NSW Strata Water Ingress Claims: Why Winning on Liability May Not Be Enough

A recent NSW Court of Appeal case shows why strata water ingress claims can fail on causation, repair invoices and procedure, even after liability is established.

A lot owner proved that an owners corporation negligently delayed common property repairs and recovered $61,880 in lost rent. The owner then established that the trial judge had mistakenly failed to decide two additional claims.

Despite those findings, the NSW Court of Appeal refused leave to appeal and ordered the owner to pay costs. That is the important lesson from John Goubran & Associates Pty Ltd v The Owners – Strata Plan 57150 [2026] NSWCA 188.

For lot owners and owners corporations involved in strata water-ingress disputes, the decision demonstrates that proving defective common property is only part of the case. The timing of the breach, evidence of causation, the scope of repair invoices and procedural decisions can be equally important.

What caused the water ingress?

The applicant owned an apartment in a strata scheme. Water entered the apartment because of:

• a failed waterproofing membrane on the balcony directly above; and
• defective flashing above an external window.

 Both were common property for which the owners corporation was responsible.

An expert report identified failed balcony waterproofing and associated water damage. The District Court later found that a reasonable owners corporation would have engaged a qualified contractor within approximately two weeks and completed the relevant work by 14 May 2022.

Remediation did however take a long time to accomplish, with the process only nearing its completion in December 2024.   

What did the lot owner recover?

At first instance, the lot owner relied upon both section 106(5) of the Strata Schemes Management Act 2015 (NSW) and negligence.

The District Court found the section 106 damages claim was out of time but upheld the negligence claim based upon the owners corporation’s failure to rectify the causes of the water ingress with sufficient urgency after receiving notice.

The owner recovered $61,880 for lost rent, calculated from 14 May 2022 until the apartment was successfully leased on 23 January 2024.

The Court of Appeal was not asked to reconsider those liability findings. The decision therefore should not be described as appellate endorsement of the negligence finding or as a new interpretation of section 106.

Our earlier article, Strata Water Ingress NSW: What Lot Owners Need to Know, examines the underlying District Court decision in greater detail.

Why were the additional repair costs not recovered?

The owner also claimed $17,061 for internal works, including carpet removal, repainting and the installation of laminate flooring. The trial judge mistakenly stated that the repair claim had not been pursued. The owners corporation conceded in the Court of Appeal that this was an error.

However, the repair claim faced a more fundamental causation problem.

The negligence found by the District Court did not begin until at least 18 April 2022. The evidence showed that the carpet and kitchen had already been removed because of water damage by 1 March 2022.

The later negligent delay could not legally have caused damage that had already occurred.

The owner also failed to identify what additional internal damage occurred after the relevant breach date.

Why were the invoices insufficient?

The Court identified significant problems with using the two invoices to quantify the claimed loss.

One invoice combined cornice replacement, carpet disposal and repainting of the entire apartment without separately pricing each item. The evidence did not establish that the water ingress made repainting the whole apartment necessary.

The second invoice concerned laminate flooring, acoustic underlay and floor levelling. That work was not a like-for-like replacement of the original carpet. There was no separate evidence of the reasonable cost of replacing the carpet or that the upgraded flooring was reasonably required to mitigate the loss.

The decision does not establish that an owner can never recover the cost of improved materials. It does show that a court must be given a proper evidentiary basis for separating recoverable rectification costs from renovation or betterment.

The overlooked 14-day procedure

The Court of Appeal also found that the trial judge had overlooked the owner’s claim for pre-judgment interest. Nevertheless, leave to appeal was refused.

A significant reason was the owner’s unexplained failure to apply to the District Court under UCPR rule 36.16. That rule can permit a judgment to be varied where an application is filed within 14 days after entry. The Court explained that a judge misunderstanding that a claim was abandoned, or overlooking a claim that remained pressed, is a clear example of when that procedure may be appropriate.

The owner knew about the apparent error within the 14-day period but did not use the available procedure. Commencing in the Court of Appeal was substantially more expensive and required three appellate judges to consider an issue that potentially could have been addressed promptly by the trial judge.

The amount still in dispute, approximately $30,000, was also well below the $100,000 threshold for an appeal as of right from the District Court.

What does the decision mean for lot owners?

A successful water-ingress claim requires more than proof that common property was defective and that money was spent inside the lot.

The evidence must connect each claimed loss to the particular breach relied upon. The timing and progression of the damage may determine whether the loss was caused by the owners corporation’s actionable delay or had already occurred beforehand.

Repair evidence must also distinguish necessary rectification from renovation, upgrades and unrelated work.

You might also like: Can You Sue a Strata Committee Member?

What does it mean for owners corporations?

The underlying judgment remains a warning that an owners corporation’s failure to act within a reasonable period after receiving expert evidence may expose it to a substantial lost rent claim.

However, an owners corporation may still contest whether particular internal damage was caused by the actionable delay and whether the amounts claimed represent reasonable rectification costs.

The Court of Appeal expressly declined to determine a further argument that the owner’s expenditure was unrecoverable because the work had not been authorised by the owners corporation. That issue remains unresolved and should not be treated as having been decided by this case.

The bottom line

The decision illustrates a recurring feature of strata litigation: establishing liability does not automatically establish every category of damages.

The legal character of the breach, when it commenced, what damage it caused and how each loss is quantified can materially affect the result. Procedural decisions made immediately after judgment can also determine whether an apparent error can be corrected proportionately.

Pobi Lawyers advises NSW lot owners and owners corporations on complex water ingress disputes, section 106 claims, lost rent, repair costs and strata litigation. Early specialist advice can help identify the correct claim, evidence and forum before avoidable costs are incurred.
This article provides general information only and is not legal advice.

Disclaimer 

This is a purely informational article and is in no way intended to be taken as legal advice. You should never rely upon it as such, as Pobi Lawyers shall not be held responsible for any losses incurred from its use.