Oberto Pty Ltd v The Owners �e" Strata Plan No 2004 [2025] NSWCATCD 200;

"The affected timber flooring show visual evidence of moisture, such as: there is evidence of leaching underneath the coating from the underside of the board. This is consistent with moisture travelling up through the laminations and if it was left for an extended period of time, it will lead to delamination. ... The existing floor is damaged beyond the ability to repair due to the damage done to the boards themselves. The existing timber is no longer available to be able to attempt any matching of boards to existing. The high percentage of moisture has caused irreversible damage to the floor and the complete flooring will need to be replaced."

1. The first attempt at removal of the magnesite in late July 2022 by the OC's contractor was not properly done on the evidence of both parties' experts. In addition, there was a 60mm difference in floor levels across unit 10 once the magnesite was removed, which needed to be remedied by levelling whatever happened to the flooring above.
2. The OC's inquiries had identified a levelling contractor by mid-September 2022 who could not do the works immediately. Given the delay, the OC retroactively authorised the lot owner to perform the levelling works with the owner's contractor on the basis that the OC would contribute a maximum of $8,800 being the quotation the OC had received. That contractor also ground down the slab to accommodate the replacement flooring solution approved by the OC which complied with the scheme's recently-resolved acoustic by-law.
3. In these proceedings filed 24 May 2024, various forms of relief were claimed by the lot owner. Other heads of claim were not included apparently because they had been the subject of a payout to the lot owner direct by the scheme's insurer. There was no evidence that the scheme insurer would seek to recover amounts paid out to either the lot owner or the OC. Consistent with SSMA s 161, the scheme insurance covered claimed losses on a different basis from the duties and rights between owners corporations and lot owners in the SSMA but some types of loss were recoverable within either route, if established.
4. The lot owner claimed, first, $38,801.25 being the proceeds (excluding GST of $3,880.13) received on 2 August 2023 by the OC from the OC's insurers which the lot owner said was contrary to what it had negotiated with the insurer in respect of the lot owner's losses, and which did not cover some matters rejected by the insurer but sought to be recouped by the OC from that amount. On 4 December 2024 the OC paid that amount to the lot owner "without any admission of liability" but made no claim for repayment in the hearing of these proceedings or by cross-application. The lot owner contended that this element of its claim was thereby resolved in the lot owner's favour.
5. In its written outline of submissions the OC said on this topic: "The funds paid to the [lot owner] included the amount of $5,226.84 paid by [the insurer] in respect of the works undertaken by the [OC] to remove magnesite and level the floor of Unit 10. The [lot owner] had no entitlement to those funds". This appeared to cross-refer to the amount of $5,200 paid by the OC to its contractor for the original magnesite removal work in late July 2022 (described later in these reasons). It was not developed as to what the OC sought to make of that submission in relation to relief, nor the basis for any claim of, for instance, a credit against any amounts awarded to the lot owner. I am therefore not able to take that aspect any further.
6. Secondly, the lot owner sought an order that the OC notify its insurer that the lot owner had carried out the relevant work and could not claim an input tax credit, so as to allow the insurer to disburse that amount of $3,880.13 to the lot owner. The lot owner accepted at hearing that such notification had been sent but the insurer had refused to disburse. The claim was not pressed against the OC.
7. The lot owner's third claim, which remained in contest, was for the extra cost of $5,634.20 for a grinding component which that was said to be required to maintain existing levels between the new hard surfaces and the existing bathroom tiles with the approved compliant replacement flooring solution.
8. The lot owner's fourth claim, which remained in contest, was for the cost of remediating a wardrobe (originally claimed at $3,223 and agreed by the experts at $1,504) and electrical cabling (originally claimed at $1,595 and assessed by the lot owner's and OC's experts in a range centred on $650) that was alleged to be damaged by the OC's magnesite removal contractor.
9. The lot owner's fifth and final claim, which remained in contest, was for rental loss from 11 June to 1 December 2022 at $1,300pw, amounting to $21,914.28 after giving credit for the amount towards rental paid by the scheme's insurer being $10,400.
10. On 13 October 2022 the lot owner had claimed $105,062.23 including GST ($95, 511.12 excluding GST) for its losses excluding slab works that the OC had undertaken, comprising $72,747.95 for remediation costs and $32,314.28 for loss of rent. On 1 August 2023 - the lot owner contended contrary to its agreement with the insurer to pay this amount, negotiated between the lot owner and the insurer, to the lot owner - the insurer paid $21,481.26 to the lot owner for acoustic report, remediation and lost rent and $42,681.38 to the OC. In total, the lot owner received $31,881.26 from the insurer direct and, after the commencement of the proceedings, the further amount originally paid to the OC of $38,801.25, totalling $70,682.51. Taking into account the experts' limited agreement on certain costs, the balance of the lot owner's claim as pressed at final hearing was $31,228.68 ($5,634.20 + $650 + $259 + $1,267.20 + $21,914.28, the $259 and $1,267.20 being claimed for other electrical works and related repair to a gyprock ceiling).
11. The lot owner sought an extension of time under s 41 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) to file the proceedings to the extent that such was required, orders for costs and orders quarantining the lot owner from levies to pay the OC's costs and costs and damages exposure. The proceedings were filed before the decision, on 28 June 2024, of the Appeal Panel in Owners SP 30691 v Pickard [2024] NSWCATAP 126 esp at [78]-[82], [89]-[97], [100] which precluded the use of s 41 to extend time in SSMA s 106(6), primarily because the time limit in s 106(6) was found to be an integer in the right of action for damages under s 106(5).
12. However, the need to consider extension of time does not arise. There was no submission that the lot owner's claims were out of time under SSMA s 106(6) for first awareness of the types or kinds of claimed loss: Owners SP 74232 v Tezel [2023] NSWCA 35 at [23], [24], [29], and especially at [41] and [45]-[49]. In my view the claims were brought within time. There was no evidence that, even if the 2016 water entry caused the relevant latent damage, the lot owner first became aware of the damage to kitchen cabinetry and flooring and the risk of further damage if the magnesite was not removed before 10 June 2022. On the lot owner's claim the other heads of loss, being damage in the course of remediation and lost rent during remediation, were clearly within time.
13. The lot owner obtained an expert acoustics report that identified flooring options which complied with the scheme's by-laws. Each party retained an independent expert. The expert retained by the lot owner sadly died before hearing. His report was admitted to give context to the OC's expert's report that responded to it. The lot owner's replacement expert conclaved with the OC's expert and a conclave report dated 9 September 2025 was the subject of concurrent evidence.
14. Preparation directions were made, with time extensions for compliance, on 9 July and 25 September 2024 (with leave for legal representation granted to both parties in the latter) and 13 February and 26 March 2025. The material filed by the parties was voluminous; the court book comprised six volumes (with significant repetition of documents) and some loose exhibits were tendered. A hearing set for 10 June 2025 was vacated on 27 May 2025 on the lot owner's application made on 23 May 2025 after the death of the lot owner's expert.
15. Although only the lot owner's director and the magnesite removal contractor were cross-examined, there was a serious attack on the director's credit to lay the basis for detailed oral submissions.
16. Despite the voluminous documentation and significant cross-examination and submissions, the parties were anxious to finish within the allotted hearing day since the focus was on relatively few remaining substantive issues in a much-reduced money claim after the first two issues effectively were resolved. The hearing did finish within slightly-extended sitting times. However, the result was that it took considerable time to sift and interpret the mass of documents and the competing characterisations placed on them within the timelines contended for by each party. This was compounded by overlapping sets of documents without their placement in chronological order by consolidation of exhibits.

