Dealing with Mould Issues in Strata Properties: Responsibilities and Financial Compensation in NSW

Introduction

Mould presents a growing concern for property owners across New South Wales, frequently appearing in buildings and creating difficulties. Beyond damaging the building’s structure, it impacts personal health and finances. Understanding how to manage these mould situations is becoming necessary for property owners seeking to maintain a safe living space and protect their investment.

This article examines the options available to lot owners facing mould problems, clarifies responsibilities, and outlines how financial losses related to the issue can be recovered. Drawing upon another successful case for PBL Law Group in the Supreme Court of New South Wales, Byrne v Strata Plan [2021] NSWSC 342, we will look into the legal considerations involved in addressing mould within strata properties.

Interactive Tool: Who is Responsible for the Mould in Strata?

Understanding Mould in Your Strata Property

Common Causes of Mould in Strata Buildings

Mould growth in strata properties is frequently linked to excess moisture combined with poor ventilation, as it flourishes in damp, poorly aired environments. Moreover, heavy rainfall and water damage significantly increase the risk of mould developing within a strata scheme, making it crucial to understand the methods for preventing & fixing water ingress.

Several common issues can lead to mould problems within strata apartments, including:

• Water Leaks: Excess moisture can be introduced through inadequate waterproofing or burst pipes that originate from common property or another apartment.
• Condensation: Temperature differences between a heated interior and a cold exterior can cause condensation on walls and windows. Similarly, hot showers can lead to moisture buildup on bathroom surfaces, especially without proper ventilation.
• Poor Ventilation: A lack of sufficient airflow, often from keeping windows closed for long periods, creates a stagnant and humid environment where mould can thrive.
• Building Design: Some strata buildings may be located in shaded areas that receive little to no direct sunlight, which promotes damp conditions conducive to mould growth.

Health Risks Associated with Mould Exposure

Exposure to airborne mould spores can pose significant health risks, as they are easily inhaled. This impact is often more severe for vulnerable individuals, such as children, the elderly, and those with asthma or compromised immune systems.

Common symptoms of mould exposure can include:

• Irritation of the eyes, nose, and throat
• Difficulties with breathing
• Allergic reactions

In more serious instances, prolonged exposure can lead to the development of chronic or obstructive lung diseases. Mould can also damage personal belongings like clothing and furniture, which may also contribute to health issues.

A Supreme Court Case Study: Byrne v Strata Plan [2021] NSWSC 342

Background to the Strata Mould Dispute

The case of Byrne v Strata Plan [2021] NSWSC 342 showcases a significant victory by PBL Law Group’s strata team for a strata lot owner who faced a severe and unresolved mould infestation. Our client sought compensation for:

• Extensive water damage
• Persistent mould
• Related health issues

These issues arose after the Owners Corporation failed to act on its promises.

For three years, the corporation neglected its formal agreement to carry out crucial remediation works on the strata property. This prolonged inaction left our client with no choice but to seek expert legal intervention from PBL Law Group to enforce their rights.

The Owners Corporation’s Breach of Duty

The core of this successful legal challenge was the Owners Corporation’s blatant breach of its legal duties. The corporation had failed in its fundamental obligation to maintain the common property—a common issue for lot owners wondering what to do when the Owners Corporation fails to repair common property—and also violated a formal settlement agreement.

This complete disregard for its responsibilities directly led to the worsening conditions in our client’s strata unit. The failure to act necessitated decisive legal action in the Supreme Court to hold the Owners Corporation accountable.

The Court’s Ruling on Financial Compensation

The Supreme Court ruled decisively in our client’s favour. The court’s judgment held the Owners Corporation fully accountable for its failures and underscored its responsibility to address all mould-related issues as required by the settlement deed.

This successful outcome delivered justice and secured crucial financial compensation for our client, including:

• Full recovery for lost rental income: The court ordered compensation for the rent our client was unable to earn due to the uninhabitable state of the strata property.
• An order for immediate action: The Owners Corporation was legally compelled to finally undertake the long-overdue remediation works to eliminate the mould.

Defining Legal Responsibility for Strata Mould

The Owners Corporation’s Duty to Maintain Strata Common Property

Under the Strata Schemes Management Act 2015 (NSW), an Owners Corporation has a strict legal duty to properly repair and maintain common property, a responsibility that often requires specialised legal advice for an Owners Corporation.

If this responsibility is not met, the corporation can be held liable for any resulting damage, including the growth of mould.

Common property failures that can lead to mould and for which the Owners Corporation is responsible include:

• Water penetration from a faulty common property roof or exterior walls
• Inadequate waterproofing membranes
• Leaking pipes located within shared walls
• Poor ventilation in common areas

When mould originates from these shared areas and affects an individual apartment, the Owners Corporation must address the underlying defect and manage the mould remediation.

As seen in the landmark case of Byrne v Strata Plan [2021] NSWSC 342, failing to fulfil this obligation can lead to legal action, where the court orders the corporation to carry out the necessary work and compensate the lot owner for foreseeable losses.

