Background

This proceeding concerned two lots in an apartment complex. One was owned by the Applicant (Mrs James) and the other by the Respondent (Mrs Christou). They were adjoining neighbours in a five storey block of units in Fitzroy Street, St Kilda.

Relevantly, each unit had a balcony overlooking Fitzroy Street. For title purposes, they were two separate balconies, but physically they were constructed as one continuous balcony which was divided at the title boundary by a steel framed screen which had a gap beneath of approximately 100 millimetres. The divided balcony was constructed with only one drainage outlet, which was located on the Respondent’s balcony.

A dispute arose when, in or around February 2016, the Respondent had tiles installed on her balcony which raised the finished floor level of the balcony, making it higher than the Applicant’s.

On 10 March 2018, the Applicant commenced the proceeding pursuant to 16(2) of the Water Act 1989 (Vic) (Water Act) alleging that the Respondent was causing an unreasonable flow of water from her balcony onto the Applicant’s balcony (Application).

The Owners’ Corporation appeared on the original application as an Interested Party. Subsequently, on 13 March 2019, the Owners’ Corporation brought separate proceedings (OC590/2019) against the Respondent (Related Proceeding) seeking similar relief to the Applicant. The proceedings were commenced out of time but, on 18 April 2019, the Tribunal directed that both proceedings be heard together.

The Related Proceeding

The Owners’ Corporation’s claim alleged that:

(a) the outer edge of the balconies constituted an open drain;

(b) the drain outlet and the open drain were common property;

(c) by tiling her balcony, the Respondent had:

(i) interfered with the intended function and operation of the drain;

(ii) breached Rules 2.1(b) and (c), 5.1 and 30 of the Body Corporate Rules, and Model Rules 1.1,

3.1(1) and 3.3; and

(iii) interfered with a reasonable flow of water in contravention of s16(2) of the Water Act.

The Related Proceeding was heard together with the Application.

Section 16 of the Water Act

The Applicant brought their Application principally under section 16(2) of the Water Act, which provides that if a person interferes with the reasonable flow of water onto any land or by negligent conduct interferes with a flow of water onto any land which is not reasonable, they are liable to pay damages to that other person in respect of any injury, damage or loss suffered as a result.

Both parties submitted extensive expert evidence, particularly with respect to alternatives for providing drainage. On this point, the Tribunal found that, while there were alternatives for providing drainage involving physical alterations to the building, in circumstances where neither the Applicant nor the Owners Corporation were willing to cooperate in implementing such alternatives, the Tribunal could not direct the Owners Corporation or the Applicant to do so.

The Tribunal then turned to consider whether the flow of water was reasonable, and had regard to whether or not there was an easement for the passage of water from the balcony of Unit 23 to the drain in Unit 24. Given no such easement was shown on the Plan of Subdivision, one would need to be implied. The Tribunal considered section 98 of the Transfer of Land Act 1958 (Vic) and noted that the issue for the purpose of the Application was whether an easement for drainage was necessary for the reasonable enjoyment of the Applicant’s Unit.

The Tribunal found that the easement was necessary because the only way water could drain from the Applicant’s balcony was along the upstand to the drain on the Respondent’s balcony. That is, without draining to an adjoining unit, the water level would rise on the Applicant’s balcony until it reached the level of the upstand, flooding the balcony and the Applicant’s Unit.

Thus it was held that the flow of water from the Applicant’s balcony to the Respondent’s balcony was lawful given the implied easement, and that the alterations undertaken by the Respondent interfered with the reasonable flow of that water for the purposes of s16(2) of the Water Act.

In the result, the Tribunal found that the Applicant was entitled to have her balcony drained according to the design of the building. The Tribunal ordered certain rectification work be carried out to the Respondent’s tiling so as to restore the flow of water to the drain. However, the Tribunal was not satisfied that the Applicant had suffered any damage to her unit as a result of the interference with the flow of water.

Model Rule Breaches

In respect of the power of the Owners’ Corporation to bring legal proceedings, the Tribunal noted that this was conferred and qualified by section 18 of the Owners Corporations Act 2006. In circumstances where the Owners’ Corporation brought its proceeding without having obtained a Special Resolution, the Tribunal noted that its claim was confined to one seeking an enforcement of the rules.

Relevantly, the Tribunal referred to Model Rule 3.3(1) which provided that an owner or occupier of a lot must not damage or alter the common property without the written approval of the Owners Corporation. The Tribunal concluded that none of the modifications to the balcony had altered or damaged common property. As a result, the claim brought by the Owners Corporation was dismissed by the Tribunal.

Takeaways

This case provides further insight into what constitutes lot property as opposed to common property, and is a reminder to owners corporations to obtain a special resolution before commencing proceedings if some of the orders sought require one. In this case, the Owners Corporation was prevented from running what may have been its strongest argument because it had failed to obtain the necessary resolution.

Further information / assistance regarding the issues raised in this article is available from Fabienne Loncar, Partner, Christopher Philactides, Senior Associate, or your usual contact at Moray & Agnew.