Hi everyone, it’s Allison Benson here from Thoughts from a Strata Lawyer. I’m talking to you today about something that’s cropped up twice in the last month or so in mediations. To me, I think it’s a bit of a no-brainer, but it’s clearly not, because it’s popped up.

What the mediations were about were that our lot owner was seeking damages because the owners corporation had failed to maintain and repair the common property. I’m going to use water as the example, because it’s a really common one.

An owners corporation has a strict statutory duty under section 106(1) of the Strata Schemes Management Act 2015 to repair and maintain the common property. Now, the case law on this has been around for a very long time. The keystone case is that of Seiwa, which was in the Supreme Court in 2006 (Seiwa Pty Ltd v Owners Strata Plan 35042 [2006] NSWSC 1157), and it says the owners corporation has a strict liability; it must maintain and repair the common property, and that case has been followed for the last 20-odd years.

Picture this: water is coming down, comes through the common property floor slab, comes into a lot, causing damage, the lot’s carpets are completely ruined and can’t be saved. The owners corporation has a duty to make sure that the water can’t come through that common property into the interior of a lot, and that’s the defect or the maintenance issue of the owners corporation. The lot owner’s claim would be a claim for damages to replace the carpet, or, if it could be repaired, to repair the carpet. That’s what the lot owner can claim under section 106(5) of the Strata Schemes Management Act.

Now, a little bit of an aside: up until 1 July last year, the time limit to do so for a lot owner was two years, and that was two years from the date the loss was recognized. In very simple terms, there’s technical detail around this, but just take it as general: when you notice or you become aware of the loss; that’s when your time frame starts ticking. From 1 July 2025, the time limit has expanded out to six years. There has been another case very very recently that says if you were within time, if you were within the two-year time limit before the change on 1 July 2025, then your right to take an action has been extended to six years. If you are out of time as at 1 July 2025, then your time frame to take action as a lot owner for reasonable foreseeable loss has expired. You didn’t get the benefit of the six-year extension. Unfortunately, it works for some; it doesn’t work for other lot owners. There may be appeals going on. There’s been no decided higher level decision on that yet, so so that’s the only decision that we’ve got.

In summary: whether the two-year, six-year time limit was extended for all claims, it wasn’t. It was only extended for claims that were still in time. That’s the current case law as of 10 April 2026.

Now, the bit that I have been fighting about in my mediations is the difference between an owners corporation’s responsibility to maintain and repair the common property versus an insurer’s responsibility to pay out under a claim. In the two mediations that I am talking about the owner’s corporation’s defense to the lot owner’s claim for damages in both cases, was framed as “we’re not responsible, we know the common property is defective, but we’re not responsible because the insurer didn’t pay out. There are two very, very, very different obligations going on there:

1. The owners corporation’s statutory responsibility to maintain and repair the common property (strict, as I said, case of Seiwa; it’s been around for 20 years, it’s a strict obligation).

2. The insurer’s obligation to meet the terms of its policy.

Now, this is not a rant against insurers, because they’re profit-making entities. They will insure the building on certain terms. Those terms will not be as all-encompassing as an owners corporation’s responsibility to maintain and repair the common property under section 106(1) of the Act. There will be instances where an insurer says, “Well, there has been damage; we can see there’s a defect in the common property, but we’re not responsible and we’re not going to pay out under the terms of our contract because we’ve contracted out of that obligation. Have a look at our terms of our policy.” One really common contracting out provision is that a lot of insurers say, “If there’s a pre-existing defect in the common property and a loss occurs, well, we as an insurer are not going to cover that. We’re not going to pay out under that clause.”

These are very different obligations, and they shouldn’t be confused. One is an all-encompassing, strict statutory duty upon the owners corporation; the other one is a contractual duty under an insurance contract between the owners corporation and the insurer, and they don’t necessarily always cover the same thing. I would say, in 99.9% of the cases, in my experience, they don’t cover the same thing, because I don’t know of any insurance policies in strata world (please tell me if I’m wrong, if anybody’s out there from an insurer) that would cover a pre-existing defect in the common property, for instance.

Please be really, really careful as an owners corporation and just understand the two differences:

1. One is a contractual obligation with an insurer.

2. One is a strict duty under the Strata Schemes Management Act.

I hope this has helped. Please, as always, get legal advice that is tailored to your specific circumstances. This is really complex legislation; it’s one of the most heavily litigated sections, in the Strata Schemes Management Act, so there are a lot of twists and turns to it. Please always get advice that is tailored to your particular scheme.

Thanks for listening.