1. The Respondent will pay the Applicants the sum of $8,763.50; being foregone rent of $8,666.50 and a charge of $97.00 by Carnegie Appliance Services.
2. A further hearing with an estimated duration of half a day is set down at 10.00 a.m. on 28 April 2008 at 55 King Street Melbourne before Senior Member Young to hear any further submissions the parties may wish to make in the light of my determination, together with any further submissions the parties may wish to make.

1. This is an application by the owners of Unit 3, 4 Pilley Street, St Kilda East ("the Applicants") claiming the unreasonable flow of water onto their property under s16 of the Water Act 1999 ("the Act") from the apartment above them, being Unit 6, 4 Pilley Street St Kilda East, which is owned and occupied by the Respondent. The Applicants are seeking damages for loss of rent and for the costs of rectification of the damage caused by the alleged unreasonable flow of water.
2. The Respondent has denied liability on the basis that he was not in occupation at the time complained of the damage was caused; and, if he was, then he took all steps reasonably available to prevent the causing of the unreasonable flow; in accordance with sub-section 16(5) of the Act.

1. I take this general background from the chronology of the Respondent and the timeline prepared by the Managing Agent for the Applicants, Ms E. Salaj. There had been some flooding in relation to Unit 3 from Unit 6 in 2002; however, I was given little evidence in relation to this matter and it was not relevant to this proceeding. These units are part of a construction approximately 10 years old in the Ardoch Development in St Kilda East, which is an extensive development of low rise multistorey units. The Body Corporate for the development of which the subject units formed part had sent a notice to unit owners regarding water leaks from the hydronic heating systems to the relevant units. Hydronic heating is a system where hot water is pumped through copper pipes which are embedded in the floor slabs of the relevant apartments.
2. The leaking the subject of this proceeding appears to have been first noticed by a routine inspection by Ms Salaj of Unit 3 on 28 April 2006. She, as an employee of the managing agent for Unit 3, faxed the Body Corporate informing it of this water penetration and the Body Corporate requested "Tymaline", property maintenance specialists, to investigate this leak. With the acceptance of the Applicants, Tymaline cut inspection holes into the ceiling of the lounge in Unit 3 exposing the underside of the concrete floor slab to Unit 6 so as to investigate the leaking from copper heating pipes in the floor slab and flowing into the ceiling of Unit 3. Tymaline presented a report of 19 May 2006 to the Body Corporate stating that there was no plumbing anywhere near the area of water penetration had occurred other than the hydronic heating pipes. The recommended rectification was to cut holes in the ceiling of Unit 3 to access the concrete floor slab to Unit 6, to dig into the concrete slab to expose and repair the leaking copper pipes. Tymaline estimated the cost of such rectification at $770.00 plus GST. The Body Corporate issued an approval for the works to proceed.
3. Tymaline forwarded another report of 30 May 2006 stating that they had cut the holes in the lounge room ceiling of Unit 3 and exposed the heating pipe work in the floor slab of Unit 6. They exposed a section of copper pipes covered in felt insulation which was damp to the touch. Tymaline could not see any express or obvious leak. They pressure tested the pipe but did not identify any leaks. They noticed a slow pressure drop in both pipes. To rectify the water flow situation in Unit 3, Tymaline recommended that it was necessary to re-run, that is remove and relay, all of the heating lines in the Unit 6 floor slab or that Unit 3 install a 4 metre long Colourbond drip tray in the ceiling of the lounge room. A drip tray would have to be maintained by the Applicants. Tymaline suspected that water was leaking through the rubber seals on the radiator isolation valves and was travelling between the heating pipes and the felt insulation surrounding it; or, alternatively, through the felt insulation to exit out of the insulation and into the concrete at locations near where leaking through the concrete was apparent.
4. Around mid May 2006, Ms Salaj wrote to the Body Corporate requesting the holes in the ceiling plaster in Unit 3 lounge room be repaired as the tenants of the unit complained it was interfering with their quiet enjoyment of the premises and that they would be seeking compensation. On 25 July 2006 Oddessian Service patched in the holes cut in the plaster by Tymaline and repainted the affected area of the ceiling at a cost of $154.00.
5. On 21 July 2006 the Respondent completed the purchase of Unit 6 and took possession. The Respondent carried out some renovations and then moved in September 2006.
6. On 25 July 2006 the tenants in Unit 3 gave the managing agent one month's notice of the termination of their month-by-month lease. The tenants vacated the premises on 27 August 2006. Upon Ms Salaj's inspection at the time the tenants vacated she noticed that there was a large amount of water dripping from the ceiling and that upon contacting the tenants she was told it commenced approximately two weeks prior. Ms Salaj placed buckets under the drips. She emptied the buckets approximately 3 times a week and the largest leak filled a bucket approximately every two days. This leaking was in the general area of the previous leaking, but it was substantially increased over the previous leaking. Ms Salaj continued to empty the buckets every couple of days until 3 October 2006 when she attended the premises to find out that the dripping from the ceiling had ceased.
7. On 20 July 2006 Ms Salaj received a quotation from Chatsworth Constructions Pty Ltd to fix the water damaged ceiling in Unit 3 for an estimated costing of $1,939.85 inclusive of GST.
8. On 7 September 2006 Ms Salaj put a letter to the owner of Unit 6 under the front door of the unit, the letter stated that:-

