Sharma v Hoque [2026] NSWCATAP 198 (24 June 2026) is not a strata case. But it may have an important strata consequence of which to be aware.

The Legal Trap: Landlord Liability for Common Property Defects

The Appeal Panel has reaffirmed that a landlord may remain liable to a tenant under the Residential Tenancies Act 2010 (NSW) (RTA) even where the relevant defect that the tenant complained about relates to common property which is the owners corporation’s responsibility to repair, replace or maintain. The same conclusion was previously reached by the Appeal Panel: see McCartney v Wood [2023] NSWCATAP 131 [77]-[79].

Section 63 of the RTA requires the landlord to provide and maintain the premises in a reasonable state of repair. Section 44 of the RTA permits an excessive rent order where goods, services or facilities provided with the premises are reduced or withdrawn or given the state of repair of the residential premises.

That matters for owners corporations I Case study: Sharma v Hoque

In Sharma, the tenants recovered rent reductions from the landlord for various defects, including a gas and water leak, balcony leak, faulty intercom, air conditioning and lift issues.

The landlord argued that some of these matters were “strata” issues and were outside of landlord’s control. The Tribunal and the Appeal Panel rejected that argument. The Appeal Panel held that a landlord may be in breach of the obligation to repair the residential premises even where delay in doing so is caused, or partly caused, by an owners corporation.

The Strata Impact: Passing the Financial Loss to the Owners Corporation

The strata point is this: where an owners corporation breaches section 106 of the Strata Schemes Management Act 2015 (NSW) (SSMA) by failing to repair common property, and that breach causes the landlord to become liable to the tenant, the landlord may have a claim against the owners corporation.

Section 106 of the SSMA and Statutory Duty

Section 106 of the SSMA requires an owners corporation to maintain and keep common property in good and serviceable repair. It also gives a lot owner a right to recover, as damages for breach of statutory duty, any reasonably foreseeable loss suffered by the owner as a result of the owners corporation’s breach of that strict duty. The current limitation period under section 106(6) is six years from when the owner first becomes aware of the loss.

Forecasting the Chain of Loss

A rent reduction or a compensation order made in favour of a tenant may therefore become part of the landlord’s loss. That loss may not be remote merely because it is first suffered by the tenant.

In some cases, it may be foreseeable that, if common property defects affect a rented lot in a strata scheme, the tenant may seek rent reduction or compensation from the landlord. It may be equally foreseeable that the landlord may then look to the owners corporation if the underlying cause was an unremedied common property defect.

Key Takeaway for Strata Managers and Owners Corporations

Owners corporations should not assume that delay only exposes them to repair and remediation orders or to loss of rental income. Delay in rectifying common property may create a chain of financial loss. Where a rented lot is affected, that chain may run from the tenant to the landlord, and then back to the owners corporation under section 106 of the SSMA.

Owners Corporation Responsibilities: Beyond Strata Law

Sharma is not new law. But it is a useful reminder that disputes about an owners corporation’s duty does not sit neatly inside strata law. A failure to repair common property can have consequences for tenancies, and those consequences may become recoverable loss in a later section 106 claim against the owners corporation.

Have a Strata Dispute – Speak to the Experts.

Need Expert Strata Law Advice?

Whether you are navigating a complex dispute or looking to protect your scheme, our specialist NSW and Sydney strata lawyers are here to help. We provide clear, practical advice on all aspects of strata law, including by-laws, building defects, and levy collections. Call our team on 02 9562 1266 or email us here today.

Can an owners corporation deliberately decide not to repair an item of common property? If so, what criteria must be satisfied before the owners corporation can validly make that decision? In a relatively recent case, NCAT’s Appeal Panel provided guidance on that issue.

Duty to Repair Common Property

An owners corporation has a duty to repair all of the common property in its strata scheme under section 106(1) of the Strata Schemes Management Act 2015 (Act).  This duty is compulsory, not optional.  The duty is also a strict one.  This means that the owners corporation must immediately fix any defects in the common property, not take reasonable steps to do so.

