NSW: Q&A Common Property Defects and Reimbursement for Repairs

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The following questions are from New South Wales strata lot owners asking about costs and reimbursements for repairs required due to common property defects.

Table of Contents:

• QUESTION: Sewer water from the unit above has leaked and caused damages to the unit below. Pipes are concealed in the wall and not visible. Can we ask the owners corporation to facilitate professional inspection to determine the exact damages to pipes and get it repaired appropriately to prevent Leaks in the future?
• QUESTION: How long must a lot owner wait for a reimbursement for waterproofing the bathroom? What can I do to obtain a resolution?
• QUESTION: We have received strata approval to lay new laminate on the floor of our apartment. The original concrete floor is not level and needs levelling at a cost of $2000. Would this be strata responsibility?
• QUESTION: There is no insulation under the concrete roof of my top floor apartment. On hot days, the apartment is basically unliveable. Is the Owners Corporation responsible for this problem?
• QUESTION: I had a split water pipe in the cavity wall between my bathroom and laundry. I contacted the strata and they said it was not their responsibility. So who can I claim the works cost back from?
• QUESTION: A resident reported a blocked drain to me. I’m a committee member. I relayed this to the other 4 committee members with no reply. The repair has been completed and 3 of the 5 committee members are refusing the invoice stating the correct procedure was not followed.
• QUESTION: Water has entered the external wall of our building and has damaged a section of the floating floor of a lot owners apartment. Is the repair the responsibility to be compensated by the buildings insurance?
• QUESTION: A builder has confirmed I have water between my tiles and the waterproofing layer in my bathroom. I have contacted strata. What do I do now?
• QUESTION: I’m renovating my unit’s flooring. The flooring has magnesite and needs to be repaired by the OC first. Should they draft the bylaw for the renovation?
• QUESTION: Fire updates within our complex Led to the installation of a box cover over my bathroom vent which caused massive problems with mould in the bathroom. How can I get this fixed?
• QUESTION: We discovered a leak in the ceiling of our newly renovated bathroom. Strata will fix but will cover the repair hole with a vent. We’d like it returned to the condition it was in prior to the leak.
• QUESTION: A lot owner put down a hard floor under a special bylaw to transfer the obligation of maintenance of the surrounding common property to the lot owner. We now need to dig up the floor for a pipe repair and they are not being cooperative.
• QUESTION: While carrying out kitchen renovations, engineering work was required to repair concrete cancer in the floor. Can I be reimbursed the substantial costs for repairs to common property defects?
• QUESTION: Water damage was caused to a lot owner’s floating floor boards from a common property defect. Aren’t internal floor coverings the responsibility of the lot owner?
• QUESTION: Our hardwood floors have suffered major water damage due to common property defects. Should the Body corporate reimburse out of pocket expenses for accommodation and food while we vacate the property for repairs?
• QUESTION: Our bathroom’s waterproofing membrane has failed and is causing damage to the lot below. Should the Owners Corporation be responsible for all repairs, as these are only needed due to common property defects?
• QUESTION: Due to a common property defect, my tiles were damaged in an area on my verandah. As the tiles could not be matched, the whole space must be retiled. Should the OC pay for all work?
• QUESTION: The floor in a lot’s kitchen has to be repaired because of concrete cancer. The lot owner now wants the owners corporation to pay for a new kitchen.
• QUESTION: One lot owner has put in a claim for over $6000 from the owner’s corporation for bathroom renovations.
• QUESTION: A lot owner wants reimbursement for repairs required due to common property defects, although they did not follow the correct process. Should the Owners Corporation appease this lot owner?
• QUESTION: Who is Responsible for Sanding Polishing Floorboards?

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Question: Sewer water from the unit above has leaked and caused damages to the unit below. Pipes are concealed in the wall and not visible. Can we ask the owners corporation to facilitate professional inspection to determine the exact damages to pipes and get it repaired appropriately to prevent Leaks in the future?

Sewer water from the unit above has leaked and caused damages to the unit below. Pipes are concealed in the wall and not visible.

Can we ask the owners corporation to facilitate professional inspection to determine the exact damages to pipes and get it repaired appropriately to prevent Leaks in the future?

Previous seepage of sewer water has caused damages including loss of rents due to Tenant moving out due to this problem. Who compensates for the past and ongoing damages ( loss of rent, amending repair etc)?

Answer: The first point of consideration would be a claim for water damage and loss of rent under the strata insurance.

Leanne Habib, Premium Strata

Yes, this would be the prudent course, as in the process of that inspection it could be definitively determined what the source and cause of the damage was. If the damage is caused by a defect in or malfunction of the common property an owner may recover damages from the Owners Corporation as per subsection (5) below:

Division 1 – Common property

106 Duty of owners corporation to maintain and repair property

1. An owners corporation for a strata scheme must properly maintain and keep in a state of good and serviceable repair the common property and any personal property vested in the owners corporation.
2. An owners corporation must renew or replace any fixtures or fittings comprised in the common property and any personal property vested in the owners corporation.
3. This section does not apply to a particular item of property if the owners corporation determines by special resolution that:
   1. it is inappropriate to maintain, renew, replace or repair the property, and
   2. its decision will not affect the safety of any building, structure or common property in the strata scheme or detract from the appearance of any property in the strata scheme.
4. If an owners corporation has taken action against an owner or other person in respect of damage to the common property, it may defer compliance with subsection (1) or (2) in relation to the damage to the property until the completion of the action if the failure to comply will not affect the safety of any building, structure or common property in the strata scheme.
5. An owner of a lot in a strata scheme may recover from the owners corporation, as damages for breach of statutory duty, any reasonably foreseeable loss suffered by the owner as a result of a contravention of this section by the owners corporation.
6. An owner may not bring an action under this section for breach of a statutory duty more than 2 years after the owner first becomes aware of the loss.
7. This section is subject to the provisions of any common property memorandum adopted by the by-laws for the strata scheme under this Division, any common property rights by-law or any by-law made under section 108.
8. This section does not affect any duty or right of the owners corporation under any other law.