"Water is leaking through the lounge room ceiling from Unit 6 and Unit 3. This matter was reported to the Body Corporate on 3 May 2006 and then subsequently to the previous managing agent of Unit 6, FMR, and is still to be rectified.

I would be grateful if you could please contact this office regarding repairs to this leak as a matter of urgency as Unit 3 is currently unlettable in its current state until the repairs are done.

Ms Salaj said that she left this letter under the door of Unit 6 on the date on the letter.

1. Tymaline produced a further report dated 22 September 2006; however, it is merely the report of 30 May 2006 redated.
2. On 19 September Ms Salaj informed the Body Corporate that the Applicants would not consider installing the drip tray in the ceiling of Unit 3 and that they wanted the leaking into Unit 3 rectified.
3. On 26 September 2006 the Applicants' Solicitors, Jeffrey A. Fox and Associates, forwarded a letter to the owner of Unit 6, the third paragraph of which stated:-

"On the basis that the above information provided to us it would appear that as a source of this leak seems to be from a hydronic heating system which is located in the floor of Unit 6, 4 Pilley Street, the legal responsibility for repairing that floor and leak rests entirely and exclusively with your company as the registered owner.

Our clients now formally look forward to your company to compensate them for the damage that has occurred in their unit and for other resulting loss or damage that they have suffered. We are instructed that the damage is of a continuing nature".

1. On 11 October 2006 the Body Corporate served a Section 208 Notice under the Sub-division (Body Corporate) Regulations 2001 on the owner of Unit 6 requiring him to:-

"Repair the leaks occurring from the floor slab of your unit that are leaking into the unit below (Unit 3, 4 Pilley Street)".

1. On 25 October 2006 the Respondent's Solicitors, Kerr and Thomas, replied to the Body Corporate in relation to the S208: "Notice of Works Required" notice and said at paragraph 3 that:-

"There is no proof at all that any water damage is caused or coming from my client's unit, nor is there any indication as to the cause of any alleged damage for the cost of repairs.

If any action is taken pursuant to the notice against my client, you will find yourself in Court.

My client recognises that with a co-operative attitude and some intelligent investigation, a cause for any damage to Unit 3 can be ascertained and most probably a reasonable remedy undertaken.

But you may not be aware that my client took possession of this property in August of this year and was never told of any problem. To receive your notice therefore is very upsetting to my client, as well as totally unwarranted especially as it is now it turns out that Barclays Real Estate were aware of the problem since May this year.

