When is an Owners Corporation Liable for Water Damage Caused by Common Property?

Deb Andronaco

Special CounselAitken PartnersView Profile

Joel Parsons

LawyerAitken PartnersView Profile

When water damage affects a lot, determining whether an owners corporation (OC) is responsible is not always straightforward. A recent VCAT decision highlights the different legal avenues available to lot owners and provides important guidance on an owners corporation’s repair and maintenance obligations in relation to common property.

The decision in Morgan v Owners Corporation 428646N (Owners Corporations) [2025] VCAT 104 is a useful reminder of the different pathways available to lot owners seeking orders for water-related issues affecting their lot. Member Rowland’s reasons draw an important distinction between proving liability for an unreasonable flow of water under the Water Act 1989 (Vic) (Water Act) and establishing that an OC must repair and maintain common property under the Owners Corporation Act 2006 (OC Act).

Background

The Applicant owned a ground-floor lot and brought claims against the OC after identifying moisture issues in the concrete slab. The building was constructed in solid brick on a concrete slab and had concrete paving around its perimeter. The relevant slab and perimeter wall formed part of the common property.

During renovation works, the Applicant became concerned about cracking in the external brick wall, as well as persistent dampness and mould in a bedroom. These issues were reported to the OC, which engaged an engineer to investigate same. The engineer identified cracking originating from the drainage network, with evidence of long‑term moisture ingress and foundational movement.

The Applicant then obtained his own engineering report, which largely aligned with the OC’s findings.

The proceeding was commenced, and further expert reports were produced. These revealed significant omissions in earlier assessments and identified extremely high moisture levels in the slab, with one inspection recording a 100% moisture content in the slab, far exceeding the generally accepted maximum of 30%.

Claim under the Water Act

The Applicant relied on the Water Act to seek both remedial orders preventing further water movement and compensation for alleged loss.

For a claim under section 16 of the Water Act to succeed, the Applicant needed to establish each of the following matters:

1. A flow of water occurred from the land of a person onto any other land;
2. The flow is not reasonable;
3. The respondent caused the flow; and
4. The flow caused loss and damage.

The Tribunal was not satisfied that the Applicant had proven the necessary causal elements. In particular, the evidence did not establish a specific flow of water into the lot attributable to the OC. The evidence instead identified several potential moisture sources beneath the slab, including causes not arising from any failure by the OC to maintain common property. The failed or missing waterproof membrane beneath the slab was treated as the principal cause of the dampness, and that issue was not caused by the OC.

As a result, the Applicant’s Water Act claim was dismissed.

Claim under the OC Act

The Applicant also pursued relief under the OC Act, seeking orders requiring the OC to address the relevant common property issues. That claim turned on a different question. Under section 165 of the OC Act, the Applicant needed to show that the OC had not complied with its duty under section 46 to repair and maintain common property. Unlike the Water Act claim, success did not depend on proving an unreasonable flow of water into the lot.

On the expert evidence, Member Rowland accepted that works were required to the common property and that those works fell within the OC’s repair and maintenance obligations.

Final Orders

It was ordered that by specific dates, the Respondent must, among other things:

• repair and replace all common property windows and exterior doors; and
• undertake works to correct the issues in the Applicant’s lot.

The Applicant’s additional claims for loss of rent and other loss and damage were dismissed. The Tribunal’s reasons included that:

• Applicant purchasing his lot with pre-existing minor moisture damage, which had not changed and was taken into account at purchase;
• Applicant not sustaining any property damage since he acquired the lot;
• carpet not being water damaged since the Applicant purchased the lot; and
• lot not being in a rentable condition due to the Applicant’s renovations.

The outcome shows the importance of pleading alternative bases for relief. Although the Water Act claim failed, the OC Act claim still enabled the Applicant to obtain practical repair orders.

Key Takeaways

• A Water Act claim will fail without clear evidence identifying the source of water and the OC’s role in causing it;
• An OC’s duty to repair and maintain common property under the OC Act is separate from liability for an unreasonable flow of water.
• Expert evidence is central to proving what repairs are required and whether claimed loss was caused by the OC’s breach.
• Repair orders may be made even where damages are refused, particularly where loss is pre-existing or not properly proven.

At Aitken Partners, our OC team is equipped with the skills and experience necessary to assist OCs, OC managers, and lot owners to understand their rights and obligations under relevant OC law. If you have any questions regarding the OC space, please contact us at (03) 8600 6000.