When a Strata Lot Owner Is Responsible

While the Owners Corporation is responsible for common property, a strata lot owner is responsible for mould issues that originate within the boundaries of their own unit, which is a key part of general NSW lot owner repair & maintenance responsibilities. Liability typically falls on the owner if their actions or inaction contribute to the development of mould.

An owner may be required to arrange and pay for mould remediation in several common situations, such as:

• Inadequate ventilation: Keeping windows closed for long periods restricts airflow and creates a humid environment where mould can thrive.
• Lifestyle factors: Activities like drying clothes indoors without proper ventilation can increase moisture and lead to condensation.
• Failure to use fixtures: Not using exhaust fans in high-moisture areas during and after activities such as showering or cooking.
• Ignoring internal leaks: Failing to report or repair leaks from personal appliances or plumbing that are not part of common property.

Builder & Developer Liability for Strata Mould Issues

Builders and developers can also be held accountable for mould resulting from design or strata building defects.

The Home Building Act 1989 (NSW) provides statutory warranties that protect homeowners when defects lead to water ingress and subsequent mould problems.

These warranties impose several key obligations on builders, including:

• Delivering work of good quality
• Using high-quality materials fit for purpose
• Completing projects in accordance with approved plans and specifications

If a breach of these warranties leads to mould growth, homeowners may have grounds to seek compensation from the builder or developer responsible for the defective work.

Securing Financial Compensation for Strata Mould Damage

Claiming for Loss of Rental Income

Lot owners may be entitled to seek compensation for lost rental income if mould issues—caused by the Owners Corporation’s failure to maintain common property—make a unit uninhabitable. The case of Byrne v Strata Plan [2021] NSWSC 342 established that an owner could recover rent they were unable to earn due to persistent water damage and mould.

To successfully claim for lost rent, strong evidence is essential.

A court will typically calculate the loss from the date an expert confirms the property is uninhabitable until the date the mould problem is properly resolved. To support such a claim, you must provide:

• Expert reports confirming the strata property is uninhabitable.
• Evidence of the market rental value for the property during the period of loss, such as rental agreements or market research.

As seen in cases like Shousha v The Owners Strata Plan 2657 [2021] NSWCATCD 6, a claim may fail if there is no evidence of market rental value or if the owner continues to live in the property.

Recovering Costs for Property Damage & Other Expenses

In addition to lost rent, a strata lot owner can claim compensation for damage to property and other related costs. This financial recovery can also cover damage to fixtures, fittings, and personal belongings that have been affected by mould originating from common property.

To substantiate a claim, it is vital to thoroughly document all losses and expenses.

Expenses that may be claimed include the costs associated with remediation efforts, such as:

• Professional mould testing and assessment services.
• Specialised cleaning services to remove contamination.
• Necessary repairs to damaged structural elements or personal items.

Every claim must be supported with detailed evidence, including photographs of the damage and all relevant invoices or receipts for repairs and services.

A Practical Guide to Addressing Strata Mould Issues

The Importance of Prompt Reporting & Documentation

When you discover mould or water damage in your strata property, it is crucial to report the issue to the Owners Corporation immediately, especially if it appears to originate from common property.

Moreover, promptly notifying them in writing creates an official record and a clear timeline of events, which can be vital for any future legal proceedings.

Thorough documentation is equally important for building a strong case.

You should meticulously record all evidence of the mould and its impact. This includes:

• Taking clear photographs: Capture the affected areas from multiple angles to serve as compelling visual evidence for strata management and any potential legal claims.
• Keeping written records: Maintain detailed notes of your communications with the strata manager or Owners Corporation, including dates and summaries of conversations.
• Documenting health issues: If you believe the mould is affecting your health, consult a healthcare professional and keep comprehensive records of all appointments, diagnoses, and treatments.

Engaging Experts for Assessment & Remediation

Obtaining a report from a qualified professional is essential for documenting the full extent of the mould problem and evaluating any associated health risks.

In addition, engaging experts like environmental consultants provides credible evidence that can support legal claims and discussions with the Owners Corporation.

These professionals can perform several critical functions:

• Conduct thorough assessments: They can carry out tests and examinations to determine the type and severity of the mould.
• Identify underlying causes: An expert can pinpoint the root cause of the mould, whether it’s a building defect, a plumbing issue, or another factor.
• Recommend remediation strategies: Their reports will suggest the most effective measures to eliminate the mould and prevent it from returning.

It is generally best to avoid trying to fix serious mould issues yourself, as improper handling can worsen the problem and create further health risks. Hiring a reputable mould remediation contractor ensures the contamination is removed safely and effectively.

Conclusion

Mould in strata properties presents significant health risks and financial burdens, making it essential for lot owners to understand legal responsibilities and the process for securing compensation. As the Byrne v Strata Plan [2021] NSWSC 342 case shows, acting promptly and documenting the issue are critical steps for holding the Owners Corporation accountable and recovering losses.

If you are dealing with mould problems in your strata property and need guidance on your rights and options, contact our strata dispute lawyers at PBL Law Group. Our experienced strata dispute Supreme Court lawyers can assess your situation and provide tailored strata legal advice to help you navigate the complexities and pursue necessary remedies.

Frequently Asked Questions