As the alleged problem is not new to the body corporate, it is suggested you advise my client as to what attempts are made to remedy the problems and what the history of the whole of the Ardoch premises is in regard to such matters".

1. On 10 November 2006 Ms Salaj writes to the Body Corporate stating that no action has been taken under the s208: "Notice of Works Required". She reminds the Body Corporate that Unit 3 has been unlettable and stood vacant since 30 August 2006 due to inaction on this issue.
2. On 16 November 2006, Carnegie Gas Appliance Services, engaged by Ms Salaj to investigate the leak, reported that it had inspected the ceiling in Unit 3 and that there was a possible water leak from the heating unit to Unit 6. However, the inspecting employee of the Company was unable to be certain as there had been no sign of water in the three visits he had made.
3. Kerr & Thomas, Solicitors to the Respondent, wrote to the Body Corporate stating that to their client's knowledge the Body Corporate has taken no further action in relation to the water leaks. The letter goes on -

"I ask that you please make enquiries as to how similar problems have been resolved in the past and engage a plumber to at least do pressure testing to ascertain where the leak is coming from, rather than threaten my client with illegal action".

1. On 26 November 2006 Kerr & Thomas, Solicitors to the Respondent, wrote a further letter to the Body Corporate stating that:-

"In a discussion with the owner of Unit 6, it was mentioned that you made an apology for the notice having been sent, that was greatly appreciated.

Mr Peter De Angelis of Bodean International indicated he will be in touch with you at a very early stage, and has both your phone number and email address. Some investigation by him I am sure will be of interest to the owner of Unit 3.

At this stage we do not have any instructions to proceed further with this matter".

1. On 4 December 2006 Ms Salaj emails Mr Eastwood of the Body Corporate requesting advice on progress and Mr Eastwood emails Mr De Angelis of the Respondent stating that "we need to work out what is the best action".
2. About 14 December 2006, Mr Eastwood of the Body Corporate emails Bolt Plumbing Pty Ltd, with a copy to the Respondent, and Ms Salaj, stating:-

"As per our discussions Robert - we have a dispute over the cause of a water leak from Unit 6, 4 Pilley Street.

We request that you arrange access to both affected units at a mutually convenient time in conjunction with a leak detection company to identify the cause of the leak and recommend works to resolve the issue.

1. Do not attend unless both parties are represented.
2. We must have closure on this issue".
3. On 20 December 2006 Mr Michael Grey of Bolt Plumbing attended both Unit 3 and Unit 6 to inspect those units. The company produced a report on 9 January 2007. Mr Grey said in evidence that the report had been prepared by him but signed by Mr Robert Bolt. The report said that they had arranged a leak detection company to attend at the same time. They examined the copper piping system embedded in the concrete slab between Unit 6 and Unit 3 and which is part of the hydronic heating unit for Unit 6. Mr Grey gave evidence that the report noted that as the pipes had been lagged, i.e. covered in felt insulation, it was very difficult to pinpoint the exact location of a leak as the water would run along the lagging to a point where it was broken and then move into the concrete. They ran the heating system for some hours but did not observe any water leaks. They pressure tested the piping and noted a very small pressure drop equivalent to a dripping tap, however, this could also be attributed to some expansion of the piping during this test. It was his opinion that it is more than likely that there is a fault in the system of the hydronic heating piping but he could only be 90% sure at this stage. He said that to stage a proper test Unit 6 would need to be vacant for at least 4 or 5 days and have the heating system operating at a high temperature. The report said that Bolt Plumbing would wait to see if they received instructions that further tests should be carried out. He recommended that if rectification work was to be undertaken at this time that it would be necessary to re-run all the flow and return piping in the heating system.
4. On 15 January 2007 the Body Corporate wrote to the Respondent attaching a copy of the Bolt Plumbing report. At the second paragraph of that letter it states:-

"The Body Corporate has undertaken investigation in order to determine if there was a cause arising from common property for which it is responsible. It has become apparent that there is no common property defect and the cause of water damage to Unit 3 is water escaping from your Unit".