1. An owners corporation owes lot owners a strict duty to maintain and repair, including as required to renew or replace, common property under SSMA s 106(1) and (2) as interpreted in well-established authority: Seiwa PL v Owners SP 345042 [2006] NSWSC 1157 at [3]- [7], [21]-[23]; Trevallyn-Jones v Owners SP 50358 [2009] NSWSC 694 at [128] et seq, esp at [154]-[156]; Riley v Owners SP 73817 [2012] NSWCA 410 at [75]- [76], referring to the same content of duty in the predecessor to SSMA s 106, being s 62 of the 1996 Act. There was no qualification on appeal to what was said in Seiwa at first instance in relation to the strict nature of the duty: Owners SP 345042 v Seiwa Australia PL [2007] NSWCA 272 - Hodgson JA at [5] referred to the strict nature of the duty in similar terms to Brereton J in Seiwa, as did Tobias JA at [54] with an acknowledgement of what is now s 106(3) that is not presently relevant. The same approach on the present provision was endorsed by reference to the earlier authority in Smith v Owners SP 3004 [2022] NSWSC 1599 at [30]- [31] and more recently in Selkirk v Owners SP 2661 [2024] NSWSC 760 at [16] et seq.
2. The duty extends to remediation of defects in the construction of the common property, because repair means making something good even if it was not originally good: Proprietors SP 6522 v Furney [1976] 1 NSWLR 412 at 416.
3. Brereton J in Seiwa [2006] NSWSC 1157 at [4] expressly referred to the duty as including keeping the common property "in proper order by acts of maintenance before it falls out of condition, in a state which enable it to serve the purpose for which it exists". This encompasses preventative maintenance and repair and financial provision for such preventative work. Reasonable steps is not a defence, nor is contributory negligence a consideration: Seiwa PL v Owners SP 345042 [2006] NSWSC 1157 at [21]; Owners SP 345042 v Seiwa Australia PL [2007] NSWCA 272 at [46]; Owners SP 74232 v Tezel [2023] NSWCA 35 at [35]. The statutory provision is not cast in the form of a duty on an owners corporation to take reasonable care. It does not embody a range of reasonable excuses for inaction. The common property is out of the state of repair and maintenance in breach or contravention of duty until the repair or maintenance occurs: Owners SP 80412 v Vickery [2021] NSWCATAP 98 at [36], [63]; Owners SP 36613 v Doherty [2021] NSWCATAP 285 at [84], [93]-[94].
4. Alleged restriction of access to, or interference with or resistance to, remediation by a lot owner as a matter of law does not qualify the OC's performance of its strict duty, but will be relevant in determining whether and, if so, to what extent the lot owner has established that a reasonably foreseeable type of loss was "as a result of" a breach of such statutory duty as distinct from whether all or part of such loss was caused by an intervening act or by the lot owner's own conduct, such as in refusing access and the consequent delay while the necessary access order under SSMA ss 122 and 124 is obtained: Owners SP 2661 v Selkirk [2024] NSWSC 760 at [21]- [24], [130], [138]-[144] [149]-[150], [163]-[176], qualifying the decision of the Appeal Panel [2024] NSWCATAP 17 on this point. The lot owner's conduct will be relevant, as will the owner's corporation's response - for example, did the owners corporation act sufficiently to seek to overcome lot owner resistance; did the lot owner unreasonably prolong rectification; was the lot owner undertaking renovations, or did the lot owner take the opportunity to undertake renovations, which meant that no rent was obtainable and for what period, and was such period extended by the owners corporation's work to fulfil its strict duty.
5. An owners corporation does not require approval by the owners in general meeting to carry out its strict statutory duty under SSMA s 106: Stolfa v Hempton [2010] NSWCA 218 at [9]-[10].
6. Delays associated with an owners corporation's insurers are an explanation but not an excuse: Nicita v Owners SP 64837 [2010] NSWSC 68 at [11]. One would expect the same to apply to others involved in the process such as delays by contractors or regulatory authorities, subject to the limited exception in s 106(4) where an owners corporation itself takes the initiative in bringing proceedings against a third party.
7. It should not be the case that the strict duty as established by authority is qualified to operate differentially depending on whether the common property in question is purely related to a particular lot or that a particular lot owner is the only person affected by the breach. To so differentiate would be to read into the application of SSMA s 106 a differentiation that is not there on the plain words and is inconsistent with the thrust of the authority just cited. It is not there for good reason. Such a differentiation would potentially be very difficult to administer and would potentially increase disputation. An owners corporation's judgment call on who was affected by fulfilment of its duty in respect of specific common property would have that consequence.
8. The foregoing principles are not qualified by the decision in Glenquarry Park Investments PL v Hegyesi [2019] NSWSC 425 at [57]- [74] et seq, [100]-[114]. In Glenquarry Park there were jurisdictional deficiencies in formulation of the orders for remediation, because the formulation potentially imposed on the owners corporation in that case, without basis in the findings, a scope of works which went beyond the owners corporation's strict duty. It was not a dispensation from the strict duty. There was recognised a degree of flexibility in the form of compliance by the owners corporation with the strict duty, which, on the authorities canvassed extensively in that decision (Ridis v Owners SP 10308 (2005) 63 NSWLR 449, [2005] NSWCA 246, Owners SP 50276 v Thoo [2013] NSWCA 270 and Stolfa) includes replacement if that is reasonably necessary because the item has come to the end of its serviceable operating life and can no longer be kept in a state of good and serviceable repair. The same must be true if the state of the item is so damaged or deteriorated that it cannot be repaired but must be replaced.
9. An owners corporation's fulfilment of its strict obligation requires it to repair or replace common property so that it substantially is similar in appearance, characteristics and quality compared with what was there before, to which could be added functionality and amenity to the extent those are not already encompassed within the foregoing words. It is inevitable that replacement in fulfilment of duty, and some repairs, will bring an element of improvement and do not attract a discount, unless it is established that the repair or replacement was an unreasonable choice or was extravagant: Owners SP 36613 v Doherty [2021] NSWCATAP 285 at [163], [165]-[166], [181]; authority discussed in Glenquarry already referred to; cp Hyder Consulting (Australia) PL v Wilh Wilhemsen Agency PL [2001] NSWCA 313 at [47], [54], [107].
10. The requirements in Glenquarry find complementary support in the requirements for work orders under the Home Building Act 1989 (NSW) (HBA). Under HBA s 48O(1)(c) an owner is required to specify action by the builder that is grounded in proof by the owner of, not only the defect, but also the manner of remediation and a work order must focus on the particular defect to be rectified and must be certain, practical and enforceable: Catapult Constructions PL v Denison [2018] NSWCATAP 158 at [46]- [61] and the authority there cited. The evidentiary onus is on the homeowner to set out the appropriate method of rectification: ibid, at [59]. In Bellgrove v Eldridge (1954) 90 CLR 613, [1954] HCA 36, the High Court said that the scope of remedial works must not be disproportionate to the defect. The High Court has also stated that there is a high bar for unreasonableness or disproportion once a breach is established: Tabcorp Holdings Ltd v Bowen Investments PL (2009) 236 CLR 272, [2009] HCA 8 at [13]- [20]; see also Walker Group Constructions PL v Tzaneros Investments PL [2017] NSWCA 27 at [186]; Barwick v Shetab [2017] NSWCATAP 127 at [87]- . The analysis in the paragraphs in the decision, and the authority there reviewed, also makes it clear in these passages that reinstatement, provided it is not extravagantly disproportionate, is the appropriate measure of relief. Reinstatement means works with a certain standard of amenity and presentation which includes not being at risk of emergent problems returning or growing which in form and finish produces an outcome that matches other components in form and finish and makes the works of the originally-intended quality and integrity.
11. An expert report may be integral to formulation of the precise scope of work required to assist the owners corporation to fulfil its strict duty or as an incident of the relief granted to require the owners corporation to fulfil its strict duty: Carli v Owners SP 56120 [2018] NSWCATCD 55i at [53]; cp in a home building context Marr v JCK Building Solutions PL [2018] NCATCD, unreported, 4 December 2018, HB 16/43946 at [46]-[54], where an element of the manner of remediation in certain circumstances may inherently require inspection, properly defined so as to be sufficiently specific, to establish the need for and required scope of remediation.
12. It is consistent with the strict nature of an owners corporation's duty that, once a breach is admitted or established of that duty, it is incumbent on the owners corporation, to fulfil the duty, to establish the source or reason for the breach and the scope of the breach. If the owners corporation fails in fulfilling those aspects of its duty then part of the remedial order is necessarily to compel the required investigations (often expert) to establish those matters so that they can be undertaken as part of the order: Selkirk v Owners SP 2661 [2024] NSWSC 760 at [101], [108], [170(1)-(3)]; [2024] NSWCATAP 17 at [22]- [30].
13. While a lot owner will be required, on the applicable principles to establish loss under SSMA s 106(5), certain types of loss will be self-evident from the breach of strict duty admitted or established by its consequences: cp McCue v Owners SP 3844 [2021] NSWCATCD 35.
14. One type of self-evident loss (unless otherwise demonstrated) from the breach of strict duty admitted or established by its consequences is loss of rent, particularly where there is a history of the lot being a rented property: Owners SP 80881 v Gregg [2022] NSWCATAP 172 at [39]; Smith v Owners SP 3004 [2022] NSWSC 1599 at [34]- [37], approving Shum v Owners SP 30621 [2017] NSWCATCD 68 at [60]- [61], see also at [64]; Vickery v Owners SP 80412 [2020] NSWCA 284 esp at [160]-[166]; Selkirk v Owners SP 2661 [2024] NSWSC 760 at [143]- [144]; [2024] NSWCATAP 17 at [47].

