Tsolakis v The Owners - Strata Plan 96367 [2025] NSWCATCD 177;

1. The complex was built in 2017, by Philip Stephen Mackie and Bradley John Mackie trading as Mackstar Build ("the builder"). Practical completion was reached in November 2017. It appears that building defects were identified shortly after completion of the build. In 2018 a rectification order was issued to by Fair Trading, directing the builder to rectify various defective work identified by the inspector. This relevantly included water ingress issues affecting lot 5.
2. On 10 August 2023 the Owners Corporation commenced proceedings against the builder in NCAT.
3. On 6 March 2024, orders were made by consent, requiring the builder to complete rectification work, including rectification of the water ingress to lot 5 from the balcony, and the leak in the garage, by 28 June 2024. The consent orders did not include the roof leak above the stairs, from the roof in the vicinity of the air conditioning unit.
4. On 3 January 2025 the Owners Corporation renewed the NCAT proceedings. Those proceedings remain unresolved. They are listed for hearing in December 2025.
5. The applicants complain that none of the water ingress issues affecting their lot has been effectively resolved by the builder, or by the Owners Corporation.

Obligation to maintain and repair common property

1. Section 106 Strata Schemes Management Act 2015 provides:

106 Duty of owners corporation to maintain and repair property

(1) An owners corporation for a strata scheme must properly maintain and keep in a state of good and serviceable repair the common property and any personal property vested in the owners corporation.

(2) An owners corporation must renew or replace any fixtures or fittings comprised in the common property and any personal property vested in the owners corporation.

(3) This section does not apply to a particular item of property if the owners corporation determines by special resolution that--

(a) it is inappropriate to maintain, renew, replace or repair the property, and

(b) its decision will not affect the safety of any building, structure or common property in the strata scheme or detract from the appearance of any property in the strata scheme.

(4) An owners corporation may defer compliance with subsection (1) or (2) in relation to damage to common property until after the taking of action if--

(a) the action is taken by the owners corporation against an owner or another person in relation to the damage, and

(b) the deferment will not affect--

(i) the safety of buildings, structures or common property in the strata scheme, or

(ii) a person's access to or use of the common property or a lot in the strata scheme.

(5) An owner of a lot in a strata scheme may recover from the owners corporation, as damages for breach of statutory duty, any reasonably foreseeable loss suffered by the owner as a result of a contravention of this section by the owners corporation.

(6) An owner may not bring an action under this section for breach of a statutory duty more than 6 years after the owner first becomes aware of the loss.

(7) This section is subject to the provisions of any common property memorandum adopted by the by-laws for the strata scheme under this Division, any common property rights by-law or any by-law made under section 108.

(8) This section does not affect any duty or right of the owners corporation under any other law.

1. In Seiwa Pty Ltd v Owners Strata Plan 35042 [2006] NSWSC 1157, Brereton J analysed the duty owed by an owners corporation under s 62(1) of the predecessor statute, which was materially identical to s 106(1):

"Section 62(1) imposes on an owners corporation a duty to maintain, and keep in a state of good and serviceable repair, the common property. That duty is not one to use reasonable care to maintain and keep in good repair the common property, nor one to use best endeavours to do so, nor one to take reasonable steps to do so, but a strict duty to maintain and keep in repair."

1. His Honour went on to explain that the duty requires maintenance before an item falls into disrepair, such that:

"as soon as something in the common property is no longer operating effectively or at all, or has fallen into disrepair, there has been a breach of the s 62 duty."

Compulsory appointment of a strata managing agent

1. Section 237 of the SSMA provides as follows:

237 Orders for appointment of strata managing agent

(1) Order appointing or requiring the appointment of strata managing agent to exercise functions of owners corporation The Tribunal may, on its own motion or on application, make an order appointing a person as a strata managing agent or requiring an owners corporation to appoint a person as a strata managing agent--

(a) to exercise all the functions of an owners corporation, or

(b) to exercise specified functions of an owners corporation, or

(c) to exercise all the functions other than specified functions of an owners corporation.

(2) Order may confer other functions on strata managing agent The Tribunal may also, when making an order under this section, order that the strata managing agent is to have and may exercise--

(a) all the functions of the chairperson, secretary, treasurer or strata committee of the owners corporation, or

(b) specified functions of the chairperson, secretary, treasurer or strata committee of the owners corporation, or

(c) all the functions of the chairperson, secretary, treasurer or strata committee of the owners corporation other than specified functions.

(3) Circumstances in which order may be made The Tribunal may make an order only if satisfied that--

(a) the management of a strata scheme the subject of an application for an order under this Act or an appeal to the Tribunal is not functioning or is not functioning satisfactorily, or

(b) an owners corporation has failed to comply with a requirement imposed on the owners corporation by an order made under this Act, or

(c) an owners corporation has failed to perform one or more of its duties, or

(d) an owners corporation owes a judgment debt.