"Please attend to this matter urgently and advise this office in writing when works have been completed so that the owners of effected units may have the resultant damage repaired".

1. On 19 February 2007 Mr De Angelis of the Respondent emails Mr Eastwood of the Body Corporate asking Mr Eastwood to contact Mr De Angelis so that:

"Could you please contact me so as a resolution may be achieved".

Mr Eastwood replies in an email a few minutes later stating that:-

"The Body Corporate has undertaken investigations and determined to the best of its ability the cause of the leak. Evidence concludes the leak is nothing to do with the Body Corporate and rests with you as the owner".

1. In about February 2007 the Respondent disconnected the hydronic heating system in Unit 6 and installed a reverse cycle wall split system for which there was a tax invoice of 24 February 2007 from Mercury Heating and Cooling.
2. On 2 April 2007 Ms Salaj sought a further quote from Chatsworth Constructions for the rectification of the lounge room ceiling and Chatsworth provided an updated quotation on 5 April 2007 for $1,815.00 and the quotation stated the same scope of works except for the moving of furniture. Ms Salaj also sought a quote from VMF Electrics to carry out any electrical work that arose as a result of leaking in the ceiling area and received a quote of 16 April 2007 in the sum of $275.00.
3. On 1 May 2007 Ms Salaj engaged Mr Alan Worthing to advise and to provide an estimate of the cost of disconnecting the hydronic heating system in Unit 6.
4. On 9 May 2007 the Solicitors for the Applicants wrote to the Solicitors for the Respondent noting that the Respondent's Points of Defence at paragraph 4 stated that the hydronic heating system was disconnected and removed on 26 February 2007 and requesting confirmation of the disconnection as the Applicants wished to mitigate their loss. The Applicants having engaged a hydronic heating company to ascertain how to isolate and disconnect such the hydronic system in Unit 6. The reply of the Solicitors for the Respondent of 15 May 2007 informed the Solicitors for the Applicants that the hydronic heating system in Unit 6 was completely and absolutely disconnected.
5. On 30 May 2007 Chatsworth forwards its invoice to the managing agent for carrying out the repairs as per its quotation of 5 April 2007.
6. On 8 June 2007, the Applicants enter into a lease for the residential rental of Unit 3 at a rental of $2,384.00 per calendar month or $550.00 per week.

1. The Applicants claim that the water dripping through their ceiling into the lounge room from a malfunction with the hydronic heating pipes of Unit 6 above was an unreasonable flow of water from one land to another; causing damage; and; thereby, under s16 of the Water Act 1989 the Respondent is required to compensate the Applicants as follows:-
   • (a) loss of rent at $400.00 per week ($1,734.00 per month) from 1 September 2006 until 20 June 2007, a sum of $17,340.00;
   • (b) the cost of patching the inspection holes in the ceiling by Ossettian Service of $154.00;
   • (c) an inspection by Carnegie Gas Appliance Services of $97.00;
   • (d) the cost of rectifying the ceiling after the flow caused by Chatsworth Constructions of $1,815.00 in a quote of 5 April 2007;
   • (e) rectification of electrical work in the ceiling of Unit 3 by VME Electrics in a quote of 16 April 2007 for $275.00; and,
   • (f) cleaning of the flat after the tenants left by Metro Property Services in September 2006 for $285.00.

1. The Respondent took possession of Unit 6 on 21 July 2006. It carried out renovations and the directors of the Respondent did not take occupation until September 2006.
2. The Respondent denies the hydronic heating is in its property pointing out that the hydronic heating pipes are set into the concrete slab between Unit 4 and Unit 6. Further, the hydronic heating system had been disconnected and removed in February 2007. The Respondent said that the hydronic heating system had not been used since around October 2006.
3. The Respondent further denied liability for the floor on the basis that:-

(a) it was not made aware of the flow until the receipt of a letter from its agent, Barleys, on 7 September 2006;

(b) there had been flows in May 2006 and 2007 which were prior to the Respondent taking possession.