Tyrone Shandiman, Strata Insurance Solutions

In relation to the second question, the first point of consideration would be a claim for water damage and loss of rent under the strata insurance.

Generally speaking (subject to the terms conditions and exclusions of the policy), the policy will cover “water damage” resulting from the leak but will exclude costs associated with finding and fixing the leak if the cause of damage relates to an exclusion such as lack of maintenance, rust, oxidation, wear & tear, corrosion, gradual deterioration, developing flaws, building defects etc. Long term water damage or rot may be something that the insurer does not cover depending on the circumstances as strata policies are designed to cover sudden and accidental damage.

In relation to Loss of Rent, a claim can be considered where the damage makes the property uninhabitable or unfit to be occupied for its intended purpose. You will need to discuss the process for claiming loss of rent with the insurer.

For losses that are not covered by an insurance claim, the owners corporation can only consider compensation where you can demonstrate they were legally liable for the damages and financial loss. Things that you may consider is firstly whether the owners corporation are responsible to maintain the damaged pipe and if so, whether they were negligent in their maintenance of pipes for example knowledge of leaks and failure to take reasonable actions to fix the leaking pipes etc.

Leanne Habib
Premium Strata
E: [email protected]
P: 02 9281 6440

Tyrone Shandiman
Strata Insurance Solutions
E: [email protected]
P: 07 3899 5129

This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Shandit Pty Ltd T/as Strata Insurance Solutions strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances. Shandit Pty Ltd T/As Strata Insurance Solutions is a Corporate Authorised Representative (No. 404246) of Insurance Advisernet Australia AFSL No 240549, ABN 15 003 886 687.

This post appears in the March 2021 edition of The NSW Strata Magazine.

Question: How long must a lot owner wait for a reimbursement for waterproofing the bathroom? What can I do to obtain a resolution?

How long must an owner wait for an entitled and agreed reimbursement for waterproofing the bathroom? What can I do to obtain a resolution?

All invoices were submitted 14 months ago and finally acknowledged. Reimbursement was promised at the AGM 4 months ago, but all to no avail.

Answer: You may consider escalating the matter to the Tribunal.

If the work relates to common property, the Owners Corporation is required to comply with section 106 of the Strata Schemes Management Act 2015.

This section provides that the Owners Corporation must properly maintain and keep in a state of good and serviceable repair the common property and any personal property vested in the Owners Corporation.

You will need to show that the works were necessary to be carried out.

I would suggest you call a meeting at the Annual General Meeting, or at the strata committee meeting (if you are on the strata committee) and/or raise the issue with the strata manager at first instance. Should this not happen and you can show the works were necessary to be carried out you may then consider escalating the matter to the Tribunal.

Pierrette Khoury
Khoury Lawyers
E: [email protected]
P: 0415 459 486

This post appears in the March 2021 edition of The NSW Strata Magazine.

Question: We have received strata approval to lay new laminate on the floor of our apartment. The original concrete floor is not level and needs levelling at a cost of $2000. Would this be strata responsibility?

Answer: If the sloping floor is considered to be a building defect, rectification of that defect (if any) would be the responsibility of the owners corporation.

Sometimes, though we understand there are certain tolerances under the Building Code of Australia, a uneven slab may constitute a building defect in certain circumstances – this link explains acceptable deviations and tolerations: New South Wales: Guide to Standards & Tolerances 2017

If the sloping floor is considered to be a building defect, since the concrete slab is almost always common property, rectification of that defect (if any) would be the responsibility of the owners corporation.

However, this could be construed as “upgrading” the common property and therefore your responsibility and not the owners corporation’s. The Owners Corporation may argue that the defect is only a defect because you have elected to change the type of flooring within your lot and that the levelling works are merely preparation works to allow for the timber flooring wherein the original carpet on the existing levelling may be fit for its purpose but not for timber flooring.

You should obtain expert advice on this specialist area.

Leanne Habib
Premium Strata
E: [email protected]
P: 02 9281 6440

This post appears in the February 2021 edition of The NSW Strata Magazine.

Question: There is no insulation under the concrete roof of my top floor apartment. On hot days, the apartment is basically unliveable. Is the Owners Corporation responsible for this problem?

When the summer sun heats the concrete roof of my top floor apartment all day, that evening the concrete sheds its heat into the apartment! On some over 35 degree days, my apartment is still over 30 degrees in the early morning!

My air-conditioning unit in the lounge room does little and fans in the bedrooms merely distribute the heat radiating from the ceiling.

At the AGM, I requested a special motion for the owners corporation to apply heatproof paint. I provided documentation, a quote and research, but as tenants occupy a majority of rooftop apartments, I was unable to gather sufficient numbers at the meeting, and the motion was denied.

The summer temperatures in my top floor apartment are unbearable and several other top floor apartment owners agree. We feel this is due to a complete lack of insulation installed when the concrete roof of the block was repaired. Is there any responsibility on the owners corporation to rectify this fault in the concrete roof affecting all top floor apartments? The temperatures are so bad, the apartment is basically unliveable.

