple areas of the ceiling, including through ceiling tiles or sarking, into the mezzanine office area. The water entry occurs from many distinct locations in the ceiling area. Numerous buckets or containers are depicted placed in numerous disparate locations around the floor of the office area in an attempt to catch water dripping from above.

32. The video also depicts water penetrating into the factory area. The upper side of that ceiling comprised the floor of the mezzanine level. Consequently, for water to penetrate to the factory floor area it penetrated through the floor of the mezzanine level and the ceiling of the factory floor area.

33. The OC does not dispute that water penetration into lot 12 occurred in February 2023 and 20 February 2024. In fact, Ms Grant stated that a number of lots have leaks, that the original roof is relatively old and the situation needs constant monitoring.

Causes of the water penetration in February 2024

34. In terms of the cause of the water penetration, the applicant relied on an expert report from Optimax Building Solutions Pty Ltd (the Optimax Report) (Ex 3, pp. 17-32). That report was authored by Yuri Posa. Mr Posa is an engineer with over 25 years of experience. Mr Posi inspected the roof and lot on 9 February 2023 and also on 20 February 2024.

35. The Optimax Report’s conclusions were as follows (Ex 3, p. 30):

Professional Assessment and Findings Regarding the Roof and Its Defective Repairs

Following site inspections on 9 February 2023 and 20 February 2024 at ** Northumberland Road, Caringbah, I observed clear and concerning evidence of roof failure and unviable repair strategies within the past two years. The roof above the premises has been subject to multiple makeshift repair attempts during this period, which have proven ineffective in preventing significant water ingress events.

Between 2023 and 2024, the property experienced two major flooding incidents. My inspections confirm that the interim repairs— primarily involving excessive use of silicone, sealant, and isolated patchwork-did not meet industry standards nor satisfy the waterproofing performance criteria set out in Australian Standard AS 1562.1-2018. These temporary measures failed to address the structural and waterproofing integrity required of a functioning metal roof system.

Of particular concern are areas around the box gutter perimeter and air conditioning inlet, where failed patching has allowed persistent leaks. During my most recent inspection, sealants had deteriorated, and visible gaps were present, allowing water to penetrate directly into the office areas below. The situation had worsened since my 2023 inspection, confirming that no effective maintenance or rectification was carried out in the intervening year.

In my professional opinion, and based solely on conditions observed since February 2023, the roof is beyond practical repair. Continued patching will only perpetuate further damage and disruption. Full roof replacement is now the only viable solution to ensure compliance with statutory maintenance obligations under Section 106 of the Strata Schemes Management Act 2015 which require the Owners Corporation to maintain and repair common property, including areas around fixtures such as air conditioning systems that were approved by the Corporation.

36. The Optimax Report included photographs which substantiated the conclusions. Picture 1 (Ex 3, p. 20) was a photograph taken from the office towards the box gutter. A physical gap is visible between the box gutter as installed and the adjacent roof area such that the sky is clearly visible. The visibility of the sky in the photograph evidences a gap where there is no barrier or impediment to the entry into the lot of rain. I find gap that this was one of the causes of the water ingress in February 2024.

37. The Optimax Report also contained photographs depicting crimping, gaps between the roof sheets, excessive use of silicone suggesting over-reliance on silicone.

38. Finally, the Optimax Report also recorded that there was insufficient overlap with the installation of the patched roofing sheets, exposed rivets, extensive corrosion, and damage from unqualified foot traffic during gutter cleaning (Ex 3, p. 30). It is unclear how Mr Posa could establish that the unqualified foot traffic occurred during the gutter cleaning so I do not propose to rely on that conclusion.

39. I find that the gaps in the roof sheets and the insufficient overlap in the installation of the patched roof sheeting were also causes of the water penetration in February 2024. I also find that inadequate sealing around the air conditioning inlet permitted water ingress into lot 12. I find that the excessive reliance on silicone, the extensive corrosion, the exposed rivets and the crimping, although not direct causes of water penetration, evidence a deteriorated roof structure.

