What Must Be the Nature & Extent of Repairing Common Property defects in NSW?

Introduction

Strata living in New South Wales offers many benefits, but common strata disputes often arise over who is responsible for repairing and maintaining common property. Understanding the legal obligations around strata repairs is essential for lot owners, strata committees, and strata managers to ensure the property remains safe and functional.

This guide explains the nature and extent of the duty to repair common property in strata schemes, focusing on the strict requirements under the Strata Schemes Management Act 2015 (NSW) and the practical steps involved when defects or disputes occur.

Interactive Tool: Is It a Strata Repair or Improvement?

The Nature of the Duty to Repair Strata Common Property

The Strict Statutory Obligation Under Section 106

The Strata Schemes Management Act 2015 (NSW) imposes a strict and non-discretionary duty on the owners corporation to manage and care for common property. Section 106 pinpoints the specific obligations for ongoing maintenance and repair.

This statutory duty requires the owners corporation to:

• Properly maintain and keep the common property—and any personal property it holds—in a state of good, serviceable repair.
• Renew or replace fixtures or fittings that form part of the common property or are vested in the owners corporation.

Consequently, the owners corporation must address defects promptly and ensure that all common areas and associated property remain fully functional.

Legal Consequences for Breaching the Duty to Repair

If an owners corporation fails to meet its statutory duty, it may face significant legal consequences. A breach entitles lot owners to pursue damages for any reasonably foreseeable losses they suffer.

For example, when a neglected common-property roof allows water to damage a lot, the owner can seek compensation from the owners corporation. Generally, a lot owner has six years from becoming aware of the loss to commence legal action for those damages.

The Extent of the Duty to Repair Strata Common Property

The Limiting Principle of Reasonable Necessity

The duty of an Owners Corporation to repair and maintain strata common property is not unlimited. Lot owners therefore cannot compel the Owners Corporation to perform works that are not reasonably necessary for safety and usability.

In Glenquarry Park Investments Pty Ltd v Hegyesi [2019] NSWSC 425 the Court confirmed that the obligation arises only when an item of common property can no longer be kept in a “state of good and serviceable repair.” To clarify when that threshold is crossed, the following situations will usually trigger the duty:

• the item no longer operates effectively;
• it has fallen into disrepair;
• it is otherwise damaged or deteriorated.

The standard does not demand perfection; it simply requires the item to remain functional and safe.

Distinguishing Necessary Strata Repairs from Discretionary Enhancements

A critical distinction in strata law exists between mandatory repairs and discretionary improvements. Works falling within the duty to repair and maintain are governed by Section 106 of the Strata Schemes Management Act 2015 (NSW) and need only an ordinary resolution. In contrast, enhancements are governed by Section 108 and require a special resolution.

The purpose of requiring a special resolution for upgrades is to protect minority owners from being forced to fund works they do not support or cannot afford. As outlined in The Owners Strata Plan 50276 v Thoo [2013] NSWCA 270, the key difference is as follows:

• Repairs (Section 106) look backward—restoring the common property to a state of good and serviceable repair.
• Improvements (Section 108) look forward—enhancing the common property beyond its previous state.

Where work is fundamentally a repair necessary to meet Section 106, it does not need a special resolution even if an incidental improvement results. For example, replacing a broken, obsolete fixture with a modern equivalent is still regarded as a repair.

Justifying Preventative Maintenance & Incidental Works

The duty to repair under Section 106 also encompasses preventative measures. Loneragan v The Owners-Strata Plan No 16519 [2020] NSWCATAP 177 confirms that the statutory duty includes acting in advance to thwart potential malfunctions.

An Owners Corporation therefore has latitude to decide how far to go with repair and replacement work. Preventative maintenance is justified when it is:

• incidental to other necessary repairs, or
• required for the proper functioning of the common property item.

Often it is more cost-effective to replace an item at the end of its service life before failure occurs, rather than pursuing temporary patch-ups that ultimately increase expense.

Defining the Extent of Strata Repairs: Case Study of Glenquarry Park Investments

The Facts Distinguishing a Major Refurbishment from Necessary Strata Repairs

The case of Glenquarry Park Investments Pty Ltd v Hegyesi [2019] NSWSC 425 centred on a dispute within a Point Piper strata scheme. For more than a decade, a multi-million dollar refurbishment was championed by the majority of lot owners.

A smaller group repeatedly opposed the plan, noting that some repairs were needed but insisting the proposed works were excessively expensive.

When the majority passed a series of ordinary resolutions, they authorised the comprehensive works and imposed a special levy of about $1.9 million. The minority responded that the works amounted to an improvement of common property rather than simple repairs and therefore should have required a special resolution, which they had enough votes to block.