Consequences of a breach of duty

The consequences for an owners corporation breaching its duty to repair common property can be serious. Any owner who is affected by the breach of duty can apply to NCAT for orders to force the owners corporation to carry out repairs to the common property and pay compensation to the owner to cover any reasonably foreseeable loss the owner suffers because of the breach of duty. There have been numerous cases in which NCAT has awarded owners substantial amounts of compensation as a result of an owners corporation’s failure to repair defects in common property. The compensation awarded by NCAT to owners has included rental loss, alternate accommodation expenses, cleaning costs, costs to repair damaged lot property, experts’ fees and legal costs. Those amounts can be awarded to an owner as damages under section 106(5) of the Act.

Exemption from the Duty to Repair Common Property

Given the serious consequences for an owners corporation that fails to repair common property, the question that arises is whether an owners corporation can legally, deliberately decide not to repair an item of common property. The answer to that question is “yes”.

Section 106(3) of the Act allows an owners corporation to pass a special resolution at a general meeting to deliberately decide that it will not maintain or repair a particular item of common property.  But there are some criteria that must be met in order for the owners corporation’s decision to be a valid one. First, the owners corporation must determine, when making its decision, that the decision will not affect the safety of, or detract from the appearance of, any property in the strata scheme. Second, there must not be any by-law in place that makes the owners corporation responsible for the maintenance or repair of the particular item of common property.

Where the owners corporation makes a decision, by special resolution, not to maintain or repair a particular item of common property, in compliance with those criteria, section 106(3) of the Act operates to exempt the owners corporation from its strict duty to repair the item of common property.

Can a Decision Not to Repair Common Property be Challenged?

A decision made by an owners corporation not to repair a particular item of common property can be challenged by an aggrieved owner.  However, the grounds for that challenge are limited. An owner can apply to NCAT for an order to set aside or overturn the decision where, for example, the owners corporation did not consider, when making its decision, whether the decision would affect the safety of the building or detract from its appearance or where the decision is unreasonable or is made for an improper purpose (e.g. a fraud on the minority) or where the owners corporation fails to take into account a relevant consideration or takes into account irrelevant considerations when making the decision.

The Case

Morrison v Neighbourhood Association DP No. 285032 [2024] NSWCATAP 18 concerned a decision by a Neighbourhood Association to decide, by special resolution, that it would not maintain and repair a trotting track on neighbourhood property. That decision was made under the equivalent provision in the community schemes legislation to section 106(3) of the Act. Mr and Mrs Morrison were lot owners in the neighbourhood scheme and they were aggrieved by the Neighbourhood Association’s decision. They applied to NCAT for orders to force the Neighbourhood Association to do work to maintain and repair the trotting track.

Mr and Mrs Morison were unsuccessful and they appealed against NCAT’s decision.  Their appeal was dismissed. The Appeal Panel observed that once the Neighbourhood Association had made the decision, by special resolution, not to maintain or repair the trotting track, and that decision was made in accordance with the requirements of the equivalent provision to section 106(3) of the Act, that relieved the Neighbourhood Association from its duty to maintain and repair the trotting track.

Importantly, the Appeal Panel held that because Mr and Mrs Morrison did not seek to challenge or set aside the special resolution the Neighbourhood Association had passed to determine not to maintain or repair the trotting track, there was no basis for NCAT to order the Neighbourhood Association to do so.

What is also important is the Appeal Panel’s decision that in order to satisfy the criteria in the equivalent to section 106(3) of the Act that the decision not to maintain or repair an item of common property will not affect the safety or detract from the appearance of the scheme, all the Association needed to do was consider those issues and determine, by special resolution, when making its decision, that the decision would not affect the safety or detract from the appearance of the scheme. The Appeal Panel said that there was no basis for NCAT to embark on an inquiry to determine whether or not, as a matter of fact, it was correct for the Association to determine that its decision would not affect safety or appearance of the scheme. This means that the grounds for an owner to challenge a decision by an owners corporation or association not to maintain or repair an item of common property are extremely limited.

Conclusion

The Morrison case confirms that an owners corporation or association has a broad power to decide not to maintain and repair an item of common property and when it validly exercises that power, the duty to maintain or repair that item of property no longer applies, and it is difficult for an aggrieved owner to successfully challenge that decision. In practice, owners corporations rarely make determinations, by special resolution, not to maintain or repair specific items of common property. This is surprising given the strict nature of the duty to repair common property that is imposed on every owners corporation in New South Wales and the serious consequences that can arise for an owners corporation when that duty is breached.

