Body Corporate for The Anchorage One v Huang [2024] QDC 60

DISTRICT COURT OF QUEENSLAND CITATION: PARTIES: FILE NO/S: DIVISION: DELIVERED ON: DELIVERED AT: HEARING DATE: JUDGE: The Body Corporate for The Anchorage One v Huang [2024] QDC 60 THE BODY CORPORATE FOR THE ANCHORAGE ONE – COMMUNITY TITLE SCHEME 35311 Plaintiff v YUE HUANG Defendant TD213/2020 Civil 17/05/2024 Townsville by videolink from Brisbane 24 - 26 July, 4 September, 27 - 29 September 2023, 31 January 2024 Barlow KC, DCJ ORDERS: 1. By 7 June 2024, the parties: (a) agree on, and if agreed the plaintiff’s solicitors email to my associate, a draft judgment reflecting my conclusions in these reasons, together with details of the calculation of interest on the principal judgment sum or sums; or (b) if not agreed, each serve on the other and email to my associate a draft judgment, details of calculation of interest and submissions on the judgment and interest sought, limited to 3 pages; and (c) agree on any order for costs of the proceeding, or serve on each other and email to my associate submissions on costs, limited to 3 pages; and (d) inform my associate by email, copied to the other party, whether they wish to have a hearing on the above issues or any other matters arising from these reasons and identified by them in the email. 2. The proceeding be adjourned to a date to be fixed. 3. Liberty to apply on 3 clear days’ notice. -- 1 of 64 -- ii CATCHWORDS: REAL PROPERTY – STRATA AND RELATED TITLES AND OCCUPANCY – MANAGEMENT AND CONTROL – BODY CORPORATE – POWERS DUTIES AND LIABILITIES – contributions by lot owners – manner of service of contribution notices – the body corporate claimed payment of contributions levied on the defendant lot owner – the lot owner denied receiving some or all of the contribution notices – whether the contribution notices had been posted to the lot owner’s address – the body corporate did not call direct evidence that notices had been posted – whether the court should infer that they had been posted - whether service proved and effective TORTS – NEGLIGENCE – ESSENTIALS OF ACTION FOR NEGLIGENCE – DUTY OF CARE – SPECIAL RELATIONSHIPS AND DUTIES – OTHERS –– during a significant rainfall event, rainwater entered the premises of a ground floor lot – whether the body corporate had adequately maintained the pavers outside the lot – whether there was adequate drainage – whether the absence of drainage or the unevenness of pavers caused or contributed to the entry of rainwater into the lot - whether the body corporate breached its duty of care – whether any breach had caused or contributed to the entry of rainwater into the lot – whether the lot owner had proved any loss as a consequence of the entry of rainwater into the lot TORTS – NUISANCE – PRIVATE NUISANCE – WHAT CONSTIUTES AND GENERALLY – during a significant rainfall event, rainwater entered the premises of a ground floor lot – whether the body corporate had adequately maintained the pavers outside the lot – whether there was adequate drainage – whether the absence of drainage or the unevenness of pavers caused or contributed to the entry of rainwater into the lot – whether the flow of rainwater into the lot was a nuisance caused or contributed to by the body corporate – whether the lot owner had proved any loss as a consequence of the entry of rainwater into the lot LEASES – damage to leased premises – rent abatement clause – during a significant rainfall event, rainwater entered the premises of a ground floor lot that the owner leased to another person – whether the entry of water into the lot required the owner to abate the rent, fully or partially and for what period Acts Interpretation Act 1954, s 39(1)(a)(ii), s 39A(1)(b) -- 2 of 64 -- iii Body Corporate and Community Management Act 1997 ss 150, 242A, 243(1) Body Corporate and Community Management (Accommodation Module) Regulation 2008 ss 139, 140, 142, 143, 157, 192 Body Corporate and Community Management (Accommodation Module) Regulation 2020 ss 152, 153, 155, 156, 206, 208, Civil Liability Act 2003 ss 9, 11 Civil Proceedings Act 2011 s 58 Dwyer v Canon Australia Pty Ltd [2007] SASC 100, cited Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87, applied Flack v Chairperson, National Crime Authority (1997) 80 FCR 137, cited Gales Holdings Pty Ltd v Tweed Shire Council [2011] NSWSC 1128, cited Goldman v Hargrave [1967] 1 AC 645, cited Gratrax Pty Ltd v T D & C Pty Ltd [2014] 2 Qd R 261, cited Herridge v Electricity Networks Corporation t/as Western Power (No 4) [2019] WASC 94, distinguished Jones v Dunkel (1959) 101 CLR 298, considered Pearlburst Pty Ltd v Summers Resort Group Pty Ltd [2007] NSWSC 1126, applied Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, applied Ramzy v Body Corporate for GC3 (CTS 38396) [2012] QDC 397, distinguished. Re Green Global Technologies Ltd [2009] QSC 262 Southern Properties (WA) Pty Ltd v Executive Director of the Department of Conservation and Land Management (2012) 42 WAR 287, considered Northumbrian Ice Cream Co Ltd v Breakaway Vending Pty Ltd [2006] NSWSC 1216, applied Wallace v Kam (2013) 250 CLR 375, applied COUNSEL: T Schmidt for the plaintiff (24 July to 26 July 2023) J Hastie for the plaintiff (4 September to 29 September 2023, 31 January 2024) Yue Huang, self-represented defendant SOLICITORS: SLF Lawyers for the Body Corporate Yue Huang, self-represented defendant Contents Summary .............................................................................................................................. 1 -- 3 of 64 -- iv The relevant legislation ........................................................................................................ 1 The Body Corporate’s claims ............................................................................................... 2 The defence and the counterclaim ........................................................................................ 3 The Body Corporate’s lay evidence ..................................................................................... 4 Evidence about the claim ................................................................................................. 4 Evidence about the counterclaim ..................................................................................... 5 Ms Huang’s lay evidence ..................................................................................................... 6 Evidence in defence of the claim ..................................................................................... 6 Evidence on the counterclaim .......................................................................................... 7 Ms Huang ..................................................................................................................... 7 Mr Vanjak................................................................................................................... 11 The expert evidence............................................................................................................ 13 Credit of witnesses ............................................................................................................. 18 Ms Huang ....................................................................................................................... 18 Mr Vanjak....................................................................................................................... 21 Ms Messer ...................................................................................................................... 21 Consideration – the Body Corporate’s claim ..................................................................... 22 Consideration – the counterclaim ....................................................................................... 31 Legal principles .............................................................................................................. 32 Negligence .................................................................................................................. 32 Nuisance ..................................................................................................................... 33 Factual issues .................................................................................................................. 34 The state of the pavers - evidence .............................................................................. 34 The state of the pavers – discussion ........................................................................... 44 What caused the water ingress to lot 17? ................................................................... 46 Was there negligence or a nuisance by the Body Corporate? ........................................ 49 Damages ......................................................................................................................... 52 Did the restaurant cease to trade or reduce its trading hours and, if so, why? ........... 52 Was Ms Huang obliged to reduce or suspend rent under the lease? .......................... 57 Did Ms Huang lose employment income? ................................................................. 59 Conclusions on damages ............................................................................................ 60 Conclusions and the result of the proceeding ..................................................................... 60 -- 4 of 64 -- 1 Summary [1] The plaintiff (the Body Corporate) is the body corporate for a community title scheme in Townsville. The defendant (Ms Huang) is the owner of the only commercial lot in the scheme, which she lets out for use as a restaurant (lot 17). Many (if not all) of the residential apartments in the scheme form a pool of lots that are managed as a hotel, known as the Park Regis. [2] The Body Corporate sues to recover administrative and sinking fund contributions levied against Ms Huang in respect of lot 17 and that were allegedly payable by her between October 2016 and April 2022, totaling $54,620.05. It also claims the costs incurred by it in recovering those unpaid contributions. These, the Body Corporate contends, total around $71,000. Thirdly, it claims statutory penalties akin to interest on those amounts. The total amount claimed is around $141,000 plus costs. [3] Ms Huang alleges that the Body Corporate failed to serve her any (or at least most) of the contribution notices prior to 16 June 2022 and that she was only able to view notices issued between January 2022 and June 2022 on a mobile telephone application. She also contends that the amounts the Body Corporate claims are owing, both in respect of the contributions and the recovery costs, have been incorrectly calculated. [4] Ms Huang also makes a counterclaim. She claims that the Body Corporate failed to maintain the common area of the scheme outside her lot and it constructed an office on the common area. As a result of these actions (and inaction), water was channeled from the common property into lot 17 during a period of substantial rain in February 2019, thus causing damage to lot 17 and consequent loss of income. She is seeking some $459,000, comprising partly lost rental income (as lessor) and partly lost employment income (as an employee of the lessee). [5] For the reasons that follow, I find that: (a) Ms Huang is indebted to the Body Corporate, on its claim, in the amount of $54,620.05, plus penalties on the individual contributions amounting to that sum, which I shall ask the parties to calculate; and (b) Ms Huang is entitled to damages of $13,404.63 from the Body Corporate, together with interest to judgment under the Civil Proceedings Act 2011. Again, I shall ask the parties to agree, or to make submissions on, the appropriate rate or rates and the calculation of that interest. [6] I shall also ask the parties to agree, or to make submissions on, whether the amount awarded on the counterclaim should simply be set off against the amount awarded on the claim, with judgment for the balance. The relevant legislation [7] The Body Corporate’s financial arrangements, as a body corporate, at all relevant times have been subject to s 150 of the Body Corporate and Community Management Act 1997 (BCCMA), which remained relevantly unchanged through the course of the relevant period. Specifically, s 150(2)(b) provides that a regulation module which applies to a community title scheme may provide for the financial arrangements about: -- 5 of 64 -- 2 Levying lot owners for contributions, including contributions of an interim nature for the period from the end of a financial year to 30 days after the annual general meeting for the next financial year… [8] The applicable regulation was originally the Body Corporate and Community Management (Accommodation Module) Regulation 2008 (2008 Regulation). That regulation was replaced, with effect from 1 March 2021, by the Body Corporate and Community Management (Accommodation Module) Regulation 2020 (2020 Regulation). The relevant sections do not differ in material respects. [9] Section 139 of the 2008 Regulation and s 152 of the 2020 Regulation provide: (1) The body corporate must, by ordinary resolution — (a) fix, on the basis of its budgets for a financial year, the contributions to be levied on the owner of each lot for the financial year; and (b) decide on the number of instalments in which the contributions are to be paid; and (c) fix the date on or before which payment of each instalment is required. [10] Section 140 of the 2008 Regulation and s 153 of the 2020 Regulation require a body corporate to give a lot owner notice of a contribution at least 30 days before the contribution is payable. Under the respective provisions of the two regulations, such a notice may be served on the lot owner at the owner’s address for service or in the way directed by the owner. An address for service is the address provided by the lot owner to the body corporate or the residential or business address last notified to the body corporate by the lot owner.1 [11] A body corporate may, by ordinary resolution, fix a penalty to be paid for late payment of contributions, comprising simple interest of not more than 2.5% per month.2 [12] Where a contribution is unpaid, a body corporate may recover from the lot owner, as a debt, the amount of the contribution, any penalty for not paying it and any costs reasonably incurred by the body corporate in recovering the amount.3 A body corporate is required to start a proceeding for recovery of unpaid contributions within two years and two months after the contribution becomes outstanding.4 The Body Corporate’s claims [13] The Body Corporate contends that, from June 2016 to June 2021, it set, by resolution, amounts of contributions to be paid by the lot owners. The contributions in respect of lot 17 were levied on Ms Huang in accordance with those resolutions and having regard to Ms Huang’s lot entitlement. The Body Corporate claims that it notified her each time by posting a levy notice to her at the address for service that had been nominated by her. [14] The Body Corporate claims that, apart from a payment of $1,483.86 made in October 2016, Ms Huang has made no payments towards the relevant contributions levied on her in respect of lot 17 during that period. The total claimed debt is $54,620.05. That 1 2008 Regulation, s 192(1); 2020 Regulations ss 153(3), 206, 208. 2 2008 Regulation, s142; 2020 Regulation, s 155. 3 2008 Regulation, s 143, 2020 Regulation, s 156. 4 2008 Regulation, s 143(2), 2020 Regulation, s 156(2). -- 6 of 64 -- 3 sum is mostly made up of quarterly contributions, but it includes two other sums: a special contribution for fire penetration rectification ($4,205.85)5 payable on 1 October 2016 and a special contribution for payment of legal costs ($4,737.62) payable on 22 April 2022.6 [15] The Body Corporate also sought “recovery costs,” being costs it alleges that it incurred in attempting to recover the amount owing to it by Ms Huang. This amounted to $71,000.59. However, during the trial I made a ruling to exclude the evidence relied on to prove this part of the claim, essentially because the Body Corporate had failed to disclose the relevant documents, nor had it informed the court or Ms Huang that they had not been disclosed when the Body Corporate initially tendered them as evidence in the trial.7 I subsequently gave the Body Corporate leave to amend its claim and statement of claim to seek costs of the proceeding in the usual manner.8 The defence and the counterclaim [16] In her defence, Ms Huang denied that the Body Corporate served all of the contribution notices on her. She went on to allege that the claimed debts were not calculated in accordance with the contribution schedule. As to the latter defence, she was unable to pursue it in this proceeding as, under the BCCMA, such disputes must be determined elsewhere.9 [17] In her counterclaim, Ms Huang claims damages for negligence and nuisance. She alleges that the Body Corporate failed to maintain the pavers on the common property outside her lot. She also contends that the Body Corporate built an office on the common property and installed air conditioners outside the building which were not properly plumbed. These actions and inaction by the Body Corporate resulted in the pavers directing water toward and into her lot on occasions of substantial rain. [18] In early February 2019, heavy rain fell in Townsville. Ms Huang claims that, as a result of the pavers redirecting water runoff on 3 February 2019, lot 17 was damaged and rendered unfit and unsafe for use as a commercial restaurant. The heavy rain also caused further damage to the pavers on the common property, causing them to rise up and block the fire exit door of the restaurant. As a result, the restaurant was largely unable to operate from February 2019 to June 2020. That resulted in the suspension of the lessee’s obligation to pay her rent. Also she, as an employee of the restaurant, lost her source of income. From July 2020, she alleged, the restaurant could trade, but its ability to do so safely was reduced because of the blocked door. That problem was not fixed until October 2022. [19] Ms Huang claims that she lost rental income, between 3 February 2019 and 30 June 2022, totaling $265,434. She also claims that she lost employment income of $89,400 between 1 July 2020 and 30 June 2022. She seeks damages in those sums.10 5 All the fees and levies referred to include GST. 6 A body corporate may raise special contributions for liabilities not sufficiently provided for in the budget, under the 2008 Regulation, s 139(2); 2020 Regulation, s 152(2). 7 Transcript 5-34, [14]-[45]. 8 The Body Corporate for The Anchorage One v Huang [2023] QDC 191. 9 As I determined in an earlier interlocutory decision in this proceeding: The Body Corporate for The Anchorage One v Huang [2022] QDC 119. 10 These figures are in paragraphs 28 (negligence) and 31 (nuisance) of her amended counterclaim. The lost rental is calculated on a base rental of $78,000pa. The lost employment income appears to -- 7 of 64 -- 4 [20] The Body Corporate denies that it was negligent or caused a nuisance. It also denies that the restaurant was unable to trade or that Ms Huang suffered any loss of income. It contends that any lost trade from 2020 onwards was as a result of restrictions and other effects of the Covid-19 pandemic or of a decision made by the restaurant owner (the lessee), with Ms Huang’s concurrence, not to resume trading seven days a week. As a result, Ms Huang’s agreement not to charge rent was outside her obligations under the lease and not as a result of any action or inaction on the part of the Body Corporate. The Body Corporate’s lay evidence Evidence about the claim [21] The Body Corporate called two witnesses in respect of its claim and tendered a number of documents. The witnesses were employees of Body Corporate Services Pty Ltd (BCS), which was the body corporate manager throughout the relevant period. [22] The first witness was Ms Susan Blair, who described herself as a strata manager for BCS. She said that, in the relevant period, BCS provided administrative services to the Body Corporate and she was involved in the issuing of contribution notices that she said were sent to Ms Huang. She said that each of the contribution notices was given to Ms Huang (although she did not say how that was done). She confirmed the amount that, she said, Ms Huang owes the Body Corporate. [23] The second witness was Ms Lisa Barrett, who is the branch manager for BCS in Townsville. She had only been in the Townsville office for about four weeks when she gave her evidence, but she had worked in its Cairns office for five years before then and she was familiar with its procedures, which she said were common to both offices. [24] Ms Barrett identified the Body Corporate’s records of Ms Huang’s purchase of lot 1711 and its strata roll records for the lot during her ownership of it.12 The roll recorded Ms Huang’s address for service, her email address and her “delivery preference” and changes to those details. Ms Barrett explained that the “delivery preference” refers to the way in which the lot owner had directed the Body Corporate to serve notices, including contribution notices. [25] The strata roll, as explained by Ms Barrett, records that Ms Huang’s delivery preference has consistently been by Australia Post. The address for service of documents was, from the time she became the owner of lot 17, a street address in North Ward.13 On 22 February 2019, that address was changed to the address of lot 17 itself and, on 4 March 2019, it was changed again to a street address in Mysterton. Ms Barrett said that it was BCS’s practice to record such changes of address on the instructions of the owner of a lot. be based on a contracted salary of $52,000pa plus $5,200pa superannuation, although she does not claim that she lost all her salary during that period. 11 Exhibit 18. 12 Exhibit 19. 13 The street address recorded in the strata roll was correct notwithstanding that, when Ms Huang’s solicitors informed the Body Corporate that she had purchased the lot, the solicitors recorded an incorrect address, namely lot 13, 17 [name of street] instead of lot 13, 1-7 [name of street]: exhibit 18. -- 8 of 64 -- 5 [26] Ms Barrett gave evidence that the address shown on a contribution notice was the address to which the notice should be sent. In cross-examination, she said that notices of contribution are printed by BCS with the correct address on them. They are then sent to a third party “to send them out.” She accepted that it was possible that the third party or Australia Post might mistakenly send notices to an incorrect address, but the notices are sent to the third party with the address for service in the Body Corporate’s records printed on them. BCS does not send them out itself. She does not know how to confirm that the notices were actually posted.14 Evidence about the counterclaim [27] In defence of the counterclaim, the Body Corporate called two non-expert witnesses. [28] The first was Marc Dille. He was the general manager for the Park Regis from April 2017 to April 2019. Among his responsibilities were the maintenance of the grounds and reporting any issues to the Body Corporate. [29] Mr Dille said that, in the days leading up to 3 February 2019, there was quite a lot of rain in Townsville. He said there was no significant water around the Anchorage property and he did not recall any water pooling on the paved area outside the restaurant. He could not remember whether, in February 2019, he saw any water entering or inside the restaurant, saying “I can’t remember that far back I’m afraid.” He said he recalled that there was an “ongoing issue in regards to the paved area with the restaurant owners and the strata management company,” but he was not able to recall what that issue was. When asked how he would describe the condition of the paved area, he said there were one or two loose, but generally the rest of it was even.15 [30] The plaintiff’s last witness was Lewis Bazeley. He had been employed as “maintenance man” at Anchorage for 10 years, working from 7am to noon Monday to Friday, until he retired the week before he gave evidence. He was responsible for keeping the place tidy, looking after swimming pools and gardens and looking after the common areas. When asked if that included the paved area outside the restaurant, he said that he did look after that area, but the owners wouldn’t let him, saying it was their area. However, he did observe that area and its condition in the course of his job. [31] When asked what he observed about the condition of the pavers, Mr Bazeley said they were fine. Now and again, there were uneven pavers, including four or five in front of the restaurant. He said that Mr Vanjak (Ms Huang’s domestic partner) had planted a tree years ago, the roots of which had uprooted “all these pavers.” [32] Mr Bazeley said that, on 4 February 2019, he arrived at 7am and walked around the property with Mr Dille. He said the paved area was dry. He did not see inside the restaurant. [33] He was asked if he observed whether the restaurant stopped trading. He said they did at one stage, he thought a couple of months after they said it was flooded, perhaps in late 2019. 14 T6-56; T6-60; T6-67. 