1. The necessary elements to ground a claim for statutory nuisance set out under sub-section 16 (1) of the Act are:-
   • (a) there is a flow of water from the land of a person onto any other land; and
   • (b) that flow is not reasonable; and
   • (c) the water causes -
     • (i) injury to any other person; or
     • (ii) damage to the property (whether real of personal) of any other person; or
     • (iii) any other person to suffer economic loss -

the person who caused the flow is liable to pay damages to that other person in respect of that injury, damage or loss.

1. The Respondent did not seriously dispute that the water running from the Unit 3 lounge room ceiling came from its hydronic heating pipes embedded in the floor slab between Units 3 and 6. I accept the opinion of Mr Grey of Bolt Plumbing that he was 90% sure the source of water was the hydronic heating pipes of Unit 6. Likewise, the Respondent did not dispute that such a flow from the ceiling of Unit 3 was unreasonable and with this I concur.
2. In relation to the Respondent's claim that the source of the unreasonable flow was not from its land, I disagree. The Respondent does not disagree that it owns and is responsible for the hydronic heating system, which I accept as the source of the water running out of the Unit 3 ceiling. The hydronic heating pipes are land within the meaning of the Act. The leaking water may then travel for some distance, albeit small, which is Body Corporate property; however this does not detract from the fact that the unreasonable flow emanates from the faulty hydronic heating pipes the property of the Respondent. Consequently, I consider there is an unreasonable flow from the land of the Respondent to the land of the Applicants notwithstanding that the unreasonable flow travelled across the land of a third party being the Body Corporate. I accept that the unreasonable flow caused some damage, this aspect of the proceeding is discussed in detail below.
3. Therefore, the Applicants have made out a claim for statutory nuisance under the Act.
4. Both parties acknowledge that sub-section 16(1) imposes strict liability upon the person who causes the flow: Tryclaca Importers & Wholesalers Pty Ltd v Growmac Importers Pty Ltd [2001] VCAT 1455 (21 June 2001).
5. However, this is not the situation in this proceeding, the current owner, the Respondent, took possession of Unit 6 after the flow of water between the units had commenced, and which had not been rectified at the time the Respondent took possession of Unit 6. Liability for damages from the unreasonable flow of water is different where the current owner was not in possession at the time the flow commenced. The extent of such liability and its elements are set out at subsection 16(5) of the Act in the following terms:
   • (5) If the causing of, or the interference with, the flow (as the case requires) was given rise to by works constructed or any other act done or omitted to be done on any land at a time before the current occupier became the occupier of the land, the current occupier is liable to pay damages in respect of the injury, damage or loss if the current occupier has failed to take any steps reasonably available to prevent the causing of, or the interference with, the flow (as the case requires) being so given rise to.
6. The current episode of leaking commenced in about April 2006, this was before the Respondent took possession of Unit 6 in July 2006. It is agreed between the parties that the Respondent was not given notice of the water flow until Ms Salaj delivered the letter of the Applicants' agent of 7 September 2006 to Unit 6 and left it under the door; which letter informed the Respondent that due to the water flow Unit 3 was unlettable. From that time, I consider the Respondent had notice of the nuisance and was under subsection 16(5) required to "take steps reasonably available to prevent the causing of, ...., the flow".
7. One of the issues; therefore, for determination is the meaning of "steps reasonably available"? The Respondent gave evidence which I accept that it used the heating system only rarely from October 2006 onwards and that at the end of February 2007 it disconnected the hydronic heating system and installed a substitute heating system by installing a reverse cycle heating/cooling system to service Unit 6.
8. However, it was not until the Applicants' Solicitor wrote to the Respondent's Solicitor in a letter dated 9 May 2007 seeking confirmation of paragraph 4 of the Respondent's Points of Defence stating that the hydronic heating had been disconnected, that the Applicants had notice the Respondent had removed the cause of the nuisance. The date of the Respondent's Points of Defence is 26 April 2007; which should have been received at the Applicants' Solicitor around 30 April 2007. Therefore, I consider that the earliest time that the Applicants had notice that the circumstances which could give rise to an unreasonable flow into their premises had been removed was at the start of May 2007.
9. The words used in subsection 16(5) relating to the reasonableness of the occupier's actions deal only with "steps", which suggests positive physical actions; does the word "steps" have a requirement of timeliness. If this was not so a subsequent occupier, upon being given notice of an unreasonable flow caused or arising from his property prior to his occupation, would not need to take any reasonable steps to prevent the cause of the nuisance until the aggrieved party took action in the Tribunal; thereafter, if the occupier took reasonable steps to prevent the causing of the flow he would have a good defence. This flies in the face of the legal principle that unnecessary litigation should be avoided; further, it allows the continuation of a nuisance, when it should be stopped. Alternatively, the subsection can be read to mean that the Respondent is required to take immediate steps to prevent the nuisance and was; therefore, liable from the time notice was received. In relation to the need or otherwise of timelines; I consider subsection 16(5) to be ambiguous.
10. The common law principles in relation to private nuisance held that the liability of a purchaser or occupier taking possession after the nuisance was created is broadly similar to the statutory position set out in subsection 16(5) of the Act; but, it required, further, that such steps as were necessary to prevent the nuisance had to be timely; otherwise, the subsequent occupier was liable for the damage caused subsequent to the notice: Sedleigh-Denfield v O'Callaghan [1940] UKHL 2; [1940] AC 880, Leakey v National Trust for Places of Historical Interest [1979] EWCA Civ 5; [1980] QB 485. In Leakey (supra), Megaw L.J. observed at p524:-