Answer: You will need a building consultant’s expert opinion.

While insulation and waterproofing of rooftops is common in the thermal management of buildings, whether or not it is a requirement of the Building Code of Australia for your particular building is a matter you will need a building consultant’s expert opinion on.

If indeed, it is a requirement and you can prove that the absence of insulation (or inadequacy of insulation) is a defect in the common property, then the Owners Corporation has a positive duty to rectify that defect.

Leanne Habib
Premium Strata
E: [email protected]
P: 02 9281 6440

This post appears in Strata News #348.

Question: I had a split water pipe in the cavity wall between my bathroom and laundry. I contacted the strata and they said it was not their responsibility. So who can I claim the works cost back from?

I had a split water pipe in the cavity wall between my bathroom and laundry. The repair involved opening the wall in the laundry, fixing the pipe and then a handyman repaired the wall. I had this happen quite a number of years earlier and it was covered by the strata.

I contacted the strata and they said it was not their responsibility. If the wall had been an external wall it would have been covered but as the water supply was only to my unit it was my responsibility. I then called my broker to use my landlord policy and they also said it was not their responsibility. So who can I claim on the cost of the works cost which were around $1000?

Answer: It will depend on the location and time of registration of the strata plan, as this may determine the waterproofing affixed to the common property walls.

It will depend on the location and time of registration of the strata plan, as this may determine the waterproofing affixed to the common property walls.

Also if the common property memorandum applies it will determine if this is a common property item.

However, if the pipe only serves your lot and is not within the common property wall it is the responsibility of the lot owner. If it is an internal wall it is the lot owner’s responsibility.

If the pipe serves several units, it is likely to be the Owners Corporation’s responsibility. If this is the case, this should be brought to the attention of the Owners Corporation. The Owners Corporation should then address reimbursement and also contact the insurer.

Either way you will need to determine whether the pipe serves your lot solely or several lots.

Pierrette Khoury
Khoury Lawyers
E: [email protected]
P: 0415 459 486

This post appears in the December 2020 edition of The NSW Strata Magazine.

Question: A resident reported a blocked drain to me. I’m a committee member. I relayed this to the other 4 committee members with no reply. The repair has been completed and 3 of the 5 committee members are refusing the invoice stating the correct procedure was not followed.

A resident reported a blocked drain to me. I’m a committee member. He was prevented from showering. I relayed this to the other 4 committee members with no reply.

Consequently, after 24 hours the owner called the building’s plumber, the repair was carried out for a reasonable amount and he submitted the bill to the strata manager for payment. 3 of the 5 committee members are refusing the invoice stating the correct procedure was not followed.

I would have thought by not answering the situation would have been considered an emergency. The three other members also have a vehement grudge against this unit.

I feel these committee members – Chairman, Secretary and Treasurer are not acting appropriately.

The strata manager makes no comment. Should this small bill be paid?

Answer: The answer, in our view, depends on the cause of the blockage.

The answer, in our view, depends on the cause of the blockage.

If it is normal wear and tear and the drain cannot cope with the daily function of showering, this is likely a defect in the common property and so should be paid for by the Owners Corporation.

If it is malicious, then that should be the responsibility of the individual lot.

We consider that a blocked drain is an emergency, not because he could not shower, but because of the possibility of the pipes bursting or causing a flood in the building.

In sum, it is likely that the responsibility for the plumbing bill is the Owners Corporation’s despite the owner not following the proper process because of the emergency nature of the repair.

Leanne Habib
Premium Strata
E: [email protected]
P: 02 9281 6440

This post appears in the December 2020 edition of The NSW Strata Magazine.

Question: Water has entered the external wall of our building and has damaged a section of the floating floor of a lot owners apartment. Is the repair the responsibility to be compensated by the buildings insurance?

Water has entered the external wall of our building due to weep holes being blocked preventing it to escape and has damaged a section of the floating floor of a lot owners apartment.

The water issue has since been resolved but the lot owner has now made a claim for damages compensation to repair/replace the floating floor, gyprock, skirting and painting to the affected area. The floating floor however had not been approved by the body corporate before the lot owner had it installed.

As this floor covering is not part of the original build and was not approved before installation is it the responsibility to be compensated by the buildings insurance even though it was damaged by a fault in common property.

Answer: Does the policy provide cover for floating floors?

There are a few issues to consider here. Firstly, does the policy provide cover for floating floors?

New South Wales legislation provides that the owners corporation are not required to insure temporary flooring (i.e floating floors). If there is no cover, the owner does not have a valid claim under the Property section of the policy.

Some strata policies automatically include cover or have the optional benefit to insure floating floors. Cover for floating floor boards can be convenient for owners as it may mean they do not need to lodge a claim with their contents insurer and strata insurer for one event and thus not pay two excesses. It can however have an unintended consequence that if there is a claim whereby floating floors are the only items damaged and the owner has contents insurance, as some contents insurers will only provide cover for items excluded by strata, it can also mean that a claim must be made on strata insurance even if there is a desire (by the owners corporation or lot owner) that a claim is made under contents.

Where the floating floors are covered by the policy, the owner having contributed towards the insurance policy and having an insurable interest, may have the ability to claim for the damaged flooring under the strata insurance.

If the floating floors are covered by the policy, I am not aware of any provisions in insurance policies which afford the insurer the opportunity to exclude cover where the owners corporation did not approve the installation of flooring. The approval process for installing flooring and claiming for the flooring on an insurance policy are two separate and distinct issues.

