Strata Property - Lot Owners recover Damages against the Owners Corporation for Owners Corporation’s failure to properly maintain and repair the common property as a result of which the Lot Owners suffered damages – Do not delay in seeking advice

12/09/2025

Watson & Watson Lawyers have for many years, advised and acted for Lot Owners or Owners Corporations in relation to most aspects that arise from Strata Schemes and Strata Living.

As a result of the incorporation of Sections 106(5) and 106(6) of the Strata Schemes Management Act 2015 (“SSM Act”), the Lot Owners were able to make claims for damages suffered by the Lot Owners, in circumstances where the Owners Corporation did not properly maintain the common property.  The entitlement to claim losses is subject to the provisions of the SSM Act.

Since the addition of Sections 106(5) and 106(6) of the Strata Schemes Management Act 2015, we have been involved in numerous cases, most of which were resolved without commencing proceedings.

In early 2022 there were many significant rain events in Sydney as a result of which, there were numerous issues that arose in buildings including in many Strata buildings.

One recent case in which we acted on behalf of Lot Owners, resulted in a significant award for the Lot Owners for losses, as a result of the failure of the Owners Corporation to properly maintain the common property.  This allowed water ingress into our clients’ Lot.

Brief Facts

Our clients purchased their Lot in 2013 and leased it out thereafter until March 2022.  Our clients inspected the property in March 2022 and determined that it was inappropriate to lease the property from that stage.  Our clients raised the issues with the Owners Corporation and advised amongst other things, that there was rental loss and other damages due to the water ingress issues. 

We received instructions and arranged for an inspection of the property by a Hydraulic Engineer skilled in these matters, whom we have briefed on numerous occasions. 

Based on the information and the facts, we identified the issues.  We wrote to the Owners Corporation in August 2022 and referred to the obligations of the Owners Corporation under Section 106 of the SSM Act, to properly maintain and repair the common property and set out the basis of the possible claim for damages suffered by our clients, due to the failure of the Owners Corporation to maintain the property and the basis of our clients’ claim under Sections 106(5) and 106(6) of the SSM Act.

Having regard to the limitation periods that applied, which limits the time in which our clients could make claims for losses, proceedings were commenced against the Owners Corporation in December 2023.  At this stage, there was no indication that the Owners Corporation would undertake the necessary remedial works and compensate our clients for their losses.

As it happened, the works were not commenced until August 2024.  The rectification works were not completed until November 2024 namely, 2 years and 8 months after the notification to the Owners Corporation by our clients that their Lot could not be leased out because of the water ingress issues, as a consequence of the failures of the Owners Corporation.  There were other issues that arose, which were substantially resolved. 

Consequences if the Applicanta had not filed their Application before about February 2024

As it happened in the event that the proceedings had not been commenced within a very short period, after the date of commencing the proceedings, our clients would have lost their claim for damages (including loss of rent).

However our clients, as the affected Lot Owners would have had a claim against the Owners Corporation, to seek an Order that the Owners Corporation rectify the building defects within the common property, caused by the Owners Corporation’s failure to maintain and repair common property. 

The Decision

The matter was listed for Hearing in March 2025 and a Decision was given in May 2025.

In addition on behalf of our clients, an Application for Costs was made and a substantially significant Cost Order, was found in favour of our clients.

The Cost Order was primarily found in favour of our clients on the basis that the proceedings were required to be commenced to protect the Lot Owners’ claim for losses and secondly, the extent of the Lot Owners’ losses. If the proceedings were not commenced within the limitation period, there was no guarantee the Owners Corporation would undertake the works, and our clients would have lost their claim for their damages and losses.

There are many matters that must be considered in relation to such a claim in particular, the process for the Lot Owners to claim their losses.  One needs to carefully consider each of the factual matters and the applicable laws that apply in relation to the particular factual matters.

Contact Us

If you are a Lot Owner suffering as a consequence of action or inaction by an Owners Corporation or another Lot Owner, do not delay in considering your options and contact Watson & Watson, experienced Lawyers and Law Society Accredited Specialist Commercial Litigation in the stream of Building and Construction, by contacting us to obtain advice and arrange an appointment to discuss your important issues, by contacting Richard Watson Principal or his Personal Assistant Shereen Da Gloria to discuss your matter and seek timely advice.

The above in our view, is not based on your particular factual matters and it is critical that one considers the factual matters. The above is not to be taken as legal advice to be relied upon, without first contacting Richard Watson as referred to above.

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 9221 6011