15 T7-66:17-40. -- 9 of 64 -- 6 [34] Mr Bazeley said that he could recall the doors into the restaurant. Customers usually used the single door closest to the Park Regis office. He remembered Mr Vanjak putting weather seals on the doors after the 2019 rains. There were no weather seals on them before then. [35] Mr Bazeley said that, more recently, in 2022, he had been asked by the Body Corporate to check on the pavers after contractors had fixed a lot of the area and had “ripped them all up and cleaned them and put them all down again.” He said that he lowered about 10 or 15 pavers and saw that there were plant roots underneath them. [36] Mr Bazeley also recalled contractors installing a drain along the wall, he thought a couple of months before the pavers were lifted and relayed. He identified the drainage works from photographs shown to him.16 Ms Huang’s lay evidence [37] Ms Huang gave evidence herself, both for her defence of the Body Corporate’s claim and for her counterclaim. Evidence in defence of the claim [38] Ms Huang said that, until October 2016, she always paid the contributions on time, but from that time she took issue with the calculation of the contributions for her lot. She considered that some of the budgeted expenses on the basis of which the contributions were calculated should have been excluded from the calculation for lot 17 because some of the services for which the budget was prepared were not provided to her lot. For example, a budgeted expense that was included in the calculation of the administrative fund contribution was a subscription for Austar, but her lot did not receive Austar. In fact, the first item that she refused to pay was a fire protection rectification levy that was included in the contribution notice issued on 12 August 2016 and payable on 1 October 2016. [39] As I made clear in my judgment on jurisdiction, it is not open to Ms Huang, in this court, to challenge the basis for the calculation of the levies. That must be done in another forum. But I took Ms Huang’s evidence in this respect to be an explanation for why she stopped paying her contributions. It does not, though, affect whether she is liable to pay the contributions that are claimed by the Body Corporate in this proceeding. [40] Ms Huang also said that she never received the contribution notices on which the Body Corporate relies. She appeared to suggest that they were delivered to the wrong address, at least on some occasions.17 She later said that she did receive two notices and then she said she did receive some.18 She said that she could, for a while, see the contribution notices on a telephone application called “CommunityHub”, but, at least more recently, it did not show her the actual contribution notices but only individual items. It now appears to show a form of account ledger for her account with the Body Corporate. She tendered a print out of a page from that application as an example.19 16 Exhibit 24. 17 For example, T1-85 to T1-86; T6-130 to T6-132. 18 T6-133:16-18. 19 Exhibit 7, p 111. Ms Huang actually explained the purpose of the tender on day 4 of the trial, when dealing with objections to evidence (T4-27). She gave evidence about the CommunityHub on day 1 -- 10 of 64 -- 7 She said that, earlier, she could see “the levy” (which I take to mean the contribution notices) “from the beginning” (which is how she saw the August 2016 invoice with the fire protection levy), but then something changed and she could no longer see them. She said she was locked out of the application at some stage and subsequently got access in 2020 by re-registering, since when she has not been able to see contribution notices themselves. [41] In cross-examination, Ms Huang said that she knew, during the relevant period, that the Body Corporate would levy contributions quarterly. She then said that she did receive some of the contribution notices, but not all of them, although she could see some on the telephone application when she re-installed it in about 2020. But she could not recall writing to the Body Corporate complaining that she was not receiving contribution notices.20 Later, she said that she was receiving notices inconsistently, but she did receive some notices.21 Evidence on the counterclaim Ms Huang [42] Ms Huang gave evidence herself about her counterclaim and tendered a bundle of documents in support of it. She also called Mr Denis Vanjak, who is the director of Vanjak Family Investments Pty Ltd (Vanjak Investments), the lessee of lot 17 and the owner of the restaurant business. He was also Ms Huang’s domestic partner at relevant times, although they have separated in more recent times. [43] Ms Huang’s evidence was that she and Mr Vanjak decided to buy the restaurant business in 2013. They did so through Vanjak Investments, paying rent to the owner at the time of the freehold of lot 17. At the time, she was the sole shareholder and director of that company, but Mr Vanjak took over as both director and sole shareholder in February 2019.22 [44] Ms Huang subsequently bought the freehold in 2014. She did so in her capacity as trustee of the Huang Family Trust.23 [45] Ms Huang said that she and Mr Vanjak agreed, when he took over the company and its business, that the company would employ her as restaurant manager on a salary of $52,000 pa. She identified the employment contract, dated 30 June 2019.24 [46] Ms Huang said that, on 3 February 2019, she and Mr Vanjak were at the restaurant when it rained extremely heavily. Rainwater entered the restaurant while she was there. The next day, they started cleaning out the remaining water, but the carpet was ruined. They were unable to open the restaurant. However, as they had agreed to provide room service to guests at the hotel, some of whom had prepaid for their stay, (T1-56, T1-84 – T1-85) and day 6 (T6-66 – 67, T6-130, T6-131 – 132, T6-141 - 142). This summary is an amalgam of her evidence over those occasions. 20 T6-138 to T1-139. 21 T6-142:44-45; T143:19. 22 Exhibit 16 shows that Ms Huang resigned and Mr Vanjak was appointed as director on 28 February 2019 (notice of which was given to the Australian Securities and Investments Commission (ASIC) on 1 March 2019), while notices of the change of shareholding from Ms Huang to Mr Vanjak were only given to ASIC on 13 and 27 June 2022. 23 This is also recorded in the strata roll kept by the Body Corporate for lot 17: exhibit 19. 24 Exhibit 9. -- 11 of 64 -- 8 they continued to provide breakfast, by room service, for a short period. They also opened for dinner on 14 February 2019 in order to honour pre-bookings for Valentine’s Day. [47] Ms Huang also said that, when the building was first constructed, the plan was that the office for the hotel would be in unit 1.25 But at some stage, the Body Corporate built an office outside the restaurant.26 In that process, the Body Corporate also installed an air conditioning unit on the wall outside the restaurant, alongside an existing air conditioning downpipe from units on one or more upper floors of the building.27 Both the upper floor air conditioner and the office air conditioner discharged water onto the pavers outside the restaurant.28 [48] Ms Huang’s evidence was that the pavers outside her restaurant were uneven for a long time, both before and after February 2019. She said she had made many attempts to have the Body Corporate fix the pavers, both before and after February 2019. She was also aware that the pavers had previously needed repairs, as shown by the minutes of the annual general meeting of the Body Corporate held on 13 June 2012, at which the Body Corporate had resolved (on a motion submitted by the committee) that it agree to paving repairs on the common property area adjacent to lot 17 and that it accept a quote for carrying out those repairs, to be paid from the sinking fund. [49] Ms Huang said that her efforts to have the pavers repaired included attending the annual general meeting held on 25 June 2019. At that meeting, she submitted a resolution to the effect that the Body Corporate have the pavers repaired.29 The resolution was lost.30 [50] Notwithstanding Ms Huang’s efforts, nothing was done until October 2022. This was despite the fact that, in 2021, she applied to the office of the Commissioner for Body Corporate and Community Management (CBCCM) for orders requiring the Body Corporate to carry out repairs. That application led to a conciliation agreement dated 31 May 2021 between her and the Body Corporate, under which the Body Corporate agreed to have a suitably qualified contractor carry out works that had been recommended in an engineer’s report obtained by Ms Huang in 2020. The Body Corporate did not carry out those works, so she applied again in 2021, which led to an adjudicator, on 1 June 2022, ordering the Body Corporate to restore the paved area to good condition within four months.31 25 The plan is at exhibit 7, p 883. 26 The new office is shown on a subsequent plan: exhibit 7, pp 894-895. In her cross-examination, she agreed that it was present there when she bought lot 17: T6-47. 27 Exhibit 8, p 10 contains a photograph of the unit and downpipe. 28 At some stage between December 2020 and December 2022 a drain was installed under these air conditioners and further alongside the wall of lot 17 to discharge points on the driveway: compare exhibit 8, p 10 and p 50. A quote for the work is at exhibit 7, pp 1959-1960. In her evidence, Ms Huang agreed that it was installed in August or September 2021: T6-48. Ben Lancini, an engineer who gave evidence, recorded that, during his inspection on 4 November 2022, the outlets from the air conditioners discharged about 2 litres of water an hour. 29 Exhibit 7, p 1451. The full resolution is set out at [185] below. 30 As were four other motions submitted by Ms Huang, with a sixth motion ruled out of order by the chair. 31 The agreement and the order are in exhibit 7A. -- 12 of 64 -- 9 [51] Ms Huang said that, during the rain on 3 February 2019, the water entered the restaurant through the door to the office and the next door.32 She maintains that that occurred because the pavers were uneven and directed the water toward the building. [52] Ms Huang said that another door of the restaurant, which had been the main entrance to the restaurant and was the designated fire access door, was, for a time, blocked by the pavers in the common area, which had become uneven and were raised in places.33 That door – one of two that opened outwards – was often used as the disabled access door because the designated door was a single door that was sometimes difficult for wheelchairs to get through. In cross-examination, she said that, before 1 July 2020, she could open it by pushing very hard and scraping it on the pavers, but when they reopened the restaurant she could not open it due to the raised pavers. That situation continued until the pavers were re-laid in October 2022.34 [53] She went on to say that she and Mr Vanjak were concerned by the problems they were having with doors and they decided to open the restaurant only two days a week (having previously opened seven days a week) from July 2020. She did not accept that the restaurant’s operations were affected by regulatory restrictions imposed in 2020 during the Covid-19 pandemic because, she said, it was closed until July 2020. [54] Ms Huang accepted, in cross-examination, that, when they did re-open the restaurant, she and Mr Vanjak decided to open only for two evenings a week. However, she did not accept that they could have opened more frequently. She said that was because they were concerned that the unopenable door was a fire exit that could not be used, which was contrary to her understanding of relevant fire regulations. [55] The lease between Vanjak Investments and Ms Huang provides for the lessee to pay $70,909.10 per annum rent since 1 August 2016.35 The lease also relevantly provides, in clause 15, that if the premises are destroyed or damaged so as to be unfit for carrying on the business, the rent shall be suspended and cease to be payable. If the premises are substantially damaged but not so as to be unfit to carry on the business, a fair proportion of the rent according to the nature and extent of the damage shall be suspended and cease to be payable until the lessor has rebuilt or reinstated the premises so as to be in substantially the same state or condition as before the destruction or damage. For the purpose of that clause, rent is deemed to accrue from day to day. [56] Ms Huang said that it took 17 months or so, from 3 February 2019 to 30 June 2020, to repair the restaurant and to make it fit for use, but then they still could not open the door. That meant that the rent under the lease had to be suspended. Ms Huang described the delays that occurred before substantial works could be undertaken. Eventually, she and Mr Vanjak did most of the repairs themselves, which took until June 2020. They decided to reopen the restaurant from 1 July 2020.36 They then 32 These doors are shown on a plan in exhibit 8, p 5. See also exhibit 15. 33 The door is depicted in the same plan, marked “exit”, and a photograph of it is exhibit 13. Photographs of the pavers and the blocked door are at exhibit 7, pp 1034-1037. Ms Huang’s evidence about these photographs is at T5-78 to T5-82. 34 T6-23 to T6-24. 35 Exhibit 7, p 907ff is a copy of the lease. The rent was increased by variations, to $50,505.20pa from 1 August 2011 – pp 952-954 - and to $70,909.10pa from 1 August 2016: pp 956-958. 36 T5-75 to T5-77. -- 13 of 64 -- 10 discovered that the door would not open properly, so they decided to open the restaurant only two days a week. [57] The state of the pavers outside the restaurant persisted for a long time. Ms Huang took photographs of the pavers and the blocked door in June 2022. They were not repaired until October 2022.37 [58] So Ms Huang blamed the state of the pavers in February 2019 for flooding the restaurant, which led to it being mostly inoperable for more than 2½ years, first while it was being repaired and then until the pavers were repaired. That, she claims, led to loss of employment income for herself personally and loss of rental income for herself as trustee. [59] As to her own employment income, she said that she had a written agreement with Vanjak Investments that she would be manager of the restaurant and would be paid $1,000 a week in that role.38 But after the restaurant was flooded and did not operate as it had before, from 1 July 2020 she and Mr Vanjak agreed that she would be paid only for the work she did, which was much reduced given that the restaurant has opened only two evenings a week since then.39 Mr Vanjak said that he “cancelled” the agreement. [60] Ms Huang attempted to explain how it was that the agreement was executed on 30 June 2019 and commenced with effect from 1 July 2019 even though, by then, the restaurant was already not operating – according to her and Mr Vanjak. She said that, after the restaurant was flooded and stopped operating, she became aggressive and would lose her temper and smash plates. She and Mr Vanjak agreed to separate (as a couple) and, in that context, he agreed that she should be paid $1,000 a week. That occurred for one year, after which they agreed that Vanjak Investments could not afford to continuing paying her that amount, so instead she would be paid for the times she worked.40 [61] Ms Huang tendered her personal tax notices of assessment for the financial years 2014 to 2019.41 She said that, during those years, she did not earn very much as director of Vanjak Investments, but she anticipated earning $1,000 a week under the agreement from 1 July 2019.42 [62] In cross-examination, Ms Huang was reminded of her allegation in the counterclaim that, before 1 July 2020, she had earned from the restaurant employment income of $52,000, but then earned substantially less up to 30 June 2022. She was then taken to her income tax assessments comprising exhibit 12, which demonstrated that her income in the years from 1 July 2013 to 30 June 2019 ranged from $1,600 to $17,000. She accepted that that was so, but insisted that she earned $52,000 “in 2019” (which I take to mean in the year to 30 June 2020).43 She was not challenged about that and 37 Exhibit 7, pp 1034-1038. 38 The employment agreement, dated 30 June 2019, is exhibit 9. 39 Her evidence about this is at T6-7. 40 T6-7:15-30. 41 Exhibit 12. 42 T6-11. 43 T6-44. -- 14 of 64 -- 11 neither she nor counsel for the Body Corporate referred to her income tax returns for the 2020 to 2022 financial years.44 Those returns showed the following income: (a) in 2020, she earned $9,000 in wages from Vanjak Investments, in the position of Administration Assistant, and $43,000 in “allowances, earnings, tips, director’s fees etc” for bookkeeping; (b) in 2021, she earned $15,000 from Vanjak Investments as an Administration Assistant; and (c) in 2022, she earned $14,021 from Vanjak Investments as an Administration Assistant. [63] As for her income as trustee, she tendered the trust income tax returns and Australian Taxation Office records of those returns.45 She was cross-examined, by reference to those records and returns, about the amount of her claim for lost rental stated in the counterclaim. In particular, she alleged in the cross-claim that, before 3 February 2019, she had received $78,000 annually in rental, but the trust returns show that, in each of the 2015 to 2018 financial years, the trust had income of a little over $49,000. When tested about this, Ms Huang accepted that the income under the lease in those years was as stated in the returns but, she said, the restaurant was also paying outgoings and rates for which she as landlord and trustee was liable, so she added together the amounts being paid by the lessee in reaching the approximate figure of $78,000.46 Mr Vanjak [64] Ms Huang’s former domestic partner, Dennis Vanjak, also gave evidence. He said that on 3 February 2019, during the rain, he went home to get his pets.47 He took them back to the restaurant, by which time only one corner was dry. He and his pets stayed in the restaurant overnight. The next day, there was “so much gunk, so much mess” inside the restaurant. He arranged for some friends to help him clean up with squeegees and an aqua-vac and one person lent him a carpet dryer. [65] He managed to clean up the restaurant enough to open for Valentine’s Day 2019, as people had booked for then. But after that there were long delays in fixing things due to a shortage of tradespeople, so he spent months, apparently until about June 2020, trying to fix up the restaurant, in which the carpet and the plaster developed mould. Nothing was put to him, in cross-examination, about door seals and whether, for example, there were none on the restaurant doors before February 2019 and whether he later installed them (as Mr Bazeley later said in his evidence), so he had no opportunity to agree or to disagree with those propositions. [66] Mr Vanjak said that he could not pay the rent under the lease while the restaurant was closed and so he agreed with Ms Huang to suspend it until he could reopen the restaurant 6½ days a week, as before. But when he was ready to reopen, he found that he could not open the main entry door that he had always used, due to the raised pavers. He identified the main entry door from a diagram of the restaurant already in 44 Those returns, but not the assessments, are included in exhibit 7. 45 Exhibits 10 and 11. 46 T6-41 to T6-43. 47 He described them as a chihuahua, a maltese shih tzu, a little cattle dog and a goldfish. -- 15 of 64 -- 12 evidence.48 Later, he said that he is still not using that door because, after the repair works in October 2022, the pavers can be slippery when wet. He also contended that the pavers are still uneven. At one stage, he said, “I even now could open six and a half days but I not believe the job is still being done how it should be done in a safe …”.49 [67] Mr Vanjak said that he replaced the carpet in the restaurant, having been paid by his insurance company, six to eight months “later” (which I take to mean after the rain incident in February 2019). [68] Mr Vanjak said that, in the few days after 3 February 2019, he provided breakfasts for hotel guests who had pre-paid for breakfasts, but he delivered them by room service. He disagreed that the restaurant was open, with customers inside, throughout 2019, although he agreed that it was open on Valentine’s Day 2019 and also lunch on Christmas day 2019. [69] One issue that occupied some time in the evidence was which door to the restaurant was used for disabled access. The plan of the restaurant appearing on page 4 of exhibit 8 (an engineer’s report that was tendered) shows paving in a particular area outside the restaurant where a plan on page 2 shows a single inward-opening door. Mr Lancini – an engineer called by the Body Corporate to give expert evidence – said that that door was the designated disabled access door.50 Ms Huang51 and Mr Vanjak52 both appeared to agree that that was the designated disabled access door, but they both said it was too narrow for easy access, especially for people in modern wheelchairs, so they tended to use the outward-opening double doors next along the wall of the restaurant (which were also the fire exit). The relevance of this evidence, as I understood it, was that they mostly relied on the double doors as the main entrance to the restaurant, including for people in wheelchairs. Those doors became blocked by raised pavers by the time they re-opened the restaurant in July 2020 and they remained blocked until October 2022. [70] Mr Vanjak was shown a number of posts from the Facebook page for the restaurant, which included a number of reviews posted between January 2019 and January 2020, and it was put to him that the restaurant was in fact trading, at least from time to time, throughout 2019. He said that he did not serve customers inside the restaurant, although he did serve breakfasts at tables outside. He also said that several of the posts (which he identified) were by friends of his who did not in fact eat at the restaurant on the dates of the posts, or who had eaten outside. He also said that, in his experience, some people will place posts on Facebook at different times to when they actually ate there. [71] He was also shown a number of reviews posted on Tripadvisor, which included comments posted from February 2019 to August 2022. He said that his daughter had organised for some of her friends to post reviews. He said that he continued to do room service breakfasts. He was not taken to each review, but several purported to have been at the restaurant for dinner and others for breakfast. He denied, however, that he was trading as normal. 48 Exhibit 8, p 5, figure 2. 49 T7-17:30-31. 50 T6-93:29. 51 T5-66:41-45; T5-79:31-43. 52 T7-22:23-40. -- 16 of 64 -- 13 [72] Mr Vanjak accepted that, in the first half of 2020, restaurants could not provide meals in house, but only takeaway, due to the Covid-19 pandemic. He disagreed that that was what forced him to shut the restaurant in 2020. He said that it was already shut, although he would sometimes serve some customers outside. The expert evidence [73] Two expert engineers gave evidence concurrently. Karen Messer was called by Ms Huang and Benjamin Lancini by the Body Corporate. Ms Huang obtained two reports with which Ms Messer was involved, while the Body Corporate obtained one report by Mr Lancini. Additionally, Ms Messer and Mr Lancini combined in a joint report.53 [74] In the first report tendered by Ms Huang, dated 2 December 2020,54 it identifies the author of the report as Dale Callaghan and it states that Ms Messer approved it for issue. In her oral evidence, Ms Messer said that it was jointly authored: Mr Callaghan undertook the site inspection and wrote his observations and Ms Messer “completed and finalized the report as the RTQ engineer.” Nevertheless, Ms Messer confirmed that the facts stated in the report were true to the best of her knowledge and the opinions expressed in it were her own. [75] Mr Callaghan himself did not give evidence and was not, apparently, required to attend for cross-examination even though Ms Huang clearly intended to rely on the first NCE report authored by him (and adopted by Ms Messer). The Body Corporate’s counsel did not challenge Ms Messer as to the reliability of this report, despite the fact that she said that she had not attended the site and seems principally to have approved the report’s issue. Having been tendered without objection, I can clearly take account of the facts and opinions stated in it. However, I note at this stage that, in the joint report, both Mr Lancini and Ms Messer disagreed with many of the opinions expressed in the report. I shall set out their opinions when dealing with the joint report. In the circumstances, I shall be careful in deciding whether to accept any of the contents of the first NCE report except where one or both of the expert witnesses who gave evidence agreed with it or where this report or other evidence satisfies me of the correctness of what was said by Mr Callaghan (and adopted by Ms Messer). I also keep in mind that Mr Callaghan inspected the property in November 2020, while Mr Lancini and Ms Messer did not inspect the site until October and November 2022, by which stage the pavers had been substantially relaid. [76] Ms Messer’s second report, dated 9 December 2022 (the 2 nd NCE report), identifies its author as Dale Kasper and Ms Messer having approved it for issue. Despite that, Ms Messer said that she was in fact the author, although she was not asked (and did not say) whether she had attended on site before writing the report. In the absence of evidence to the contrary, I shall assume that she did. [77] The first NCE report was based on an inspection by Mr Callaghan on 6 November 2020. In that report, he expressed the observation that the pavers at the locations where the water had entered the restaurant either directed water toward the building or were above the internal finished slab height, trapping water internally.55 53 All the reports were tendered without objection in one volume that became exhibit 8. 