(4) Qualifications of person appointed A person appointed as a strata managing agent as a consequence of an order made by the Tribunal must--

(a) hold a strata managing agent's licence issued under the Property and Stock Agents Act 2002 , and

(b) have consented in writing to the appointment, which consent, in the case of a strata managing agent that is a corporation, may be given by the secretary or another officer of the corporation or another person authorised by the corporation to do so.

(5) Terms and conditions of appointment A strata managing agent may be appointed as a consequence of an order under this section on the terms and conditions (including terms and conditions relating to remuneration by the owners corporation and the duration of appointment) specified in the order making or directing the appointment.

(6) Return of documents and other records A strata managing agent appointed as a consequence of an order under this section must cause a general meeting of the owners corporation to be held not later than 14 days before the end of the agent's appointment and must on or before that meeting make arrangements to return to the owners corporation all documents and other records of the owners corporation held by the agent.

(7) Revocation of certain appointments An order may be revoked or varied on application and, unless sooner revoked, ceases to have effect at the expiration of the period after its making (not exceeding 2 years) that is specified in the order.

(8) Persons who may make an application The following persons may make an application under this section--

(a) a person who obtained an order under this Act that imposed a duty on the owners corporation or on the strata committee or an officer of the owners corporation and that has not been complied with,

(b) a person having an estate or interest in a lot in the strata scheme concerned or, in the case of a leasehold strata scheme, in a lease of a lot in the scheme,

(c) the authority having the benefit of a positive covenant that imposes a duty on the owners corporation,

(d) a judgment creditor to whom the owners corporation owes a judgment debt,

(e) the Secretary.

1. The cases make it clear that if the Tribunal finds that a strata scheme is not functioning, or is not functioning satisfactorily, the Tribunal has a discretion as to whether to appoint a compulsory manager, which is a draconian step which should not be taken lightly (see for example the case of Foo v Frew [2023] NSWCATAP 303 paras 21 - 27):

21 SSMA s 237 gives, by the word "may", a discretion to the Tribunal which needs to be exercised on principled grounds.

22 The appointment of a compulsory strata manager under SSMA s 237, like the removal of a strata scheme officer under s 238, is not lightly made and requires some dereliction of duty or dysfunction in operation of the scheme, usually not arising from an isolated incidence unless it showed serious misconduct or dereliction of duty (including disobedience to Tribunal or Court orders): see, eg, Kahn v Owners Corporation SP 2010 [2017] NSWCATCD 39 ('Kahn') at [30]; The Owners-Strata Plan No 14593 v Soares [2019] NSWCATAP 35 ('Soares') at [44], [46]; Anderson v Owners SP 61034 [2019] NSWCATAP 61 at [41]- [42].

23 The aim of SSMA s 237 and its predecessors in the 1996 Act is, where possible, to maintain a democratic system which the legislative scheme has established, rather than substitute a compulsory appointment: Kahn at [30]. It is not enough that the owners simply do not get along: Bischoff v Rita Sahade [2015] NSWCATAP 135. The evidence may show a properly functioning strata scheme in all practical respects despite any personal animosities or disagreements on the decisions made: Robinson v Owners SP 61717 [2018] NSWCATCD 49 at [53]- [58]; Anderson v Owners SP 61034 [2019] NSWCATAP 61 at [41]- [42].

24 However, if dispute becomes chronic, complex and/or litigious the trigger point may well have been reached: Moallem v CTTT [2013] NSWSC 1700 at [7]; Bate v Owners SP 60549 [2018] NSWCATCD 36 at [77]- [78]. This may also be the case where there is a clear and substantial dereliction in the duty to manage the scheme in accordance with statutory requirements and in the interests of all lot owners under SSMA s 9(2) and its statutory predecessors, without discrimination: Gershberg v Owners SP 5768 [2011] NSWCTTT 411; Soares at [44], [46].

25 Failure to engage or reasonably to act in accord with relevant expertise and advice, including the strata manager for voluntary members of a strata committee, may be a sufficient indicium: Co Funds Management PL v Owners SP 78945 [2011] NSWCTTT 488 at [27]- [28].

26 There may be a need for intervention to provide a "clean slate", to re-establish proper functioning, and to facilitate non-repetition of dysfunctional conduct or non-compliance with statutory requirements, which may require the maximum appointment period of two years: Kotevski v Seadon and Owners SP 82413 [2013] NSWCTTT 597 at [74]. This may require continuation on a serial basis if the complexity of the mix of uses in the scheme, the size of the scheme or other ongoing management issues are present: Foong v Scutella [2021] NSWCATAP 225.