"Was there sufficient time for preventative action to have been taken, by persons acting reasonably in relation to the known risk, between the time when it became known to, or should have been realised by, the defendant, and the time when the damage occurred? Factors such as these, so far as they apply in a particular case, fall to be weighed in deciding whether the defendant's duty of care requires, or required him, to do anything, and if so what."

1. A further difference between the common law and the statutory positions delineated by subsection 16(5) is in relation to the extent of damages for which a subsequent occupier is liable. The common law principles hold that a subsequent occupant is liable for the damage caused as a result of their failure to act upon the notice or constructive notice of the nuisance and to remove it or abate its effect in an effective and timely manner. That is to say that at common law a subsequent purchaser is only liable for the damage that is caused after they have had notice or notice can reasonably be presumed and a reasonable time in which to abate or cease the nuisance has passed Sedleigh-Denfield (supra). In Proprietors of Strata Plan 14198 v Cowell (1989) 24 NSW LR 478 at 484 Hodgson J. expressed in the following terms the time from which a subsequent occupier is liable:-

"a person who acquires land after trees have been planted on that land is not liable in respect of a nuisance caused by the roots of those trees unless he continues or adopts the nuisance, as those expressions are discussed in Sedleigh-Denfield v O'Callaghan [1940] ACT 880 at 894. Although a tree is not an artificial structure or contrivance, in my view, the following statement by Viscount Maugham (at 894) in that case is applicable to nuisance by trees:

... an occupier of land 'continues' a nuisance if with knowledge or presumed knowledge of its existence he fails to take any reasonable means to bring it to an end though with ample time to do so. He 'adopts' it if he makes any use of the erection, building, bank or artificial contrivance which constituted the nuisance."

The general principles applied in that case were also applied in Torette House Pty Ltd v Berkman [1940] HCA 1; (1940) 62 CLR 637 and Montana Hotels Pty Ltd v Fasson Pty. Ltd (1986) 69 ALR 258. They were applied in relation to tree roots by Kaye J of the Supreme Court of Victoria in Richmond City Council v Scantelbury (1988) 68 LG BA at 51.

