Resolving Common Property & Shared Facility Disputes in Mixed-Use Developments

Introduction

Disputes over common property and shared facilities are a frequent challenge in mixed use developments, where residential, commercial, and community interests often intersect. Clear agreements and effective management are essential to ensure that shared spaces and resources are maintained equitably and disputes are minimised.

Understanding the legal frameworks and practical steps for managing lots and common property is crucial for owners, managers, and stakeholders. Consulting a strata lawyer can provide valuable guidance in navigating these complexities and protecting the interests of all parties involved.

Understanding Cost Sharing for Shared Facilities & Common Property

Management Statements & Governing Shared Property

In a mixed-use development, the residential and commercial components of the building are entirely separate legal entities. The relationship between these entities, especially regarding shared facilities and common property, is typically governed by a Building Management Statement (BMS) or a Strata Management Statement (SMS).

This statement is a critical document that outlines how the costs for the maintenance and repair of any shared property are to be divided between the different owners. It is essential to review this document to understand the financial responsibilities of each party within the mixed-use scheme.

It is common for a BMS or SMS to be silent on certain issues, such as responsibility for external painting. When this occurs:

• The residential and commercial lot owners are each independently responsible for their own sections of the facade.
• To complete a project covering the whole building, you would need to negotiate with the other owners to paint their sections at their own expense.

Calculating Contributions for Common Property Maintenance

The owners’ corporation raises the necessary funds for maintaining common property by levying contributions from all lot owners, a process that requires addressing high strata levies when disputes arise. The amount each owner must contribute is typically calculated based on their lot entitlement as specified in the community plan.

A lot entitlement represents the proportion of the unimproved value of a single lot in relation to the aggregate unimproved value of all lots within the scheme. For a strata lot, this value includes the part of the building that contains the lot but does not account for fixtures and other improvements.

While lot entitlement is the standard method for determining contributions, the corporation can decide to use a different basis for calculations. However, changing this method requires a unanimous resolution from the lot owners at a general meeting.

Common Disputes Over Shared Facilities & Costs

Managing shared facilities in mixed-use strata properties can lead to several challenges and disputes among owners. These disagreements often arise from differing expectations regarding the use and upkeep of common property.

Typical issues that can cause conflict include:

• Maintenance and Repairs: Disagreements often emerge over who holds responsibility for the upkeep or repair of shared facilities, particularly when the costs are substantial.
• Usage Conflicts: Disputes can occur regarding the use of shared areas, such as conflicts over parking spaces, access times, or the use of recreational facilities.
• Cost-Sharing: Arguments may arise over how expenses related to shared facilities, including maintenance fees, utility bills, and repair costs, are divided among property owners.
• Lack of Clear Agreements: Problems frequently stem from the absence of clear, documented rules governing the use, maintenance, and costs associated with shared property.
• Breach of Rules: When owners or tenants violate the by-laws or rules established by the owners’ corporation, it can lead to strata disputes and potential legal action.

Case Study: The Owners Strata Plan No 87881 v Frasers Broadway [2025] NSWSC 1073

Background of the Dispute: The Problem with the Vertical Gardens

In The Owners Strata Plan No 87881 v Frasers Broadway [2025] NSWSC 1073, the dispute centred on the “One Central Park” development, a high-rise mixed-use property in Chippendale, known for its distinctive vertical gardens. These gardens consist of approximately 1,672 planter boxes cantilevered from the building’s façade.

Each planter box is made of a black moulded polymer, clad in aluminium composite panels (ACP), and attached to the building’s concrete beams using a bracket and T-bolt system.

The conflict escalated in April 2022 when a planter box detached and fell from the 29th level. Subsequent investigations by abseil contractors during routine maintenance revealed that other planter boxes had “slipped” because the heads of the fixing bolts had broken.

A materials science consultant later concluded that a “bad batch of bolts” had been used to affix the planter boxes. Further complicating the issue were concerns about the materials used, as the black polymer box was identified as combustible.

The Legal Battle: Rectification Orders & Multiple Proceedings

The situation evolved into a complex legal scenario involving:

• Multiple legal actions and regulatory interventions
• The owners initiating five separate court proceedings against the developers and other parties involved in the construction

These proceedings were primarily for building defects, including claims related to combustible cladding and the failing T-bolts used to secure the planter boxes.