CLICK HERE FOR ADVISE ON COMMON PROPERTY STRATA DISPUTES

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

Can an owners corporation make a by-law that permits it to recover from owners and occupiers of lots costs it incurs as a result of their conduct including breaches of by-laws committed by them?

Since 2022 there have been a series of cases in which NCAT has held that cost recovery by-laws are not enforceable. However, a recent decision of NCAT’s Appeal Panel has breathed life back into cost recovery by-laws.

What is a cost recovery by-law?

A cost recovery by-law is typically a by-law which allows an owners corporation to recover from owners and occupiers costs it incurs as a result of their conduct including breaches of by-laws committed by them.  Under most cost recovery by-laws, an owners corporation is permitted to recover from owners and occupiers costs it incurs repairing damage to common property or cleaning common property as a result of the conduct of owners and occupiers, costs payable to NSW Fire and Rescue for false fire alarm call out fees, insurance excesses, legal costs and other expenses such as costs for a contractor re-attending the building to conduct an annual fire safety inspection where access to lots is initially declined.

Are cost recovery by-laws valid?

Since 2022, NCAT has handed down at least 6 decisions in cases in which it has held that cost recovery by-laws are not enforceable. In those cases, NCAT generally concluded that costs recovery by-laws are not valid because they:

(a) are inconsistent with the regime in the Strata Schemes Management Act 2015 under which any costs and expenses incurred by an owners corporation are payable by all owners (rather than some owners) in shares proportional to the unit entitlements of their lots;

(b) they are harsh and unenforceable because they do not require the costs that are recoverable by the owners corporation to be reasonably incurred or reasonable in amount;

(c) they do not allow owners and occupiers to challenge the costs claimed by owners corporations under them.

There were some cases in which NCAT upheld cost recovery by-laws or aspects of them but those cases were in the minority.  Consequently, it has generally been accepted that cost recovery by-laws either are not valid or are of dubious validity.

What has changed?

On 15 May 2025, the Appeal Panel of NCAT handed down its decision in Gokani-Robins Pty Ltd v The Owners – Strata Plan No. 77109 [2025] NSWCATAP 107.  In that case, a lot owner appealed against NCAT’s decision to dismiss their application to have a cost recovery by-law declared invalid.  Relevantly, the cost recovery by-law in that case permitted the owners corporation to recover from owners and occupiers costs it incurred arising from false fire alarms, work required to repair or upgrade a component of a fire safety system inside any lots, a failure by an owner or occupier to give access to their lot when required by the owners corporation or a breach of a by-law by them.  The by-law also permitted the owners corporation to record costs recoverable from owners on section 109 (now section 184) certificates.

The owners corporation amended the cost recovery by-law in November 2023 to remove the part of the by-law that rendered an owner who owed money under the by-law unfinancial and unable to vote at a general meeting and, importantly, to make clear that any costs claimed by the owners corporation under the by-law could only be recovered from owners and occupiers in accordance with a determination of a Court or Tribunal of competent jurisdiction on the reasonableness of those costs.

Are cost recovery by-laws now valid?

NCAT dismissed the owner’s application to declare the by-law invalid and the Appeal Panel dismissed the owner’s appeal against that decision.  NCAT concluded that the cost recovery aspects of the by-law were not harsh, unconscionable or oppressive or otherwise invalid. The Appeal Panel agreed.  Essentially the Appeal Panel agreed with NCAT that the by-law was not harsh or otherwise invalid because:

(a) the by-law simply required an owner or occupier to indemnify the owners corporation in respect of costs incurred by the owners corporation because of the act, negligence or omission of the owner or occupier or his or her failure to give access to their lot;

(b) any costs claimed by the owners corporation under the by-law could only be recovered in a Court or Tribunal of competent jurisdiction which would give an affected owner or occupier the right to dispute his or her liability to pay those costs and the reasonableness of those costs;

(c) any determination by the owners corporation about the costs an owner or occupier was liable to pay under the by-law was not conclusive and could be overturned by a Court or Tribunal of competent jurisdiction;

(d) the power given to the owners corporation to make by-laws under the Strata Schemes Management Act 2015 is broad and extends beyond the model by-laws which only deal with a handful of topics;

(e) the by-law dealt with an important topic, namely fire safety in a strata building, and the owners corporation has a broad power to make by-laws including by-laws that deal with fire safety and, implicitly, the recovery of costs from owners and occupiers in relation to fire safety matters.

