This situation can, and does, happen. More often than you would think and the case The Owners – Strata Plan No 865 v Carroll [2026] NSWCATAP 58 provides some guidance for us.
In that case, a common property rights by-law had been passed authorising the lot owner (Carroll) to conduct kitchen renovations. The by-law was passed in October 2019, but the works did not commence until 2022. During the works Carroll’ s builder discovered significant pre-existing defects in the common property concrete floor and inadequate footings to the Northern wall, ceased works and notified the owners corporation of the defects.
The owners corporation’s position was that the common property rights by-law had passed all responsibility for the defects onto Carroll. Carroll disagreed and the Appeal Panel ultimately agreed with Carroll.
The Appeal Panel’s reasoning followed a long line of cases about the strict duty of an owners corporation to repair and maintain the common property including the duty to renew or replace it. This duty extends to the need to remedy defects in the original construction of the common property as “repair” includes making something good even if it was not originally good.
As the common property defects pre-existed Carroll’s works and had not been “affected by” the partial works then Carroll was entitled to start with a clean slate. The clean slate being common property that was not defective. The Appeal Panel held it significant that the lot owner’s duties under the common property rights by-law were present and future focussed finding that it “would require very clear words and very clear lot owner’s consent to impose a retrospective duty” on the lot owner and in doing so transfer the owners corporation’s duty to maintain and repair the defective common property onto them.
The key takeaway is that unless there are clear words in the by-law and clear consent by the lot owner, the owners corporation will be liable for pre-existing common property defects.
For this reason, we strongly recommend that common property rights by-laws are professionally drafted and thoroughly reviewed by both lot owners and owners corporations.
This is general information only. Please see legal advice tailored to your situation.
Author: Allison Benson