54 To which I shall refer as the first NCE report (Northern Consulting Engineers). 55 Section 2.0, exhibit 8, p 5. -- 17 of 64 -- 14 [78] Mr Callaghan went on to discuss the external masonry block wall, recording that:56 It was observed at multiple locations that the door opening height or slab height was within 50mm of the external ground level, with the front actually lower than the external finished ground level. [79] He went on to record his inspection of the external pavers. He recorded that the ground in the area of the water discharge outlets of the air conditioners on the wall outside the restaurant was saturated at the time of inspection and directly underneath the units the pavers were undulating, indicating that there was uneven settlement in that area (as shown in photograph 2 to his report).57 He also recorded that: The pavers to the main entrance were observed to be ‘raised’ above the internal slab height, which was not allowing the doors to open (Photograph 4). [80] Mr Callaghan concluded that the air conditioning units had contributed to some extent to the uneven pavers and the condensate drain discharge points, but the primary cause of the moisture problems was the incorrect height and gradient of the paved area more generally. He opined that the additions of exposed external paved sections, with a gradient falling towards the habitable floor level, would result in rain (particularly wind-driven) easily entering the building. He also contended that modifications to the unit complex (which I infer refers to the addition of the office and the air conditioning), the garden beds and the paving had resulted in “poor drainage outcomes” and the primary cause of the “moisture problems” was the incorrect height and gradient of the paved areas. He concluded that the “moisture ingress” was the direct result of incorrectly installed external paved areas. [81] Ms Messer inspected the property on 14 October 202258 and then produced the 2 nd NCE report. The majority of this report deals with other sources of dampness in the restaurant at the time of her inspection, which are mostly irrelevant to the issues in this proceeding. Relevantly, she observed localised areas of “heave” and subsidence in the pavers. She stated that, during periods of high seasonal rain or flooding, soils under pavers can move, resulting in the pavers moving unevenly. This is a common occurrence with external paving. To avoid that, pavers would need to be on a bed of concrete slab substrate. She concluded that the movement of the pavers was a result of stormwater flows and fluctuations in moisture content of the bedding soils and had occurred over a long period of time. However, she did not address whether the pavers, as they reportedly were in 2019, were or might have been a cause of substantial amounts of water entering the restaurant. [82] Mr Lancini inspected the property in November 2022 (that is, in the month after the paved area outside the restaurant had been repaired). In his report, Mr Lancini recorded that the paved area was generally graded to Palmer Street and the driveway to achieve the free draining design intent for surface water. However, undulations in the pavers resulted in some uneven surfaces, which he considered to be caused by tree roots exerting upward pressure on the pavers. The resulting uneven surfaces caused issues with compliant access to lot 17. The roots were principally from a large foxtail palm that had been present but had recently been removed (at the time of his inspection).59 56 Section 2.1, exhibit 8, p 5. 57 Section 2.2, exhibit 8, p 5. 58 That is, a week after the pavers had been repaired. 59 Exhibit 8, pp 28-29. -- 18 of 64 -- 15 [83] Mr Lancini considered that the air conditioning discharge did not affect the property, although at the time he inspected the premises a drain had been installed under those outlets, draining to the driveway. He also concluded that the construction of the office did not affect the flow of water on the paved area, nor adversely affect lot 17. He reiterated that the undulations in the pavers were caused by tree roots under them. [84] In answer to the question what was the cause of any water penetration into lot 17, Mr Lancini noted that two of the four doorway thresholds (apparently referring to the single door comprising the designated disabled access door and the double doors comprising the main entrance to, and the fire exit from, the restaurant) met the requirements for disabled access at the time of construction, with minimal steps into the restaurant (less than 30mm) and the segmented pavers abutted the doorways. As such, water from wind-driven rain must be blocked by door seals. He considered that leakage through the door seals of those doors was likely. [85] Mr Lancini and Ms Messer inspected the property again on 17 May 2023. In their subsequent joint report, they reviewed each paragraph of each earlier report. They disagreed with many of the statements in the first NCE report. For example, they disagreed with Mr Callaghan’s opinion in section 2.0,60 agreeing instead that a correct description was: Localised settlement and/or bulging(?) in the proximity of the Water Ingress locations nominated in Figure 2; which has potential to trap wind driven rain … or air conditioner condensate adjacent the doorway openings.61 [86] Mr Lancini and Ms Messer made the following comment on Mr Callaghan’s observation about the external masonry wall and the air conditioner discharge:62 Both experts agreed that referenced disabled access entry, refer Figure 3 (Section 3.2.1) has a level of FFL 2.9m being generally higher than the external finished ground level (segmental pavers). However, understand that at the time of the inspection paver undulations had in a local around raised the paver edges above the finished floor level of 2.9m.63 [87] They agreed that Mr Callaghan’s description of the state of the external pavers64 was correct. But they disagreed that the pavers had a gradient falling towards the building. They had been constructed with fall away from lot 17 and towards Palmer Street and the common driveway. They agreed that segmental pavers were appropriate for the area, but required ongoing maintenance to ensure that localised undulation was minimised.65 They also said that a correct description of the reasons for water ingress was:66 The external segmental pavers of and surrounding the office on common property generally grade away from all buildings (refer figure 3) towards the common driveway and Palmer Street. However, localised undulation of the segmental pavers due to organic plant growth and subsidence has occurred. The 60 See [77] above. 61 Exhibit 8, p 72. In this and all subsequent quotes from the experts’ respective reports, I have kept all typographical or grammatical errors as in the originals, except where I have inserted words [in italics and square parentheses]. 62 See [78] above. 63 Exhibit 8, pp 72-73. 64 See [79] above: the quote there is the last sentence of section 2.2. 65 Exhibit 8, p 74. 66 Exhibit 8, pp 73-74. -- 19 of 64 -- 16 subsidence is a result of over wetting of the paver sub-grade, caused by post- building completion installation of air-conditioners and their associated concentrate drains discharging directly onto the pavers. [Blank]67 was observed in the proximity of the water ingress locations nominated in figure 2 [of the first NCE report], which has potential to trap wind driven rain and maintenance water (washdown or air-conditioner condensate) adjacent the doorway openings. With prolonged exposure to wind driven rain or direct maintenance water, water penetration under door exterior weather seals appears to be the cause of the water ingress. [88] Mr Lancini and Ms Messer disagreed with Mr Callaghan’s opinion on the causes of water ingress into the restaurant. They said:68 … as reviewed and agreed under Section 3.2 water ingress in the locations nominated in Figure 2 is not as a result of stormwater but trapped wind driven rain and maintenance water (washdown or air-conditioner condensate) adjacent the doorway openings. With prolonged exposure to wind driven rain or direct maintenance water, water penetration under door exterior weather seals appears to be the cause of water ingress. [89] They also agreed that the recommendation in the first NCE report to install the grated drain under the air conditioning outlets had assisted in the drainage of wind driven rain and maintenance water that may have been previously trapped by localised paver undulations.69 [90] As to the conclusions in the first NCE report (summarised at [80] above), both Mr Lancini and Ms Messer said, in the joint report, that they disagreed with them. They said that:70 (a) the absence of weather seals on the doors was the cause of water ingress; (b) surface water generally had a grade to drain away from the building; (c) the pavers did require ongoing maintenance, which had been completed by the time of their inspection in May 2023; (d) the pavers as originally constructed had suitable drainage away from the building but, prior to installation of the drain and removal of tree roots under the pavers, localised paver undulation may have held water at the doorway thresholds. Wind driven rain or maintenance water in combination with the lack of an external weather seal were the most likely causes of water ingress. [91] In discussion of Mr Lancini’s report during their oral evidence, he and Ms Messer agreed with the matters I have summarised at [82] and [83] above. They recorded that, at the time of their inspection, there were pavers within the required path of travel that did not meet the criteria for tolerances for level surfaces71 and they would require ongoing maintenance. 67 In the report, a word was missing at the start of this sentence. 68 Exhibit 8, pp 74-75. 69 Exhibit 8, p 75. 70 Exhibit 8, p 75. 71 Pavers with square edges had a tolerance from even of 3mm between pavers and those with 5mm bevelled edges had a tolerance of 5mm. At exhibit 8, p 79, they recorded that on site measurements showed, at the time of their inspection, that isolated pavers had up to 10mm in height difference to adjacent pavers. They repeated that they need ongoing maintenance. -- 20 of 64 -- 17 [92] They also agreed with Mr Lancini’s opinion as to the cause of water penetration.72 They added that there were two mechanisms for the water ingress: maintenance leaks identified in Mr Lancini’s report and wind driven rain. Water ingress would be under weather seals and no seal was present under the disabled access door at the time of their inspection.73 [93] Finally, in their report, Mr Lancini said that he disagreed with Ms Messer’s final statement in her report.74 Ms Messer agreed with him that it is not accurate. [94] Both experts said, in their oral evidence, that the condition of the pavers in February 2019 would not have influenced the ingress of water into the restaurant during the rain event on 19 February.75 Most of the pavers sloped away from the building and there was no stormwater or other flooding up to the floor level that could have entered the restaurant. Wind-driven rain could enter the restaurant even if the pavers were still new and had been laid in accordance with the plans, with a slope away from the building. The condition of the pavers does not affect wind-driven rain ingress into the building. [95] But later, Ms Messer said that, in her opinion, the condition of the pavers in 2020 immediately adjacent to the area of the doors would lead to water ingress more often that it should have occurred and would have increased the volume of water that entered the building.76 Mr Lancini appeared to agree, noting that, as designed and originally constructed, the pavers immediately adjacent to the building sat lower than the finished floor level, so directing water away from the building. He went on to say that, since that construction, tree roots growing under the pavers could push the pavers up which could, in a very localised location over a localised length, reorientate the paver so that, instead of falling away from the driveway (by which I think he must have meant away from the building and toward the driveway), its incline could be reversed. “The pavers, in very localised locations, have undulated, causing changes in grade in isolated locations, not the intent of the entire pavement as its general arrangement, being free draining.”77 [96] Ms Messer agreed that that is what she meant. She went on to record that there was not just one rain event in early 2019. There was a prolonged meteorological low and there would have been periods when the undulations in the pavers would not have affected the amount of water entering the building. But there were periods where the opportunity arose for water from localised water ponding to be blown or otherwise enter into the building. If the pavers had still been as constructed (graded toward the driveway), the amount of water that might have entered the restaurant would have been reduced, although it could still have entered because the doors did not prevent water ingress in all situations.78 [97] Ms Messer then went on to agree again that the condition of the pavers in 2019 would not have any impact on water ingress to the property.79 72 See [84] above. 73 Exhibit 8, p 78. 74 That is, in the 2 nd NCE report: see the penultimate sentence in paragraph [81] above. 75 Mr Lancini at T6-95 and T6-96 - 97. Ms Messer at T6-96 and T6-97 - 98. 76 T6-104:15 - T6-105:10; T6-106:43 – 107:2. 77 T6-105:19 – T6-106:9. 78 T6-106 – 107. 79 T6-108 – 109. -- 21 of 64 -- 18 Credit of witnesses Ms Huang [98] Mr Hastie, appearing for the Body Corporate, submitted that I should not accept Ms Huang as a witness of credit. He submitted that in many respects her evidence was unreliable, namely: (a) her initial evidence was that she did not receive any of the contribution notices the subject of the Body Corporate’s claim;80 (b) she then said she received one notice from a neighbour who had received it, but she did not receive any others;81 (c) later, she said she had received two of the notices, and then that she had received some of them;82 (d) having denied receiving any notices from the Body Corporate, she said that she did receive one notice of an annual general meeting at her Mysterton address;83 but that evidence was inconsistent with earlier evidence that she had not received notice of the 2019 annual general meeting by mail, but had been given it by the owner of another lot;84 (e) it is implausible that, knowing that the Body Corporate sent quarterly contribution notices and having previously received them quarterly, Ms Huang stopped receiving them after complaining about the notice payable in October 2019 and she received none, or very few, over the next five years; (f) it is equally implausible that if, all of a sudden, Ms Huang stopped receiving the quarterly contribution notices, she did not raise the issue with the Body Corporate or BCS for five years or so, until she first raised it in July 2022, in her third amended defence in this proceeding, in which she denied receiving the notices; (g) during the trial, Ms Huang denied that the Body Corporate had disclosed the contribution notices to her in this proceeding,85 notwithstanding evidence from the Body Corporate’s solicitor, Ms Melton, that they had all been sent to her by email on 16 June 202286 and despite Ms Huang having insisted that she needed the notices to file her third amended defence, which she did on 23 June 2022.87 [99] I must say that I found Ms Huang’s evidence about non-receipt of contribution notices over such a long period implausible. That is especially because her evidence was inconsistent in the ways described in [98](a) to (d) above and implausible for the reasons set out in (e) and (f). Furthermore, I do not accept that she did not receive the notices in disclosure on 16 June 2022: in her defence filed on 22 June 2022, she 80 T1-85:41-42; T1-86:8-11, 16-27. 81 T6-129:38-41; T6-130:1-4. 82 T6-133:16-18; in cross-examination, T6-138:38 – T6-139:11. 83 T6-133:12-15. That address was her address for service from 4 March 2019. 84 T6-49:3-28. 85 T6-135:34-35; T6-136:4-5; T6-137:42-47. 86 T6-117 – T6-121, exhibit 21. 87 Although I note that, in that pleading, Ms Huang pleaded in very general terms to the allegation that the Body Corporate had served the notices on her, denying that the Body Corporate had served all the notices on her before 16 June 2022. That date, of course, is the date on which Ms Melton said the notices were served on Ms Huang. See also exhibit 7, pp 41, 44-47. -- 22 of 64 -- 19 denied that the Body Corporate had served all of the notices on her before 16 June 2022. She can only have selected that date because she had received the notices by emails on that date. Despite that, she continued, in her evidence, to deny that she had received those emails. That is simply not credible and it adversely affects my view of the reliability of her evidence generally. [100] There were also problems with Ms Huang’s evidence about her counterclaim. Examples are that: (a) she said that, after the rain event, the restaurant could not be opened, but for a very short time it continued to provide room service breakfasts to guests in the hotel who had prepaid for breakfast, then they completely closed the restaurant and the outdoor area;88 (b) having said that in her evidence in chief, in cross-examination she agreed that the restaurant was reopened on 14 February 2019 for Valentine’s Day dinner, which she said was done to honour existing bookings;89 (c) at the same time, she denied that the restaurant continued to trade throughout 2019 and up to March 2020; (d) Mr Vanjak’s evidence was inconsistent with that of Ms Huang, in that he said that the restaurant continued to make room service breakfasts until “not even two years ago”90 – apparently meaning later than September 2021; he also said that when he did breakfast in the mornings, customers would sit outside on the footpath,91 which was inconsistent with Ms Huang’s evidence that they completely closed the restaurant and the outdoor area; (e) he also conceded that, as well as Valentine’s Day, it had opened on Christmas day 2019;92 (f) extracts from posts on the Tripadvisor website indicate that the restaurant continued to serve diners throughout 2019 and up to March 2020.93 That evidence is also supported by the restaurant’s Facebook page,94 although Mr Vanjak said that most of the reviews on that page in 2019 and 2020 were by friends who were not, in fact, able to dine there. If that were the case, one might wonder what the point was of arranging favourable reviews when the restaurant was supposedly closed;95 (g) Ms Huang denied that the restaurant was forced to close, or to operate under severe restrictions, from March 2020 for a number of months due to government restrictions arising from the Covid-19 coronavirus pandemic, saying that it was shut anyway due to the February 2019 event; she did not appear even to accept that its operations would have been adversely affected by those restrictions in any event.96 88 T5-58:11-30. 89 T6-30:16-20. 90 T7-38:32-33. 91 T7-36:12-15. 92 T7-34:38 – T7-35:3. 93 Exhibit 23. 94 Exhibit 22. 95 Ms Huang and Mr Vanjak said they did not reopen until July 2020 – and then only two nights a week. 96 T6-32:45 – T6-34:16. -- 23 of 64 -- 20 [101] I also add that Ms Huang appears to have blamed the state of the pavers in July 2020, in preventing (or making difficult) the opening of a door, for thereafter opening the restaurant only two days a week. That reasoning is illogical. She said that she would not agree to the restaurant opening in breach of fire regulations because it was the designated fire exit that was blocked. That assertion alone is inconsistent with the restaurant being open at all and yet she and Mr Vanjak decided to open it on weekends anyway. Furthermore, although I understand that the door is no longer blocked, it is still only open on weekends. [102] Finally, I take into account Ms Huang’s pleading of the losses that she claims to have incurred, compared with the evidence about her income, both as lessor of the premises and as employee of Vanjak Enterprises. In her amended counterclaim she pleaded that, before 3 February 2019, she had received $78,000 annually in rent, but since then, as a consequence of the rain event and the condition of the pavers, she has suffered a loss of rental of $109,434 up to 30 June 2020 and $78,000 in each of the 2021 and 2022 financial years. She also pleaded that, before 1 July 2020, she had earned $52,000 in wages, but she had since lost wages of $37,000 and superannuation of $5,200 in the 2021 financial year and lost wages of $42,000 plus superannuation of $5,200 in the 2022 financial year. [103] The rent for the premises provided for in the lease was $70,909.10 (plus GST) from 1 August 2016.97 However, Ms Huang’s income tax returns for the trust in the financial years 2015 to 201898 showed rental income of about $49,000 and the return for the 2019 year showed income of $50,182.99 In contrast, in the 2020 to 2022 financial years, the income (presumably from rent) was shown at $37,140, $2,727 and $24,826 respectively. [104] Similarly, Ms Huang’s personal income tax assessments100 showed that, in the financial years for 2014 to 2019, she earned considerably less than $52,000. However, she did tender an agreement with Vanjak Enterprises under which she was to be paid a salary of $52,000 pa from 1 July 2019.101 Her income tax return for the 2020 financial year showed total income of $52,000. Her returns for 2021 and 2022 showed employment income of $15,000 and $14,021 respectively.102 [105] This comparison of the pleaded losses with Ms Huang’s pre and post incident earnings, both as trustee and as employee, reveals startling discrepancies. I shall deal with them fully when considering the losses claimed in her counterclaim, but the allegedly lost rental is certainly not supported by the income tax returns nor, indeed, by the lease itself in terms of the gross rental payable. Ms Huang did try to explain the pleaded rental figure as including the outgoings, rates and body corporate fees that, she said, Vanjak Investments was also paying.103 However, the amounts of those outgoings and other expenses were totally unproved and, no doubt, would vary from 97 Exhibit 7, pp 956-957. 98 Exhibit 10. 99 Exhibit 7, pp 51-60. 100 Exhibit 12. 101 Exhibit 9. The agreement is dated 30 June 2019. 102 The 2019 and 2022 returns are in exhibit 7. 