This article on Owners Corporation’s Duty – Repair & Maintain Common Property has been supplied by Pierrette Khoury of Turnbull Bowles Lawyers.
An Owners Corporation has a statutory obligation to repair & Maintain common property. This is particularised in section 62 of the Strata Schemes Management Act 1996 (“the Act”) which relevantly provides:
- An 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.
- 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.
- This clause does not apply to a particular item of property if the owners corporation determines by special resolution 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.
It is imperative the Owners Corporation is mindful of its obligations with regard to the legislation and ensures the common property is properly maintained and repaired. Failure to do so, can affect the amenity of the building and market value of the property in general. Further, a lot owner may commence proceedings against the Owners Corporation and its managing agent seeking:
- Orders for the Owners Corporation to carry out the repair works.
- Damages with regard to property damage as a result of the failure to maintain and repair.
- Compulsory appointment of managing agent, under Section 162 of the Act.
In the case of The Owners Strata Plan 50276 v Thoo  NSWCA 270, the Court held that the obligation under section 62(2) is directed at keeping the common property operational and thus, will only arise in circumstances where the common property is no longer operating effectively or has fallen into disrepair to the point where it is no longer in a state of good and serviceable repair pursuant to section 62(1). The Court clarified that the obligation to replace requires no more than the installation of one thing in the place of another to achieve performance and functional significance.
If an Owners Corporation was seeking to alter something in the building to the effect it is an improvement or enhancement, it is beyond the scope of section 62(2) and will require a special resolution pursuant to section 65A of the Act.
Relevantly, section 65A of the Act provides:
- For the purpose of improving or enhancing the common property, an owners corporation or an owner of a lot may take any of the following action, but only if a special resolution has first been passed at a general meeting of the owners corporation that specifically authorises the taking of the particular action proposed:
- add to the common property,
- alter the common property,
- erect a new structure on the common property.
NSW: Q&A Statutory Duty to Repair and Maintain Common Property
Question: Our apartment is having rising damp repairs carried out. Are we required to contribute to the cost to repair and maintain common property?
I am an owner of a unit in a strata building. There are approximately 60 units in the building of which 2 units are on ground level.
These 2 units are affected by rising damp. The cause of the rising damp has been determined by 2 independent structural engineers to have been caused by incorrect installation of damp causing. The build is about 35 years old and in 2003 was converted from hotel accommodation to residential units.
The executive committee of the body corporate has accepted responsibility and wishes to complete some structural repairs to maintain common property.
The repairs that they will be conducting will be to apply a moister barrier to the inside walls of the unit to a height of about 1 meter. The quote obtain indicates that we have to vacate the unit for a period of 7-8 weeks while this work is undertaken.
The executive committee have advised that there will pay for this work to maintain common property and will repaint the part of the wall of the unit to the height of the repair.
However, they have advised that:
- They will only re-render the wall to the high of the membrane and if the join is noticeable it will be at our cost to have the whole wall rendered if wish to have a smooth wall.
- That they will only paint to the repair line and if the paint does not match (which it is unlikely to do) we will have to pay for the cost to have the rest of the wall painted.
- That the cost of the temporary accommodation while the repair to the building is being undertaken will not be covered by them.
I feel that, as the work is being completed to correct a building defect (as described by the structural engineer), I expect the unit be returned in the same condition it is handed over in (smooth walls and an even paint job).
In regards to the cost of temporary accommodation, it is my understanding that all owners in the building are responsible for the cost of repairs to the building structure. As such I would think the temporary accommodation cost should also be covered, as the repair cannot be conducted unless we vacate our unit for the required period.
Answer: The Owners Corporation has a statutory obligation to repair and maintain common property
This query relates to the duty of the Owners Corporation to “properly maintain and keep in a state of good and serviceable repair the common property and any personal property vested in the Owners Corporation” in accordance with Section 106 of the Strata Schemes Management Act 2015.
The Strata Schemes Management Act 2015 came into force on 30 November 2016. Prior to that, the duty was found at Section 62 of the Strata Schemes Management Act 1996.
Both the old and the new sections use the same language to express the duty to “properly maintain and keep in a state of good and serviceable repair the common property”.
In addition, both old and the new sections provide that: “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.”
When it comes to the sufficiency of the intended scope of work and whether it will suffice to meet the duty which the legislation imposes, one should focus in the key phrases “maintain and keep” in respect of the common property and “renew and replace” in respect of any fixtures or fittings comprised in the common property.
There is ample case law to support the proposition that the Owners Corporation cannot adopt a watered down or lesser scope of works if to do so would mean that the common property is not being properly maintained and kept in a state of good and serviceable repair. The Owners Corporation must replace like with like.
On the issue of paying for temporary accommodation, Section 106(5) provides: “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”.
This section was introduced with a view to overturning the decision in the matter of The Owners – Strata Plan No. 50276 v Thoo (2013) NSWCA 270. In that case, which dealt with Section 62 as it then was, the Court of Appeal decided that a breach of the duty to properly maintain and keep in a state of good and serviceable repair the common property did not give rise to claim for damages to a lot owner.
Section 106(5) puts the entitlement of an owner to seek damages for any loss suffered due to a breach of the duty on a statutory footing and opens the door for claims in respect of damage to personal property, loss of rental and, of course, the cost of alternative accommodation.
However, based on the actual wording of the section, there may be some room for debate in cases where the Owners Corporation is taking steps to comply with the Act. The section says an owner can recover a loss suffered as a result of the owners corporation failing to comply with its duty. Even though it would seem to lead to a somewhat absurd outcome, in this case, the section does not say you can recover loss suffered as a result of the Owners Corporation undertaking works to comply with the duty imposed.
- NSW: Owners Corporation’s Negligence to Repair Common Property
- NSW Fair Trading Repairs and maintenance
Turnbull Bowles Lawyers
P: 02 8272 1999.
Parts of this article were first published to the Turnbull Bowles Lawyers website.