A burst water pipe causes damage to a property (July 2016)

Meters, poles, wires and pipes
Case Number 2015/295
Outcome Conciliation

The Issue

Ms B contacted EWOV because a water pipe had burst and caused damage at her business property, including destruction of some footings and wall foundations which undermined the structural integrity of the front wall of her building. The water corporation had completed repairs but Ms B was dissatisfied with the quality of the work.

She organised for an independent engineer to inspect the property and for repairs to be carried out prior to the water corporation’s contractor completing the works. Her engineer advised that the works completed were not satisfactory for the medium to long-term support of the wall. Although Ms B’s engineer offered a solution, the water corporation declined to accept liability for the necessary remedial works. Ms B advised EWOV that the estimated cost of repairs was between approximately $10,000 and $13,000.

EWOV initially lodged the matter as an Assisted Referral, however, Ms B recontacted EWOV advising she was unable to resolve the matter directly with the water corporation. The matter was then escalated to EWOV’s Real Time Resolution (RTR) process, where the water corporation advised that it was responsible only for repairing the water main - and reinstating the immediate surroundings. It felt that the works requested by Ms B were an ‘improvement to the property’ which it was not responsible for. It advised that Ms B should lodge a claim via her insurance company and offered to pay the excess ($1,000). Ms B believed that solid clay was removed as a part of the repairs and had been replaced by stabilised sand which was insufficient and did not provide the same structural integrity as the clay removed. She considered it unnecessary for her insurance company to become involved. As such, EWOV escalated the matter to an Investigation.

The Investigation

The water corporation did accept that the footings at the property had been washed away as a result of the water flow from the burst water pipe. However, it did not agree that it had been negligent in repairing the damage as per its obligations under the Water Act 1989 (Water Act) (section 157). The water corporation advised that when the wall footings were washed away, it repaired the damage using stabilised sand which is a combination of sand and cement. It also believed that based on the age of the wall, it was most likely previously built using sand that was compact enough to be considered effective as footings – instead of a mix of concrete and sand. The water corporation therefore believed that it had sufficiently repaired the damage and that the works proposed by Ms B’s engineer would be an enhancement to the building.

The water corporation maintained its offer to cover Ms B’s insurance excess with a $1,000 credit was an appropriate resolution for the case. Ms B maintained that an insurer should not be involved as the water corporation’s main had caused the damage. In order to investigate Ms B’s concerns further, EWOV completed a review of the relevant laws and codes, the corporation’s customer service performance, industry practice advice, previous case results and sought technical advice. The following is the result of EWOV’s Investigation.

Industry practice

EWOV sought industry practice advice from three other water corporations as outlined below.

  • All agreed that it is standard practice to refer customers to their insurer for claims about this issue and to cover the cost of insurance excess.
  • All advised that when concerns are raised regarding quality of work, safety risks and any potential for further damage, further investigation is undertaken by engaging a qualified engineer to advise.
  • One noted that a contractor can make a decision around repair works and what materials to use, but they are not qualified to decide if the wall is stable after completing the works. If challenged by a customer and their engineer, the water corporation should engage their own engineer to assess the damage and the repair works.
  • All confirmed that this should be done even when no negligence is proven/demonstrated.
  • One water corporation would accept the customer’s engineer’s report and pay the claim.

EWOV believed that the offer made by the water corporation was not in line with good industry practice.

Laws and Codes

The Water Act outlines that a water corporation must prove it has not intentionally or negligently caused the flow of water that damaged a customer’s property. However, in a negligence claim at common law, the onus of proof would rest on the customer to prove that the water corporation was negligent.

EWOV also reviewed a similar decision by the Victorian Civil and Administrative Tribunal (VCAT). This decision assessed if a water corporation was required to repair a property following damage from a burst water main, under the terms of the Water Act. This VCAT case found that the water corporation was responsible for the damage caused to the customer’s property, because the burst water main had a history of leaks and therefore the water corporation should have been aware that it needed more regular maintenance and monitoring to prevent further issues. In making its decision, VCAT had reviewed 12 years’ worth of records for the mains.

Substantiation

EWOV reviewed both the water corporation’s and Ms B’s supporting documentation. This included account notes, quotes for repairs, an engineer’s report and photos of the damage to the property. EWOV also sought a quote from an independent engineer to review the substantiation provided and, if required, complete a site visit to the property.

The Outcome

In response to EWOV’s investigation of industry practice, the VCAT decision and a review of both parties supporting evidence, the water corporation agreed to pay Ms B $13,000 in full and final settlement of the matter. The water corporation would not however accept liability for the works and Ms B was required to sign a release form. A direct contact at the water corporation was also provided. Ms B was satisfied with the final offer made and the matter was closed.

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