Lastly, where the floating floors are not covered by the Property section of the policy, and the owner is claiming compensation due to “negligence” the Public Liability section of the policy can provide cover in instances where the owner can demonstrate that the owners corporation were legally liable for the damaged flooring (i.e. negligence) subject to the insurers terms, conditions and exclusions.

Tyrone Shandiman
Strata Insurance Solutions
E: [email protected]
P: 07 3899 5129

This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Shandit Pty Ltd T/as Strata Insurance Solutions strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances. Shandit Pty Ltd T/As Strata Insurance Solutions is a Corporate Authorised Representative (No. 404246) of Insurance Advisernet Australia AFSL No 240549, ABN 15 003 886 687.

This post appears in Strata News #397.

Question: A builder has confirmed I have water between my tiles and the waterproofing layer in my bathroom. I have contacted strata. What do I do now?

I had noticed something wrong with the grout in my bathroom and my metal door frames are starting to get corrosion on them. I organised for a builder to check the problem and he stated I have water between the tiles and the waterproofing layer.

The builder is supplying me with a letter for our owners corporation. I have let our strata know of the problem but was wondering what is the next step should be? The building is not quite 2 years old.

Answer: You should keep reminding the strata manager of the need to investigate your water issue and keep records of same.

It is critical that the source of the water ingress be determined. You should liaise with the strata manager to obtain an expert report in relation thereto.

While you must not allow the leak to go unchecked, you should exercise caution before carrying out any works yourself so as not to potentially void or compromise the owners corporation’s insurances (eg in case the leak is a common property defect covered by relevant home building warranties).

You should keep reminding the strata manager of the need to investigate your water issue and keep records of same.

You have done the right thing to notify the strata manager who should now liaise with the strata committee for a determination as to the cause and attributing responsibility for the costs of rectification.

Should there be an undue delay in investigating your water issue, then you should consider escalating the matter.

Leanne Habib
Premium Strata
E: [email protected]
P: 02 9281 6440

This post appears in the September 2020 edition of The NSW Strata Magazine.

Question: I’m renovating my unit’s flooring. The flooring has magnesite and needs to be repaired by the Owners Corporations first. Should they draft the bylaw for the renovation?

I am renovating my entire Unit’s Flooring. The Strata Committee is requesting that prior to doing any flooring renovations, the magnesite needs to be completely removed and any concrete spalling repairs need to be carried out.

As the Strata Committee needs to repair the flooring, is it the Owners Corporation’s responsibility to draft a new By-Law for my bathrooms?

Answer: The OC is carrying out its statutory duty to repair & maintain the common property and therefore, does not require a by-law.

Leanne Habib
Premium Strata
E: [email protected]
P: 02 9281 6440

This post appears in Strata News #397.

Question: Fire updates within our complex Led to the installation of a box cover over my bathroom vent which caused massive problems with mould in the bathroom. How can I get this fixed?

I finished renovating my unit last year. Not long after we had fire updates done throughout the complex. This led to the installation of a box cover over my bathroom vent.

This has caused massive problems with mould as there is no ventilation in the bathroom except the window. I complained to my owners corporation and they said they would address the issue later but the job had to be completed first.

Strata and the owners corporation are now telling me that it is my problem and not their responsibility to fix this issue. I have asked them for the reasoning or legislation behind this statement but they have not responded. How can this be my issue to repair?

The apartment is let and my tenants are opting to move out because of the mould problem. My managing agents have informed me the ventilation problem must be rectified before we even consider reletting.

Answer: The Owners Corporation should rectify the reduced ventilation in your bathroom.

While the Owners Corporation may have had a duty to implement a fire upgrade, in doing so, it appears they may have caused a defect in the common property i.e. through the obstruction of your vent. In our view, the Owners Corporation should rectify the reduced ventilation in your bathroom, whether by way of the installation of an exhaust fan or otherwise – noting that the Owners Corporation may be held liable for compensation in case of breach of their statutory duties to properly repair and maintain the common property.

Leanne Habib
Premium Strata
E: [email protected]
P: 02 9281 6440

This post appears in Strata News #382.

Question: We discovered a leak in the ceiling of our newly renovated bathroom. Strata will fix but will cover the repair hole with a vent. We’d like it returned to the condition it was in prior to the leak.

I recently noticed a drip through a light fitting in my main bathroom. We completely renovated the apartment earlier this year, including this bathroom.

The strata manager has agreed to fix the defect but the plumber will cover the hole he needs to cut with an air vent.

We’ve just spent over 6 figures completely renovating our apartment. I feel Strata should, after repairing the pipes, return the ceiling to the condition it was in prior to the leak. Is this unreasonable and what can we do?

Answer: If the leak is due to a defect in the common property, the owners corporation should re-instate all affected lot and common property.

Pursuant to Section 122 Power of owners corporation to enter property in order to carry out work of the Strata Schemes Management Act, 2015 (NSW):

6. an owners corporation is liable for any damage to a lot or any of its contents caused by or arising out of the carrying out of any work, or the exercise of a power of entry, referred to in this section unless the damage arose because the owners corporation was obstructed or hindered.

So, if the leak is due to a defect in the common property, the owners corporation should re-instate all affected lot and common property.

You should raise this position with your strata manager, and, if the owners corporation still refuses to re-instate your ceiling/paint/lights, you may apply for Mediation to attempt to resolve the situation (failing which, commence action in NCAT).

Leanne Habib
Premium Strata
E: [email protected]
P: 02 9281 6440

This post appears in Strata News #356.

Question: A lot owner put down a hard floor under a special bylaw to transfer the obligation of maintenance of the surrounding common property to the lot owner. We now need to dig up the floor for a pipe repair and they are not being cooperative.