1. Application of principles: The overall position is considered, followed by its application to the remaining heads of claim.
2. The OC said that, but for the lot owner disturbing common property in the course of the kitchen work (be it minor or part of a larger renovation) by removing and exposing the substrate magnesite, the need to remediate by removing the magnesite and, possibly, remediating the concrete spalling would not have arisen.
3. The OC went on to submit that the work on the sub-floor that it undertook, or at least the magnesite removal (which it distinguished from the six days to remedy the concrete spalling), "arose not from any breach of its obligation to repair and maintain the common property but, rather, its discharge of that obligation and its prudent management of the common property". Having referred to an alleged absence of defect in the magnesite, the lot owner's alleged view at one point that it remain in place and the OC's alleged agreement to the lot owner's request to remove the magnesite (matters dealt with below), the OC submitted that "Doing so was a prudent measure to avoid any future damage which might be caused by the presence of magnesite. It did not involve the rectification of a defect in the common property".
4. The OC then said that the spalling repairs and levelling were "also undertaken in the performance of the [OC]'s duty to maintain the common property, not because a defect in the common property was causing damage to a lot (such as where a defect permits water ingress)". It pointed to the provisions of special by-law 19 in such circumstances, which in cl 12 provided as follows: whenever floor coverings were removed, a reasonable opportunity for the OC to inspect and assess the state of repair of the floor slab; a reasonable timeframe for the OC's contractor to effect any determined-on repairs, including "removal of magnesite, concrete cancer repairs and levelling of the slab, if required", and, apart from the repairs themselves, an exemption of the OC from liability for lot owner costs, expenses or losses associated with the repairs including related to the period of works, unforeseen work times, hold-ups or delays. (An earlier version appeared as by-law 14.5 in the same consolidation sealed on 6 July 2022 without express reference to removal of magnesite, concrete cancer repairs and levelling of the slab.)
5. In my view the OC's submission mistakes the breadth and meaning of the strict duty in SSMA s 106(1) and (2). That duty expressly includes a strict duty to "maintain" as well as to repair. The ordinary meaning of "maintain" is to keep in continuance or preserve or retain in due condition. In other words, the OC's strict duty includes taking steps to avoid the common property falling into disrepair or otherwise ceasing to continue in a proper state and to ensure such continuance. The authorities already cited state that the OC's obligation is to keep the common property "in proper order by acts of maintenance before it falls out of condition, in a state which enable it to serve the purpose for which it exists": Brereton J in Seiwa [2006] NSWSC 1157 at [4]. Such obligations require pre-emptive action, including investigative inspection, once a risk that the common property has fallen or will fall "out of condition" has become obvious or ought reasonably (including by reasonable further steps on what is then known) to become obvious or a matter of awareness: Doherty at [180]-[181].
6. Accordingly, once the risk of further damage from water-affected magnesite (whatever the source for the water affecting the magnesite, which was contested), and the spalling, were recognised by the lifting of affected floorboards and disclosure of the sub-floor, the relevant common property was out of maintenance and the OC was in contravention of its strict duty until the state of maintenance was restored (or confirmed as still satisfactory in the existing state). It was such contravention that attracts the incidence of the statutory action in s 106(5) and (6), either because the contravention continued - through inaction or delayed action and in any event during the period of bringing the property back into maintenance and/or repair or confirming that it is, after investigation, sufficiently in maintenance and/or repair - or because the action taken (for instance, defective remediation) constituted further contravention. What was done to bring the property back into maintenance and/or repair, or to confirm that it is satisfactory as it is, was the choice and responsibility of the owners corporation. That choice and responsibility in the present context is examined below.
7. SSMA s 270 provides:

Contracting out prohibited

(1) The provisions of this Act and the regulations have effect despite any stipulation to the contrary in any agreement, contract or arrangement entered into after the commencement of this section.

(2) No agreement, contract or arrangement, whether oral or wholly or partly in writing, entered into after the commencement of this section operates to annul, vary or exclude any of the provisions of this Act or the regulations.

1. To the extent that cl 12 of special by-law 19 (and by-law 14.5) were inconsistent with the rights in SSMA s 106(5) and (6), they could not affect such rights.
2. Given the strict nature of the statutory duty and associated liability, in my view the OC's duty required such remediation whenever and for whatever reason the defect in and risk to common property arose. The evidence does not indicate that there never would have been a need to remediate the unit 10 substrate once the risk of further deterioration in magnesite and potential concrete cancer was known. On the authority already cited, that was the onus of the OC to establish.
3. In those circumstances, the OC may have rights against a lot owner arising out of the circumstances in which the defect is discovered; for example, the right to insist on an ordinary resolution for renovation of a kitchen under SSMA s 110(2)(a) against the unit 10 lot owner; a right of recoupment against the unit 14 lot owner if the burst pipe, from which the water escaped into that lot and then via common property to unit 10, was lot property and could after this period be traced to that source. That is not the subject of these proceedings. In such situations the OC would need to establish, in order to succeed against another, that the duty to repair common property would not have arisen in the character it assumed without the unauthorised or negligent action by another. It would not in most circumstances change the OC's responsibility and liabilities under its strict duty.
4. On the authority cited earlier in these reasons, the OC was required to remediate the common property substrate in a manner which restored existing appearance, characteristics, quality, functionality and amenity. That required a level floor as an incident of removing the magnesite which produced a lack of level in the substrate. It also required replacement of the flooring with like-for-like, being hard flooring that complied with the by-laws on acoustic matters and did not create a trip hazard unless it could establish that the flooring replacement did not arise "by reason of" the breach of strict duty. It further required replacement of the dry-rotted kitchen cabinetry. Since the magnesite was throughout the unit, the entire flooring required to be replaced. The flooring contractor's opinion, which was not contradicted successfully and which I accept, said that the existing flooring was not salvageable.
5. Loss of rent was, on the authority cited earlier, a self-evident head of damage recoverable by the lot owner if otherwise established as a loss in fact.
6. So, too, was the damage done, if established, by an OC sub-contractor. The OC relied, absent a non-delegable duty (which was rare) or other form of vicarious liability, on an absence of duty of care of an entity for the acts or liabilities of an independent contractor: Leichhardt MC v Montgomery [2007] HCA 6, 230 CLR 22 esp at [34], [104]. However, this does not take into account the strict nature of the duty and liability, which of its nature makes the OC responsible on the foregoing authorities - it is, for example, not sufficient that it took reasonable care in appointing an independent contractor: see, eg, Higgins v William Inglis & Son PL [1978] 1 NSWLR 649 at 653D (although it is clear from approval of this authority subsequently that allocation of liability between the two parties is a matter for determination).
7. The OC relied upon the lot owner's conduct in the following chain of events to remove liability for the lot owner's claimed losses. I interpolate relevant findings in relation to the OC's contentions on the events:

(1) Having requested on 10 June 2022 the removal of the magnesite and floor re-levelling, the lot owner's contractor on 14 June, without OC approval, removed the cementitious screed between the magnesite and the floating timber floor after removing the flooring throughout unit 10. The lot owner obtained a quotation for changed flooring.

(2) On 20 June 2022 the lot owner's director pressed for the removal and stated that it had obtained a quotation from the OC's usual contractor for that work, which was sent to the strata manager on 5 July.

(3) On 24 June 2022 the director emailed the strata manager as follows:

"At this meeting [which included two SC members, the director and a contractor], the decision was put to me by all as to what I would like to do regarding the magnesite. After consultation with my builder, we think the best solution is to have the magnesite remain intact and to level the floor on top of the existing magnesite. So, on Monday 27/6/22, we have organised a specialist's floor levelling company to drop by and look at this job. After this, my builder will forward you a quote for the price of the levelling and is ready to do this next week, obviously after Jason has completed his remedial works. However, if the SC desires that they prefer to remove the magnesite, then [the OC's magnesite removal contractor] advises that he is ready to remove the magnesite anytime soon upon being approved. I would appreciate this to be processed in a timely manner and treated as urgent." [emphasis added]

The emphasised words were not referred to in the OC submission, based on this email, that it was the lot owner's choice to keep the magnesite.

(4) In his follow-up email to the strata manager on 30 June 2022 the director referred to getting quotations and then said "I need confirmation from the SC that they approve the non-removal of the magnesite. Every qualified person that has seen this job is asking for confirmation in writing that it's actually been approved for the magnesite not to be removed in U10". [emphasis added]

(5) On 9 July 2022 the director emailed that "further correspondence from the SC has now changed the option and you require for [the magnesite] to be removed, which is fine". An email from the strata manager on 1 July 2022 had stated that the lot owner was required to submit an application prior to laying any new hard flooring and, "on receipt of such application, the SC will then review and act quickly to undertake Trades to inspect, quote and remove all magnesite and treat any concrete cancer throughout the apartment".

(6) The OC said that this email did not constitute an email that the SC had required for the magnesite to be removed, which the lot owner said "was fine", and that there was no other email that qualified as so saying.

(7) I respectfully disagree with the OC's interpretation in context and, even if it could be inferred that the OC would make a decision on removal after seeing the quotation, that still did not establish that it was the OC's choice what to do. The tenor of the fuller text of the emails of 24 and 30 June 2022 showed that the director of the lot owner quite properly was leaving the decision on retention or removal of the magnesite to the strata committee (SC), as part of the common property (formally confirmed in a strata manager email on 14 July 2022). After that response on 1 July the lot owner sent its quotation for removal to the strata manager, which was consistent with such an understanding of the 1 July email.

(8) As at 9 July 2022, the lot owner's acceptance of the proposed course had not resulted, on the evidence, in any delay of the OC's decision and action. After 10 June the OC's duty was to work out the method it chose to remediate the sub-flooring, independent of what the lot owner sought or suggested or applied for. Any remediation would of necessity require removal of the existing flooring on the evidence, including that of the flooring contractor. An application concerning what was to replace the removed flooring was a separate exercise the timing of which did not impede the OC fulfilling its duty concerning what was beneath the flooring.

(9) On 9 July 2022 the lot owner also confirmed that he was laying carpet as the new flooring except in the kitchen; on 1 July he had emailed "At this point in time, I intend to lay carpet. Please expedite all necessary repairs in preparation for this. If this changes for any reason, I will advise appropriately" and "I'm waiting to be advised by the expert if this existing flooring can be re-installed which will be my preference. ... My decision will be made which way I go when more information comes to hand. Currently, carpet is my go to plan". On the above terms, and consistent with SSMA s 109(1) and (2)(e), this did not require an application or OC approval, which reinforced that the OC's performance of its duty was not impeded. He also specified kitchen renovation works: replacing the kitchen cupboards, cracked stone benchtop and splashbacks and dishwasher and sink and re-orienting the cooktop with minimal plumbing and electrical upgrade to current compliance. He said that he had been told by the strata manager in 2021 that this was minor renovation that did not require approval but to advise if that had changed. The strata manager by email on 11 July 2022 re-confirmed "You are not required to seek permission from the Strata Committee to put in a new kitchen" (despite s 110).

(10) On 13 July 2022 an SC member advised the director that the SC had approved the "complete removal of the magnesite". On 14 July 2022 the strata manager sent a work order to the OC's contractor and the magnesite was removed, it turned out not fully, between 22 and 25 July 2022. The OC paid the contractor's invoice of $5,200.

(11) At this point there was no impediment to the OC performing its duty by seeking remediation of its contractor's works (in both categories of defects in the work on the common property and any damage to lot property).

(12) On 28 July 2022 the lot owner emailed the strata manager of a change to hard flooring, formalised in an application for approval on 1 August 2022. In an email on 29 July 2022 to the strata manager, the director said that he had never planned to remove the flooring but for the damage discovered. After that discovery he was not ready to decide the type of flooring wanted. This was consistent with the provisional nature of carpet being advised on 1 and 9 July 2022 already described.

