Introduction

The Supreme Court has confirmed that an owners corporation and NCAT can grant an owner retrospective approval of work or repairs done by the owner to the common property without the approval of the owners corporation.

However, the Court has also confirmed that there are some prerequisites that must be met before NCAT is able to grant retrospective approval for works done by an owner on common property without the approval of an owners corporation.

The Court has left open the question of whether an owner who does repairs to the common property which an owners corporation should have but did not perform can be compensated for the cost of those repairs.

Facts

Mr Colman owns a lot in a strata building in Pyrmont, Sydney.  Mr Colman and his wife sought the approval of their owners corporation to undertake alterations to a terrace on their lot which affected the common property.  Those alterations included removing and replacing tiles and waterproofing on the terrace. The Colmans alleged that work, or some of it, was necessary to repair defects in the common property which the owners corporation has failed or refused to fix.  Ultimately the Colmans undertook those works without first obtaining the permission of the owners corporation.

The Case

Mr Colman applied to NCAT for orders approving the works he did to his terrace on the grounds that the owners corporation had unreasonably withheld approval of those works and for the owners corporation to pay him damages.  Mr Colman’s application to NCAT was dismissed and an appeal to the Appeal Panel of NCAT was unsuccessful.  Mr Colman then appealed to the Supreme Court but was also unsuccessful.

Ruling

In its decision, the Supreme Court made some key findings about the operation of the Strata Schemes Management Act 2015 with respect to works done by owners that affect the common property.  In summary, the Supreme Court found that:

• Both an owners corporation and NCAT can give retrospective approval of works or repairs already carried out by an owner to common property directly affecting the owner’s lot, even if the owners corporation did not approve of those works before they were done;
• In the case of repairs to the common property undertaken by an owner without the consent of an owners corporation, the strata committee could retrospectively approve those repairs;
• If an owners corporation decides to retrospectively approve work that has been done to the common property by an owner after completion of the work, that approval must be given by special resolution if it involved major renovations;
• NCAT cannot grant retrospective approval for works or repairs that an owner has done to the common property without the permission of the owners corporation unless the owner has first sought the approval of the owners corporation for those works or repairs (even if that approval is sought after the works or repairs are done);
• Where an owner wants to do renovations that affect the common property, there is no reason why the owner cannot seek the owners corporation’s approval of those works and agree to take on responsibility for the maintenance and upkeep of the works by way of a special resolution approving a single by-law that both authorises the works and makes the owner responsible for their maintenance and upkeep – separate special resolutions to approve the works and then to adopt a by-law for the works are not necessary;
• An owners corporation can be taken to unreasonably refuse to approve an owner’s request for consent to carry out works that affect common property, even if the owner’s application for approval has not been voted on at a general meeting, for example, where the application for approval is urgent but the strata committee or secretary refuse to convene a general meeting to consider the issue or decline to do so within a reasonable time or accidentally omit it from the agenda of the next general meeting – in those circumstances there would be a constructive refusal of consent even though no formal decision has been made by the owners corporation at a meeting to reject the owner’s application;
• A by-law cannot delegate to the strata committee power to approve major renovations undertaken by an owner;
• An owner cannot recover compensation from an owners corporation for the cost of repairs the owner does to the common property without the authority of the owners corporation or an order approving that work made by NCAT (either prospectively or retrospectively);
• The question of whether an owner who carried out repairs to the common property which an owners corporation fails to perform can recover compensation from the owners corporation for the cost of those repairs if they are approved by the owners corporation or NCAT remains open and previous cases which indicated that repair costs could not be recovered by the owner under the previous strata legislation do not necessarily shut the gate on recovery of those repair costs under the current legislation;
• There is no need for an owners corporation to pass a resolution at a general meeting to authorise itself to carry out repairs to the common property – the decision to perform the repairs can be made by the strata committee;

Conclusion

The Colman case provided the Supreme Court with an opportunity to clarify a number of grey areas of strata law.  In doing so, the Court has clarified the power for an owners corporation and NCAT to retrospectively approve of work that has been done by an owner to the common property and also clarified that in some circumstances, an owner’s proposal to carry out work to common property can be rejected by an owners corporation even if the proposal is not put to a vote at a meeting, for instance, where the owners corporation delays dealing with the proposal.