103 The lease provided that the lessee pay certain costs – clearly associated with operating the restaurant – in addition to rent, including rates but not body corporate fees: clause 2.2 and item B in the appendix. Her explanation is at T6-43:15-24. -- 24 of 64 -- 21 year to year, so there was no basis to plead that the rent payable under the lease was $78,000 per year. [106] Similarly, the allegation in the counterclaim that, before 1 July 2020, Ms Huang earned a salary of $52,000, while true for the year to 30 June 2020, was at the least misleading, given that that was the only year in which she was paid that amount and it was under an agreement that took effect from a date some four months after the rain incident that she alleges caused her a loss of income. [107] I find that Ms Huang has a tendency to make bald assertions that she believes suit her case (both in defence and in her counterclaim) but that often do not stand up to scrutiny, particularly when compared to documentary evidence. I consider her to be an unreliable witness and I do not accept her evidence on contentious matters unless it is supported by contemporaneous documents or other evidence that I do accept. Mr Vanjak [108] Mr Hastie submitted that I should also consider Mr Vanjak’s evidence with caution. In particular, he criticised Mr Vanjak’s evidence to the effect that the reviews of the restaurant posted on Facebook and Tripadvisor were by friends and family members, not by customers who had eaten in the restaurant at about the dates of the reviews. That is particularly unlikely, he submitted, because several reviews, at least on Tripadvisor, were very negative. [109] I am prepared to accept that some of the reviews on Facebook or Tripadvisor were organised by Mr Vanjak’s daughter or were posted by friends, but surely there would be no reason to do that unless the restaurant was trading, at least on some nights. But the same cannot be said of at least some of the reviews on Tripadvisor. Some of them were good, while others were derogatory. Some were for breakfast while others appeared to be for dinner, including in March, May, June, July and November 2019 and February 2020. Those entries are inconsistent with Mr Vanjak’s evidence that the restaurant did not open for dinner from February 2019 to June 2020. [110] Given particularly the derogatory reviews on both websites, I have difficulty in accepting Mr Vanjak as an entirely credible witness. Alternatively, at the very least his recollections were not reliable. More generally, he had a tendency to revert to giving historical stories rather than direct answers to questions, although mostly I did not perceive him to be dissembling. However, he clearly blames the Body Corporate for not ensuring that the pavers are regularly maintained so as not to undulate at all, which he considers has caused his tables and chairs outside not to be even, the fire exit door not to open properly for about 30 months and ongoing possible tripping hazards for customers. Much of his evidence was not overly helpful to me, but there were clear discrepancies between the Facebook and Tripadvisor posts and his evidence about how often he opened the restaurant in the 17 months from 3 February 2019 to 30 June 2020 (and, indeed, thereafter). Also, his evidence of the reasons for not opening more frequently than two evenings a week since June 2020 was not generally plausible. Ms Messer [111] I need also to address concerns that I have about the engineering evidence tendered on behalf of Ms Huang. The true author of the first NCE report, which was undertaken -- 25 of 64 -- 22 in December 2020, was not Ms Messer, yet she appears to have accepted responsibility for it even though she did not attend at the site on that occasion. As I have set out in detail above, in the joint report and in her oral evidence she disagreed with almost all the conclusions in that report. She also quickly agreed that a conclusion in her own report was not accurate.104 That type of inconsistency continued in her oral evidence, in which she sometimes expressed a view that she later altered, or she later agreed with a statement by Mr Lancini that was inconsistent with her previously expressed view. Her approach to these matters gave me reasons to have concerns about her evidence generally, although in the end she did agree with most, if not all, of Mr Lancini’s report and oral evidence. [112] Mr Hastie did not suggest that I should have any concerns with Ms Messer’s evidence, no doubt because in the end it was generally favourable to his client’s defence of the counterclaim. But, given these matters, where there are differences between any of her evidence (including the reports made or adopted by her) and that of Mr Lancini, I generally prefer the latter unless it is contradicted by other evidence that I accept. Consideration – the Body Corporate’s claim [113] The only real issue arising in the Body Corporate’s claim, having regard to Ms Huang’s defence, is whether it “gave to” or “served on” Ms Huang each relevant contribution notice. [114] The Body Corporate issued contribution notices quarterly: in August (due 1 October), November (due 1 January), February (due 1 April) and May (due 1 July). [115] The contribution notices relevant to the Body Corporate’s claim appear within exhibit 2. Each of them is addressed to Ms Huang and bears a postal address. The postal addresses match the addresses for service that are recorded in the strata roll records for lot 17. Ms Huang accepted that her postal address for service of notices until March 2019 was the North Ward address to which each of the contribution notices up to and including February 2019 was addressed. She also accepted that her postal address for service of notices from March 2019 was the Mysterton address to which each of the contribution notices from May 2019 onwards was addressed. [116] Since the first of the relevant contribution notices was issued (in August 2016 and payable on 1 October 2016), Ms Huang has only made one payment, of $1,483.86, on 3 October 2016, for the administration and sinking fund levies invoiced in the August notice.105 [117] Ms Huang obviously received the August 2016 notice.106 Since then, however, she has said that she has received none, or two, or some of the subsequent notices. But, even if I were to accept her evidence that she did not receive all or many of the notices, apart from going to her credit her non-receipt of some or all of the notices is immaterial to her liability to pay the amounts claimed in the notices. That is because 104 See [93] above. 105 That is the date of payment according to the Body Corporate. Ms Huang contends that she paid that amount on 1 October 2016, but nothing depends on which of these dates is correct, as the amount Ms Huang paid took into account the discount on those levies allowed by the Body Corporate for payment by 1 October. The Body Corporate does not seek to recover the amount of that discount. 106 Although she said that she saw that notice on the “CommunityHub” telephone application: see footnote [40] above. She appeared to deny having received the original in the mail. -- 26 of 64 -- 23 her liability for the contributions does not depend on whether she received the notices, but on whether they were given to or served on her addresses for service.107 As the High Court has said, concerning delivery by post:108 delivery may be different from receipt by the intended recipient and, provided that delivery is not disproved, the fact of non-receipt does not displace the result that delivery is deemed to have been effected at the time at which it would have taken place in the ordinary course of post. [118] The Body Corporate relied principally on Ms Barrett’s evidence to prove delivery of the contribution notices.109 Counsel for the Body Corporate, Mr Hastie, properly acknowledged, in his submissions, that there was no evidence from any person who actually posted each notice. He submitted, correctly, that that is unsurprising given the large number of notices that BCS would have been responsible for issuing on behalf of this and other bodies corporate. He submitted that any criticism of the Body Corporate for not leading evidence of that kind should be rejected. [119] Mr Hastie relied, in this regard, on a decision of McGill SC, DCJ,110 in which his Honour (said Mr Hastie) “drew an inference from similar evidence that notices levying contributions on a lot owner had been properly served.” Mr Hastie particularly relied on the following passage from his Honour’s reasons for judgment which, Mr Hastie submitted, demonstrates that the system for service of contribution notices before his Honour was very similar to the system before this court: The process was largely automated, so that there was no particular identifiable person who was responsible for taking the various steps referred to in that judgment specifically in respect of the notice sent to the appellant. There was on the other hand a good deal of evidence about the processes of that contractor, and some evidence about the process by which information was sent to the contractor which would give rise to appropriate notices. From that evidence it was open to the Magistrate to draw the inference on the balance of probabilities that a copy of the relevant notice had been inserted into an envelope which was addressed to the appellant at the address for service, that the envelope had been duly prepaid and that it was lodged at a post office. [120] With respect, I do not consider that that decision (or that passage) assists the Body Corporate in this case. In that case, as his Honour recorded, there was a good deal of evidence about the processes of the contractor to which the body corporate sent information for the notices to be produced and posted and it was “from that evidence” that the inference could be drawn that all the necessary steps111 had been taken to “deliver” the notices. [121] The evidence in this case was not similar to that before Judge McGill SC. Ms Barrett did not give any evidence, either directly concerning these notices or of a system for dealing with such notices, which could on its face demonstrate to the Court, on the balance of probabilities, that the necessary steps had been taken to give Ms Huang the notices. The absence of such evidence distinguishes this case from that before Judge McGill SC. 107 Acts Interpretation Act 1954, s 39(1)(a)(ii), s 39A(1)(b). Both sections make it clear that they apply whether the word used in the relevant Act is “serve”, “deliver”, “give”, “send” or another expression. 108 Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87, 97. 109 See [26] above. 110 Ramzy v Body Corporate for GC3 (CTS 38396) [2012] QDC 397, [53]. 111 That is, those described in the Acts Interpretation Act, s 39A(1)(a). -- 27 of 64 -- 24 [122] This case seems more akin to the facts in other cases where delivery was not sufficiently proved. A Queensland case that was referred to by Judge McGill SC was Re Green Global Technologies Ltd,112 a decision of Daubney J. The issue there was whether the applicant to wind up the company had proved that it had served a statutory demand on the company, which the company denied having received. The applicant relied on service having been effected under s 109X of the Corporations Act.113 Relevantly, the evidence relied on by the applicant was that of a solicitor, who deposed: I did on the 13 th of March 2009 cause a letter dated 13 March 2009 enclosing the Creditor’s Statutory Demand … and an Affidavit of Debt … to be forwarded by prepaid post … to the registered office of [the company]. The solicitor exhibited copies of the documents referred to. The address on the letter was that of the company’s registered office. [123] Daubney J concluded that that evidence was not “sufficient evidence of proof of posting to enable the applicant to invoke the benefit of deemed service pursuant to section 109X.” His Honour considered earlier cases in which the facts that must be proved in order to prove service of a document by post were discussed.114 The necessary facts requiring proof are, at least, that: (a) the document to be served was placed in an envelope; (b) the envelope bore the correct name and address; (c) the envelope bore the correct cost of postage; and (d) the envelope containing the document was placed in the post, either at a post office or by putting into a post box. [124] Daubney J noted that, in Pearlburst, Barrett J had described the state of the evidence before him and held that, with the evidence in that state, he could not find that the statutory demand in the case before him was posted to the company’s registered office. Barrett J (at [24]) described the missing evidence in this way: In the present case, there is no direct evidence about what appeared on the face of the envelope; there is only evidence of what appeared on the letter … Indeed, there is no direct evidence of the existence of any envelope … There is no evidence of the amount or value of any stamp or franking affixed to any such envelope, and there is no direct evidence that anyone lodged any stamped or franked envelope (and contents) at any post office or in any post box. [125] Daubney J went on to say: I am left in a similar state so far as the evidence of service by post in this matter is concerned. … There is no evidence before me of any of the processes within the applicant’s solicitor’s office which could give me any proper basis for concluding that posting of the documents in question in an envelope addressed to the registered office of the respondent company actually occurred. 112 [2009] QSC 262. 113 Which relevantly provided that a document may be served on a company by posting it to the company’s registered office. 114 Northumbrian Ice Cream Co Ltd v Breakaway Vending Pty Ltd [2006] NSWSC 1216, [12]; Dwyer v Canon Australia Pty Ltd [2007] SASC 100, [6]; Pearlburst Pty Ltd v Summers Resort Group Pty Ltd [2007] NSWSC 1126, [22]-[24]. See also Brown v Bluestone Property Services Pty Ltd [2010] NSWSC 869, [13]. -- 28 of 64 -- 25 Accordingly, I find that the applicant has not proved service of the statutory demand by post. [126] I too am left in a similar state on consideration of the limited extent of the Body Corporate’s evidence about delivery. Ms Blair’s evidence that each of the contribution notices was given to Ms Huang was, with respect, of no assistance. Whether they were given to Ms Huang is a fact for the court to decide on the evidence. Ms Barrett said that the contribution notices were printed by BCS with the name and address on them taken from the strata roll entry for Ms Huang. Those notices were then sent to a third party to “send them out.” There is no evidence of who that third party was at any relevant time, nor whether there was more than one over the relevant period, nor what their systems were for putting address information received from BCS onto envelopes, putting notices into envelopes, stamping or franking and posting envelopes containing notices. [127] I accept that, if a person employed by the third party had given evidence, it would be highly unlikely that anyone could give evidence of actually having taken the various necessary steps with the relevant notices. But I expect that such a person would be able to give evidence of the processes undertaken as a matter of course by the third party, after receiving a bundle of contribution notices from BCS, to ensure that each notice was placed in an envelope addressed in the same manner as the notice and that the envelope was franked (most likely) or stamped with the appropriate cost of postage and then delivered to the post office or placed into a post box. From that evidence, the court could infer, on the balance of probabilities, that each contribution notice was in fact given to Ms Huang in the manner permitted by the Acts Interpretation Act and the BCCM Regulations. [128] No such evidence was called by the Body Corporate. No explanation was given for not calling someone to give that evidence. The court might infer that any such evidence would not have assisted the Body Corporate,115 but I do not consider that necessary or appropriate. I think it more likely that it was simply overlooked or a forensic decision was made that it was not necessary to seek to call the evidence. [129] In the absence of evidence to that effect, subject to the further submission made to me by Mr Hastie to which I refer below, there is no factual basis for drawing the inference that these notices were given to Ms Huang in the required manner (or at all). The onus of proving delivery is, of course, on the Body Corporate and the court cannot make a finding or draw an inference without any evidential basis. [130] However, Mr Hastie submitted that, even in the absence of such direct evidence, on all the evidence before the court I can and should infer that each of the notices was given to Ms Huang. He directed my attention to the following matters: (a) Ms Barrett’s evidence about preparing the notices with the correct addresses and sending them to a third party; (b) this case concerns a large number of notices over a long period of time, not just one notice (as in Green Global and Pearlburst); considerations akin to the presumption of regularity116 permit a conclusion that the process did not go 115 Jones v Dunkel (1959) 101 CLR 298. 116 Perhaps meaning a presumption akin to the presumption of continuance: for present purposes, one might describe that presumption as one that what has happened in the recent past is likely to continue to happen in the future, all other things being equal. (Here, as there is no issue that Ms Huang -- 29 of 64 -- 26 wrong the number of times that would be necessary to result in Ms Huang not receiving so many notices; (c) Ms Huang accepted that she knew that it was the Body Corporate’s practice to issue contribution notices quarterly and, indeed, she had been receiving and paying the quarterly levies from 2014, when she bought lot 17, to at least August 2016, when she received (or at least became aware of) the notice which she only partly paid;117 (d) despite that knowledge and, coincidentally, only since she raised objections to the manner of calculation of her contributions, between late 2016 and when she filed her third amended defence on 23 June 2022, Ms Huang never informed the Body Corporate that she was no longer receiving contribution notices; (e) it is inherently implausible that such a long period would elapse without Ms Huang raising the issue of her non-receipt of contribution notices and she could not identify any document by which she did raise such a query; (f) it is also inherently improbable that, over such a long period, BCS’s contractor would not have effectively undertaken its tasks of sending the contribution notices it received from BCS to Ms Huang by ordinary pre-paid post; (g) having initially denied that she received any of the contribution notices,118 Ms Huang changed her evidence to say that, at least at her address since March 2019, she did receive two levy notices, or some notices;119 and (h) for the reasons discussed above, I should not accept Ms Huang as a witness of credit. [131] In these circumstances, he submitted, it is open to the court to draw the inference that the documents were properly addressed and posted to Ms Huang by pre-paid ordinary post. [132] The onus is, of course, on the Body Corporate to prove its case, including that it gave the contribution notices to Ms Huang. To prove that by direct evidence would not have been hard: it simply needed to call on the “third party” to give evidence of its systems. Appropriate evidence would, as in the Ramzy case, have enabled the court to draw the inference that Mr Hastie now asks it to draw in the absence of such evidence. In contrast, the nature of the evidence upon which Mr Hastie asks the court to draw that inference is far less direct. [133] In my view, relevant to whether I should draw the inference proposed by Mr Hastie are the circumstances leading to the absence of adequate direct evidence. [134] This is not a situation where the plaintiff was taken by surprise by late evidence of the defendant, leading to a difficulty in obtaining direct evidence in time for the trial. The issue was raised (although perhaps not as well as it could have been) in the pleadings. In the statement of claim, the Body Corporate pleaded at [3] that: received previous notices sent under the same system, one might presume that they continued to be sent to, and probably received by, her in the same way.) 117 Ms Huang’s evidence, as I understood it (although it was far from clear and may not matter), was not that she received that notice in the mail, but she saw it on the CommunityHub application: eg, T6- 129 - 132. 118 T1-85:41-42; T1-86:16-27; T6-130:1-2. 119 T6-133:16-18; T6-138:39 – T6-139:5. -- 30 of 64 -- 27 Pursuant to s.140 of the [2008 regulation] and s.153 of the [2020 regulation], as they each applied at the relevant times, (“BCCM Regulations”), the Plaintiff levied contributions required to be paid by the Defendant relative to Lot 17 and the administrative fund and/or sinking fund of the Plaintiff and served notice on the Defendant of the contributions payable (“the Contributions”). [135] In her third amended defence, in answer to that paragraph, Ms Huang pleaded, for the first time: As to the allegations in paragraph 3 of the Statement of Claim, the Defendant: (a) does not admit the allegations because the matters alleged therein are within the sole knowledge of the Plaintiff, the Defendant is unable to admit the truth or falsity of the allegations. (b) Denies the Plaintiff served all of the Defendant’s contribution notices on the Defendant prior to 16 June 2022. (c) Prior to 16 June 2022, the Defendant could only view her contribution notices that were issued between January 2022 to June 2022 by use of her phone application. (d) The current balance of the Defendant’s contributions as of 23 June 2022 is $-141,345.67 (DR). [136] In the first tranche of the trial, Ms Blair gave the evidence to which I referred at [22] above. Ms Huang also gave evidence, on that occasion, that she had not received the contribution notices. [137] At the beginning of the second major tranche of the trial, on 27 September 2023, Mr Hastie applied to reopen the Body Corporate’s case to prove that the notices were given to Ms Huang. In his submission on that application, he noted that Ms Blair had simply said that the notices had been given to Ms Huang and she was not challenged about that in cross-examination. It was only during Ms Huang’s evidence that it became apparent that she denied receiving the notices. Ms Blair was not available to give additional evidence, so Mr Hastie sought to call Ms Barrett. He opened her evidence, saying:120 she will give evidence about what the records show and about the practices of Body Corporate Services for issuing levy notices. The effect of her evidence, by way of short opening, is that I’m – the Body Corporate Services maintains what’s called a strata roll, which has an address for the services of notices, including levy notices for each lot owner, including lot 17, but there have, since Ms Huang acquired lot 17 in the scheme in 2014, been three relevant addresses. The first was an address in North Ward, the second was an address of the lot itself, and then the third was an address in Misterton, and that each of those addresses were supplied, updated to the roll, and those addresses reflect the addresses on each of the levy notices which are part of exhibit 2. She will further go on to say that the way in which these levy notices are given where, as she says is the case here, that a lot owner elects to receive the levy notices by post – and I must stress we’re only talking about the levy notices the subject of the claim, so from 2016 to 2022 – that the levy notices are dispatched by post by a central office and that when they are sent, they are marked as being sent by post in the Body Corporate Services electronic record system known as Alfresco. 120 T5:11-26. -- 31 of 64 -- 28 [138] I allowed the Body Corporate to reopen to call Ms Barrett. It should be said that her evidence did not actually amount to all that was opened. In particular she gave no evidence of the matters described in the last four lines of the passage I have quoted above. I have summarised her evidence at [23] to [26] above. In cross-examination, Ms Huang asked Ms Barrett if it was possible that a contribution notice would go to the wrong address and it was only then that it came out in her evidence that BCS did not post them itself, but sent them to a third party to send them out. [139] The Body Corporate had ample opportunity to call evidence from the mailing contractor apparently engaged by BCS. It was clear on the pleadings that the Body Corporate asserted that it had served all the relevant contribution notices on Ms Huang and Ms Huang denied that it had served them all before 16 June 2022. It is surprising that appropriate evidence was not called during the first tranche of the trial. Having closed its case, two months later it obtained leave to reopen specifically to call evidence to prove that the notices were sent or given to Ms Huang by post (her nominated method for service of notices). Yet it still did not call direct evidence of the system by which the Body Corporate, BCS or BCS’s contractor, allegedly posted notices to lot owners. As I have said, in the absence of such evidence, subject to the other matters on which the Body Corporate now relies there is insufficient direct evidence from which the court can draw the inference the Body Corporate proposes. [140] The Body Corporate has therefore failed to prove directly an essential element of its claim for all but one of the notices of contribution: that they were all given to Ms Huang. [141] I must, however, refer to some of the other evidence about tax invoices (contribution notices) of which Ms Huang was clearly aware at the times they were issued. [142] On the first day of the trial, Ms Huang tendered an exchange of emails in October and November 2016 between her and BCS.121 It is relevant to set out the relevant parts of the exchange in full. She sent the first on 24 October 2016: I am the lot 17 owner of The Anchorage One, … I would like to let you know that I have paid $1483.86 on 1st October 2016. The payment of $1483.86 is paid for Admin and Sinking Levies from 01/10/2016 to 31/12/2016 for lot 17. I have not paid $4205.84, which is for the Fire Penetration Rectification (Special Levy). I am currently seeking advices from lawyer and Body Corporate Commissioner about the Fire Penetration Rectification, as well as other issues relating to The Anchorage One. My lawyer will send you a formal letter about the fire penetration and other issues of The Anchorage One, in a very soon future. [143] She sent the next on 29 November 2016, saying: I am the lot 17 owner of The Anchorage One, … In my previous email dated on 24 October 2016, I have informed the Body Corporate that I have not paid $4205.84 (still outstanding), which is for Fire Penetration; and I paid $1483.86, which is the Discounted Contribution Levy up to 31/12/2016. 