(13) The hard flooring required OC approval with reasonable conditions under SSMA s 109(5)(a) with s 110(1), (2) and (3)(c). Such OC approval cannot be unreasonably withheld: ss 110(1), 127. Under special by-law 19 cll 7 and 8, the approval process had been delegated to the SC. It can be inferred that insufficient detail under s 110 was provided since both tiles and floating floor were nominated with choice "TBA". 22 days later, on 19 August 2022 this inadequacy was communicated to the lot owner by the OC's solicitor, together with notification that the proposed flooring would not meet acoustic requirements and approval was withheld.

(14) On 3 September 2022 the lot owner submitted an amended application for tiling with an estimated start date of 21 September and completion date of 21 November 2022, a period of 61 days or nearly nine weeks. There was no indication in the evidence that floating flooring would be quicker.

(15) The application for the lot owner's compliant tiling solution was approved by the SC on 9 September 2022.

(16) However, none of the foregoing ought to have impeded the OC's continued performance of its duty with respect to the sub-floor further remediation and rectification of contractor damage. It appears below that it did not.

(17) What it did show was that the choice of hard flooring had been made and approved and that such would require at least nine weeks' lost rent, being $11,700.

(18) The SC rejected, as excessive compared with similar works elsewhere in the building, a quotation dated 5 August 2022 of $11,700 for spalling repairs to the kitchen only and $10,900 for levelling, both excluding GST. Following SC approval on 23 August 2022, on 24 August the OC issued a work order (with instructions to proceed as soon as possible) on an alternative quotation provided on 11 August 2022 to repair spalling (but not, it seems, to remove any remaining magnesite and to level). The quoted work was carried out between 25 and 29 August 2022.

(19) On 5 September the OC approved a quotation for re-levelling received on 1 September 2022 and the strata manager advised the director on 8 September 2022. On 9 September the director emailed the strata manager:

"As you are aware, the OC was advised on 10 June 2022 (3 months ago) regarding this issue and my losses to date are substantial. To avoid more delays, I have engaged my Licenced Builder to commence immediately to level the floor to mitigate more losses and damages to myself. As mentioned in a previous email, I'm willing to pay the difference between the [two quotations] within reason (if my Builder's quote happens to be higher) which I believe is fair and reasonable to the OC."

The lot owner's builder had quoted $9,800 plus GST for re-levelling on 8 August 2022.

(20) As at 9 September 2022 the lot owner had no OC approval to begin levelling works to common property. By 13 September 2022 the work had been completed. On that date the strata manager informed the director that, since the OC's quoting contractor was unable to undertake the work for at least two weeks, the SC agreed that the lot owner's contractor could complete the job and would be paid the quoted price of $8,800 including GST. Whatever occurred between the lot owner and its builder, that was what the OC paid.

(21) The lot owner's contractor also ground down the concrete slab without OC approval, the absence of which was formally communicated on 13 February 2023. The contractor's invoice dated 16 September 2022 for $15,000 plus GST narrated work which included "Grind down 5-10mm slab floor x 4 days to make new hard floor levels meet existing bathroom tile floor level". A subsequent itemisation that allocated $5,120 to the item included "magnesite residue" and changed the narrative to read "Grind 5-10mm magnesite residue down to the floor slab". This changed the description of the work scope to a grinding of magnesite residue to meet existing tile floor level rather than grinding the slab itself. Either way, the grinding down was because of the compliant flooring solutions that required reducing the levels, as described below.

(22) On 15 September 2022 the director sought compensation for the alleged contractor damage to the wardrobe doors in the second bedroom with a quotation of $3,520 for repair. The contractor responded on 14 October 2022 to the OC's inquiry of 20 September 2022 that he did not think that he had caused the damage.

(23) On 8 October 2022, the lot owner's electrical contractor invoiced $1,595 for works including the cabling and power point repairs in the second bedroom alleged to arise from the magnesite removal contractor's work.

(24) Between 15 and 28 September 2022 the lot owner installed new tiling. From 29 September to 1 December 2022, in a period of 63 days or nine weeks, the lot owner undertook works including painting, electrical works, repairing and re-installing sliding doors, installing kitchen cabinets and a kitchen stone benchtop, and kitchen electrical and plumbing works.