27 If a compulsory strata manager is appointed, it should be someone who, in addition to giving the statutory consents, will provide the necessary impartial management at least cost: Farland v Simmons [2018] NSWCATCD 28 at [45].

1. The following facts emerge from the evidence, and I find:

(1) Since April 2022, the applicants have been complaining to the Owners Corporation about a number of issues relating to the repair of common property affecting their lot 5. The issues include a leak from the first floor balcony around the sliding door, and from the balcony, resulting in damage to the master bedroom ceiling, a leak into the garage causing damage to one bulkhead, and a leak from the roof in the vicinity of the roof mounted air conditioning unit causing damage to the ceiling around the air conditioner return. There has also been resultant damage caused by mould infestation consequent upon the damp conditions in the lot.

(2) The Owners Corporation has had the benefit of numerous building reports, identifying these issues (and issues affecting other lots), including several from Houspect. The builder has returned several times to attempt to rectify the issues without success.

(3) On 6 March 2024, orders were made by NCAT by consent, requiring the builder to complete rectification work, including rectification of the water ingress to lot 5 from the balcony, and the leak in the garage, by 28 June 2024. The consent orders did not include the roof leak above the stairs, from around the air conditioning unit.

(4) In June 2024, the builder carried out some rectification work, including opening the ceiling in one of the downstairs bedrooms exposing a beam which appeared damp. The builder proposed to repair the ceiling. The applicants were concerned about the appearance of the beam and the builder's intention to cover it by closing the ceiling. They asked Houspect to urgently inspect the beam. Houspect in a report dated 25 June 2024 stated that the installation of the sliding doors on the balcony, and a lack of waterproofing to the screws/bases of the balustrade posts had caused undue dampness in the building. Houspect reported that the builder's proposed rectification (waterproofing the bases and screws of the balustrade posts) would not resolve the issue.

(5) A Houspect report dated 25 October 2024 set out a scope of work for rectification of the water ingress issues.

(6) On 15 November 2024 Houspect reported that the builder's attempted rectification of the three identified issues represented "bandaid fixes" of "noncompliant building defects".

(7) On 1 July 2025, Mark Colecliff of Houspect provided an expert report confirming that the defects previously reported on had not been rectified, and providing a scope of work for rectification of those defects and others in the scheme.

(8) The ceiling opened by the builder in June 2024 remains open.

The applicants submissions - common property repairs

1. The applicants' position, supported by the Houspect reports, is that the balcony needs to be properly repaired, and then the beam, which was observed to be wet and delaminating, can be checked to ensure it has dried out, or whether further repairs are required. In addition, a mould treatment can be carried out. Only then can the ceiling be repaired.
2. The leak above the stairs is related to the roof mounted air conditioner. The builder installed the air conditioning units. The leak is coming through the common property roof.
3. The applicants say that because of the unresolved building issues, they have been unable to use the unit since 2023. They have had to delay the plans which they had, to sell their Sydney property, put money into super and live in the subject property. They say that the leak above the stairwell is unsafe. Their daughter slipped on water in the stairwell. They say that both Mrs Tsolakis and the applicants' son have had respiratory issues related to the dampness and mould in the unit.

1. The respondent's position in respect of the common property repairs is that it has acted appropriately in attempting to enforce the Owners Corporation's rights under the Home Building Act 1989 to have the builder carry out the rectification work. In respect of the leak above the stairs, the Owners Corporation says that as the strata plan identifies the air conditioning units as lot property, it is the responsibility of the applicants as lot owners to attend to that matter.

1. I am satisfied that the Owners Corporation is in breach of its obligations under s 106 of the SSMA. The numerous reports commissioned by the Owners Corporation disclose the three issues requiring repairs of common property relating to lot 5. The rectification of those issues has not been carried out, despite the Owners Corporation being on notice of them since at least 2022, or indeed 2018.
2. The Owners Corporation says that it has not repaired the leak above the stairwell because the leak is coming from the air conditioning unit which is lot property. However, the evidence is clear that it is the roof which is leaking. The roof is common property. I am satisfied that the Owners Corporation is responsible for repair of the common property roof to prevent water ingress. The fact that it may be the way in which the builder installed the air conditioner (lot property) which has damaged the common property roof does not make the lot owner responsible to repair the roof (it might be different if the lot owner had damaged the roof whilst installing the air conditioner but that is not the evidence before the Tribunal).
3. It should also be noted that the issue relating to the roof was not the subject of the consent orders entered into with the builder, and whilst the Owners Corporation now seeks to include that issue in its case against the builder, it is not clear that the Tribunal has jurisdiction to determine it in those proceedings. That matter may well turn on whether the defect was included in the original claim against the builder.
4. In relation to the other two matters, the Owners Corporation says that it has not carried out the repair and maintenance of the common property because it is enforcing its rights to have the builder honour its obligations. Putting aside the fact that the Owners Corporation has so far not been successful in doing so, despite the issues being apparent since 2018, s 106 (4) provides that an owners corporation may only defer compliance with its obligations under s 106 (1) and (2) until action is taken against another person if the deferment will not affect the safety of the buildings, structures or common property, or a person's access to or use of the common property or a lot in the strata scheme.
5. In this case the failure to repair the common property has resulted in the applicants being unable to use their lot. It has also affected the safety of the stairway, and the continuing damp conditions have resulted in mould in the common property affecting the lot, which is also a safety issue.
6. I am not satisfied that the Owners Corporation is entitled to defer its obligations to repair the common property whilst it pursues its rights against the builder. It is in breach of its obligations under s 106.