121 Exhibit 4. The contribution notice referred to “as attached” and as “the attached Tax Invoice” to Ms Huang’s email of 29 November 2016 does not form part of that exhibit, but appears in exhibit 2 at pp 105-106. The debtors statement referred to as attached to Ms Timmins’ email is also not part of the exhibit, nor is it otherwise in evidence. -- 32 of 64 -- 29 According to the new Contribution Notice due by 01/01/17 (as attached) and my online Community Hub account, I have noticed that the amount of $1,483.86 (Contribution Levy) has been paid for the Fire Penetration (Special Levy) without my consent, knowledge and approval from the committee.) I request the Body Corporate to re-adjust the Tax Invoice-Contribution Notice due by 01/01/17 to the amount of $5,689.69 within seven days from the receipt of this email. (Please refer to the attached Tax Invoice) [144] On 30 November, Ms Timmins of BCS wrote an email to Ms Huang, saying: Please find attached documents for your records. The QFES inspected the premises, deemed the complex non compliant and issued a 30 day notice to repair. The Body Corporate had to raise a special levy of $65,000.00 to urgently cover these costs. These costs were split evenly by 17 lots. Please find attached debtors statement with a breakdown of your account. [145] Within about half an hour of receiving that email, Ms Huang responded: Once again, I kindly request the Body Corporate to re-adjust my Tax Invoice and online Community Hub account. The amount of $1483.86 is paid for my Discounted Contribution Levy up to 31/12/2016. The Body Corporate has no authority to use my Contribution Levy for other purpose without my consent. [146] It is clear from these emails by Ms Huang that, in some manner, she had received the contribution notices issued on 12 August 2016 and 8 November 2016 (payable respectively on 1 October 2016 and on 1 January 2017), even if she had not received them by post – and more than 30 days before they were payable (as required under s 140(1) of the 2008 Regulation). Section 140(3) of the 2008 Regulation provided that a contribution notice may be served on an owner at the owner’s address for service or in the way directed by the owner. It did not make it compulsory to serve a contribution notice in either of those ways. Service could be effected in other ways, provided that the notice was actually given to the owner. Actual service in some manner would overcome the need to rely on deemed service under s39A of the Acts Interpretation Act. [147] I am satisfied, from these emails, that Ms Huang was given (and in fact received) those two contribution notices. She became liable to pay the contributions specified in those notices on the dates respectively specified.122 [148] The position is different under the 2020 Regulation. In contrast to s 140(3) of the 2008 Regulation, s 153(3) of the 2020 Regulation provides that a contribution notice must be given to an owner (a) in the way directed by the owner or (b), if the owner has given no such direction, under s 208. The latter is expressly subject to s 153(3)(a) 122 A special levy such as the fire penetration rectification levy is a “contribution”: 2008 Regulation, s 139(2). I note, though, that s 139(5) required that contributions (with irrelevant exclusions) levied on the owner of each lot must be proportionate to the contribution schedule lot entitlement of the lot, whereas this contribution was levied equally between the lots. Lot 17 has 10 lot entitlements while all other lots have 12 (exhibit 2, p 3), so the special levy on lot 17 may well be more than the proper amount. Assuming that the figure quoted by Ms Timmins did not include GST (which the Body Corporate added to the amount of the contribution claimed by it), the correct amount would be $3,217.80. However, the calculation of a levy is not a matter that this Court can review or alter. -- 33 of 64 -- 30 and is therefore irrelevant in this case, given Ms Huang’s direction to serve notices by post. The result is that contribution notices since the commencement of the 2020 Regulation on 1 March 2021 must have been given to Ms Huang by being posted to her. [149] Notwithstanding that position under the 2020 Regulation, if the Body Corporate had shown that Ms Huang had been given the contribution notices raised since 1 March 2021 in some other way and more than 30 days before the respective due dates for payment, I consider that she would have become liable for those contributions anyway. There would be no purpose in a lot owner not being liable simply because the lot owner received a contribution notice other than in the manner directed. In such a case, this well-known principle would apply:123 An act done in breach of a condition regulating the exercise of a statutory power is not necessarily invalid and of no effect. Whether it is depends upon whether there can be discerned a legislative purpose to invalidate any act that fails to comply with the condition. [150] I cannot discern any legislative purpose in the Regulations or the Act that a lot owner would not be liable to pay a contribution simply because notice of the contribution was given to the lot owner in a manner other than the prescribed manner. The purposes of the Regulations appear to be to ensure that a lot owner is given sufficient notice of contributions to be paid by a certain date and to protect a body corporate against an owner claiming not to be liable because the lot owner did not in fact (or allegedly) receive a notice, if it is given in the prescribed manner. [151] So far as I am aware, Ms Huang did not disclose any contribution notices. The Body Corporate disclosed them all.124 Having seen them, Ms Huang has continued to deny receiving them. [152] Ms Huang did not pay the fire penetration rectification levy of $4,205.85 (including GST) payable on 1 October 2016, nor the contribution levies payable on 1 January 2017, even though I have found that she was given (or at least received) both of the relevant notices. The Body Corporate is entitled to judgment for those sums at least. [153] As for the balance of the notices, despite the absence of direct evidence of any system of BCS’s mailing contractor for posting them to Ms Huang, of itself that does not mean that I cannot be satisfied, on the balance of probabilities, that the notices were posted to her. The rule in Jones v Dunkel does not prevent any inference favourable to the party who failed to call the witness from being drawn; other evidence may justify the drawing of the inference.125 [154] It is just not credible that, over such a long period of time, the systems of BCS and its mailing contractor (which appear to have worked fine over the previous two years or so) were such that, although BCS prepared the notices and sent them to the contractor,126 none of them was (or at most only a few were) actually posted to Ms Huang. Nor is it credible that she received none, or only a few, of those posted to 123 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355, 388. 124 Each party’s list of documents is exhibited to an affidavit of Ms Huang sworn on 29 August 2023, on which she relied in the hearing of objections on day 4 of the trial, 4 September 2023. 125 J D Heydon, Cross on Evidence, [1215], citing Flack v Chairperson, National Crime Authority (1997) 80 FCR 137, 148-149. 126 As Ms Barrett said in her evidence. -- 34 of 64 -- 31 her addresses for service. For those reasons, as well as the other matters relied on by Mr Hastie,127 I consider that I can draw the reasonable inference, and therefore can find on the balance of probabilities, that each of the contribution notices was posted to Ms Huang at her address for service and in sufficient time before the contributions were payable. [155] I find that each of the contribution notices the subject of the claim was given to Ms Huang more than 30 days before the contributions were payable. [156] Therefore, Ms Huang is indebted to the Body Corporate for each of the contribution levies claimed by it and the Body Corporate is entitled to judgment for the total of those levies, namely $54,620.05. [157] The Body Corporate does not, in the body of the statement of claim, appear to seek payment of any penalty sum or interest on the fire penetration rectification levy. Paragraph 9 of the further amended statement of claim contains a table that sets out each amount of penalty interest sought, each of which is described as “Interest Raised Admin Fund/Sinking Fund”. The fire penetration rectification levy is not a contribution to either fund, but was a special levy.128 [158] However, in annexure A to the further amended statement of claim and the prayer for relief, the Body Corporate claims “interest”, under s 155 of the 2020 Regulation, on the cumulative debt including the special levy. In Mr Hastie’s submissions, he added reference to s 142 of the 2008 Regulation. The rate of interest sought is 2.5% per month, in accordance with a resolution of the Body Corporate in general meeting on 13 June 2012.129 [159] Under each of those regulations, a body corporate may fix a penalty to be paid if a contribution is not paid by the date for payment fixed in the notice of contribution. A special contribution, such as the fire penetration rectification levy, is a contribution to which sections 142 and 155 apply. [160] Therefore, Ms Huang is liable to pay the outstanding contributions, together with a penalty of 2.5% for each completed month for which each contribution has been outstanding. I shall ask the parties to agree on the calculation of those penalties up to the date on which I publish these reasons and a daily rate thereafter that I can apply up to the date on which formal judgment is given. Consideration – the counterclaim [161] The essence of Ms Huang’s counterclaim is that, because the Body Corporate did not maintain the pavers, in February 2019 they were uneven and caused substantial quantities of rain to flow towards (or to pool against) lot 17 and, in the wind, to enter under the office door and the single disabled access door. That in turn caused damage to the inside of the restaurant, rendering its dining area unusable until repairs were completed by June 2020. [162] The second part of her claim is that, by June 2020, the pavers outside the first set of double doors (which she and Mr Vanjak contend were the main entrance to the 127 See [130] above. 128 As described in the minute of the resolution to raise it: exhibit 2, p 367. 129 Exhibit 2, p 374. -- 35 of 64 -- 32 restaurant) were so uneven and raised that the doors could not be opened. That was the designated fire exit, without which Mr Vanjak and Ms Huang decided that the restaurant should be opened only two evenings a week. As I understand their evidence, they (or at least Ms Huang) saw this as reducing the risk to customers of having the designated fire access door unable to be opened. Legal principles [163] Ms Huang bases her claim for damage caused by the ingress of water into the restaurant on both negligence and nuisance. Insofar as it is based on negligence, relevant provisions of the Civil Liability Act 2003 (CLA) apply. It has been said, though, that that Act does not apply to the claim in nuisance (at least where the claim in nuisance does not involve fault or negligence), as such a cause of action does not encompass or require a duty of care and a breach of such a duty.130 Whether this is so was not raised in this proceeding, but I do note that the escape of water from a defendant’s land onto a plaintiff’s land could well (and, on Ms Huang’s case, does) involve fault or negligence on the part of the defendant.131 [164] Ms Huang’s case that the uneven pavers caused the door to be blocked from July 2020 relies on negligence of the Body Corporate in failing to maintain the pavers. Negligence [165] For Ms Huang to recover damages for negligence on the part of the Body Corporate, as Mr Hastie submitted, she must establish that the Body Corporate owed her a duty of care, it breached that duty and that breach caused her to suffer loss. The Body Corporate does not dispute that it owed Ms Huang a duty of care, although its content and extent may be unclear. But Mr Hastie concentrated on whether Ms Huang has established that the Body Corporate breached that duty and, if so, whether that the breach has caused her harm. [166] Relevantly to a breach of duty, s 9 of the CLA sets out some general principles for the standard of care: (1) A person does not breach a duty to take precautions against a risk of harm unless— (a) the risk was foreseeable (that is, it is a risk of which the person knew or ought reasonably to have known); and (b) the risk was not insignificant; and (c) in the circumstances, a reasonable person in the position of the person would have taken the precautions. (2) In deciding whether a reasonable person would have taken precautions against a risk of harm, the court is to consider the following (among other relevant things)— (a) the probability that the harm would occur if care were not taken; 130 Douglas et al, Annotated Civil Liability Legislation Queensland (5 th ed, 2021), [4.6]; Gales Holdings Pty Ltd v Tweed Shire Council [2011] NSWSC 1128, [346], [362]; Southern Properties (WA) Pty Ltd v Executive Director of the Department of Conservation and Land Management (2012) 42 WAR 287, [126] (McLure P, obiter), [329] (Pullin JA); cf Herridge v Electricity Networks Corporation t/as Western Power (No 4) [2019] WASC 94, [536]-[544]. 131 Goldman v Hargrave [1967] 1 AC 645, 656-657. -- 36 of 64 -- 33 (b) the likely seriousness of the harm; (c) the burden of taking precautions to avoid the risk of harm; (d) the social utility of the activity that creates the risk of harm. [167] Section 11 sets out general principles for causation of harm: (1) A decision that a breach of duty caused particular harm comprises the following elements— (a) the breach of duty was a necessary condition of the occurrence of the harm (factual causation); (b) it is appropriate for the scope of the liability of the person in breach to extend to the harm so caused (scope of liability). [168] This case does not raise issues concerning the scope of the Body Corporate’s liability, but only factual causation. As to that, the High Court has said:132 The determination of factual causation in accordance with s 5D(1)(a) involves nothing more or less than the application of a “but for” test of causation. That is to say, a determination in accordance with s 5D(1)(a) that negligence was a necessary condition of the occurrence of harm is nothing more or less than a determination on the balance of probabilities that the harm that in fact occurred would not have occurred absent the negligence. [169] The issues for me to decide are therefore in broad terms: (a) the extent or content of the Body Corporate’s duty of care; (b) whether the Body Corporate breached its duty of care; and (c) if it did breach that duty, whether the breach caused (in the sense that the events would not have occurred if the Body Corporate had not breached its duty): (i) the entry of water into the restaurant on 3 February 2019; and (ii) the losses claimed by Ms Huang. Nuisance [170] Mr Hastie usefully quoted this passage as an accurate summary of the necessary elements of a private nuisance:133 In general terms, the tort of private nuisance is committed where the defendant’s activity, or a state of affairs for which the defendant is responsible, unduly interferes with (or, as it has commonly been expressed, causes a substantial and unreasonable interference with) the use and enjoyment of the claimant’s land. [171] Mr Hastie went on to submit that a party may be liable for a nuisance where the party caused the nuisance, or by some neglect of duty allowed it to arise, or where it fails to take reasonable steps to remedy a state of affairs on its land causing a nuisance after becoming aware of it. 132 Wallace v Kam (2013) 250 CLR 375, [16]. The section referred to was in the New South Wales Civil Liability Act 2002, which is identical to s 11 of the CLA. This statement was adopted for s 11 by the Court of Appeal in Gratrax Pty Ltd v T D & C Pty Ltd [2014] 2 Qd R 261, [27]. 133 Jalla v Shell International Co Ltd [2023] UKSC 16, [2], quoted in plaintiff’s submissions on counterclaim, [66]. -- 37 of 64 -- 34 [172] These principles are not disputed by Ms Huang and I accept them as correct. The issues that arise for determination in this case are: (a) whether the Body Corporate neglected to maintain the pavers, which effectively allowed the circumstances to arise in which water could enter the restaurant; (b) whether the Body Corporate was aware of the risk of that happening and unreasonably failed to remedy the situation that would cause water to enter the restaurant; (c) whether either of those matters caused the water to enter the restaurant; and (d) if I find these factors to exist, whether the nuisance caused the damage claimed by Ms Huang. Factual issues [173] There are several factual bases for Ms Huang’s claim, although they all lead to alleged unevenness of the pavers. She pleads that, over many years, the Body Corporate did not maintain the pavers so that they remained relatively even and sloped away from the building. She alleges particularly that, by building the office next to the restaurant, the Body Corporate caused the pavers to slope toward the restaurant. She also alleges that, by placing the air conditioner for the office on the outside wall and not draining it properly, the water draining from that air conditioner, together with water draining onto the pavers from another air conditioner situated on an upper floor, caused the accumulation of moisture on and under the pavers, which led them to become uneven and to cause water to penetrate the restaurant from time to time, but particularly on 3 February 2019. The Body Corporate took no steps to correct this. The condition of the pavers also led to the fire access door being blocked by uneven pavers by July 2020 and from then until October 2022. The state of the pavers - evidence [174] The Body Corporate submits that Ms Huang has not proved that, in February 2019, the pavers were uneven, nor that they were in such a state that they caused water to pool against the doors or directed water to flow toward the doors of lot 17, nor that any such condition was a result of the Body Corporate failing to maintain them adequately. On that basis alone, her counterclaim should fail. [175] It is correct that there is no direct evidence, apart from the assertions by Ms Huang and Mr Vanjak, of the condition of the pavers in February 2019. However, there is substantial evidence, direct or indirect, about the condition of the pavers, or certain areas of the pavers, at different points in time between 2012 and 2023. A review of that evidence is merited. [176] First, as I have already mentioned, on 13 June 2012, at the annual general meeting of the Body Corporate, it resolved, “That the body corporate agree to the paving repairs on the common property area adjacent to lot 17 (Table 51) with the cost to be met from the sinking fund.”134 Ms Huang contends that it appears that no repairs were done, as she would have been aware of them. However, with respect that is incorrect, as she and Mr Vanjak did not purchase the restaurant business until 2014. It is 134 Exhibit 7, p 1686. -- 38 of 64 -- 35 possible that any repairs had been done well before then and there is no evidence, other than Ms Huang’s assertion, that they were not done. [177] Secondly, Ms Huang relied on a letter dated 25 August 2017 from the Townsville City Council to the Body Corporate, in which the Council asserted that the private stormwater pipe servicing the restaurant had collapsed, causing subsidence of pavers and a potential pedestrian safety hazard.135 The Council appended two photographs of the collapsed area and required the Body Corporate to rectify the situation. However, this situation had nothing to do with the area of the pavers the subject of this litigation. The Council letter stated that the pipe was located within the road reserve, which appears to be outside the relevant area. That conclusion is also supported by the photographs, which show the area of concern to the Council to be on or close to the footpath (which, at that time, appears to have been paved in the same manner as the common property outside the restaurant, although that has since been changed). [178] I should add that, on day 4 of the trial, in dealing with objections before a large number of documents were tendered, the Body Corporate objected to this letter being tendered as proof of the facts asserted in it, although it did not object to it being evidence that the Council had sent the letter making the assertions contained in it. On that day, I allowed the tender on the latter basis, but reserved to Ms Huang the right to rely on it as proof of the truth of the assertions if she could identify a statutory or other basis for doing so.136 She did not later seek to do that but, even if they were tendered on that basis, as I have said above, the area of concern to the Council is not the area now of concern to the court. [179] Thirdly, Ms Huang tendered photographs that she had taken on 27 September 2018, of the pavers outside the office area of lot 17, in the area where outlets from the air conditioning units for the office and for the upper floor were situated.137 These were the closest evidence of the pavers to the date of the February 2019 incident. They showed the pavers immediately adjacent to that wall, from the Park Regis office wall, under the air conditioner for the office, along to the downpipe adjacent to the disabled access door.138 The photographs are not overly clear, but they do show a considerable amount of moisture and some unevenness of the pavers near the wall, including (at p 1023) some pavers appearing to have subsided away from the wall. The movement in pavers has also, in part, formed a gully outside the restaurant’s office door and toward the disabled door.139 However, there are no photographs of the more general area of the pavers, nor immediately outside the two doors under which the water allegedly travelled in February 2019. [180] Fourthly, Ms Huang said that, in 2018, she made a complaint to the CBCCM about the state of the pavers, seeking (among other things) an order that the Body Corporate “fix water damage caused to my carpet.” That application was rejected by the Commissioner in December 2018 because Ms Huang had not made reasonable attempts to resolve the dispute.140 The notice rejecting the application sets out the outcomes that Ms Huang had sought in her application. Of six outcomes sought, only 135 Exhibit 7, pp 1150-1151. 136 T4-20 – 22. 137 Exhibit 7, pp 1022-1028. 138 Compare the first NCE report, photograph 9. 139 The gully is most obvious in the photographs at pp 1022, 1023 and 1028. 140 Exhibit 7A, pp 549-550. -- 39 of 64 -- 36 one concerned water damage: “The body corporate must fix the water damage to my carpet.” What that relates to is not entirely clear. The application itself is not in evidence. A later conciliation application, made by Ms Huang on 20 March 2021, that is in evidence141 refers to this application and says that, following its rejection, Ms Huang attended the 2019 annual general meeting to raise her dispute and to ask the Body Corporate to repair the common area outside lot 17, but that was rejected. [181] Despite the absence of the earlier application and notwithstanding Ms Huang’s tendency to be imprecise in her evidence, I am satisfied that the 2018 application included a complaint about the state of the pavers along the wall between the Park Regis office and the doors to the restaurant office and to the restaurant itself, although it is not clear whether she then claimed that those matters caused the influx of water into the restaurant and damage to her carpet. I make this finding having regard to the following matters: (a) the photographs referred to above; (b) the fact that Ms Huang made an application to the Commissioner some time before December 2018 (that is, probably at about the time when she took those photographs); (c) the resolution that Ms Huang sought at the general meeting of the Body Corporate in June 2019 (see below); and (d) the statement in her application of 20 March 2021 referred to above. [182] The combination of this evidence satisfies me that Ms Huang complained to the CBCCM in 2018 about the lack of drainage and the consequent state of the pavers along that wall and that it somehow contributed to water damage to the carpet in the restaurant. However, it is not entirely clear whether the Body Corporate became aware of the application at about the time it was made. The Body Corporate did not assert before me that it was not then aware of the application. However, under the BCCMA it is not necessary for an applicant to serve a conciliation application on the respondent. It appears that a respondent is likely to become aware of such an application only if the commissioner accepts it and refers it for conciliation under s 242A. The department is then required to commence conciliation (s 252D), which must of necessity involve informing the respondent of the application, even though there is no specific provision requiring such notice (as there is in the case of an adjudication application – s 243(1)(a) and (b)). [183] In the course of Ms Huang’s evidence on the first day of the trial, when she first attempted to tender documents concerning the conciliation application, she said that she started (clearly meaning started her complaints to the Body Corporate) in 2018 and sent her documents to BCS in 2018, but the Body Corporate “just ignored it”.142 Counsel for the Body Corporate did not later assert to Ms Huang, in cross- examination, that she had not complained to it about the pavers in 2018. Nor did any witness for the Body Corporate give evidence that it did not receive the application, or that Ms Huang did not complain to it, in 2018. It is open to me to infer that any evidence about this would not have assisted the Body Corporate. I am also satisfied 141 Exhibit 7A, pages 664-667; as to which, see [190] and footnote 148 below. 