The rival positions can be distilled into two key contentions:

• Majority owners believed ordinary resolutions were sufficient to approve and fund the full refurbishment.
• Minority owners maintained the works were improvements, so only a special resolution—subject to their veto—could authorise them.

The Court’s Ruling on Reasonable Necessity

The Supreme Court clarified that an owners corporation’s repair and maintenance duty is confined by the principle of “reasonable necessity.” This duty to renew or replace arises only when an item can no longer be kept in good, serviceable repair.

In assessing the proposed lift replacement, the court observed that the lift, though old, was still functioning as designed and could remain operational for many years with proper maintenance. Consequently, replacement was not reasonably necessary.

When determining whether work is an improvement rather than a repair, the court considered several factors:

• Functional condition – the item must be unable to remain in good repair before renewal is mandatory.
• Extent of upgrade – significant enhancements or modernisations fall outside the basic repair obligation and therefore require a special resolution.

The ruling confirmed that if an element is still serviceable, substantial upgrades are classified as improvements, not repairs, and must be approved accordingly.

Understanding the Nature of Strata Repair Decisions: Case Study of Loneragan

The Facts A Dispute Over Roof Repair Versus Replacement

The case of Loneragan v The Owners-Strata Plan No 16519 [2020] NSWCATAP 177 revolved around a dispute within a strata scheme in Kirribilli, Sydney NSW. The Owners Corporation passed a resolution at an annual general meeting to raise a special levy of $400,000 for the complete replacement of the building’s roof.

Mr Loneragan, a lot owner, opposed the decision, believing the roof could be repaired for a significantly lower cost and did not require full replacement.

He then applied to the NSW Civil and Administrative Tribunal (NCAT) seeking orders to block the replacement and instead compel the Owners Corporation to carry out repairs.

The Tribunal’s Decision on the Owners Corporation’s Judgment

The NCAT Appeal Panel ultimately found in favour of the Owners Corporation, clarifying the scope of its decision-making power. The panel confirmed that an Owners Corporation enjoys discretion when choosing how to meet its duty under Section 106 of the Strata Schemes Management Act 2015 (NSW).

The decision emphasised that even when common property can be repaired, replacement is not automatically an enhancement requiring a special resolution. Accordingly, the Owners Corporation may weigh several practical factors, including:

• Comparative costs of repair versus replacement
• Estimated service life of the repaired item compared with a new one

This ruling establishes that an Owners Corporation can make a practical, long-term decision to replace an asset rather than pursue temporary or less cost-effective repairs as part of its duty to maintain common property.

What to Do When Your Strata Corporation Fails its Repair Duty

The Dispute Resolution Pathway in NSW

When an owners corporation neglects its obligations, lot owners can follow a step-by-step guide to resolving strata building defects & disputes through the NSW system.

The typical escalation steps are:

• Submit a formal motion at the next general meeting so all owners can debate the required repair.
• If the corporation still resists, engage NSW Fair Trading’s free mediation service to encourage agreement.
• Should mediation fail or be refused, lodge a formal complaint with Fair Trading so the agency can investigate and push for compliance.

If Fair Trading intervention does not prompt action, the agency may open an investigation and facilitate statutory compliance measures against the owners corporation.

Applying to NCAT for Specific Strata Repair Orders

After internal efforts and mediation break down, a lot owner can seek legal assistance with a strata dispute in NCAT to obtain an order compelling repairs, but the application must be specific and well-defined.

A valid application should include:

• A detailed scope of works already presented to the owners corporation.
• Evidence that the corporation has failed to act on that concrete proposal.
• Clear links showing the works are necessary under Section 106 of the Strata Schemes Management Act 2015 (NSW).

The Tribunal cannot endorse a vague “wish list” of improvements; its power is triggered only when the requested works are precise enough to be enforceable and leave no doubt about what is required.

Conclusion

The duty of an owners corporation to repair common property under the Strata Schemes Management Act 2015 (NSW) is a strict obligation, yet it is carefully limited by the principle of reasonable necessity. This crucial distinction between mandatory repairs and discretionary enhancements, shaped by key legal precedents, defines the lawful decision-making process for any strata scheme.

Navigating these complex strata obligations requires precise legal understanding to ensure compliance and prevent disputes. For trusted expertise on strata repair issues in NSW, contact the specialist strata lawyers at PBL Law Group for a consultation today to ensure your rights and responsibilities are protected. If you are facing a disagreement or unresolved issue, our strata dispute lawyers can provide targeted advice and representation to help resolve your strata dispute efficiently.

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