Accordingly, under the common law a defendant cannot be liable for damage caused by a nuisance until such time as they continued or adopted the nuisance; or, in terms of the Act, they did not take reasonable steps to cease the unreasonable flow.

1. Under the statutory position set out in subsection 16(5) "the current occupier is liable to pay damages in respect of this injury if the current occupier fails". A plain reading of the words leads to the immediate impression that the current occupier is thereby liable for all for the damage caused by the unreasonable flow whether occurring within the time of their occupation or outside of that time.
2. This initial impression is reinforced by subsection 16(6) which states:-
   • (6) The existence of a liability under subsection (5) extinguishes the liability under subsection (1) of the person who caused the flow or the liability under subsection (2) of the person who interfered with the flow (as the case requires).

Thus, in effect, transferring the liability, of the initial creating occupier for the damage caused by the unreasonable flow from its inception up until the time the subsequent occupier takes possession, from the creating occupier to the subsequent occupier. Thus, the effect of the legislative enactment would confer retrospective liability on a subsequent occupier for nuisances created and damages incurred over which they had no knowledge or control, or rights to control.

1. I also note that in Sedleigh-Denfield (supra), where the modern law principle in relation to the liability of a subsequent occupier for a continuing nuisance, was a case where the nuisance was created by a trespasser, being in that case a local municipality which installed an underground culvert at the draining point of the occupier's land, this drain subsequently blocking and flooding the next property downstream. If such a case came before the Tribunal under the Water Act then the subsequent occupier of the property causing the nuisance would only be liable for the damage caused by the nuisance after they had known or ought to have known of the trespasser's actions under the Sedleigh principle; as subsection 16(5) applies only to subsequent occupiers and not to current occupiers where their lands are interfered with by trespassers.
2. Thus, in summary, to take the statutory statement of the position of a current occupier as set down in subsections 16(5) and 16(6) based on first impressions:-
   • (a) the current occupier does not have to be given notice, or have had constructive notice of the unreasonable flow before they are liable; and
   • (b) the current occupier has failed to take reasonable steps they are liable for all of the damage since the creation of the nuisance in event of a retrospective liability.
3. The Act does not address the two differences between the statutory and common law positions; and, to this extent I consider the statutory scheme set out in the Act to be ambiguous; and, potentially, leads to injustice, for the reasons set out above. Adopting the principle of statutory interpretation that a statute will only be regarded as limiting a common law right if it does so clearly and unambiguously; Potter v Minahan [1908] HCA 63; (1908) 7 CLR 277, at 304, Director of Public Prosecutions v Zarah Garde-Wilson [2006] VSCA 295 at [22] and [23]. I consider that the words "steps reasonably available" includes a requirement that the current occupier has a sufficient and reasonable time in which to carry out those steps after being given notice or constutive notice of the unreasonable flow is imputed. Further, that their liability in the event of them not taking reasonable steps to cease the flow after such notice is limited to the time from which such steps should reasonably have been taken.
4. In relation to subsection 16(6) of the Act the impact of this subsection is much fairer and more readily understandable if it is interpreted to mean that whatever is the extent of liability of a subsequent occupier, to that extent the liability of the original creating occupier is extinguished.
5. Therefore, I find that "reasonable steps" in the Act infers that the current occupier takes the necessary steps within a reasonable time. Following the same process as followed by the agent for Unit 3 and the Body Corporate in their investigation the source of the leak into Unit 3, I would allow the Respondent a reasonable time to carry out investigations, assess the results and to implement measures to ensure the unreasonable flow is ceased by the disconnection of the hydronic heating is ceased. Given the difficult nature of the investigation, the assessment of various methods of rectification and the disconnecting and disposal of the hydronic heating and the installation of a replacement heating system; whilst on the other hand the damage suffered is not acute, catastrophic or endangering to persons or other property, so that urgent action was immediately required, I would allow four months to carry out the necessary steps. Therefore, I consider the Respondent is liable for any damage incurred by the Applicants after the first week in January 2007.