1. The applicants complain that they have been treated differently from other lot owners, whose repairs have been carried out. The Owners Corporation disputes that it has done so.
2. The evidence shows that some repairs have been carried out to other units, whilst repairs to lot 5 have not. This has been on the mistaken understanding that the repairs to lot 5's common property were either the responsibility of the applicants, or needed to await the NCAT proceedings against the builder. There are also other units which have not been repaired for similar reasons.
3. The applicants complain that in seeking approval to settle the action against the builder, the secretary failed to put all alternatives from the lawyer before the meeting. I am satisfied that this was inappropriate. Owners ought to have been provided with the whole of the lawyer's advice, although the committee is free to express a preference as to which option should be adopted.
4. There is no doubt that the relationship between the applicants and other owners has become frayed. This seems largely because the applicants do not agree with the path which other owners are determined to follow. However, the applicants' stance is not unreasonable, as the Owners Corporation's determination to allow the builder multiple opportunities to attempt the rectification work over more than 6 years has not to date resulted in effective repair of the common property.

1. The applicants expressed concern that the committee is unable to properly manage the NCAT proceedings nor to manage the repair of the common property. They submitted that the Owners Corporation would continue to be in breach of its obligations unless a compulsory strata manager is appointed.
2. I am satisfied that this is the case. I note that the members of the committee have acted to the best of their abilities, but even with the assistance of both a strata manager and a lawyer engaged in respect of the building claim, the Owners Corporation has not fulfilled its obligations to repair the common property, instead focussing on pursuing the claim against the builder. To date, and after 6 years, that action has not resulted in proper rectification of the common property. Indeed, it is of concern that the committee did not seek legal advice about this current matter, even though it had lawyers engaged in respect of the building claim. When I asked the Owners Corporation's representatives at the hearing whether they had made their lawyer aware of these proceedings, which may impact the conduct of the other proceedings, they said they had not done so.
3. The appointment of a compulsory strata manager is not to be made lightly. However I am satisfied that unless I do so, the Owners Corporation will continue to be in breach of its obligations.
4. I will order the Owners Corporation to carry out the repairs to the common property in accordance with the report of Houspect dated 1 July 2025. I will allow a period of 6 months, considering the time of the year and allowing for the usual delays over December and January. I will compulsorily appoint a strata manager to ensure the proper management of that process.
5. I note that the proceedings against the builder remain on foot, and are listed for hearing in December 2025. This order should not prevent a proper resolution of those proceedings, but the repairs must be carried out in accordance with these orders, regardless of the outcome of those proceedings.
6. I note that repairs to common property affecting other lots are also identified in the expert evidence before the Tribunal. I make no orders in respect of those matters as they were not canvassed at the hearing. However clearly those works will also need to be carried out.

(1) The Tribunal appoints BKFY Pty Ltd trading as Platinum Strata Management, 80 Mann Street Gosford NSW 2250 as strata managing agent to exercise all the functions of the Owners Corporation - Strata Plan 96367.

(2) The Tribunal orders that BKFY Pty Ltd trading as Platinum Strata Management is to have and may exercise all the functions of the chairperson, secretary, treasurer or strata committee of the Owners Corporation.

(3) This appointment is for a period of 12 months from the date of this order.

(4) This appointment is on the terms and conditions specified in the letter dated 10 July 2025, filed with the Tribunal.

(5) The Owners - Strata Plan 96367 is to cause the carrying out of the following work in a proper and workmanlike manner by appropriately qualified and licensed tradespersons, to be completed by 27 April 2026:

The scope of work for rectification set out in the report of Houspect dated 1 July 2025 at paragraphs 5.1, 6.1 and 7.1 along with the mould remediation of lot 5 in accordance with section 8.1 of that report.

(6) Any application for costs is to be filed and served by 10 November 2025.

(7) Submissions in reply are to be filed and served by 24 November 2025.

(8) Submissions must address whether a hearing of the cost application can be dispensed with.

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.