We have a situation in our building, which is a complex of 40 units in Sydney, New South Wales. A lot owner put down a hard floor in 2012. We asked the lot owner for a special bylaw to transfer the obligation of maintenance of the common property on which the floor was laid to the lot owner. This was approved at an extraordinary general meeting and recorded in the minutes.

We now find that we need to take up some of the hard floor in order to access pipes that were embedded in the concrete at the time of construction.

The owner has shown us the Strata Scheme Management Act for that time which says that in order for a bylaw to be binding it needs to be signed by the owner and he did not sign anything because we didn’t know to ask him to sign.

52 How does an owners corporation make, amend or repeal by-laws conferring certain rights or privileges?

1. An owners corporation may make, amend or repeal a by-law to which this Division applies, but only:
   1. with the written consent of the owner or owners of the lot or lots concerned

Our strata manager says that there is also a clause in the legislation that says that after two years it is deemed that everything was correctly done with respect to the bylaw and therefore the by-law is binding.

After 2 years from the making, or purported making, of a by-law to which this Division applies, it is conclusively presumed that all conditions and preliminary steps precedent to the making of the bylaw were complied with and performed.

Answer: Look to section 148 – Order revoking amendment of by-law or reviving repealed by-law

It is arguable that section 52 applies which provided at that point in time:

4. After 2 years from the making, or purported making, of a by-law to which this Division applies, it is conclusively presumed that all conditions and preliminary steps precedent to the making of the by-law were complied with and performed.

I am presuming the special by-law was prepared, however not signed and registered.

Having regard to the Strata Schemes Management Act 2015 there are provisions which are relevant. An application may be made to the Tribunal regarding the special by-law which is set out in section 148. The Truibunal is to consider the interests of all owners of the lots in the strata scheme.

Order revoking amendment of by-law or reviving repealed by-law

1. The Tribunal may, on application by a person entitled to vote on the amendment or repeal of a by-law or addition of a new by-law or the lessor of a leasehold strata scheme, make one of the following orders–
   
   1. an order that the amendment be revoked,
   2. an order that the repealed by-law be revived,
   3. an order that the additional by-law be repealed.

2. The Tribunal may make an order only if the Tribunal considers that having regard to the interest of all owners of lots in a strata scheme in the use and enjoyment of their lots or the common property, the change to the by-laws should not have been made by the owners corporation.
3. An order under this section, when recorded under section 246, has effect as if its terms were a by-law (but subject to any relevant order made by a superior court).
4. When making an order under this section in relation to a common property rights by-law, the Tribunal may direct the payment by the owners corporation of compensation to the owner of the lot, or owners of the lots, referred to in the by-law.Note: Section 78 of the Civil and Administrative Tribunal Act 2013 provides for the recovery as a judgment debt of amounts ordered to be paid by the Tribunal.
5. An order under this section operates on and from the date on which it is so recorded or from an earlier date specified in the order.

A further power is contained in section 149 of the Act: Order with respect to Common property rights by-law. Subsection (b) is of relevance where an owner of a lot has unreasonably refused to consent to the terms of the proposed amendment or repeal of a common property rights by-law.

1. The Tribunal may make an order prescribing a change to a by-law if the Tribunal finds–
   
   1. on application made by an owner of a lot in a strata scheme, that the owners corporation has unreasonably refused to make a common property rights by-law, or
   2. on application made by an owner or owners corporation, that an owner of a lot, or the lessor of a leasehold strata scheme, has unreasonably refused to consent to the terms of a proposed common property rights by-law, or to the proposed amendment or repeal of a common property rights by-law, or
   3. on application made by any interested person, that the conditions of a common property rights by-law relating to the maintenance or upkeep of any common property are unjust.

2. In considering whether to make an order, the Tribunal must have regard to–
   
   1. the interests of all owners in the use and enjoyment of their lots and common property, and
   2. the rights and reasonable expectations of any owner deriving or anticipating a benefit under a common property rights by-law.

3. The Tribunal must not determine an application by an owner on the ground that the owners corporation has unreasonably refused to make a common property rights by-law by an order prescribing the making of a by-law in terms to which the applicant or, in the case of a leasehold strata scheme, the lessor of the scheme is not prepared to consent.
4. The Tribunal may determine that an owner has unreasonably refused consent even though the owner already has the exclusive use or privileges that are the subject of the proposed by-law.
5. An order under this section, when recorded under section 246, has effect as if its terms were a by-law (but subject to any relevant order made by a superior court).
6. An order under this section operates on and from the date on which it is so recorded or from an earlier date specified in the order.

Pierrette Khoury
Khoury Lawyers
E: [email protected]
P: 0415 459 486

This post appears in Strata News #329.

Question: While carrying out kitchen renovations, engineering work was required to repair concrete cancer in the floor. Can I be reimbursed the substantial costs for repairs to common property defects?

I recently carried out renovations to my unit.

During the process I noticed that the concrete slab area in the kitchen had crummy patches and loose concrete.

I contacted a structural engineer to look at the slab. The engineer removed further concrete to find the whole area was crummy and the reinforcement was significantly rusted to the point where steel came out with loose concrete.

The engineer specified what should be done to repair the slab. I engaged a specialist contractor and he carried out the works. There was no lump sum cost as he was not able to determine the full extent of work. The work eventually cost $27000.

Can these costs be given to the owners Corp for reimbursement as repairs to common property defects? Is there a time frame for claiming the reimbursement? I have only been made aware the owners Corp paid for this work in another unit at $60,000.

