REPAIRS V IMPROVEMENTS TO THE COMMON PROPERTY: WHEN IS A REPAIR A REPAIR?

Put another way what is the standard of repair for owners corporation repairing common property?

This is a tricky question and it will always depend on the facts of your owners corporation’s situation. In Marks v Owners SP 30190 [2023] NSWCATAP 21 the Appeal Panel made a number of findings about the requirement of an owners corporation to repair, maintain, renew and replace the common property when resolving a dispute about resolutions for works and a special levy to pay for the work.

In the case the owners corporation wanted to do work to the common property laundry which on the appellants argument would have included adding a fourth washing machine and introduced new finishes and materials replacing original building elements with heritage significants such as the door and window joinery. The appellant argued for a lesser scope of work costing between $4,000 – $6,000. It was also argued that the owners corporation’s scope of work was an alteration not a repair which, if correct, required a special resolution to be passed which the appellant could have used their voting rights to block.

The owners corporation’s position was that it had a heritage exemption, the works did not change the fundamentals of the laundry either internally or externally or its functionality or size, a fourth washing machine had been removed some 10 years prior and the works sought by the appellant would not be enough for the owners corporation to meet its duty under s106 of the Strata Schemes Management Act 2015 (“SSMA”).  In the appeal the owners corporation also  had fresh evidence of a heritage exemption certificate for the works and an updated quotation for works in line with that exemption. , The owners corporation’s scope of work had been quoted at approximately $17,000.

Rightly, it was argued that Stolfa v Hempton [2010] NSWCA 218 gave primacy to the owners corporation’s duty to maintain and repair the common property due to its strict liability under s106 of the SSMA (then s62 under the Strata Schemes Management Act 1996). Stolfa, it was argued, gave the owners corporation the right to undertake the repair even if when doing it there was an alteration to the common property that improved, upgraded or enhanced it. The often quoted decision of Owners of SP50276 v Thoo [2013] NSWCA 270 was also used to support the argument that renewal or replacement was incidental to the owners corporation’s duty to maintain and repair the common property.

The Appeal Panel found that Stolfa and Thoo had been correctly applied by the Tribunal member below as the work the owners corporation wanted to conduct were clearly required based on the evidence and were for the purpose of avoiding or remediating defects or damage in the building due to its age, use and time rather than to introduce an enhancement or difference “even if that was a consequence”.

The heritage exemption was taken as reinforcing this conclusion.

Where does this decision take us? In some ways it makes determining what is a repair (which requires only an ordinary resolution and the owners corporation is strictly required to conduct) versus what is an alteration or alteration to the common property (which requires a special resolution)easier in some cases and harder in others.  The key questions will be:

  1. Is the work required to remediate or avoid a defect or damage in the common property?
  2. Is the work for the effect or purpose of remediating or avoiding that defect or damage?
  3. Is any enhancement or improvement to the common property incidental (or a side effect) of the proposed work?  

Prepared by
Allison Bensons
Kerin Benson Lawyers

Author: Allison Bensons