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In The Owners – Strata Plan No 2661 v Selkirk [2024] NSWSC 760, the NSW Supreme Court considered the respective legal responsibilities of an owners corporation and a lot owner after water leakage caused damage within a Darling Point strata building.
In this case, the owners corporation acknowledged its responsibility under s 106 of the Strata Schemes Management Act 2015 (NSW) (‘the Act’) to repair common property, proposing two repair options limited to the shower area where the defect arose. The lot owner rejected that approach and instead sought complete re-tiling of the bathroom. This disagreement gave rise to a broader dispute concerning both the appropriate scope of works and the amount of rental income allegedly lost while the bathroom remained unusable. Proceedings were ultimately commenced to recover that loss, with the owners corporation disputing liability for the full amount on the basis that the owner’s refusal to allow the proposed repairs affected any entitlement to extended compensation.
The Court accepted the owners corporation’s position, holding that a claim for loss of rent may be reduced where a lot owner’s unreasonable conduct delays or interferes with necessary repair works. Here, the owner’s refusal to provide access, along with her removal of the bathroom tiles without coordination and her mistaken belief that strata insurance would fund the installation of new tiles, delayed the repair process and weakened the connection between the water damage and her claim for ongoing rental loss.
In summary, the decision confirms that an owners corporation bears a strict obligation under s 106 of the Act to repair common property, irrespective of a lot owner’s views on the scope or method of the proposed works. Simultaneously, lot owners must mitigate their loss, and any entitlement to rental compensation may be reduced where their conduct contributes to delay. The Appeal Panel ultimately allowed the appeal and returned the matter to the Tribunal to reconsider both the scope of works required and the amount of rental loss recoverable in the circumstances.