Answer: An owners corporation must renew or replace any fixtures or fittings comprised in the common property and any personal property vested in the owners corporation.

The usual process is that the owner notifies the strata managing agent of any issues concerning the property as soon as they become aware. This should be in writing.

Section 106 of the Strata Schemes Management Act 2015 provides a statutory duty that the Owners Corporation is to comply with.

It provides that:

1. An owners corporation for a strata scheme must properly maintain and keep in a state of good and serviceable repair the common property and any personal property vested in the owners corporation.
2. An owners corporation must renew or replace any fixtures or fittings comprised in the common property and any personal property vested in the owners corporation.

The section does not apply if the owners corporation has determined by special resolution at a meeting that: it is inappropriate to maintain, renew, replace or repair the property, and its decision will not affect the safety of any building, structure or common property in the strata scheme or detract from the appearance of any property in the strata scheme.

Relevantly to your situation section 106(5) provides:

5. An owner of a lot in a strata scheme may recover from the owners corporation, as damages for breach of statutory duty, any reasonably foreseeable loss suffered by the owner as a result of a contravention of this section by the owners corporation.
6. An owner may not bring an action under this section for breach of a statutory duty more than 2 years after the owner first becomes aware of the loss.

At first instance, I would notify the strata managing agent of the works undertaken with the evidence of the same attached and seek reimbursement. You will need to ensure that the works carried out affected the common property. You will also need to show it was a reasonable foreseeable loss you suffered and that is why you took steps to carry out the work and mitigate your loss.

In the event, you do not receive a response I would refer the strata managing agent to section 106 outlined above whereby the Owners Corporation have a statutory duty to properly maintain and keep in a state of good and serviceable repair the common property and any personal property.

Pierrette Khoury
Khoury Lawyers
E: [email protected]
P: 0415 459 486

This post appears in Strata News #314.

Question: Water damage was caused to a lot owner’s floating floor boards from a common property defect. Aren’t internal floor coverings the responsibility of the lot owner?

We recently had an owner put in a claim for the owners corporation to pay for damage to their floating wooden floor within their living area. The damage was due to water leakage.

After consulting with our Strata agent they advised that this is now a ‘grey area’ in NSW and that the owners corporation may be liable.

This is news to me as I thought it was clear cut. I thought the internal floor coverings; carpet, floating and fixed wooden floors that were installed by past or present owners are the responsibility of the present owner and should be covered by their own household insurance.

Answer: It is important to understand the difference between “responsibility to insure” and “responsibility for damage”.

I think it is important to understand the difference between “responsibility to insure” and “responsibility for damage”. It is my view this may be the cause of the misunderstanding.

“Responsibility to Insure” is covered by Section 161 (4) Strata Schemes Management Act 2015 and outlines that temporary floor coverings are not required to be insured under a strata policy. Subsequently, strata insurers will exclude cover for floating floors.

Insurers have however started providing an optional benefit to cover floating floors. This muddies the waters somewhat as contents/landlords insurance which has traditionally been the policy to insure floating floors now covers fixtures that are not insured by the strata policy. In the event of a claim for damage to floating floors, if an owner tries to make a claim on their contents/landlords insurance policy, the contents insurer may require confirmation that the strata insurer is declining to provide cover. If the strata insurance policy has the optional benefit covering floating floors selected and you contact the insurer for a decline letter. The insurer technically can not decline a claim for something they cover. For this reason, we caution owners corporation clients about taking the floating floors optional benefit because it can have the unintended consequence of forcing an owner to claim on strata even if their preference is to claim on their contents/landlords insurance.

“Responsibility for damage” or a negligence claims against the owners corporation are different from any property damage claim. Strata policies have public liability insurance which is designed to provide cover for claims for property damage they become legally liable for. If the leak was from the owners corporation property (such as a leaking pipe the owners corporation are responsible for) and the owner can demonstrate negligence on the part of the owners corporation or a legal responsibility for the damage, then a public liability claim can be considered by the insurer. The insurer will either defend the claim if they feel there are reasonable grounds to do so or they will settle the demands.

Tyrone Shandiman
Strata Insurance Solutions
E: [email protected]
P: 07 3899 5129

This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Shandit Pty Ltd T/as Strata Insurance Solutions strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances. Shandit Pty Ltd T/As Strata Insurance Solutions is a Corporate Authorised Representative (No. 404246) of Insurance Advisernet Australia AFSL No 240549, ABN 15 003 886 687.

This post appears in Strata News #306.

Question: Our hardwood floors have suffered major water damage due to common property defects. Should the Body corporate reimburse out of pocket expenses for accommodation and food while we vacate the property for repairs?

We have had major water damage occur to a hardwood floor laid on battens on a slab as part of the original build in a 10 year old NSW town house complex.

The hardwood floors are recognized as Body Corporate responsibility as the damage is due to common property defects.

For reasons too convoluted to go into, insurance is refusing to pay out.

Body corporate are willing to pay for the repair, though I will need to vacate my property for at least a week while the floor is replaced.

Does Body corporate have an obligation to reimburse me for out of pocket expenses to house and feed my family for a week while we vacate the property for repairs?

Answer: The accommodation should be recoverable, but it is unlikely that the costs of food etc would be reimbursed.

If the water ingress can be construed as a failure on the part of the owners corporation to properly repair and maintain the common property, then under Section 106(5) of the Strata Schemes Management Act 2015 (NSW):

5. An owner of a lot in a strata scheme may recover from the owners corporation, as damages for breach of statutory duty, any reasonably foreseeable loss suffered by the owner as a result of a contravention of this section by the owners corporation.