Consideration of s 106(1)

40. Section 106(1) of the SSMA provides as follows:

An owners corporation for a strata scheme must properly maintain and keep in a state of good and serviceable repair the common property and any personal property vested in the owners corporation.

41. In The Owners - Strata Plan No 33368 v Gittins [2022] NSWCATAP 13 the Appeal Panel conveniently summarised at [56] the principles relating to the obligations of an owners corporation as follows:

(1) The owners corporation has a strict duty under s 106 (1) of the SSM Act to maintain and keep in a state of good and serviceable repair the common property. That duty is not merely to take reasonable steps or use best endeavours.

(2) The duty under s 106 (1) of the SSM Act includes keeping common property in order by acts of maintenance before it falls out of condition. The duty includes taking preventative measures to ensure there is not a malfunction. The duty also includes remediation of defects in the original construction of the common property.

(3) As soon as something in the common property is no longer operating effectively or at all, or has fallen into disrepair, there has been a breach of the s 106 (1) duty.

(4) Breach of the duty under s 106 (1) of the SSM Act gives each Lot owner a statutory cause of action.

(5) Repairs to common property (including renewal or replacement of common property) that does not involve alteration or addition for the purpose of improving or enhancing the common property does not require a special resolution of the owners corporation under s 108 of the SSM Act.

(6) Renewal or replacement of common property under s 106 (2) of the SSM Act is only engaged when the item of common property is no longer operating effectively, or at all, or has fallen into a state of disrepair.

(7) Renewal or replacement of common property under s 106 (2) of the SSM Act is limited by a concept of reasonable necessity.

42. Having regard to my findings above as to the causes or reasons for water penetration, I find that in February 2023 and February 2024 water penetrated through the common property into the lot and that the extent of the water penetration was significant. I also find that the reason for the water penetration was because the OC did not properly maintain and keep in a state of good and serviceable repair the common property namely, the roof structure. The repairs were inadequate and unsatisfactory for the reasons given by Mr Posi in the Optimax Report, apart from Mr Posi’s conclusion as to the unqualified foot traffic. Further, the excessive reliance on silicone, the extensive corrosion, the exposed rivets and the crimping, although not direct causes of water penetration, which I have found evidence a deteriorated roof structure reinforce my view that the OC did not properly maintain and keep in a state of good and serviceable repair the roof structure. For these reasons I find that the OC breached its statutory duty to “properly maintain and keep in a state of good and serviceable repair the common property”, comprising the maintenance and repair of the roof structure of the common property, including the box gutter installation.

43. In addition to the preceding paragraph, in relation to the February 2024 water penetration event, I also find that a cause of the water penetration was the box gutter installation, and in particular the gap in the installation through which water could enter into lot 12.

44. Based on the above matters, I find that the OC’s failure to properly maintain and keep in a state of good and serviceable repair the roof structure above lot 12 resulted in significant water penetration into lot 12 in February 2023 and February 2024.

45. The OC contended that the applicant had not demonstrated the cause of the water penetration and/or that a number of causes were attributable to matters for which the applicant, as lot owner, was responsible.

46. One of the OCs contentions was that there was a manhole in the roof permitting access for the lot to the roof and that the OC was not able to control access to the roof. The submission was that some of the roof damage causing the water penetration might be due to unqualified foot traffic on the roof at the applicant’s direction and that this caused damage to the roof. However, there was no cogent evidence of the extent of the access to the roof at the direction of the applicant and I am not satisfied that the OC has established that this was a cause of the roof’s deterioration which is attributable to the conduct of the applicant. Each of the parties made allegations that unauthorised or unqualified pedestrian traffic on the roof damaged the roof but the allegations were general and insufficiently specific as to persuade me to make any findings.