1. Cost of additional grinding: The lot owner contended that the tile flooring solution implemented by the lot owner required grinding down the slab to avoid a trip hazard with different levels and so remain compliant with relevant regulation because the acoustic underlay for the approved tile solution that complied with the scheme's recently-approved acoustic by-law was substantially thicker than the existing material. It was also contended that the only flooring solutions that did not require grinding were either non-compliant with the acoustic by-law or required a change to carpet. The lot owner said that it was entitled to a like-for-like flooring replacement in terms of quality and amenity (as described earlier) arising from the breach of duty.
2. The lot owner also said that the further grinding was to remove magnesite residue, with reference to the altered invoice with more detailed narrative.
3. On either basis it claimed the additional costs as part of its losses arising from the OC's breaches of its strict duty to maintain and repair the scheme common property.
4. The OC said that the additional work and costs were unauthorised and were the result of the lot owner's choice: Owners SP 32735 v Lesley-Swan [2012] NSWSC 383 at [174]- [198], esp [196]-[197]; Colman v Owners SP 61131 [2025] NSWSC 63 at [129]- [130].
5. It is apparent from the chronological narrative and findings above: first, that complete removal of magnesite and levelling was a requirement of the OC's remediation; secondly, that the OC approved, retrospectively, and paid the lot owner's sub-contractor, for the levelling work and any further magnesite removal to a cap; thirdly, the retrospective authorisation to that limited amount was because of the delay in getting the work done; fourthly, getting the work done benefitted the OC by not paying damages for two extra weeks of delay before its own contractor could do the work; fifthly, the grinding work was to accommodate a flooring solution of equivalent quality and amenity within the scheme's acoustic by-law.
6. There is insufficient evidence to establish that the lot owner intended to replace the flooring in the kitchen, let alone the entire apartment, as part of any renovation that it was planning to undertake as at 10 June 2022, so as to deny that replacing the flooring was an incident of the OC's breach of duty. The director denied the alleged conversations with SC members, which in any event were not specific as to the nature of the renovation, let alone that it included such flooring replacement, and were not documented at the time they allegedly occurred. The director denied that the tenancy agreement was in effect a sham and there was no evidence to demonstrate directly that it was, being evidence of the kind required to establish such a serious allegation. The renovations that were undertaken in fact, in late 2022, did not require such flooring replacement; they merely post-dated it.
7. In those circumstances, the replacement of the entire flooring was an incident of the OC's duty to maintain and repair the common property because the entire flooring was required to be removed to fulfil the OC's duty in respect of the sub-floor and, on the evidence, what was removed was not salvageable.
8. Such finding does not depend on the nature of the materials ground (including whether or not they contained magnesite residue), only that they needed to be ground to accommodate a compliant solution within the scheme's acoustic by-law.
9. The preferred evidence is the actual cost where it is available unless an alternative is established to be appropriate: Hyder Consulting (Australia) PL v Wilh Wilhelmsen Agency PL [2001] NSWCA 313 at [19], [96], [99]. An invoice is sufficient to establish liability to pay.
10. The lot owner is entitled against the OC to be reimbursed the $5,120 plus GST allocated against the grinding, being $5,632.
11. Damage to lot property: The strict nature of the OC's duty and liability opens it to this claim, as discussed earlier.
12. The OC denied that its contractor had caused the damage or that the lot owner had proved the same.
13. The lot owner relied upon photographs that were said to support the undamaged wardrobes before the contractor's works, the damaged state immediately after his works and no intervening contract work.
14. In response, the OC's contractor denied that he caused the damage and, contrary to the lot owner's evidence, said that there were other contractors on site during his work.
15. Focusing on the more objective evidence and expert opinion, in the conclave report the experts agreed that there was at least one chip on each wardrobe door and that the chips on only two doors were easily visible. The photographs appeared to show some form of rub mark, in addition to the chips, primarily in a line across four of the six doors (not four all in a row) that was not present before the cementitious screed atop the magnesite was removed by the lot owner's builder in June 2022 and were present after the magnesite removal works by the OC's contractor in late July 2022. There was insufficient clarity to know when the marks emerged after which of those sets of works.
16. The OC's expert also said that the pattern of damage to the wardrobe doors was inconsistent with impact damage from use of a jackhammer and posited other potential causes only some of which potentially arose from the removal works. The potential causes included scraping a machine along the doors.
17. The lot owner's expert said "I cannot know how the damage was caused as there is no evidence of the source" and went on to say "on a balance of probabilities it was caused by the [OC]'s contractor" on the basis that this was the most physically intensive work and could have been the impact of any part of the equipment, not just the tool head. The OC's expert said this was speculative.
18. Both experts agreed, and the OC said it was clear from the photographs referred to by the experts, that the damage to the base of the wardrobe end panel pre-dated the OC's contractor's work, as shown by photographs.
19. On that state of the evidence it has not been established that the damage to the wardrobe end panel was caused by the OC's contractor's work.
20. In relation to the door panels, the state of the evidence is too uncertain to attribute responsibility to the OC's contractor.
21. If I had found that damage to the wardrobe doors was established against the OC, I would have accepted the experts' common assessment of remediation cost at $1,504. There is insufficient evidence in the present case to find, on the basis in Hyder stated earlier, that the quotation obtained by the lot owner was carried through, unlike an invoice. In any event, the costing was not itemised so the measure of remediation cost for the doors alone, distinct from other damage, was not established.
22. In relation to the electrical work, the OC did not press in oral submissions its contentions that the damage was de minimis and not yet rectified, and that the cabling works were common property and were not approved. In my view the photographic evidence showed that the damaged part of the cable was not embedded in the wall or otherwise shown to be common property infrastructure.
23. The invoice for $1,595 did not distribute the total cost between the cabling and other work specified on the invoice.
24. The parties' experts were unable to assess a cause for the electrical damage because there was insufficient evidence. This claim fails.
25. Loss of rent: The OC said, first, that the lot owner chose to renovate the lot during that period. There was a disputed conversation on that topic on about 30 April 2022 between the lot owner's sole director and a member of the SC and other disputed conversations with another SC member. The lot owner pointed to the absence of evidence of such renovations beyond what was required for the remedial work, including the dry rot in the kitchen cabinetry, and limited kitchen items that have been described elsewhere in these reasons. The lot owner also pointed to the absence of proposals maturing into works apart from installation of a balcony light. This was said to be consistent with the lot owner's evidence of intent to do only minor repairs before re-letting. That evidence of intent itself was consistent with: the works done by contractors; $1,200 for an extensive clean which would not make sense if a major renovation was contemplated; the existence of a binding tenancy agreement entered into on 2 June 2022 for a term of twelve months beginning on 1 July 2022, which the lot owner committed to before knowing of the issues with the sub-floor.
26. There was said for the lot owner to be, in the SC, a climate of adverse opinions in respect of the lot owner's director which was not supported by the objective evidence and which should lead to cautious treatment of the OC's version of disputed matters. Examples given were: independent evidence from the flooring company that the flooring was not salvageable, contrary to the SC members' belief; belief, contrary to the experts' common opinion, that the OC's contractor did not remove all of the magnesite; assertion that the OC was not responsible for the 2016 flooding despite the insurer's acceptance of the claim, including re-opening it in 2022 to pay out for extra damage in the lot owner's lot; an attack on the lot owner's director to the effect that the rental agreement was, in effect, a smokescreen.
27. The OC contended that the lot remained inhabitable. The lot owner said that this was simply not credible. The entire flooring had to be replaced (as part of the magnesite removal and spalling remediation) on the better view, plus the kitchen cabinetry, and at least the kitchen would have no floor.
28. The OC also contended that the lot had been vacant with loss of rent from March 2022 and was therefore time-barred under SSMA s 106(6) as the two-year time period then was. The lot owner responded that no claim was made for the period prior to discovery of the swollen floor and spalling slab as a result of the minor works before re-tenanting, in June 2022. That was the start of the rental claim arising from the breach of duty on discovery of the magnesite, which prevented re-letting. The vacancy in the prior period did not arise from that circumstance.
29. The lot owner was said to be unable to rent the lot until the flooring works were completed on 1 December 2022; rent commenced on 5 December 2022. The lot had been continuously rented out since its purchase in 2004 and a tenant was meant to rent from 1 July 2022 to 30 June 2023. I accept that the tenancy agreement was intended to operate according to its terms. There was no evidence establishing that it was not signed on 2 June 2022, which was eight days before the lot owner knew of the sub-floor issue; it was not contended that the lot owner's director had earlier knowledge of the sub-floor issue. It allowed, between date of entry and date of commencement of tenancy, about one month which was consistent with some renovation, and thorough cleaning post-renovation, of the unit. There was no other evidence sufficient to establish that signing the tenancy agreement was to disguise the scope of the intended works. There was insufficient evidence to rebut that more extensive works were said by the lot owner's director to be more recent than 2022.
30. The best evidence from which to draw an inference as to what would have happened by way of works within unit 10 as at and immediately after 10 June 2022 appears to be what actually occurred. As already said, in the two weeks between 15 and 28 September 2022 the lot owner installed new tiling. From 29 September to 1 December 2022, in a period of 63 days or nine weeks, the lot owner undertook works including painting, electrical works, repairing and re-installing sliding doors, installing kitchen cabinets and a kitchen stone benchtop, and kitchen electrical and plumbing works, which was largely consistent with what the director had described to the OC in mid-2022. That was a longer period than from 2 June to 1 July 2022 when the tenancy originally was to commence. That it took longer was the lot owner's choice, as was whether the scope of work increased by reason of the sub-floor remediation. From their nature and the lot owner's evidence it was likely that they rendered the unit uninhabitable while they were being done.
31. On my findings on the evidence to this point the re-flooring, with a hard surface that can be inferred to be of similar amenity to the existing hard surface floating floor, was intrinsically part of the required work to restore the common property to maintenance and repair, irrespective of the lot owner's choices without that work. It was a reasonably foreseeable type of loss in itself (although not claimed in these proceedings against the OC) and the time to lay it generated a delay in being able to complete further renovations and re-let the unit, which was also and self-evidently a reasonably foreseeable type of loss. There was no evidence that the lot owner intended to do other than sand the existing floating floor before the sub-floor issue was discovered. The discovery meant that a floor needed to be re-laid and gave the opportunity for choice. The first indication of choice - obtaining a quotation for alternatives - occurred on 14 June 2022, after the sub-floor issue was discovered.
32. I accordingly have taken the period of lost rental to be from 10 June to 28 September 2022, being 111 days at $185.71pd, totalling $20,613.81. The lot owner's total claim was $32,314.28 which included the nine weeks that I have excluded from 29 September to 1 December 2022.
33. The insurance payout component of $10,400 was for lost rental resulting from reinstatement works in the kitchen and living room (including the floating floor) so should be applied against the period after 15 September 2022. This means that rental reimbursement from the insurer has two weeks that overlapped with the damages for lost rental against the OC. The pro-rated amount of the insurance payout for the overlapping two weeks is $1,890.91 which needs to be deducted from $20,613.81 to give a net recovery to the lot owner of $18,722.90. Although the insurer paid out in respect of eight weeks' loss of rent in terms of amount, that was in respect of the 11-week period in terms of the works the subject of the payout.
34. The total amount recoverable by the lot owner on the contested items, in addition to the $38,801.25 originally contested but paid after proceedings commenced and not further contested, is $24,354.90, comprising $18,722.90 and $5,632.