If the above clause is applicable, in our view, the accommodation should be recoverable, but it is unlikely that the costs of feeding etc would be, given that you must feed your family wherever you live ie the requirement to feed your family has not arisen because of any breach of the owners corporation. Bearing in mind too, that you must mitigate your losses, so rather than stay at eg a 5-star hotel and eat room service every night, we recommend you find a serviced apartment of similar quality in the vicinity of your existing apartment.

Leanne Habib
Premium Strata
E: [email protected]
P: 02 9281 6440

This post appears in Strata News #300.

Question: Our bathroom’s waterproofing membrane has failed and is causing damage to the lot below. Should the Owners Corporation be responsible for all repairs, as these are only needed due to common property defects?

Our bathroom is the original bathroom and the waterproofing membrane has failed and is causing damage to the lot below.

The Owners Corporation’s contractor has advised that to comply with the current building codes, the entire bathroom needs to be stripped out, the waterproofing membrane replaced and the bathroom tiles and fixtures renewed.

As the bathroom and waterproof membrane are original and there is nothing wrong with the tiles or fixtures, shouldn’t the Owners Corporation be responsible for the cost to replace these? The repairs are only needed due to the common property defects and so the Owners Corporation can maintain the common property membrane. Is this correct?

The current bathroom is tiled in marble and we have even advised we will accept a standard white tile instead of requiring the like for like marble tiles, as this will keep the cost lower.

What bylaw or part of the legislation would we be able to quote in regards to this? Who is responsible? The property is about 30-40 years old.

Answer: There is a very similar 1999 strata titles case.

There is a 1999 case where water had leaked into two lots below another lot so the owners corporation removed two rows of tiles to effect membrane repairs. The owners corporation was insistent that its obligations extended only to replacement of the 2 rows of titles it had removed. The Owner, however, wanted his entire balcony retiled.

An Adjudicator ordered that the owners corporation had to retile with tiles that matched as closely as possible in appearance and value so as not to detract from the appearance of the balcony floor or negatively impact on the value of the lot. Further, if reasonably matching tiles were not available and those non-matching tiles might detract from the appearance of the lot, the owners corporation was to retile the whole balcony.

Leanne Habib
Premium Strata
E: [email protected]
P: 02 9281 6440

This post appears in Strata News #266.

Question: Due to a common property defect, my tiles were damaged in an area on my verandah. As the tiles could not be matched, the whole space must be retiled. Should the OC pay for all work?

My veranda incorporates a steel post which structurally supports the roof above. The post was defective in that it had no ‘weep holes’ to allow condensation to flow out. The water resulting inside the post eventually rusted the base of the post and, destabilised the tiles and tile bed.

In fixing this common property defect, the tiles could not be matched therefore the veranda had to be retiled.

The Strata management advised that this was not their responsibility even though the damage was consequential to the defective pipe and only required replacement due to damage caused by the common property defect.

The strata manager said that they may be responsible for the portion of the tiles that were damaged by the pipe but not the whole retiling job. I note again that the tiles could not be matched so there was no alternative other than full replacement.

Can you advise my rights to recover costs?

Answer: There is a strata titles case very similar to yours.

There is a strata titles case concerning a common property defect (Denning v The Owners – Strata Plan No. 11318 [1999] SA/99/038) which states that the duty of the Owners Corporation to repair tiles on a balcony, in a context similar to yours, was, either to match new tiles as closely as possible in appearance and value to the existing tiles so as not to detract from the appearance or value of the lot OR in case very similar tiles were not able to be sourced, then the owners corporation would have to retile the whole balcony floor.

Leanne Habib
Premium Strata
E: [email protected]
P: 02 9281 6440

This post appears in Strata News #220.

Question: The floor in a lot’s kitchen has to be repaired because of concrete cancer. The lot owner now wants the owners corporation to pay for a new kitchen.

Who is responsible for a kitchen in a unit? The floor in a lot’s kitchen has to be repaired due to common property defects, specifically because of concrete cancer. The lot owner now wants the owners corporation to pay for a new kitchen. The original kitchen was 30 years old! Where do we stand?

Answer: The Owners Corporation would need to address concrete cancer and then reinstate the kitchen with like for like.

It sounds like the kitchen is original. Subject to any by-laws applicable to the scheme and any notations on the strata plan, the general position is that the floor tiles, any membrane and the structure of the concrete slab are all common property, and, therefore, the responsibility of the Owners Corporation.

The Owners Corporation would need to address concrete cancer and then reinstate the kitchen with like for like. Any upgrade or superior finishes would be at the cost of the individual lot owner.

Leanne Habib
Premium Strata
E: [email protected]
P: 02 9281 6440

Question: One lot owner has put in a claim for over $6000 from the owner’s corporation for bathroom renovations.

What are the responsibilities of Strata Committee members in relation to maintenance work? One lot owner has put in a claim for over $6000 from the owner’s corporation for bathroom renovations. Is this allowed? Who has the right to view the bathroom in question? All lot owners, or just the Strata Committee members?

Answer: If the owner alleges the renovations were required due to common property defects, then such defects should have been notified to the owners corporation.

Bathroom renovations require a by-law under the legislation – which the owner appears not to have obtained. If the owner alleges the renovations were required due to common property defects, then such defects should have been notified to the owners corporation.

The owners corporation should not be liable to foot the bill unless there is compelling evidence of a defect in the common property necessitating a full bathroom renovation. This does not seem to be the case. You should seek legal advice on this one. Before you can access the lot, you will need the relevant owner’s consent.