142 T1-67:46 – T1-68:4. Her reference to “Belinda” is to an employee of BCS. Although made in the course of Ms Huang’s evidence in chief, this statement was effectively made by way of submission on the admissibility of documents concerning the 2018 conciliation, so it was not, strictly speaking, part of her evidence. -- 40 of 64 -- 37 that Ms Huang would not have hesitated to make known to the Body Corporate her dissatisfaction with the state of the pavers, both before and after filing the application. [184] Despite the absence of direct evidence that the conciliation application was ever served on the Body Corporate, I infer and am satisfied that it was aware of the application and that Ms Huang had complained to it, in 2018, about uneven pavers outside the restaurant, particularly along the wall and the drainage of water from the air conditioners. I am also satisfied that part of her complaint was that the state of the pavers (again, particularly along the wall) had led to water damage to the inside of the restaurant on occasions of rain before February 2019. [185] Fifthly, on 25 June 2019, Ms Huang and Mr Vanjak attended the annual general meeting of the Body Corporate. The minutes of that meeting record several motions put by Ms Huang and rejected by the meeting. They included the following:143 15 PAVEMENT AREA – LOT 17 Submitted by owner Lot 17 Yue Huang I submit the fourth motion that the Body Corporate is to engage licensed tradesman to exam and repair the tiled pavement, and to exam and repair any water damage caused to unit 17. The pavement area is defined as outdoor dining on the Building Format Plan. The pavement is in a very poor condition due to lack of maintenance and repair, it accumulates excessive water when raining. The edge of the pavement is cracked and dissolved due to long-term water damage. During the massive rain fall happened in Townsville recently, rain water submerged through cracked and dissolved areas into unit 17 causing flood inside the unit 17. RESOLVED that motion 15 be lost. [186] Sixthly, on 3 June 2020 the Committee of the Body Corporate met. The minutes of the meeting144 contain two items of relevance. Drainage Under Tiled Area of Lot 17 & Relaying of Tiles Chairperson has discussed with Franzmann Plumbing that the drainage under the tiled area under Lot 17 will require repair before the tiles can be lifted and repaired. Chairperson to confirm if quotation request to be issued to Franzman Plumbing by BCS or Onsite Management. BCS to arrange quotation for the relaying of the tiles for committee review. Fire Exit Sign Lot 17 Chairperson circulated a quote during the meeting, it was discussed that the Body Corporate should leave the current fire exit sign where it is and install another over the other door to ensure compliance. The Body Corporate not proceed with the quote to relocate the existing exit light and onsite management will obtain a quote to install an additional exit light over the other door for committee approval. I understand Ms Huang to rely on the first of those items as comprising an admission by the Body Corporate that repairs were required to the drainage and tiles outside lot 143 Exhibit 7, p 1451. 144 Exhibit 7, pp 1438-1441, at 1440 and 1441. -- 41 of 64 -- 38 17 and on the second as corroborative of her complaint that the fire access door was unable to be opened at around that time. [187] Seventhly, on 8 October 2020 the Body Corporate committee met again. Mr Vanjak attended the meeting as representative of the owner of lot 17. The minutes145 again contain two relevant items. Relaying of Pavers Quotations from Ausnorth Building & Constructions and Programmed Property Services were tabled. The scope of works and cost were compared, with Ausnorth Building & Construction $3,253.20 + GST and Programmed Property Services $3,80.00 (sic) + GST. It is agreed the contractor, Chairperson, Strata Manager and Onsite Manager will review the site and confirm the scope is sufficient before proceeding. MOTION That the body corporate committee resolve to carry out repairs to the pavers as per the scope and quotation from Ausnorth Building & Construction at a cost not to exceed $3,253.20 + GST, with costs to be met by the administration fund. RESOLVED that the motion be carried. Fire Exit Sign – Lot 17 It was agreed by the Committee and Lot 17 representative that the matter will be resolved once the pavers have been relayed, as this will enable the door with the existing fire exit sign to be used. Item Deferred for further review. I understand Ms Huang to rely on these items in the minutes as admissions by the Body Corporate that the pavers then needed repair and relaying and that, pending those works, they were obstructing the fire exit door and preventing its use. [188] Eighthly, Ms Huang tendered a letter dated 3 November 2020 from the Council to the Body Corporate, in which the Council recorded that the office had not been the subject of a development approval and required it either to demolish the office or to apply for a development permit.146 Attached to that letter were two photographs of the office, including areas outside it. One of them clearly shows the pavers from the wall outside the office of lot 17 (with the air conditioners) to the driveway. That area of the pavers does not appear to be uneven and it clearly slopes toward the driveway rather than toward the wall outside lot 17. [189] Ninthly, the first NCE report describes the state of the pavers, with some photographs, as they were on 6 November 2020. There is no evidence that any work on the pavers been undertaken since February 2019. While I have summarised the report above,147 it is important to record here some of the descriptions in that report (NCE) and the comments made about them in the joint report of Ms Messer and Mr Lancini (ML). [NCE, 2.1] It was observed at multiple locations that the door opening height or slab height was within 50mm of the external ground level, with the front entry actually lower than the external finished ground level. 145 Exhibit 7, pp 1422-1425. 146 Exhibit 7, pp 1146-1149. This letter was admitted into evidence on the same basis as the August 2017 letter and, again, is not in evidence as proof of the assertions made in it, but simply that the assertions were made. 147 At [77]. -- 42 of 64 -- 39 [ML] Both experts agreed that referenced disabled access entry, refer Figure 3 (Section 3.2.1) has a level of FFL 2.9m being generally higher than the external finished ground level (segmental pavers). However, understand that at the time of the inspection that paver undulations had in a local around raised the paver edges above the finished floor level of 2.9m. [NCE 2.2] The external wall/paved area was inspected for any signs of water damage. There are two air-conditioning units which are discharging a small amount of water at a constant rate, with the ground in this area being saturated at the time of inspection. Directly underneath the units, the pavers are undulating, indicating that there was uneven settlement in this area (Photograph 2). The ‘cream’ coloured wall paint finish was also stopped at the existing paver height, which due to settlement has exposed a non-painted surface (Photograph 3). This area is mouldy given the constant damp conditions and lack of exposure to sunlight. The pavers to the main entrance were observed to be ‘raised’ above the internal slab height, which was not allowing the doors to open (Photograph 4). [ML] Experts agreed on content. Ben (LCE) questioned whether NCE had lifted pavers and inspected the subbase. That is to confirm if tree roots were the cause of the isolated “raised” pavers above the internal finished floor level adjacent the Lot 17 access door. Karen (NCE) advised that NCE had not lifted the pavers to observe the sub- base, however agreed with the content in the later reviewed LCE report that the localised pavement raising/undulation is a result of tree root growth. [190] Tenthly, on 31 May 2021, a conciliation meeting occurred between the parties in the office of the CBCCM, at which the parties agreed,148 among other things, that: 1 The body corporate acknowledges that it is responsible for maintaining common property in good condition and, if it is structural in nature, in a structurally sound condition. 2 The body corporate acknowledges the area, the subject of this dispute is common property and that the body corporate must maintain the area in good condition. 3 The body corporate has accepted a quote from a suitably qualified contractor to carry out the recommendations contained in the [first NCE report]. [191] Eleventh, on 12 July 2021, Ausnorth Building & Construction provided a quote to the Body Corporate to remove and reinstall pavers along the wall between the Park Regis office and the disabled access door of lot 17 and to install a new drain along that wall to take overflow from the air conditioners and to connect the drain to the existing storm water downpipe and drain. In her evidence, Ms Huang said that the Body Corporate did have the drain installed, but only did a little bit.149 148 The document recording the agreement is at exhibit 7A, pp 553-554. The conciliation application, dated 20 March 2021, is at pp 664-667. These are more documents tendered on the basis that the assertions contained in them were made, but not as to the truth of the assertions. However, I do not apprehend that the Body Corporate disputes that it made this agreement. 149 T5-64:23-34. The drain appears in photograph 25 to Mr Lancini’s report: exhibit 8, p 50 and in the photographs in exhibit 24. -- 43 of 64 -- 40 [192] Twelfth, on 1 November 2021, in minutes outside a committee meeting of the Body Corporate,150 the following motion was carried by the committee: Relay and Level the pavers outside of Lot 17 to not interfere with the door That the Body Corporate engage Ausnorth to relay the pavers outside of Lot 17 to make them level so there is no interference with the door of Lot 17 and authorise the expenditure of up to $5000 including GST with the expenditure to be drawn from the sinking fund. [193] Thirteenth, on 1 June 2022, an adjudicator in the office of the CBCCM published a decision,151 in a different application, in which the adjudicator ordered that: Within four months, the Body Corporate restore to good condition the paved area outside lot 17, including correcting the fall so it drains toward the driveway rather than toward lot 17, correcting the subsidence and uneven pavers, and correcting any rising pavers that impede the operation of lot 17’s doors. The adjudicator was satisfied that the pavers were in poor condition in reliance on the first NCE report. There appears to have been no contrary report. The Body Corporate was apparently represented by its solicitor at both the conciliation and possibly the adjudication, as its committee had resolved to authorize that representation in its meeting on 26 May 2021.152 [194] Fourteenth, on 2 June 2022, Ms Huang took a series of four photographs of some areas of the pavers outside lot 17.153 They clearly show areas of very uneven paving, although only the first and the last show where they are. The last photograph clearly shows a paver blocking a door from opening. Ms Huang said that that door was the fire exit door.154 [195] Fifteenth, on 7 October 2022, some labourers undertook works outside the fire exit doors. Ms Huang took a photograph through the doors from inside the restaurant.155 The works involved were apparently lifting and relaying the pavers. Ms Huang said they did not remove the tree roots before relaying them. While Mr Hastie objected to her giving that evidence, Mr Lancini first visited the site on 4 November 2022. He reported that he had lifted some pavers and had seen tree roots under them. Photographs 11 and 13 in his report show roots under the lifted pavers outside the single disabled access door. I am prepared to infer that tree roots also remained under the pavers outside the adjacent fire exit doors. [196] Sixteenth, on 14 October 2022, Ms Messer and a colleague from NCE inspected the site again. As I have indicated earlier, most of her report following that inspection (the 2 nd NCE report) does not deal with matters the subject of this proceeding. 150 Exhibit 7, p 1495: essentially a flying minute. 151 The Anchorage One [2022] QBCCMCmr 204. A copy is in exhibit 7A, pp 556-560. Ms Huang’s adjudication application, dated 29 September 2021, is at pp 668-671. Again, these documents are tendered as proof that they were produced, but not as to the truth of the assertions within them. Neither party addressed me on whether any issue estoppel arises from this decision. 152 Exhibit 7, p 1505. 153 Exhibit 7, pp 1034-1037. The location from which Ms Huang took the photograph at p 1034 was marked with an ‘X’ by Ms Huang during her evidence, on the plan at p 883. 154 T5-81:43-45; T5-85:37-42. 155 Exhibit 7, p 1038. It clearly appears to be the fire exit doors, as they were the only set of double doors with pavers laid outside. They can also be seen in photograph 9 in Mr Lancini’s report. -- 44 of 64 -- 41 However, she did make the following comments about the pavers. Again, it is important to record here some of the descriptions in that report and the comments made about them in the joint report. [ NCE] 2.3 External Pavers At the time of the inspection the owner indicated that the pavers outside the main restaurant building are undulating and uneven (Photograph 13). In addition, localised areas of heave/subsidence were also observed (Photograph 14). 3.0 DAMAGE CAUSATION 3.2 External Pavers The movement and subsidence of the external paving is a result of seasonal fluctuations in moisture content of the bedding soils. The foundation material and bedding for the pavers expands and contracts with changes in moisture content, ingress of stormwater. During periods of high seasonal rain or flooding, the soils can move, resulting in movement of the paving. This movement does not always occur evenly over the entire paved area. This is a common occurrence with external paving. If paver bedding is to remain level for access/use purposes; the pavers should be bed on a concrete slab substrate or alternatively the pavers changed for a reinforced concrete slab. 5.0 CONCLUSION The movement of the external paving is a result of stormwater flows and fluctuations in moisture content of the bedding soils and has occurred over a long period of time. [ML] 2.3 External Pavers Experts to reviewed condition of external pavers on site to provide a confirmation of whether the pavers are fit for purpose. … AS142.1 Section 4 Clause 4.2 nominates deemed to comply requirements for construction tolerances at abutment of surfaces. This section of the code nominates that construction tolerances shall be 0mm +/- 5mm, provided the higher edge is bevelled or rounded to reduce the likelihood of tripping … From the onsite measurements shown isolated locations pavers have up to 10mm in height difference to the adjacent paver … Ben (LCE) and Karen (NCE) agreed that segmental pavers do require ongoing maintenance … 3.2 External Pavers Experts agreed on content regarding what seasonal moisture variation may do to segmental paver systems. … However as per the combined review comments of Section 2.3, localised rectification of pavers are required to ensure no paver is more than 5mm higher than an adjacent paver at the time of inspection. With the completion of the required maintenance works both Ben (LCE) and Karen (NCE) agreed the external area was fit for purpose. 5.0 CONCLUSION … Ben (LCE) and Karen (NCE) agreed that the content of the Section 5 Conclusion is not considered accurate. -- 45 of 64 -- 42 [197] Seventeenth, on 4 November 2022, Mr Lancini inspected the property, leading to the production of his report. Again, I extract relevant parts of his report (LCE) and add the comments from the joint report. [LCE, 3.2; ML agreed] The segmentally paved area of 51-55 Palmer Street generally grades to both Palmer Street and the shared driveway to achieve the free draining design intent for surface water. However, undulations in the segmental pavement have occurred which has resulted in some uneven surfaces. Lancini Consulting Engineers investigated the movement onsite via removal of segmented pavers. Our determination for the cause of the movement is by tree roots. That is the growing tree roots will exert an upward pressure on the pavement, whereas soil subject to drying because of tree or shrub roots will tend to remove support from under the pavement by inducing shrinkage. The tree roots are stemming from the raised garden bed within the property boundary. We are aware that this garden bed has been recently (post 2019) modified to remove a mature (over 5m tall) foxtail palm (refer Photo 2). From investigation onsite, whilst the foxtail palm has been removed the tree’s root system was extensive and remains present under the Shared External Pavement. In regards to rectification, all existing tree roots should be removed prior to releveling the paved area. [LCE, 4] a) Is the Pavement in the common property area fit for purpose Generally, the Common Area Pavement, refer to as “Shared External Pavement” in Table 3 was constructed in a fit for purpose manner. The segmentally pavement construction is suitable for pedestrian loads, a sand bedding layer has been installed as an appropriate subbase, and the pavement is graded to achieve a free draining surface. The pavement defects identified are uneven surfaces, causing issue with compliant access to Lot 17. The cause of this is confirmed as tree roots induced movement by a mature (over 5m tall) foxtail palm within the internal property garden bed which has since been removed locally. However, the root system remains. [ML] … as per the combined review comments of Section 2.3, localised rectification of pavers are required to ensure no paver is more than 5mm higher than an adjacent paver at the time of inspection. With the completion of the required maintenance works both Ben (LCE) and Karen (NCE) agreed the external area was fit for purpose. Ben (LCE) and Karen (NCE) agreed that segmental pavers do require ongoing maintenance … [LCE, 4] d) Has the construction of the office affected the direction of the water flow on the common property? If so: …based on our onsite inspection, the segmentally paved area of 51-55 Palmer Street grades to both Palmer Street and the shared driveway to achieve the free draining design intent for surface water. As such we do not believe that the office construction has adversely effected Lot 17 regarding stormwater infiltration. -- 46 of 64 -- 43 i. Where is the heaving located in relation to the redirected flow? The highest degree of pavement movement was observed in the location of Photo 11.156 ii. Is the heaving in isolated areas The office does not affect the direction of the water flow on common property. … as the overland flow is directed towards the common driveway, away from the office and Lot 17, the office construction does not affect the direction of water flow. [ML] Experts agreed on content. NCE had available As-constructed building information including external site levels of original construction. Karen (NCE) and Ben (LCE) agreed that post construction of the office that original design intent for surface water flow has been maintained i.e., surface directed through fall to common driveway. [LCE] h) What is the cause of any water penetration to Lot 17 and what damage has been caused as a result? From our observations, the common area’s grades to both Palmer Street and the shared driveway to achieve the free draining design intent for surface water. Two of the four doorway thresholds where constructed meet the requirements of eth National Construction Code of the time which includes provisions for entry or persons with disabilities. As such here is only minimal steps into the building (less than 30mm) and the segmental pavement abuts the doorways. As such water from wind driven rain and external pavement wash down must be blocked from the door seals. From our inspection we believe that leakage through door seals in Photo 11 and Photo 12 is likely.157 [ML] Experts agreed on content. Karen (NCE) and Ben (LCE) discuss the water infiltration was via two mechanisms. 1) Maintenance leaks as identified I the LCE report 2) Wash down and wind driven rain Agreed no structural damages. Water ingress under weather seals and no weather seal were present under Disabled access door at the time of inspection. [198] Eighteenth, on 17 May 2022, both Ms Messer and Mr Lancini inspected the site again, for the purpose of their joint report. Obviously, the site differed then from its state in February 2019, but I have set out above their relevant comments on the earlier reports and their observations on this occasion. [199] Finally, there is the evidence of Mr Dille and Mr Bazeley. As Mr Hastie points out in his written submission, neither of them was cross-examined. I have summarised their evidence above,158 but Mr Hastie relied on particular passages for the proposition that Ms Huang has not demonstrated a failure by the Body Corporate to take 156 That photograph is of the area outside and between the disabled access door and the fire exit doors. 157 Photos 11 and 12 were of the areas outside the disabled access door and the fire exit doors respectively. 158 [28] to [33]. -- 47 of 64 -- 44 reasonable steps to maintain the condition of the pavers. He submitted that it is not enough for her to demonstrate that the pavers were, for example, between regular and appropriate maintenance, not in a perfectly even condition. The state of the pavers – discussion The office [200] The first assertion to consider is that the presence of the Park Regis office and the pavers outside it caused or contributed to water running toward and into lot 17. [201] Photograph 2 in the first NCE report and photographs 14 and 15 in the Lancini report appear to show that the pavers from the side of the Park Regis office were sloped overall toward the pavers outside the lot 17 office door. However, NCE photograph 9 and photograph 13 in the 2nd NCE report both appear to show an overall gradient, as well as toward the lower pavers, toward the driveway. A drain access point appears in the middle of the area outside the office, but there was no drain along the wall under the air conditioning units. [202] Mr Lancini and Ms Messer clearly stated that that area of pavers, as designed, as laid and after construction of the office, had an overall gradient toward the driveway. They excluded water on that area as a cause of any water entering lot 17.159 Photographs, of course, can be deceptive so, despite the apparent gradient showing in the photographs to which I referred above, and not having viewed the site myself, I accept the experts’ evidence in this respect and I find that the construction of the office and the gradient of the pavers beside it were not such as to direct water into Ms Huang’s premises. The air conditioning outlets [203] As for the air conditioning drainage outlets, I accept and agree with the description of photograph 2 at NCE2.2, set out in [189] above. It is confirmed by photograph 2 in that report, as well as Ms Huang’s photographs taken in September 2018 (see [179] above). [204] The drainage outlets certainly caused moisture to accumulate under the pavers near the wall of lot 17, from near the Park Regis office to the edge of that wall next to the designated single disabled access door. That moisture caused subsidence and lifting of the pavers along the wall, including the formation of a gully along the wall that terminated in the area around the downpipe.160 No drain existed anywhere along that wall until it was installed some time in the second half of 2021, after the conciliation agreement. However, while causing that subsidence and associated damage, the experts agreed that the condensate discharge emanating from the air conditioners did not cause or contribute to water entering the restaurant. I accept that evidence. [205] I have referred above to Ms Huang’s evidence about the drain recommended by NCE in its first report.161 Ms Huang appeared to be saying that the Body Corporate only put in half the length of the drain recommended by NCE in its first report. That appears to be correct, but it probably results from a misunderstanding on the Body Corporate’s part. The recommendation for the drain is a little vague: it was that it be 159 See [197] above, LCE 4(d) and ML comment. 160 The gully is most obvious in the photograph in exhibit 7, page 1023. 