6. I consider that the Respondent is liable to the Applicant until it informs the Applicants that it had disconnected and disposed of the hydronic heating system. This is the obvious impact of the Applicants' agent letter of 7 September 2006 informing the Respondent that Unit 3 is unlettable until the water flow from the lounge roof ceiling the unit was stopped. Thus, the Applicants were attempting to mitigate their damage by not letting Unit 3 until they were made aware that the flow had been stopped by the Respondent and by the letter of 7 September 2006 the Respondent had notice of this. It is a reasonable step to expect the Respondent to take to give notice to the Applicants that the flow had been stopped; and; in fairness to the Applicants, it would be liable until this reasonable step was taken.
7. I consider that the drip tray alternative proposed by the Respondent was not appropriate. The Applicants would be required to maintain and empty the tray. It would significantly increase the humidity in their Unit. Further, it was more likely than not that such leaking would increase in time particularly as the reason for the leaking was the corrosion of the copper hydronic heating pipes embedded in the concrete slab. This alternative required the Applicants to undertake onerous maintenance and management tasks and diminished the amenity of their Unit. I consider the Applicants' rejection of this offer to be appropriate and understandable.
8. I accept that the Respondent, via his Solicitors, gave the Applicants notice that the flow has ceased in its Points of Defence served on 9 May 2007.
9. In relation to the Applicants' claim for damage of foregone rent I consider that such damage was reasonably foreseeable by the Respondent given that the Units are in the Ardoch development in St Kilda, this is a large unit development and many of the apartments would be leased: Wagonmound (No 2) [1966] UKPC 1; [1967] AC 617, Stockwell v State of Victoria [2001] VSC 497. I consider the Applicants would need until the end of the first week in June 2007 to rectify the flat after confirmation the flow had ceased and to allow for a leasehold to be agreed. Therefore, I consider that the Respondent is liable to the Applicant for foregone rent from the end of the first week in January 2007 to the end of the first week in June 2007, a period of 5 months at the rent being paid prior to September 2006. This previous rent was $400.00 per week or $1,733.30 per calendar month. The Respondent submitted that this sum should be reduced by 7.7% being the managing agent's charge; however, I consider it would follow that if I awarded foregone rent to the Applicants then it would be obliged to pay the agent's fee to the agent. I do not, therefore, accept the Respondent's submission. The Applicants submitted that the rent foregone should be $500.00 per week but I do not consider that the Applicants established that a rent review would have taken place and I consider a rent of $400.00 per week to be appropriate. In relation to rent foregone I consider the Respondent must recompense the Applicants for five months' foregone rent of $1,733.20 per month, an amount of $8,666.70.
10. In relation to the remaining claims of the Applicants:-
    • (a) I do not allow the claim of Chatsworth Constructions Pty Ltd to fix the water damage ceiling as this damage was incurred before the Respondent had reasonable notice of the unreasonable flow as the quotation was provided to the Applicants' agent on 20 July 2006, one day before the Respondent took possession of the unit;
    • (b) the Applicants conceded that the rectification work carried out by Oddession Service was for damage prior to the Respondent taking possession of Unit 6;
    • (c) I consider the investigation by Carnegie Appliance Services, an investigation that took place in November 2006, well after the Respondent took possession, is a charge being $97.00, that should be paid by the Respondent, as it was during this period that the Respondent should have been undertaking such investigations if it was undertaking reasonable steps as required by the Act;
11. In relation to the claims for the charges of VMF Electrics and Mega Property Services, I will hear further argument. Therefore, I will set this matter down for a half day hearing commencing at 10.00 a.m. on 28 April 2008 at 55 King Street Melbourne before Senior Member Young to hear any submissions in relation to the two claims identified above; together with any further submissions the parties may wish to make.