Leanne Habib
Premium Strata
E: [email protected]
P: 02 9281 6440

Question: A lot owner wants reimbursement for repairs required due to common property defects, although they did not follow the correct process. Should the Owners Corporation appease this lot owner?

We had a motion passed after a discussion held at our last years AGM.

See below:-

MOTION

If an owner authorises work on common property and bypasses the Strata Committee and Strata Manager then the Owners Corporation will not reimburse the owner for such works. All requests for maintenance must be channelled through the Strata Committee and the Strata Manager who will then issue a work order to a certified contractor.

The motion will then either be CARRIED/AMENDED or LOST

This was carried by the Owners Corporation.

Since this was passed at the last AGM, we had an owner get work done on her lot. The work was necessary due to a common property defect and was carried out by their own contractor. They are now demanding a reimbursement for the cost of the work.

Just prior to this claim, another owner wanted the same issue caused by the common property defect repaired. They requested the issue to be repaired through the strata manager and after confirming it was strata responsibility, the job was done at strata’s costs. This owner followed the correct process, as per the motion.

The owner who has not followed the process and has had the work done outside of this motion is causing all kind of demands because the compliant lot owner was compensated by strata.

We passed this motion because we have previously had owners being reimbursed at a later date for works that have not been channelled through the strata manager and strata committee.

Should the strata committee go against a motion passed at an AGM by the Owners Corporation to appease this owner?

Answer: We would not entertain reimbursement until such time as the owner demonstrated actual costs, the qualifications of the workers, the necessity for the works, the insurances/warranties obtained.

This is a difficult question because the motion passed implies that an owner has authority to issue work orders for work on the common property (which they do not) but if they do so, they will not be reimbursed. While we understand this was intended to dissuade lot owners from by-passing the proper channels for common property repairs, Section 111 clearly states that owners must not carry out work on the common property without the proper approvals. Further, Section 126 gives the Tribunal powers to order an Owners Corporation to consent to common property repair works carried out by an owner and which directly affects the owner’s lot.

The concern for the Owners Corporation is that where a lot owner carries out the work, the Owners Corporation does not obtain the benefit of any warranties for works carried out. Also, it is not aware of the qualifications of the contractor carrying out works on the common property and there is a possibility that the insurances of the Owners Corporation may have been compromised.

All that said, we cannot give you legal advice. However, we are of the view that the by-law is confusing and could be better drafted.

In terms of the current issue at hand with the lot owner demanding reimbursement, again while we cannot give you legal advice, we would not entertain reimbursement until such time as the owner demonstrated:

• actual costs
• the qualifications of the workers
• the necessity for the works
• the insurances/warranties obtained.

Ultimately, and because of the strict liability of the Owners Corporation to properly repair and maintain the common property, the owner could make application to NSW Civil & Administrative Tribunal and recover from the Owners Corporation damages for the Owners Corporation’s breach of statutory duty Section 106 (5).

Question: Who is Responsible for Sanding Polishing Floorboards?

I wonder if you can clarify a strata question that is very grey with regards to my floorboards.

Our building in Sydney NSW was completed on the year 2000. Each townhouse has a section of floorboards in the lounge room.

Our Strata manager says the floorboards are not common property and are the owners responsibility.

This contradicts the following – last year we had some rectification works due to common property defects relating to waterproofing and some of the townhouses did have some water damage to their floorboards and the strata paid for the repairs to the floorboards.

When I asked the strata manager about sanding polishing floorboards, they said NO as these are the owner’s responsibility. When I asked the Executive Committee, the chairperson said that because the other units had damage caused by the reification works of the common property defects, the owners corporation had to pay for them.

I find this inequitable and am really confused. What do I do?

Answer: You need to confirm whether your flooring is common property or lot property

It is not uncommon for the Owners Corporation to repair lot property resulting from damage caused by common property defects. Therefore, whilst the flooring may not be common property, the Owners Corporation would still be responsible to repair flooring where their property has caused the damage.

However, to determine if your flooring is common property or lot property, and which party is responsible for general repair and maintenance of the flooring, the following should be confirmed:

1. Type of timber flooring , hard flooring or floating floors
2. How the timber flooring is installed, is the flooring attached to the common property in any way, i.e. screwed, glued to the floor slab.
3. Is the timber flooring part of the original building, i.e. installed at the time of construction and not replaced or altered by an individual owner(s) since construction
4. Are there any special bylaws that transfer the responsibility of maintaining the flooring to either party, the individual Owners or the Owners Corporation

In summary, if the flooring was installed at the time of construction, has not been altered since by an individual owner(s) and is affixed to the common property floor slab within your lot, and there is no special by law in place to determine who is responsible, the flooring will be deemed to be common property and the Owners Corporation would be responsible to repair and maintain. Please note there is an argument excluding the polish/lacquer, which is lot owner responsibility as it is our view that the polish sits within your lot space. It is the upper surface of the floor and the starting point of your cubic airspace in as much as you own the painted surface of the common property ceiling in your lot.

Therefore, in practice, while the Owners Corporation is responsible to repair and maintain the floorboards, any cost for application of polish would be payable by you.

In conclusion, further assessment of the need for re-sanding will assist in determining who’s proper responsibility the polish is, as there are alternate arguable views regarding the responsibility to repolish the flooring.

Leanne Habib
Premium Strata
E: [email protected]
P: 02 9281 6440

This post appears in Strata News #211.

These articles are not intended to be personal advice and you should not rely on it as a substitute for any form of advice.

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