47. Another issue that the OC brought to the Tribunal’s attention was the penetration of the air conditioning electrical wiring through the roof. The Optimax Report identifies that the sealing around the air conditioning penetration permitted water penetration. The evidence does not demonstrate how or why that area of the roof needed to be maintained by the applicant. There was reference to by-laws in the submissions during the hearing but the by-laws to which the Tribunal was taken did not assist either party on this issue.

48. The OC also contended that the structure supporting the wind turbine placed on the roof was a cause of the water penetration. However, Mr Koumoulas’ evidence was that the water penetration into the lot was from the other of the lot, and mostly around the box gutter installation. Having regard to this evidence, and the Optimax Report which did not identify the wind turbine support structure as a cause of water penetration or roof damage, I am not persuaded that this was a cause of water penetration or damage or deterioration of the roof.

Loss and damage

49. I now turn to consider the applicant’s claim for monetary compensation. Sub-sections 106(5) and (6) of the SSMA provide as follows:

(5) An owner of a lot in a strata scheme may recover from the owners corporation, as damages for breach of statutory duty, any reasonably foreseeable loss suffered by the owner as a result of a contravention of this section by the owners corporation.

(6) An owner may not bring an action under this section for breach of a statutory duty more than 2 years after the owner first becomes aware of the loss.

50. It follows that to be entitled to an award for monetary compensation, the applicant must show that the OC breached its statutory duty and that the applicant suffered reasonably foreseeable loss as a consequence. In addition, any proceedings by a lot owner for breach of an owners corporation’s statutory duty must be commenced within 2 years after the owner first becomes aware of the loss.

51. The applicant’s claims in these proceedings relate to alleged losses arising from the February 2023 and February 2024 water penetration. Any water penetration prior to February 2023 is not the subject of any claim by the applicant. The application commencing these proceedings was lodged on 29 October 2024. Consequently, the applicant’s claims arising from the February 2023 and February 2024 water penetration are within the time limit prescribed by s 106(6) of the SSMA.

Reasonably foreseeable loss

52. The question as to what constitutes reasonably foreseeable loss requires an assessment of the type of loss that a reasonable person could foresee could arise from a breach of the duty to maintain and repair the common property. Some of the relevant circumstances as to foreseeability of the type of loss that might flow from a breach of that duty include the fact that the lot owners use their lots at the strata scheme for commercial purposes and that to undertake their commercial activities lot owners such as the applicant could be expected to have offices with computers, office furniture and office fixtures such as carpet or flooring would be present in the lot that could be damaged.

53. I find that it was reasonably foreseeable that the applicant would suffer loss due to water penetration into the lot from the common property roof structure. I also find that it was reasonably foreseeable that water could penetrate through the roof structure into the lot due to the condition of the roof.

54. Having regard to the September 2022 emails between Mr Koumoulas and the strata manager, I also find that as at February 2023 reasonably loss which might arise from water penetration through the roof into lot 12, particularly around the box gutter area, included damage to equipment, furniture and fittings.

55. I also find that it was reasonably foreseeable that water penetration into the lot due to a faulty or defective installation of a box gutter, such as an installation in which a there was visible gap through which water could penetrate into the lot, could cause loss to the lot owner in the form of damage to equipment, furniture and fittings.

56. Having regard to the SMS text messages between Mr Koumoulas and the strata manager in December 2023 that water was penetrating into lot 12, I also find that it was reasonably foreseeable that the applicant may suffer loss due to water penetration from the common property roof.

57. I will deal with the applicant’s losses in greater detail in the following paragraphs.

Heads of loss

58. The applicant adduced numerous invoices, quotes and records of payment. Mr Koumoulas’ oral evidence during the hearing was to the effect that all the items for which a claim was made represented damage to the applicant’s property due to the February 2023 and February 2024 water penetration events. I pressed Mr Koumoulas on this issue and his response was unwavering.

