NSW: Is the OC required to pay an owner’s claim for a failed bathroom membrane?

Question: An owner renovated their ensuite without approval and is demanding $5,000 for a failed membrane. Does the owners corporation have to pay?

A lot owner claims the waterproofing membrane in their internal ensuite failed. No external walls are involved. The strata committee and strata managing agent asked for a report from a water ingress specialist, but the owner hasn’t provided one. Instead, they’ve supplied a report from the construction company they had already engaged to renovate the bathroom.

The owner says the work is minor, replacing like for like, and that they aren’t required to tell the strata committee. We believe it’s major work, as it involves waterproofing and removing an internal powder room wall. We understand these changes require a by-law to be registered. Is that correct?

The owner has demanded a cash payment of $5,000 from the owners corporation towards the renovation. They haven’t returned our insurer’s calls to arrange an inspection, and they’ve gone ahead with the renovation without giving the strata committee, insurer or strata managing agent any evidence of where the leak came from. They’ve also threatened take the owners corporation to Fair Trading.

Do we have a statutory obligation to pay? Where do we stand?

Answer: No, the owners corporation has no statutory obligation to make a cash payment towards an owner’s unapproved renovation.

The owners corporation (“OC”) does not have a statutory obligation to make the requested cash payment.

Even if the original ensuite waterproofing membrane is common property and had failed, the OC’s statutory obligation under section 106 of the Strata Schemes Management Act 2015 (NSW) (“SSMA”) is ordinarily to investigate, maintain and repair the common property. It is not obliged to fund an owner-controlled bathroom renovation or reimburse common-property work undertaken without the required approval.

The owner’s works involve waterproofing and removal of a wall. These are therefore not “cosmetic works”, and waterproofing cannot be treated as a minor renovation under section 110. If the works alter common property, they ordinarily require prior authorisation under section 108 by special resolution. A properly drafted and registered by-law is generally required if the owner will alter common property and assume ongoing responsibility for the new waterproofing and affected common property.

The owner’s refusal to provide adequate evidence, permit inspection, respond to the insurer, or obtain approval substantially undermines any present claim for payment.

1. Is the failed membrane common property?

The question of whether the failed membrane is common property must be established before liability can be determined. It depends on:

• the registered strata plan and lot boundaries;
• when the building and strata plan were registered;
• whether the membrane was part of the original construction;
• whether it was installed or replaced during an earlier owner renovation;
• any registered renovation or common-property rights by-law;
• any common property memorandum; and
• the precise location and function of the membrane.

An original waterproofing membrane beneath bathroom tiles will commonly be treated as common property because it is attached to and protects the structural floor slab. However, that is not an invariable conclusion. If the membrane was installed through an earlier renovation, responsibility may have been transferred to the relevant lot owner by a registered by-law.

Section 106(7) makes the OC’s maintenance duty subject to a common property memorandum, a common-property rights by-law and a by-law made under section 108. A properly drafted renovation by-law may transfer ongoing responsibility for altered common property, including waterproofing, to the owner. Recent authority confirms that clear renovation by-laws can allocate continuing responsibility for altered common property to the lot owner.

The assertion that the membrane has failed does not establish:

1. that the membrane is common property;
2. that it was defective;
3. that it caused the alleged water ingress;
4. that the OC breached section 106;
5. that the proposed renovation scope is reasonably necessary to rectify the defect; or
6. that $5,200 is recoverable loss.

A component’s failure does not, without expert evidence, necessarily establish its cause or legal responsibility.

2. The OC’s duty under section 106

If the membrane is common property, section 106(1) and (2) requires the OC to:

• properly maintain it;
• keep it in a state of good and serviceable repair; and
• renew or replace it where necessary.

That duty is strict. It is not discharged merely because the OC has taken reasonable steps. Nevertheless, breach of the duty is distinct from an entitlement to damages. An owner claiming damages under section 106(5) must still prove:

• that the relevant property was common property;
• a contravention of section 106;
• actual loss;
• factual causation;
• reasonable foreseeability; and
• quantum.

On the present facts, the OC has attempted to investigate by requesting reports and arranging insurer involvement. The owner has instead:

• failed to supply an independent water ingress report;
• relied on a report from the construction company engaged for the renovation;
• refused or failed to facilitate insurer inspection;
• proceeded before the OC could establish the source and scope of the problem; and
• combined the alleged repair with broader renovation work.

Those matters do not necessarily extinguish the underlying section 106 duty if a common-property defect exists. They do, however, create serious problems for the owner in proving breach, causation, reasonable rectification cost and mitigation.

3. There is no automatic right to a cash contribution

Section 106 does not give an owner an election to:

1. decide that common property has failed;
2. select the contractor and scope;
3. combine rectification with a private renovation;
4. proceed without approval; and
5. require the OC to contribute cash.

In Colman v The Owners – Strata Plan 61131 [2025] NSWSC 63, the Supreme Court held that a lot owner could not recover under section 106(5) the cost of common-property work undertaken without approval from the OC or an order of the Tribunal.

4. Classification of the owner’s works

The owner’s description of the works

Common-property alterations: section 108

If the works add to, alter or erect a structure on common property, section 108 ordinarily requires a special resolution specifically authorising the proposed work.

If the removed powder-room wall is wholly within the lot and is not structural, fire-rated, load-bearing or carrying common services, its removal may not itself be an alteration to common property. That must be established from:

• the strata plan;
• structural or engineering evidence;
• service locations;
• fire-safety documentation; and
• the building’s original plans, where available.

The new waterproofing will likely affect common property even if the bathroom fixtures and tiles are lot property.

5. Is a by-law required?

A by-law is required where the owner is altering common property and is to assume ongoing responsibility for the altered waterproofing and associated works.

The appropriate approval package would ordinarily comprise:

1. a special resolution under section 108 approving the defined works;
2. the owner’s written consent to the maintenance allocation;
3. a renovation/common-property rights by-law;
4. registration of the by-law;
5. approved plans and a detailed scope;
6. structural confirmation concerning the wall;
7. evidence of contractor licences and insurance;
8. waterproofing design and certification requirements;
9. access and inspection rights;
10. obligations to protect and make good common property and other lots;
11. an indemnity in favour of the OC; and
12. continuing maintenance, repair, replacement and reinstatement obligations binding future owners.

A by-law is particularly important because it can allocate responsibility for the altered common property to the owner and successors in title. Without an effective allocation, the OC may remain responsible for the altered common property under section 106.

However, a by-law cannot simply impose responsibility for common property upon an owner without complying with the relevant statutory requirements, including special resolution, written consent and registration. The by-law must clearly identify the affected common property and the ongoing obligations.

6. Consequences of proceeding without approval

If the works affect common property and have proceeded without authorisation, the owner may be in breach of section 111 of the SSMA.

This post appears in Strata News #814.

Pierrette Khoury
Khoury Lawyers
E: pierrette@khourylawyers.com.au
P: 0415 459 486