Water, Water Everywhere—And Who Is Responsible?

It is an all too common scenario in apartment style condominiums: Owner A, whose unit is on the top floor, turns on her washing machine and goes out to run her errands. Owner B, who lives below, is quietly going about his business. Suddenly there is water flowing from the ceiling of B’s unit (obviously from A’s unit), ruining everything in its wake. After a frantic call to the strata manager, the plumber and anyone else who can lend a hand, the water is shut off. Soon the source of the problem is found. It turns out to be the coupling hose on A’s washing machine which burst simply due to old age. The insurance company is called, a claim is made, repairs done and a bill for the $5,000 deductible is rendered. That bill is paid by the strata corporation, who promptly turns to A to collect this sum. A, feeling that she has done nothing wrong, politely refuses to pay.

A question that I am often asked to answer is who is responsible to pay the deductible when a flood occurs? The answer to that question can be found primarily in section 158(2) of the Strata Property Act (the “Act”). That section reads as follows:

“Subsection (1) does not limit the capacity of the strata corporation to sue an owner in order to recover the deductible portion of an insurance claim if the owner is responsible for the loss or damage that gave raise to the claim.”

Section 158(1) simply states that the insurance deductible is a common expense to be contributed to by all owners on the basis of unit entitlement.

The case of Strata Corp. VR 2673 v. Comissiona (2000)(BCSC) considered s.158(2) and reaffirmed the strata corporation’s right to sue an owner for deductible which that owner caused the strata corporation to have to pay through their causing of an insured loss.

It should be noted that section 158(2) uses the word responsible instead of “liable”, “negligent” or any other word that is similar in nature. The word responsible is arguably much broader in its scope and context and does not imply or require any degree of fault (where as negligent does). While Comissiona never really explored that issue, a recent case, Strata Plan KA 1019 v. Keiran 2006 BCPC 360, did. It is that case that I propose to review in some detail in this article.

In Keiran the damage covered by the insurance claim came from a pipe that burst in the wall in the Keiran unit. The burst was as a result of a coupling that failed due to the high acid level of the local water and “not to a negligent act or omission of the owner”. One of the questions before the court was whether or not Ms. Kieran was liable for the costs of the repair. Those costs fell well short of the deductible of $10,000.00. (The other question had to do with the extent of coverage toward paying the strata corporation’s deductible to be provided by Ms. Kieran’s household insurance policy and is not within the scope of this article).

In determining whether or not Ms. Kieran must pay for the whole of the repairs, the court first looked at the repair and maintenance responsibilities of the strata corporation and the individual owners under the bylaws of the strata corporation. The pipe was not within the scope of what the strata corporation was responsible to repair and maintain. It was clearly the owner’s responsibility. (Remember that not all pipes and plumbing are the responsibility of the strata corporation. Generally it is only those pipes located in walls, floors and ceilings that form a boundary between two strata lots that are common property and hence the strata corporation’s responsibility).

Next the court looked at the wording of s.158(2) of the Act. Although, the case did not involve the recovery of deductible, the principles behind that section are nonetheless applicable. The court noted that the section uses the phrase “responsible for the loss”. Without going into any real analysis, the court concluded that “because the damage occurred within the unit and not to common property, this is a situation where the homeowner had the duty to repair and maintain and is therefore ‘responsible for the loss’ regardless of the absence of fault or negligence on their part” [emphasis added]. Ms. Kieran was liable to pay the whole cost of the repairs.

This is an extremely significant case for strata corporations and owners. The case makes it very clear that if the source which gives rise to the loss originates in your unit, then you are responsible for the damage (i.e. costs) that flow from that. The scope and extent of your vigilance and knowledge is of no relevance. Remember, in Kieran the burst coupling was inside a wall and presumably not visible. It is very clear that there is no need for the strata corporation to prove that an owner was negligent in order to recover either the deductible or repair costs. This should make the collection of insurance deductibles from owners much easier.

Individual owners should ensure that they have adequate insurance coverage in their owner’s policy to ensure that the deductibles (which now commonly range upward of $10,000) are covered and that they pay only the deductible in their owner’s policy (which is typically $500). As well, routine maintenance and inspection of appliances and plumbing fixtures has become all the more important. Lastly, owners should clearly review the bylaws and the Act to ensure that they understand what they are responsible to repair and maintain.

Shawn M. Smith is a partner with the law firm of Cleveland Doan LLP located in White Rock and may be reached at 536-5002. He is also Honourary Legal Counsel for the Pacific Condominium Association This article is intended for information purposes only and nothing contained in it should be viewed as the provision of legal advice.