Case citation: Colman v The Owners – Strata Plan No. 61131 [2025] NSWSC 63

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

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For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

Introduction

It is an unfortunate reality that many strata apartment buildings contain defects.  Many of those defects are widespread or systemic defects that affect most or all of the lots.  But how far does an owners corporation have to go to prove the existence of systemic defects?  Does the owners corporation have to organise for its experts to inspect each and every lot to prove that those systemic defects exist in each lot?  A recent Supreme Court case provides the answer to that question.

The Case

There is a strata complex containing 45 townhouses in Tweek Heads South.  The complex was built in about 2018 and 2019.  There are defects in the complex.

In 2021, the owners corporation of the complex sued the builder for damages to (among other things) cover the cost to rectify defects throughout the complex.  In the case, the owners corporation claimed that several defects were systemic and present in numerous townhouses.  One of those defects related to waterproofing defects at the outer edge of balconies above garage doors of many townhouses.

The parties’ experts agreed that the beam which spans the outer edge of the balconies on two of the townhouses suffered moisture damage due to the same waterproofing defect on the balconies of those townhouses.  However, the owners corporation’s expert did not inspect any of the other townhouses or carry out any investigations to prove that those defects existed in them.  The builder denied that those same defects existed in the other townhouses and claimed that the owners corporation had not proved its case in that regard.

Proving the Existence of Systemic Defects

The Court agreed with the builder and concluded that the owners corporation had not proven, on the balance of probabilities, that the waterproofing defects and moisture damage to the beams on the outer edge of the balconies existed in any of the other townhouses.  In other words, the Court concluded that the owners corporation had not proven that those defects were systemic.

The Court relied heavily on an earlier decision in The Owners – Strata Plan No. 62930 v Kell & Rigby Holdings Pty Ltd [2010] NSWSC 612.  In that case, the owners corporation of a block of 14 units argued that no water stops had been installed by the builder in the bathrooms of all 14 units.  The owners corporation’s expert evidence only proved that there were no water stops in the bathrooms of three units.  But the owners corporation claimed that the lack of water stops was a systemic defect present in all of the bathrooms.

The Court held that it could not be inferred from the evidence that established that there were no water stops in three bathrooms that waterproofing work was incorrectly performed in other units and observed that the fact that the waterproofing contractor defectively performed work in a small number of units did not warrant a conclusion that it did so everywhere else.  Importantly, the Court concluded that the burden of proof lay on the owners corporation and that it had chosen to carry out limited destructive testing in three bathrooms only when there was no reason why it could not had done so in all of the units.

In the case involving the townhouse complex in Tweed Head South, the Supreme Court followed the reasoning in Kell & Rigby and concluded that there was insufficient evidence available to support the inference that the balcony waterproofing defect in two townhouses provided a basis for finding that the same defect existed in all 26 townhouses which have front first floor balconies.

Importantly, the Court held that it could not rely on the opinion of the owners corporation’s expert that the defect was systemic due to similar construction details being present in all townhouses because it was not known whether the waterproofing defects that had been identified in two of the townhouses were caused by faulty design or shoddy workmanship.  For all of these reasons, the Court rejected the owners corporation’s claim that the defect on the outer edge of the balconies was a systemic one that affected all such balconies and instead only accepted that the defect existed in two of the balconies that had actually been inspected and tested by the owners corporation’s experts.

Conclusion

The case provides a salutary lesson for owners corporations who wish to pursue a claim against a builder, developer or subcontractor for systemic defects.  Typically, the owners corporation will need to go the extra mile and pay its expert to inspect more than just a handful of lots to ensure that adequate testing and investigations are undertaken to enable the expert to form an opinion that will allow the owners corporation to prove, on the balance of probabilities, that the defect in question is widespread and systemic.  In some cases, this will require the expert to inspect and undertake testing and investigations in all of the lots, which in a large strata building, can be expensive.  But that is the unfortunate price an owners corporation must sometimes pay in order to succeed in a claim with respect to systemic defects.

Case: The Owners – Strata Plan 99960 v SPS Building Contractors Pty Ltd [2024] NSWSC 687

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.