Alongside the court cases, the Secretary of the Department of Customer Service issued a Modified Building Work Rectification Order (MBWRO) to the developers. This order was made under the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (NSW), which grants the authority to compel developers to remediate serious building defects.

The MBWRO identified:

• The defective bolts
• A faulty drainage system in the planter boxes as serious defects requiring rectification

The fifth court proceeding was commenced by the owners specifically to seek a declaration about the lawful method of complying with this order.

The Court’s Decision on Summary Dismissal

The developers responded to the fifth lawsuit by applying for a summary dismissal, arguing that it was an abuse of the court’s process. The Supreme Court of New South Wales agreed and dismissed the proceedings.

The judge determined that the issues raised in the fifth case could and should be addressed within the four existing building-defect proceedings.

The court reasoned that allowing a separate, fifth case to proceed would create:

• A risk of inconsistent findings
• A duplication of costs and resources

The central question of how to lawfully rectify the planter boxes was already a key issue in the other cases. The dismissal allows the owners to raise the same question within one of the existing proceedings, ensuring all affected parties are involved and bound by the outcome, thereby preventing further disputes.

Key Issues in Vertical Garden & Green Wall Disputes for Strata Properties

Maintenance Costs vs Building Defects

A common point of contention in disputes over vertical gardens involves whether a problem is building defect or a maintenance issue.

Conversely, developers may argue that such problems are not inherent defects in the planter boxes themselves. Instead, they assert: 

• poor maintenance practices have caused the drainage blockages and water overflow.
• responsibility shifted to the owners once the building was formally handed over.

This disagreement can create a stalemate over the issue of who pays for a building defect, which is a common challenge in rectification works.

The Challenge of Combustible Materials & Changing Building Codes

Disputes involving green walls are often complicated by changes in building regulations over time. Materials used in vertical gardens, such as black moulded polymer liners, may be combustible even though they once complied with the Building Code of Australia.

While these materials might have satisfied earlier standards, subsequent updates can impose stricter rules on combustible elements attached to external walls.

For example, the National Construction Code 2022 now restricts fixing combustible ancillary elements to non-combustible walls. Owners may argue:

• removing a combustible planter box means it cannot lawfully be re-attached under current rules.
• the situation demands a full replacement rather than a simple repair.

This conflict over the required method of rectification can drive further legal proceedings to confirm compliance obligations under laws such as the Design and Building Practitioners Act 2020 (NSW).

The Importance of Seeking Expert Strata Legal Advice

How a Strata Lawyer Can Help Resolve Complex Disputes

When disagreements over the maintenance or costs of shared facilities in a mixed use development reach a stalemate, a strata lawyer can provide essential guidance. Legal experts are able to assess whether a deadlock constitutes a formal dispute under the terms of the SMS.

Often, an SMS will contain specific dispute resolution provisions that outline the required steps when an agreement cannot be reached. A lawyer can help the owners’ corporation utilise these provisions, which may direct the parties toward mediation or other formal processes.

With the right legal advice and representation, an owners’ corporation can:

• Effectively establish non-compliance by other members
• Protect its interests if legal proceedings become necessary

Preventing Disputes Through Clear Agreements & By-Laws

Engaging legal professionals proactively is crucial for preventing future conflicts over lots and common property. In a mixed use development, an SMS or BMS is the key document that ties the different strata plans together and governs the relationship between them.

A strata lawyer can assist in drafting or reviewing these statements to ensure they are comprehensive and clearly set out how costs for the maintenance and repair of shared property are to be split.

Similarly, well-drafted strata by-laws serve as the rules for the community corporation and are legally binding on all owners and occupiers. Legal experts can help create detailed by-laws that regulate:

• The administration and control of common property
• The use and enjoyment of both common areas and individual lots
• Responsibilities for maintenance, repairs, and the appearance of buildings and landscaping

Conclusion

Managing shared facilities and common property in mixed-use developments involves complex cost-sharing arrangements governed by management statements, which frequently lead to disputes over maintenance and building defects. As illustrated by legal challenges involving vertical gardens and changing building codes, clear agreements and professional guidance are essential for resolving conflicts and protecting the interests of all lot owners.

Therefore, if your owners’ corporation is facing difficulties with shared property or defect claims, it is crucial to consult the experienced strata lawyers at PBL Law Group for trusted advice and tailored solutions. Their expertise can help you effectively manage your mixed use development and secure a fair resolution.

Frequently Asked Questions