59. I accept that Mr Koumoulas was an honest witness whose evidence was truthful. Mr Koumoulas gave honest answers when those answers were not favourable to his case. In one instance, when Ms Grant asked Mr Koumoulas whether he had permitted any person to access the roof, he accepted that he had even though that evidence would reinforce the OC’s submission that roof damage was caused by unauthorised persons accessing the roof.

60. As I have observed earlier, the OC submitted that it had not been given the opportunity to inspect the damaged items. However, the OC did not object to the evidence being tendered and did not seek an adjournment of the proceedings. The applicant also disputed that it had inappropriately obstructed the OC and the applicant also had complaints about the strata manager attendance at the lot. Although I do understand the difficulty in the OC’s position, in the absence of objection to the applicant’s evidence and in the absence of any adjournment application, the Tribunal is required to proceed to determine the matter on the basis of the evidence adduced by the parties.

61. Item 1 - The first item claimed by way of loss is $4,247.50 for painting the lot after the February 2023 water penetration event (see Ex 1, p. 5). The tax invoice from Deco group painters which evidences that work is at exhibit 1, p. 6. The invoice has been paid (Ex 3, p. 8). I find that the need to repaint the lot due to water damage was a foreseeable loss and I accept that the applicant did suffer this loss.

62. Item 2 - The next item claimed by way of loss is $4,640.00 for replacement of a sofa (Ex 1, p. 5). This alleged loss relates to the February 2023 water penetration. One of the invoices in exhibit 8 is from Office Furniture Solutions dated 29 November 2019 in the amount of $17,895.00. One of the items on the Office Furniture Solutions invoice is a sofa. The applicant claims that the replacement sofa will cost $4,650.00 (see Ex 1, p. 9). The damaged sofa, described as a Manhattan 3 seat lounge, cost $3,999.00 in November 2019. There were no submissions or evidence as to depreciation. I am satisfied that such loss was a foreseeable loss in that damage to office furniture is a type of damage that might occur from water penetration. Consequently, I am satisfied that the applicant has established loss of $3,999.00 in respect of this item.

63. Item 3 - The next item claimed by way of loss involves two amounts for replacing computer equipment (Ex 1, p. 5). The first amount is $3,234.00 and the second amount is $7,256.00. Invoices from Firstech Computers for each of these amounts was adduced (Ex 1, pp. 11 and 15). Evidence of payment of the invoices has also been adduced (Ex 3, pp. 11 and 15). The claimed losses relate to the February 2023 water penetration event. The existence of computers during the rain event in February 2023 is evidenced by the photographs in exhibit 6 and one of the videos on the USB. In addition, exhibit 8 contains 3 invoices from Firstech Computers for computer equipment of a similar price range dated 2-3 years prior to February 2023. I am satisfied that after the February 2023 water penetration event the applicant purchased the computers because it was required to do so due to damage caused by the water penetration. I am satisfied that such loss was a foreseeable loss I am satisfied that the applicant has established loss of $10,490.00 in respect of this item.

64. Item 4 – The next item claimed by way of loss is for data recovery services in the amount of $3,531.26 (Ex 1, p. 5). The claimed loss relates to the February 2023 water penetration event. The applicant tendered an invoice and evidence of funds transfer (Ex 1, pp. 12-14). I am satisfied that such loss was a foreseeable loss in that it was the type of damage that might occur from water penetration affecting the computers and servers in the office and that data recovery was required. In fact, there was no other reason postulated by the OC for the need for those services. I am satisfied that applicant required data recovery services due to the water penetration and that it has established its loss in respect of this item.