The Appeal Panel did not explicitly consider the previous decisions by NCAT which had invalidated cost recovery by-laws.

Conclusion

The Appeal Panel’s decision in Gokani-Robins breathes life back into cost recovery by-laws and demonstrates that, in some circumstances, it is possible for an owners corporation to have in place valid and enforceable cost recovery by-laws.  The case also provides some guidance on the way in which cost recovery by-laws should be drafted to maximise their enforceability.

DO YOU REQUIRE A COST RECOVERY BY-LAW? CLICK HERE NOW!

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.

NSW strata laws are set to redefine accountability for building managers, mandating that you update your building manager contracts to reflect these changes. These reforms are part of the ongoing commitment to enhance transparency and ensure best practices across all strata schemes.

Key Takeaway: Building Managers Step into the Spotlight

Just as strata managing agents have seen increased disclosure requirements, building managers will now be subject to new statutory duties that mirror those of strata managing agents. This critical development aims to significantly increase accountability for how our buildings are managed, ensuring that all parties involved act in the best interests of the owners corporation.

What This Means for Building Managers:

While the specifics of these new duties are being refined, the overarching goal is to compel building managers to act with greater transparency, diligence, and in alignment with the owners corporation’s needs. This will likely include:

• Expanded Disclosure Requirements: Similar to strata managers, building managers will need to disclose any affiliations with suppliers or developers, providing owners corporations with full transparency regarding potential conflicts of interest.
• Enhanced Reporting: Expect more stringent reporting obligations to owners corporations regarding their activities, maintenance schedules, and any issues impacting the scheme.
• Acting in the Owners Corporation’s Best Interests: This is a fundamental principle that will now be legally enforced for building managers, ensuring their decisions and actions prioritise the welfare of the strata scheme.

Increased Powers for NCAT: A New Era of Enforcement

Perhaps one of the most impactful changes is the expanded power of the NSW Civil and Administrative Tribunal (NCAT). NCAT will now have the explicit authority to terminate both strata manager AND building manager contracts if they are found to be acting unlawfully.

This is a significant shift. It provides a powerful mechanism for owners corporations to address instances of mismanagement or misconduct, offering a clear pathway for resolution and ensuring that contracts can be swiftly terminated where there is a breach of legal obligations.

Why These Changes Matter to You:

• For Strata Managers: These reforms reinforce the emphasis on ethical conduct and transparency across the entire strata ecosystem. Understanding the new landscape for building managers will be crucial for seamless collaboration and ensuring your practices align with heightened expectations.
• For Building Managers: This is a call to action. Review your existing contracts and practices to ensure full compliance with the incoming statutory duties. Proactive adaptation will be key to navigating these changes successfully and avoiding potential Tribunal intervention.
• For Owners Corporations & Strata Committees: These reforms empower you with greater oversight and a stronger voice in ensuring your building is managed effectively and lawfully. You will have more tools at your disposal to hold both your strata manager and building manager accountable.

Act Now: Update your Building Manager Contracts

The new strata laws are changing how building manager contracts are handled. With new duties and NCAT’s power to terminate unlawful agreements, reviewing your building manager contracts are crucial. Don’t risk non-compliance; to ensure your contracts are up-to-date and protect your scheme, contact our team of specialist strata lawyers, we’re happy to help.

CLICK NOW TO UPDATE YOUR BUILDING MANAGER CONTRACT

Adrian Mueller I BCOM LLB FACCAL I Partner

Since 2002 Adrian has specialised almost exclusively in the area of strata law. His knowledge of, and experience in strata law is second to none. He is the youngest person to have been admitted as a Fellow of the ACSL, the peak body for strata lawyers in Australia. Profile I Linked

Contact Us

For all strata law advice including by-laws, building defects and levy collections contact our specialist NSW and Sydney strata lawyers here or call 02 9562 1266, we’re happy to assist.