161 At [191]. -- 48 of 64 -- 45 installed “along the perimeter of the building from the two highest points either side of the existing, sub-surface, stormwater discharge pipe.” The installed drain appears to be only from one side of the stormwater discharge pipe which, I understand, extends sub-surface from the downpipe next to the disabled access door to the driveway. The recommendation appears to require additional drainage further along the perimeter (that is, in front of the disabled access door and the next, double doors (the fire exit doors) of the restaurant), although it is not clear what is the highest point on that side of the discharge pipe. [206] Subject to my comments below about the unevenness of pavers causing water to pool outside the doors, I find that the air conditioner outlets and the discharge of water from them did not, of themselves, cause any water damage to lot 17. The uneven pavers [207] That leaves the issue of the alleged general unevenness of the pavers causing water to enter lot 17. Although there is little or no direct evidence of the state of the pavers in February 2019, my review of the evidence about the pavers and historical references to them enables me to draw inferences about their state from time to time, including in February 2019, and about the Body Corporate’s reactions over time to complaints about them. [208] Mr Dille was really unable to recall any facts about the state of the pavers in 2019. He could not remember what the ongoing issue was about the paved area. While he said that his recollection was that there were one or two loose, but generally the rest of the pavers were even, I do not accept his evidence in that respect because he clearly had little or no recollection of the situation and events around that time. [209] Mr Bazeley’s evidence was almost equally vague and general, particularly his assertion that the pavers were fine. But he did accept that “now and again” there were uneven pavers, including four or five in front of the restaurant. “Now and again” suggests that the pavers were maintained from time to time, whereas earlier he said that the owners would not let him look after the area. He certainly did not say that he maintained the pavers by, for example, relaying uneven pavers. With respect, his estimate of four or five uneven pavers outside the restaurant was equally vague and implausible and it is inconsistent with many of the photographs. He struck me as not really having a recollection of how many were uneven, nor where they were with any degree of accuracy. [210] In summary, I did not find either Mr Dille’s or Mr Bazeley’s evidence particularly helpful. [211] There is no doubt in my mind that the pavers in the area under the air conditioning outlets and extending at least to the disabled access door were uneven before and in February 2019. Together with the absence of a drain under the air conditioning outlets, that unevenness is likely to have caused a tendency for water to pool in places on the pavers. As I have also said, the pavers also formed a gully under the restaurant office door and toward the disabled access door. [212] The Body Corporate committee minutes of the meeting on 3 June 2020 appear to accept that the pavers outside lot 17 required lifting and relaying at that stage, as well as requiring drainage to be installed. Similarly, the committee meeting on 8 October -- 49 of 64 -- 46 2020 acknowledged that repairs to the pavers were required, including that they prevented (or at least obstructed) the use of the designated fire exit doors. [213] The pavers outside the disabled access door are best described and shown in the first NCE report. Although the inspection leading to that report did not occur until 6 November 2020, on the balance of probabilities I consider that the state of the pavers at that stage was not dissimilar to their state in February 2019 and in the months thereafter. This conclusion is supported by the photographs of the pavers along the wall under the air conditioning units to which I have referred. Certainly it is likely that the pavers did not remain stable and stationary after the February deluge, but I am satisfied, from my review of the evidence concerning the period up to then and within the few months thereafter, that the pavers outside the restaurant doors (not only along that wall) were uneven for a considerable period before November 2020, including in February 2019. [214] The first NCE report clearly demonstrates unevenness of the pavers outside lot 17. Indeed, they were so uneven in places that, by then, they had risen above the level of the slab that formed the floor of lot 17, particularly outside the double fire exit doors, thus impeding the ability to open those doors. That was most clearly shown in photographs 4 and 7 of that report. I find that the pavers were in a similarly uneven state in February 2019, although they were not then so high as to obstruct the fire exit doors. [215] The uneven state of the pavers continued throughout 2019, 2020, 2021 and until October 2022. This was demonstrated, not only by the matters to which I have referred in the above few paragraphs, but also by the events subsequent to the first NCE report that I have described at [190] to [196]. These matters, together with my analysis of the evidence about the pavers, satisfy me that there was substantial unevenness of the pavers, including forming a gully along the restaurant wall and ultimately blocking the fire access doors (at least from around June 2020), between some time in the second half of 2018 (at the latest) and October 2022. The second NCE report shows that that unevenness had been substantially repaired by the time of Ms Messer’s inspection on 14 October 2022 (a week after the repairs). Ms Messer referred to some pavers remaining above the proper tolerance of 5mm difference in height between them (2.3) but, of the photographs to which she refers, photograph 13 shows the area outside the Body Corporate office, not outside the restaurant, and only photograph 14 shows the unevenness to which she refers. However, the latter photograph (apparently taken outside the disabled access door) appears to show an overall gradient toward the driveway and no areas where water may then have pooled against the disabled access door. What caused the water ingress to lot 17? [216] Having found that the pavers were uneven, including that a “gully” existed in the pavers under and between the air conditioning units and the disabled access door, did those things cause the rainwater to enter lot 17? Or was there another cause, unrelated to the pavers? Even if the pavers caused the ingress, could anything have stopped the water and, if so, who was responsible for it? [217] Of course, Ms Messer and Mr Lancini did not see the pavers before late 2022. Their views on the state of the pavers in 2019 must therefore yield, where necessary, to the description of the pavers in the first NCE report, which was prepared closer to -- 50 of 64 -- 47 February 2019 and before repairs were undertaken to the pavers, and to other reliable evidence of the state of the pavers at times closer to (including before) February 2019. It is particularly notable that the experts placed reliance on the “as constructed” drawing in concluding that the pavers were constructed with a general slope away from the building and toward Palmer Street and the driveway. But they did concede that the undulations in the pavers and the difference in the height of the pavers and the doorway entrances would trap water from wind-driven rain and maintenance water (such as air conditioner condensate) against the doorway openings, which, with prolonged exposure to that water, would permit water to penetrate under any exterior door seals (if any were present) and that this, together with the absence of door seals, was the cause of the water ingress.162 That seems inconsistent with their conclusions stated in their oral evidence summarised at [94] and [97] above and more consistent with their evidence at [95] and [96]. If water was trapped against the doors due to these factors, then that may well be a nuisance caused by the state of the pavers and the absence of a drain under the air conditioners and outside those doors. [218] The first complaint in Ms Huang’s counterclaim is that the construction of the office, including the undrained air conditioner drain pipes, caused water to drip on the common property continuously, which resulted in the poor condition of the pavers in that area and caused water to penetrate her lot, damaging the foundation, structure and contents for a prolonged period of time.163 [219] There is some evidence of water penetration to lot 17 before February 2019. The only substantive evidence is Ms Huang’s complaint in 2018 to the CBCCM, in which she apparently complained about the state of the pavers and sought an order that the Body Corporate “fix water damage to my carpet.” However, Ms Huang did not give any evidence of what actually happened to her carpet on that occasion, nor possible causes of any damage to it. The first NCE report does state that the absence of drainage caused some moisture problems and the photographs, as I have said, show a gully formed in the pavers toward the restaurant office door and the disabled access door. I am not satisfied that the air conditioner outlets themselves directly caused any water to enter the lot, but I am satisfied that Ms Huang had complained to the Body Corporate about the entry of water into the restaurant in 2018. [220] The second (and clearly the principal) complaint arises from the rain event on 3 February 2019. That event appears to have been unusual in its intensity, but perhaps it is not overly surprising given Townsville’s location and climate. [221] I accept Ms Huang’s and Mr Vanjak’s evidence that a substantial amount of water entered the restaurant office and principal dining area during and as a result of that rain event. Did the state of the pavers, either their unevenness or the absence of drainage (or both factors), cause or contribute to the water entering the restaurant? [222] In their joint report, Mr Lancini and Ms Messer agreed that water ingress through the office and disabled access doors was a result of “trapped wind driven rain and maintenance water (washdown or air-conditioner condensate) adjacent to the door openings” and “wind driven rain or maintenance water in combination with the lack of an external weather seal are the most likely cause of moisture ingress.”164 162 Joint report, exhibit 7 p 75, at the top in section 4.1, in section 5.0 paragraph 1 and at the foot of the page, also in section 5.0. See also the extracts at [87], [88] and [90] above. 163 Counterclaim paragraphs 10 to 13. 164 Note 162 above. -- 51 of 64 -- 48 Mr Lancini also commented that the installation of the grated drain along the wall beneath the air conditioners had assisted in drainage of wind driven rain … which may have been previously trapped by localised paver undulations.”165 [223] Also, as I have recorded above, Ms Messer’s oral evidence was that, if the pavers had still been as constructed (not uneven and graded toward the driveway), the amount of water that might have entered the restaurant would have been reduced, although it could still have entered because the doors did not prevent water ingress in all situations. [224] The Body Corporate relied on oral evidence of Mr Lancini and Ms Messer that appeared to conflict with their evidence referred to above.166 In particular, Mr Hastie referred to the following passages in the transcript.167 MR HASTIE: Yes. Thank you. Now, Mr Lancini, I appreciate you can’t comment on the state of the pavers outside the restaurant at the time of the Townsville floods, but is there any state, in your professional opinion, that those pavers could have been in which would have caused them to have – caused water ingress into the restaurant? MR LANCINI: As a direct answer, no, and the reason being is that the pavers in the as-constructed and the arrangement that I’ve observed generally fall towards the common driveway and out to Palmer Street. In terms of whether there would’ve been ingress as a result of stormwater from Palmer Street, I cannot say that I’ve directly observed it during the floods; however, there is Townsville online flood mapping available that is freely available to everybody that shows that the – this Palmer Street and the building property location is not inundated by a Q100 flood. … Water ingress as a result of wind-driven rain – which it is entirely possible at any point in time that you’ve had water coming in not vertically but somewhat horizontally and hitting the – the external wall of your building – generally, your building sits higher than the surrounding paving [indistinct] levels, so it would flow away from the building. MS MESSER: So, during that event in 2019, would water have ingressed into the rest – or likely ingressed into the restaurant during that time? MR HASTIE: As a consequence of the condition of the pavers was my question, or are the pavers really irrelevant to the question of whether or not there have been water ingress? MS MESSER: No, the condition of – of the pavers at that time would not have influenced the ingress during that event. … MS MESSER: Yes. I would – the question asked previously was, was the condition of the pavers have affected that ingress? DEFENDANT: Of the condition of pavers. MS MESSER: So in answer to that question, the condition of the pavers would not have influenced the wind driven rain. The required minimal step from 165 Exhibit 7, p 75. 166 Although the Body Corporate did not acknowledge that conflict. 167 Mr Lancini at T6-95:18-30, T6-97:4-8; Ms Messer at T6-96:10-18, T6-97:28-41. -- 52 of 64 -- 49 outside to inside and accessibility means that wind – wind driven rain that can enter underneath doors, it does, and it’s well known that that happens. But the condition of the pavers - - - DEFENDANT: Yes. MS MESSER: - - - which was the question, does not influence that from occurring. [225] Those conclusions seem to me, with respect, not to be supported by the more considered statements in their reports (particularly in the joint report). With respect, I do not agree with the conclusions they expressed in those passages. [226] I am satisfied, from the evidence referred to in paragraphs [222] and [223], together with the other evidence, that the water entered the restaurant as a result of being trapped at the bottom of the doors and, especially at the disabled access door, escaping from the area outside the door and into the restaurant, which was an easier channel than to flow away from the doors over the undulating pavers. Obviously this would not have happened if the wind and rain had not, between them, been so substantial that the rain was blown against the walls and doors of that side of the restaurant. It is possible that some water would have intruded into the restaurant even if it had not been trapped against the doors, but the amount of water ingress would have been substantially less had it not been so trapped but had been able to flow away from the doors into a drain or over relatively even pavers with a gradient toward the driveway. I am also satisfied that, with heavy rain that was wind-driven close to or against the wall between the Park Regis office and the disabled access door, the presence of the gully along that wall would have directed water along the wall and added to the water that accumulated under and against the restaurant office and disabled access doors on that occasion. That is, the amount of water flowing toward the doors would have been increased due to the absence of drainage along that wall and the gully that had formed along it. Was there negligence or a nuisance by the Body Corporate? [227] It was clearly the Body Corporate’s responsibility to maintain the pavers and to provide adequate drainage. It did not do so. I am satisfied that it did not provide adequate drainage along the wall on which the air conditioners were situated or alongside the doors to the restaurant. The absence of drainage resulted in any wind driven rain that hit the wall and the pavers in that area draining, at least in part, along the wall to the restaurant office door and to the disabled access door. As I have said, that rain and the absence of drainage contributed to water accumulating outside those doors and entering under the doors. [228] The general unevenness of the pavers in the area outside the restaurant led, in part, to the pavers outside the designated fire doors being higher than the slab that comprised the restaurant floor. That would have resulted in water pooling at the base of those doors. However, the evidence was that the water did not gain access to the restaurant under those doors, but under the office and disabled access doors, so I need not be concerned with the fire exit doors. [229] The office and disabled access doors were exposed to the wind driven rain and the absence of drainage. Mr Lancini and Ms Messer agreed that, prior to the installation -- 53 of 64 -- 50 of the drain and removal of tree roots under the pavers, localised undulations in the pavers may have held water at the thresholds to those doors. Neither of those doors appears to have had a weather seal at its base, the absence of which allowed water to flow under them and into the restaurant. [230] As I have said at [183] above, I am satisfied that Ms Huang had complained to the Body Corporate about the state of the pavers, at the latest in the second half of 2018. I am also satisfied that the Body Corporate knew about the unevenness of the pavers and some of the water ingress problems about which Ms Huang had complained by about that time. I am satisfied that, with that knowledge, the Body Corporate was negligent in not properly draining the area along the wall and in not maintaining the pavers so that they remained relatively even and continued to drain toward the driveway. For whatever reason, it was clearly not minded to take account of Ms Huang’s complaints to it from, at the latest, 2018, about the undulating pavers and the absence of drainage along the wall. [231] I find it astonishing that the Body Corporate failed in 2018 and then refused, in 2019, to engage tradespersons to repair the paved area; then, despite resolving in October 2020 to carry out repairs, it did not do so until October 2022; and it did not install drainage along the wall until after May 2021. It should have been obvious to the Body Corporate by late 2018 that they required repair, as well as the installation of drainage. It appears to have treated Ms Huang’s complaints with disdain. It acted unreasonably in ignoring her pleas. [232] The Body Corporate had a duty of care (as well as its statutory duty) to maintain the pavers and the general area under its control outside lot 17 in a state that was both safe and would not foreseeably damage the lot. Having regard to the state of the pavers, the risk that they might cause or contribute to water entering the lot and causing damage to the owner and the occupier was foreseeable and not insignificant. This was particularly so in Townsville, given its tropical location and the real possibility, from year to year, of substantial downpours accompanied by strong winds. As Mr Lancini said,168 it was entirely possible at any point in time that there might be wind-driven rain coming in horizontally and hitting the external walls of the building. [233] In my view, the Body Corporate should have taken appropriate precautions against that risk, by providing proper drainage and maintaining the pavers so that they were substantially even and continued to have a gradient toward the driveway. It should also have ensured that the entrances to the lot were reasonably impervious to rain water entering under the doors. (I shall discuss this aspect shortly.) [234] The expert evidence revealed two likely causes of the unevenness of the pavers. At least in the area where the drain was later installed, the unevenness was caused by varying moisture content in the bedding soils under the pavers. Mr Lancini and Ms Messer agreed, though, that most of the unevenness of the areas outside the disabled access and fire doors was caused by tree roots under the pavers lifting them unevenly. To my mind, it does not matter what caused the unevenness, as it was the Body Corporate’s responsibility to maintain the area, particularly to take reasonable steps to maintain the pavers reasonably level and draining toward the driveway. Mr Lancini and Ms Messer said repeatedly in their joint report that pavers of this type do require ongoing maintenance. That is a task that the Body Corporate singularly 168 T6-97:4-6. -- 54 of 64 -- 51 failed to undertake between at least 2018 and October 2022 (apart from installing a drain along the wall in 2021). [235] I find that the Body Corporate breached its duty of care to Ms Huang in failing to install proper drainage and in not adequately maintaining the pavers. The failure to install drainage and to relay the pavers so that they did not undulate, nor potentially trap water against the doors to lot 17, but drained well to the driveway, created a state that caused, or contributed substantially, to the ingress of a substantial amount of water to the restaurant under the disabled access and office doors on 3 February 2019. It was foreseeable that this might occur. The pooling of water at the base of the doors and the consequent entry of substantial amounts under the doors would not have happened (at least not to the extent that it did) if the Body Corporate had continually maintained the pavers, which it failed to do. Nor would it have happened (or at least not to that extent) if a drain had been installed under those doors. [236] That state of the pavers and the absence of drainage caused or substantially contributed to the ingress of substantial amounts of water into the restaurant, which was a substantial and unreasonable interference with the use and enjoyment of Ms Huang’s lot. It was the Body Corporate’s neglect to provide drainage and to maintain the pavers that resulted in the state of affairs that led to water entering lot 17. It had taken no steps to remedy the situation, despite being aware it. Its conduct was unreasonable and led to the nuisance of water entering lot 17. [237] I am satisfied that the Body Corporate was negligent and caused a nuisance to lot 17. A red herring [238] One further issue that arose incidentally during the trial was whether the office door and the disabled access door had weather seals on them in February 2019. Mr Lancini and Ms Messer formed the view that there had not been weather seals on those doors and that the absence of weather seals contributed to the flow of water under them. Ms Huang and Ms Vanjak both said there were weather seals on those doors at the time and Ms Huang pointed to photograph 2 in the first NCE report as showing a seal on the office door.169 [239] In his cross-examination, Mr Lancini said that he did not believe that the disabled access door had a weather seal on it, as Ms Huang had pointed out to him (apparently at the time of one of his visits).170 He also said that weather seals require constant inspection and maintenance.171 [240] Mr Bazeley said that the door to the restaurant closest to the management’s office (by which he clearly meant the disabled access door) had no weather seal on it until after February 2019, when he saw Mr Vanjak putting seals on the doors to the restaurant.172 Mr Vanjak was not asked about the seals. [241] In my view, it was the Body Corporate’s responsibility to put weather seals on doors that were potentially exposed to wind and water at ground level. The doors were situated in the boundary wall separating lot 17 from the common property. Therefore 169 T5-63. However, that photograph was not taken until November 2020. 170 T6-99. 171 T6-111. 