65. Item 5 – The next item claimed by way of loss is for the installation of new flooring in the office area in the amount of $15,750.00 (Ex 1, p. 5). The flooring is described as a floating floor, which is a type of non-timber floorboard system. This claim relates to the February 2023 water penetration event. The quote for the new flooring was adduced (Ex 1, p. 16). Mr Koumoulas said that quote had been accepted and the floating floor was installed. The applicant also adduced evidence of a quote for a floating floor from the same supplier from 2021 for a floating floor (Ex 8, p. 3) and emails dated September 2021 confirming payment to the supplier (Ex 8, p. 4). Consequently, I am satisfied that prior to February 2023 there was a floating floor and that after the February 2023 water penetration event the floating floor was replaced. Having regard to how recently the floor had been installed prior to February 2023, I am also satisfied that it was replaced because of the water damage. I am satisfied that such loss was a foreseeable loss in that it was the type of damage that might occur to a floating floor from water penetration. I am satisfied that the applicant has established this loss.

66. Item 6 – The next item claimed by way of loss is for staff costs for the clean up after the February 2023 water penetration. The amount claimed represents the amounts paid in excess of the usual staff costs due to the clean up (see ex 1, p. 17). Having regard to the extent of damage visible in photographs and the USB video, it is clear that the clean up required days of work if undertaken by 3-4 people. The claim is for $3,271.76 spread across 3 staff members and Mr Koumoulas. This is a reasonable amount having regard to the clean up effort that would have been required. I am satisfied that such loss was a foreseeable loss in that it was the type of damage that might occur from water penetration. I am satisfied that the applicant has established its loss in respect of this item.

67. Item 7 – The next item claimed by way of loss is the replacement of a CCTV system which was damaged due to water. This relates to the February 2023 water penetration. Exhibit 8 contains a quote from Pulse Alarms from 2013 in the amount of $4,125.00 to evidence the system in place prior to February 2023. The applicant has adduced an invoice dated November 2023 in the amount of $3,570.00 (Ex 1, pp. 18-21). Although the Tribunal was not taken to evidence of payment, that does not mean the loss was not incurred by the damage to the then existing system. I am satisfied that such loss was a foreseeable loss in that it was the type of damage that might occur from water penetration. I am satisfied that the applicant has established its loss in respect of this item.

68. Item 8 – The next item claimed by way of loss is the cost of electrical services to make safe after the February 2023 water penetration event. The amount claimed is $1,540.00 referrable to an invoice from Optimax Building Solutions Pty Ltd dated 9 February 2023. Having regard to the proximity of the invoice to the date of the water penetration and the contents of the invoice which describe an emergency call out, I am satisfied that this loss has been established.

69. Item 9 – The next item is a storage custom made cupboard which is described in the supplier’s invoice as a replacement item, connoting that it is modelled on an existing item that was intended to replace. The supplier’s invoice, Competitive Joinery Pty Ltd, is for $8,190.00 (Ex 1, p. 26). A similarly described item appears on the Office Furniture Solutions invoice dated 29 November 2019. The value ascribed to the item on the Office Furniture Solutions invoice was $8,499.00, plus GST. Where two items appear of equal functionality and quality it is appropriate that a respondent only be held responsible for the lower cost. I consider that the loss was foreseeable and that applicant has established a loss of $8,190.00 in respect of this item.

70. One aspect of the Competitive Joinery invoice for this item is for removal and disposal costs of $1,320.00 plus GST (Ex 1, p. 26). I accept that this is appropriate. The total with GST is $1,452.00.

71. Item 10 - The next item also relates to replacement of furniture alleged to be a consequence of the February 2023 water penetration. This item is for the replacement of a desk and return. The applicant claims $4,372.00 and exhibits a tax invoice from Competitive Joinery Pty Ltd (Ex 1, p. 25). The Office Furniture Solutions invoice dated 29 November 2019 (Ex 8, p. 7) has a similar item, namely, a desk with draws and a return. That item cost the applicant $2,199.00. I consider that the more reliable measure of loss to the applicant is the amount spent on the replaced item, namely, $2,199.00.