1. For strata schemes, there are special legislative provisions which govern recovery of OC costs and expenses in respect of proceedings, as relevantly determined by the Appeal Panel in Owners SP 74698 v Jacinta Investments PL [2021] NSWCATAP 387 at [180]- [208].
2. First, SSMA s 232 supports the making of an order quarantining lot owners against contributions (from the existing funds of an owners corporation or from levies) to pay damages and costs orders against the owners corporation in favour of the lot owners.
3. Secondly, SSMA s 104 operates of its own force, without need for orders, to quarantine successful lot owners from contributing (from the existing funds of an owners corporation or from levies) to the owners corporation's costs and expenses in the proceedings.
4. Thirdly, it is appropriate, if there is a separate determination on costs and expenses in the proceedings, to reserve for that determination any dispute as to the operation of SSMA s 104 in terms of whether the lot owner is successful in the proceedings and the owners corporation unsuccessful in the proceedings, even if that appears reasonably clear.
5. What is not the subject of such quarantining is expenditure from existing funds or from levies to fund remedial work to common property.
6. Since SSMA s 104 operates as a statutory obligation without need for an order once the lot owner is established as the successful party, a notation of that statutory force is sufficient without further order.

(1) Note that the applicant has received from the respondent prior to hearing $38,801.25 of the amount originally claimed, without further contest in the proceedings.

(2) Order that The Owners - Strata Plan No 2004 pay Oberto Pty Ltd $24,354.90 on or before 22 December 2025.

(3) Order, in respect of costs (determination of which was deferred until after delivery of substantive decision) and definition of parties:

(i) Any party's application for costs and submissions, any further evidence in support of that application and any application for a further hearing on costs, are to be filed and served on or before 8 December 2025.

(ii) Any party's submissions and any further evidence in response are to be filed and served on or before 22 December 2025.

(iii) The parties' submissions should include a brief note, which should be by consent if possible, as to whether the respondent's designation should be amended to take account of the strata scheme registration in 2021 and, if so, how.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.