172 T7-72:43-44; T7-73:5-13. -- 55 of 64 -- 52 they formed part of the common property or, even if not, the Body Corporate had a duty to maintain them in good condition unless a fixture or fitting had been installed by the occupier of the relevant lot for its own benefit.173 The doors that reached down to ground level (that is, where the edge of the slab forming the floor or base of lot 17 was at or about the level of the outside pavers) were the restaurant office door and the disabled access door. They were clearly at risk of water entering under them, especially when there was no drainage nearby and the pavers were uneven. (It is not mere coincidence that the water entered lot 17 under those doors.) If there were no external door seals on them at the time, that was another responsibility of the Body Corporate that it neglected. [242] However, in the end the questions of whether door seals were present and, if not, who had responsibility for that state of affairs and its consequences are red herrings as, in her counterclaim, Ms Huang does not raise their absence as a breach of duty by the Body Corporate or as a cause of the damage to lot 17. I need not consider them further. Damages [243] As I summarised earlier, there are two aspects to Ms Huang’s claim for damages. The first (in her capacity as trustee of her family trust and owner of the lot) is lost rental under the lease to Vanjak Investments. The second (in her personal capacity) is lost employment income from Vanjak Investments. [244] Notably, Vanjak Investments has not sued the Body Corporate for any loss of income arising from any inability to trade as it had before February 2019. Nevertheless, whether or not it could and did trade and for how long are relevant to: (a) whether it was entitled to stop or reduce the payment of rent to Ms Huang under the lease, as Ms Huang contends and as she says led to her not earning the rental income that she otherwise would have earned; and (b) whether Ms Huang suffered a loss of employment income as a result of the restaurant not trading as it had before. [245] In considering what, if any, loss Ms Huang suffered as a result of the Body Corporate’s negligence and nuisance, therefore, these questions arise: (a) did the restaurant cease to trade or reduce its hours of trade and, if so, to what extent, for how long and why? (b) was Ms Huang obliged to reduce or suspend the rent under the lease and, if so, by what proportion and for what period? (c) did Ms Huang lose employment income and, if so, how much and why? Did the restaurant cease to trade or reduce its trading hours and, if so, why? [246] The Body Corporate contends that the restaurant was not only capable of continuing to trade after 3 February 2019, but it did in fact trade from shortly after that date and it continued to do so thereafter. It contends that any reduction in its hours of trade was not as a result of any damage caused by the water entering it, but for reasons having no connection with the damage. It also contends that, once the restaurant reopened regularly, Mr Vanjak and Ms Huang (or Mr Vanjak alone) decided to reduce 173 2008 Regulation, s 157(2)(a)(ii), (3)(a). -- 56 of 64 -- 53 its hours of opening for reasons not associated with any damage caused by the flooding. Therefore, it contends, any reduction in its hours of trading was not a result of the Body Corporate’s negligence or nuisance, but of a conscious, unrelated decision of Vanjak Investments and the failure of Ms Huang to enforce payment of rent under the lease. [247] It is not disputed that, in the days following 3 February 2019, Mr Vanjak served breakfasts to some of the guests in the hotel. His explanation was that those guests had prepaid for breakfast to be included with their accommodation and he felt obliged to honour that obligation. Those breakfasts were delivered to guests’ rooms. Later in the year, he served some breakfasts outside on the paved area, but not inside. [248] It is also not disputed that, on 14 February 2019, Mr Vanjak opened the restaurant and served Valentine’s Day dinner to guests. He said he felt an obligation to maintain his bookings for that event, so he tidied up the restaurant sufficiently to do that. But thereafter he did not open the restaurant as it was not in a fit state for ongoing trade. The carpet became smelly and mouldy and the walls also became mouldy over time. However, he also agreed that he opened the restaurant for lunch on Christmas day 2019. Nevertheless, he denied opening the restaurant regularly, if at all, for dinner during 2019 and the first half of 2020. He said that, since 1 July 2020, he opens the restaurant only for dinner on Friday and Saturday nights. [249] His evidence and that of Ms Huang about post 3 February 2019 trading was not entirely consistent. For example, in her evidence in chief, Ms Huang said they did room service breakfasts for a very short time and then they completely closed the restaurant and the outdoor dining area.174 [250] In cross-examination, it was put to Mr Vanjak that the restaurant was trading, at least from time to time, throughout 2019. His response was:175 About this, I never trade inside in restaurant. I have few time people come in. When I was doing breakfast in the morning for that – this, and they sit outside on the footpath. But in the restaurant, I never – I never let people in because I was not ready for it. [251] He also said that he continued to serve breakfasts to guests in their rooms until “not even two years ago.176 [252] I have summarised Mr Vanjak’s evidence about the Facebook posts from January 2019 to January 2020 and the Tripadvisor posts about the restaurant from February 2019 to August 2022.177 I have also said that I accept that some of the posts were made by friends of Mr Vanjak or his daughter. But clearly not all of them were by friends or acquaintances (especially, I should think, those that were critical of the restaurant). I also accept that some (if not many) of the posts may have been uploaded some time after the reviewer had eaten at the restaurant, but I consider it unlikely that, in most cases, any delay in that respect was substantial. Some of them, indeed, identify specifically when they ate there (including whether for breakfast or dinner). 174 T5-58:25-30. 175 T7-36:12-15. See also paragraph [100] above. 176 T7-38:30-37. 177 [70]-[71] above. -- 57 of 64 -- 54 [253] In considering whether and how often the restaurant was open, whether for breakfast or dinner, it pays to review those posts more closely. [254] There were 26 Facebook posts from February 2019 to September 2022.178 Of those: (a) two were posted on 14 February 2019 and concerned dinner that evening; (b) 12 were posted by people whom Mr Vanjak said either were his friends, or had worked for him, or he knew; (c) of those people (all of whom gave good reviews), three were posted on a Friday, three on a Saturday, two on a Sunday and two on a Monday, two referred to breakfast, while most of the others were not clearly referring to specific meals or days; (d) also, of those people, one was posted in March 2019,179 three in May 2019, one each in June, July and October 2019, one each in April and September 2021 and one each in January and September 2022; (e) of the other posts (not including February 2019), three were posted on a Friday, seven on a Saturday and two on other days; two were about dinner, while the others did not specify; one (in January 2020) referred to having had dinner twice in recent months and one (in September 2020) referred to having eaten there twice in a week long work trip; (f) also, of those other posts, there were three on Saturday 27 April 2019 (one of whom said she had dinner that night) and one in December 2019, one in each of January, September and October 2020 (on a Wednesday, Friday and Saturday respectively); one in each of April, July, October and December 2021 (all on a Friday or Saturday); and one on a Saturday in May 2022. [255] There were 21 reviews posted on Tripadvisor from February 2019 to May 2023. Mr Vanjak said that one of them had been posted by a friend of his (although it was not clear to which he was referring and his friend’s name did not appear as the person posting a review). He said that his daughter organised her friends to post good reviews to bring up the standard of the restaurant. But even if some of the positive reviews were posted by friends of his daughter who had not eaten at the restaurant, or at least not at the times stated, that does not account for the fact that 10 of the 21 reviews were critical (some severely critical) of the food or the service. Ms Huang did not call Mr Vanjak’s daughter, so there was no corroborative evidence. [256] When cross-examined about a very poor review written in August 2019, Mr Vanjak asserted that he remembered that customer, who was in a room upstairs. Mr Vanjak said that he had contacted the customer and said to him that, if he was not happy with the breakfast, he should have contacted Mr Vanjak, who would have taken him another. That led to Mr Vanjak saying that he was still doing breakfast service to the rooms at that stage and only stopped doing that less than two years ago. [257] Mr Vanjak was not taken through more of the reviews on Tripadvisor. However, of those reviews: 178 Exhibit 22, pp 4-10. 179 However, that was a general review posted by a friend of Mr Vanjak, not referring to any particular meal or date. -- 58 of 64 -- 55 (a) there was one in each of March,180 April, June and July 2019 and January and February 2020, there were two in each of May, August and November 2019 and March 2020 and then two in 2021, two in 2022 and one in 2023; (b) 10 were for dinner, seven were for breakfast and three are not clear; (c) one posted in May 2019 asserted that the restaurant was open for breakfast seven days a week, one in June 2019 asserted that the person had had breakfast and dinner in May, and one posted in November 2019 asserted that the person had had dinner that month on a Wednesday evening. [258] One thing that puzzles me about Mr Vanjak’s evidence that many of the Facebook and Tripadvisor reviews were posted by friends, in essence to boost the reputation of the restaurant, is that those posted in 2019 and the first half of 2020 would have served no purpose if the restaurant was not open for business, as Mr Vanjak and Ms Huang maintained in their evidence and Ms Huang pleaded. If it was not open, then it was pointless and, indeed, might cause many potential customers to be disappointed upon finding that it was not, in fact, open for business. Also, one would not expect to see bad reviews if the restaurant was not open or if the reviews were posted only by friends of Mr Vanjak or his daughter. I also note that, of the bad or mixed reviews posted before July 2020, four were for dinner (not including one for Valentine’s Day dinner in February 2019), three for breakfast and one unclear. [259] While the reviews, at least arguably, are not evidence of the facts stated in them, the fact that they were posted is indicative, and gives rise to a clear inference, that the restaurant was trading, at least partially, in 2019 and until March 2020. [260] In cross-examination, Mr Vanjak accepted that restaurants were forced to close (apart from producing take away meals) for a few months from about March to July 2020 due to Covid-19 restrictions, but he said they did not affect his restaurant because it was already closed. But he also said that, after February 2019, he would serve some people breakfast outside the restaurant.181 [261] In her evidence relevant to the length and reasons for the restaurant closing,182 Ms Huang said that the carpet was ruined and, after the event, she was not sure what to do and she had discussions with an insurance broker. It took a month or so for an insurance assessor to assess the damage. One insurer declined to cover the damaged carpet. Another accepted the claim and the carpet was later replaced. Ms Huang was not clear on how long that process took. [262] However, Ms Huang went on to say that there was also something wrong with the electricity that caused her to get shocked when she touched a wall, so they kept the restaurant closed while that was investigated. There is no evidence that any such problem was associated with the February incident, or at least with water entering under the doors.183 180 Although it referred to a visit in February on a Saturday night. 181 T7-40. 182 T5-57 - 58. 183 It seems, from the 2 nd NCE report, that some water may have gone into the wall cavities from the roof, but that is not a subject of Ms Huang’s claim. -- 59 of 64 -- 56 [263] Ms Huang also said that they continued to serve breakfasts, either by room service or at tables outside on the paved area, for “a very short time” to honour their prior commitments. [264] Ms Huang went on to say that, when they decided to open the restaurant from July 2020, after all the repair works had been done, they found that the fire exit doors were blocked from opening properly by raised pavers. She and Mr Vanjak decided that that was not safe and so they did not feel they could open every day and they decided to open only for Friday and Saturday night dinners. At the same time, they reviewed the lease and agreed that, in the circumstances, the lessee’s obligation to pay rent should be suspended.184 [265] I find that, having been flooded by rain water, the carpet in the restaurant was damaged and had to be replaced and the restaurant needed to be thoroughly cleaned and, possibly, repainted.185 I also find that, until those things happened, it was appropriate not to open the restaurant dining room. I do not accept that that damage was sufficient to force the restaurant to close for more than a few weeks or months (perhaps until the carpet was replaced). It may also have been necessary to close on occasions after that period, in order to undertake some repairs or the replacement of the carpet, but it was not closed for the entire period the subject of the claim. Nor do I accept that any ongoing mustiness or mould, as Mr Vanjak complained about, was caused by the ingress of rain under the doors on 3 February 2019. Rather, it seems to have been caused by other leaks from the roof above the restaurant which, as I have said, were identified and discussed in the second NCE report but are not subjects of this claim. [266] I find that the fire exit doors were blocked, probably from shortly after February 2019 but at least from some time before July 2020 until the pavers were relaid in October 2022. But that did not stop Mr Vanjak and Ms Huang deciding to open the restaurant two days a week from July 2020. Either it was unsafe (and potentially illegal) to trade at all or it was unnecessary to close the restaurant other than for two days a week. Mr Vanjak and Ms Huang were prepared to open it notwithstanding the blocked door and there is no logical reason, in the circumstances, why they could not then, or soon thereafter, have reopened to trade as they had before February 2019. They still had available to them, as alternative exits, the disabled access door and the double doors next along from the fire exit doors. [267] Mr Vanjak also said that he still opens only for two days a week, even though the pavers were relaid in October 2022, because he does not consider the pavers to be safe. That decision does not result from the Body Corporate’s conduct the subject of this litigation. [268] I do not accept that the decision to open only two nights a week was a consequence of the condition of the tiles. [269] The Covid-19 restrictions did prevent restaurants serving customers in their premises between 23 March and 14 May 2020,186 following which: 184 T5-76 – 77. 185 Ms Huang referred to painting the walls at T5-76. 186 Chief Health Officer, Non-Essential Business Closure Direction (23 March 2020); Chief Health Officer, Non-Essential Business Closure Direction (Nos 2 to 9). -- 60 of 64 -- 57 (a) from 15 to 31 May 2020, it was limited to having 10 patrons at any one time with a maximum of one patron per 4m 2 ;187 (b) from 1 June to 1 July 2020, it was limited to having 20 patrons at any one time with a maximum of one per 4m 2 .188 [270] As the Body Corporate’s counsel submitted, those restrictions must also be taken into account in deciding whether the alleged continued closure of the restaurant during that period was a result of the water ingress in February 2019. [271] Mr Bazeley was asked whether the restaurant stopped trading at any point after the 3 February event. He said they did stop trading for a couple of months, although he thought that was in late 2019.189 [272] I do not accept that the restaurant was closed from February 2019 to March 2020 due to the event on 3 February 2019. Clearly it was open, at least on quite a number of occasions, during that period. The first occasions on which it was clearly open (other than for Valentine’s Day dinner) (according to Facebook posts and a Tripadvisor post) were in April 2019. One Facebook post clearly shows that it was open for dinner on Saturday 27 April 2019.190 Tripadvisor posts show that it was open for breakfast (even though possibly only at tables outside for a period) on or before 16 April 2019 and continued to be open for breakfasts (possibly 7 days a week) thereafter.191 Many of the posts after that indicate that it was likely to have been open mostly, if not wholly, on Friday and Saturday nights. The inference I can draw from this evidence is consistent with Mr Bazeley’s evidence that the restaurant closed for a couple of months (I consider that he was mistaken in saying this happened in late 2019). As it was possible to open it, at least on some occasions, during that period, both for breakfast and dinner, I do not accept that it remained closed, as a result of the event, after mid-April 2019. [273] I find that the restaurant closed for dinners (apart from on 14 February 2019) and for dine-in breakfasts from 4 February to 14 April 2019 inclusive,192 but thereafter it was capable of being opened and serving customers in the dining area. The closure was a consequence of the rain water ingress on 3 February 2019. Any closures thereafter and any decision by Mr Vanjak to open on fewer than seven days a week were not consequences of the February water ingress under the doors, even though they may have been consequences of other leaks into lot 17. Was Ms Huang obliged to reduce or suspend rent under the lease? [274] Ms Huang claims that, as a consequence of the flooding, the restaurant was forced to close because it was not fit for use as a restaurant until it reopened on 1 July 2020. As a consequence, as lessor she was obliged to suspend the rent while it was unfit for use. She claims lost rent from 3 February 2019 to 30 June 2020 as a result of damage 187 Chief Health Officer, Non-Essential Business Closure Direction (No 10). 188 Chief Health Officer, Restrictions on Businesses, Activities and Undertakings Direction (31 May 2020) 189 T7-71. 190 Exhibit 22, p 8, 2 nd post from top. It appears to be supported by the last post on that page and the top post on page 9, which are both dated 27 April 2019 but do not expressly state when the author was at the restaurant. 191 Exhibit 23, p 8 (top post) and p 7 (top 2 posts). 192 I select this date as the end of the week before the 16 April Tripadvisor review was posted. -- 61 of 64 -- 58 caused by the rain on 3 February leading to the suspension of the lease and thereafter from 1 July 2020 to 30 June 2022 due to reduced trading hours caused by the blocked fire access doors. The total of her claim, as pleaded, is $109,434 to 30 June 2020 and then a further $156,000 to 30 June 2022. Both sums are based on annual rental of $78,000. [275] Clause 15 of the lease relevantly provides: 15. DAMAGE AND DESTRUCTION 15.1 If the Demised Premises shall at any time during said Term be destroyed or damaged by any means without any default or neglect on the part of the Lessee the covenant to keep and yield up the Demised Premises in good and tenantable repair shall be suspended and if the Demised Premises shall be destroyed or damaged so as to be unfit for carrying on the use permitted by this Lease the whole of the rent for the time being payable under this Lease shall be suspended and cease to be payable and if the Demised Premises shall be substantially damaged but not so as to be unfit for carrying on the permitted use then a fair proportion of the rent according to the nature and extent of the damage sustained shall be suspended and cease to be payable until the Lessor has rebuilt or reinstated the Demised Premises so as to be in substantially the same state and condition as before the destruction or damage … 15.2 Accrual of Rental For the purposes of this clause, rent shall be deemed to accrue from day to day. [276] I have found that the restaurant was closed (apart from in-room breakfasts and Valentine’s Day dinner) due to the water damage from 4 February to 14 April 2019 inclusive, a total of 69 days. Thereafter it traded, at least intermittently (although the Facebook and TripAdvisor posts indicate the likelihood that it traded regularly, even if not every day), from April 2019 to March 2020 and then two days a week from July 2020. [277] The closure period to which I have referred was, in my view, because the premises were damaged and, for that period, were not fit for carrying on use as a dine-in restaurant, as a result of the entry of rain water under the doors on 3 February 2019. There is no suggestion that that damage was the fault of the lessee. [278] The restaurant was able to be opened on 14 February. One might conclude that, given that fact, it was no longer incapable of use as a dine-in restaurant. However, for a period from then it did not have a carpet (or the carpet was damp and became smelly – that is, musty) and I am prepared to accept that it continued not to be fit for ongoing use as a restaurant for a period of time beyond that date: that is, to 14 April 2019. [279] Ms Huang claims lost rental based on annual rent of $78,000. However, the Body Corporate submits that the court ought not find that the rent payable to Ms Huang as trustee was that sum. The Body Corporate relies, in this respect, on the terms of the lease itself and the income tax returns for the trust for a number of years up to and beyond 30 June 2019. [280] The annual rent payable under the lease, as amended with effect from 1 August 2016, was in fact $70,909.10. As I have recorded above in considering Ms Huang’s -- 62 of 64 -- 59 credit,193 the trust returns show income from rent in the financial years ending on 30 June 2015 to 2018 of about $49,000 and, in the return for 2019, $50,182 (in a financial year in which the restaurant was allegedly closed for some 5 months). In the subsequent three financial years the rental income dropped considerably, but those returns show that some rent was still being paid in those years, in which Ms Huang claims not to have been paid any rent. [281] I have also recorded Ms Huang’s explanation for the discrepancies between her claim and these figures.194 But, as I have said, there is no evidence of the amounts other than rent payable by the lessee under the lease. In the circumstances, the starting point for lost rent appears to be $70,909.10 per annum. Although that sum does not appear to have been paid in any year and the figure of $50,182 for the 2019 year is unexplained,195 the rent payable under the lease is, in my view, the appropriate basis on which to calculate the loss to the trust. [282] Under clause 15.1, the rent under the lease was wholly suspended and ceased to be payable for 69 days, from 4 February to 14 April 2019 (apart from 14 February). On the basis that the annual rent under lease was $70,909, the daily rent in 2019196 was $194.27. Consequently, the total amount of rent that was wholly suspended and not payable under the lease was $13,404.63. Whether or not Ms Huang and Mr Vanjak decided that rent would not be payable thereafter was by agreement between them, but not as a consequence of the event of 3 February 2019. Similarly, I have found that the decision to open for only two nights a week was not caused by that event, nor by the blockage of the fire exit door from July 2020. She is not entitled to any damages for a reduction in rent after 14 April 2019. [283] Therefore, Ms Huang as trustee is entitled to damages in the sum of $13,404.63 as a consequence of the rain damage stemming from the Body Corporate’s negligence and nuisance. Did Ms Huang lose employment income? [284] Ms Huang claims that, as a further consequence of the Body Corporate’s negligence and nuisance resulting in the closure of the restaurant, she has personally lost wages that she otherwise would have earned as manager of the restaurant. She bases her claim on an annual salary of $52,000. That is the salary payable under the employment agreement that she and Vanjak Investments entered into on 30 June 2019 with effect from 1 July 2019. [285] Ms Huang’s claim for lost income is for the period from 1 July 2020 to 30 June 2022. There are several problems with this claim. First, the employment agreement was not in existence at the time of the event: it was created despite the fact that (on Ms Huang’s case) the restaurant was closed. There is no suggestion in the evidence that Ms Huang and Mr Vanjak had agreed, before that event, that she would be paid that salary from 1 June 2019. While she may have lost income, in the circumstances I do not accept 193 At [103], [105]. 194 At [105]. 195 If that were 7 months’ rent, then the annual amount would have been $86,026, which also does not accord with the lease. Of course, it may have included payment of other fees and simply have been an incorrect characterisation of the income in the tax return. 196 Which was not a leap year, of course. -- 63 of 64 -- 60 that the level of income lost was the amount that she subsequently agreed at a time when the restaurant was closed. [286] Secondly – and perhaps more importantly – I have found that the restaurant was not closed as a result of the rain event by the time of the 2021 and 2022 financial years. Also, the decision to open on only two days a week was not a necessary consequence of the fire exit doors being blocked. In the circumstances, any drop in her income in those years was not a consequence of the Body Corporate’s negligence and nuisance. [287] Consequently, I find that Ms Huang has not proved any loss of employment income for which she should be compensated by damages. Conclusions on damages [288] Therefore, I shall order that the Body Corporate pay damages to Ms Huang, as trustee of the Huang Family Trust, in the sum of $13,404.63. I shall also allow interest on that sum from 15 April 2019 to the date of judgment. Conclusions and the result of the proceeding [289] The Body Corporate is entitled to judgment for $54,620.05 plus interest at 2.5% per month on the amount outstanding from time to time and to the date of judgment. [290] Ms Huang, as trustee, is entitled to judgment for $13,404.63 plus interest under s 58 of the Civil Proceedings Act 2011 from 15 April 2019 to the date of judgment. I shall ask the parties to agree, or otherwise to provide submissions, on the appropriate rate or rates of interest to apply and the calculation of interest to be included in the amount of the judgment. [291] Under rule 184, instead of giving judgment on each of the claim and the counterclaim, the court could give judgment for the Body Corporate for the balance after setting off the counterclaim. I shall hear from the parties about whether or not to take this course. -- 64 of 64 --