72. Item 11 - The next item claimed by way of loss is for the installation of new flooring in the office area in the amount of $15,750.00 (Ex 1, p. 5). The flooring is described as a floating floor. This relates to the February 2024 water penetration. The invoice for the floor replacement after the February 2024 damage was distinct from the invoice for floor replacement after the February 2023 damage (Ex 1, pp. 16 and 23). It is clear from item 5 above that after the February 2023 water damage a floating floor was installed. This floating floor was then damaged due to the February 2024 water penetration and was replace. Again, as with item 5, I am satisfied that such loss was a foreseeable loss in that it was the type of damage that might occur from water penetration. I am satisfied that this damage has been established.

73. Item 12 – The next item claimed by way of loss is legal costs. This is not properly claimable as a head of loss and will dealt with, if appropriate, by way of a costs order.

74. Item 13 – The final item claimed by way of loss is $7,370.00 for painting the lot and restoration work after the February 2024 water penetration event (see Ex 1, pp. 5 and 27). The tax invoice from Deco group painters which evidences that work is at exhibit 1, p. 27. The Tribunal was not taken to documents evidencing payment but the supplier has issued a tax invoice, so I infer the work was done and the liability has been incurred. I find that the need to repaint the lot due to water damage was a foreseeable loss and I accept that the applicant did suffer this loss.

Summary of applicant’s losses

75. A summary of the foreseeable losses which I have found to have been caused by the OC’s breach of its duty under s 106(1) are as follows:

1. $4,247.50 – painting after February 2023 event (item 1);

1. $3,999.00 – sofa (item 2)

2. $10,490.00 – computer replacement (item 3);

3. $3,531.26 – data recovery services (item 4);

4. $15,750.00 – floating floor, replacement due to February 2023 (item 5)

5. $3,271.76 – staff clean up costs (item 6);

6. $3,570.00 – CCTV system (item 7);

7. $1,540.00 – Optimax Building Solutions make safe (item 8);

8. $9,951.00 – custom made cupboard and removal/disposal costs (item 9);

9. $2,199.00 – replacement desk (item 10);

10. $15,750.00 – floating floor, replacement due to February 2024 (item 11);

11. $7,370.00 - painting after February 2023 event (item 13).

76. The total amount of foreseeable loss which I have found occurred as a result of the OC’s breach of its duty under s 106(1) is $81,669.52.

Relevance of lot owner insurance

77. The OC also contends that the applicant’s insurance policy should cover the applicant’s loss. This argument does not absolve the OC of liability if the loss is otherwise within the scope of s 106(5). If all the elements of s 106(5) are satisfied, then the OC’s liability for the loss and damage is not avoided because a lot owner has in place an insurance policy.

78. Further, it would ordinarily be the case that an insurer would have rights of subrogation vis-à-vis the insured to the extent the insurer paid under a policy. The right of subrogation ordinarily means that the insurer takes the place of the insured in terms of rights against third parties. This observation is not strictly relevant to this decision but is made so as to explain why that issue is not necessarily of any assistance to the OC.

Costs

79. I will give the parties an opportunity to make submissions as to costs. Those submissions should also address whether the question of costs can be determined on the papers without a further hearing.

80. In relation to costs the parties are directed to section 60 of the Civil and Administrative Tribunal Act 2013 (NSW), rule 38 of the Civil and Administrative Tribunal Rules 2014 (NSW) and s 90 of the SSMA.

Orders

81. The Tribunal makes the following orders:

1. The respondent is to pay the applicant $81,669.52 within 14 days.

2. Reserve the question of costs.

3. The applicant is to file any submissions on the question of costs and on whether the question of costs can be determined on the papers without a further hearing within 14 days, such submissions not to exceed 4 pages.

4. The respondent is to file any submissions on the question of costs and on whether the question of costs can be determined on the papers without a further hearing within 28 days, such submissions not to exceed 4 pages.

5. The applicant is to file any submissions strictly in reply within 35 days, such submissions not to exceed 2 pages.

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 24 September 2025