The Basics of Common Property Boundaries
The basic rule is that the common property of a strata scheme is anything not designated as belonging to a lot. Lot property boundaries are defined by the lines marked on the Strata Plan that indicate walls, ceilings and floors. Importantly, legislation holds that the upper surface of floors, the lower surface of ceilings and the inner surface of vertical walls is where the common property begins, subject to any notations on the Strata Plan. A scheme’s common property also includes “common infrastructure” such as shared pipes and service lines but where a pipe for example is entirely contained within a lot’s internal walls (e.g. for the lot’s private plumbing) it would be the responsibility of the owner. For these reasons is commonly said that lot owner is only entitled to the “airspace” within a lot as only the cubic airspace of a lot and structures entirely within it (e.g., an internal and non-structural wall) are typically held to constitute lot property.
This raises the question of whether paint, carpets, floorboards and other “fixtures” to the surface (‘surface fixtures’) of the walls and floor slabs constitutes common property? This was discussed in The Owners – Strata Plan 99960 v SPS Building Contractors Pty Ltd [2024] NSWSC 687 in the context of a building defect claim.
The Case
In this case The Owners – Strata Plan No. 99960 (‘OC’) was comprised of a 45-townhouse scheme and surrounding land. The OC sued the builder, SPS Building Contractors Pty Ltd (‘SPS’), under the Home Building Act 1989 (NSW), section 18B for breach of implied statutory warranties (that their construction work would be done with due care/diligence).
The OC alleged that insufficient construction practices led to water leakages throughout the common property as the waterproofing of balconies and brick walls was defective. The water also entered individual lots and damaged the lot’s carpets. As such the OC sought coverage for the costs of rectifying damage arising from defective construction.
Uncertainty arose in the case as to whether the OC could claim damage to items like the carpets within lots as the builder argued that carpets constituted lot property and therefore compensation would have to be sought by the lot owners.
Common Properties’ Creeping Boundaries
Ultimately the Court held that carpets, floorboards, tiles, paint, and all surface fixtures will constitute part of the common property if they are installed at the time the strata plan was registered. This is because in prior caselaw the boundary of common property was held to be the ‘upper surface of the floor’ including tiles or timbering (and therefore also inferably carpet). Note that this means even paint arguably constitutes common property walls were affixed prior to registration because the upper or inner surface of walls and floors at the time of registration would include anything affixed to their surfaces.
The reasoning was that section 109 of the Strata Schemes Management Act 2015 (NSW) (‘the Act’) lists several aspects of the common property that can be altered without OC approval as it is deemed to be cosmetic work. This list includes carpets and wall-paint, thereby implying both form part of the common property and are the responsibility of the owners corporation. Accordingly, the Court held that the ‘internal surfaces’ extended to surface fixtures because the inner surfaces of walls and floors at the time of registration would include anything affixed to these surfaces.
Furthermore, the prior case of Stolfa v Owners Strata Plan 4366 & Ors [2010] (‘Stolfa’) established that floorboards and tiles were akin to carpentry and thus formed part of the common property.
This verdict has several implications.
Will Cosmetic Works Now Require a By-law? – No (from 30 November 2016 they have not required by-law)
The default position under the legislation is that common property cannot be altered without the explicit consent of an owners corporation. However, section 109 provides an exemption for ‘cosmetic works.’ This is explicitly listed to include laying carpet and painting walls. Alterations to these features will therefore not require a by-law even if they were affixed at the date of registration.
Note however that replacing or installing floorboards is explicitly listed as a ‘minor renovation’ requiring an owners corporation’s approval under section 110 of the Act.
This is contrary to the general wisdom that carpets and other such fixtures were lot property. It does not radically change the law on renovations as the section 109 carve-out always permitted such cosmetic works regardless of whether they formed part of the common property or not. What it does change is whether or not the OC should insure these areas.
Does Damaging the Carpet Damage the Common Property? – Likely Yes
The main issue and implication of this ruling is that damage to surface fixtures like carpets installed at the date of registration would constitute damage to the common property. Hence, obligating individual lot owners to fix any damage they cause to the carpet (who hasn’t split something on their carpet at one time or another?) and potentially requiring the OC to replace the carpet when it is in a state of disrepair. Thus, potentially increasing the financial burden on owners corporations.
A corollary of this, however, is that owners corporations may seek compensation for damage to carpets, paint, etc affixed at the date of registration when suing for rectification of building defects as was held in the present case.
Was the Verdict Wrong?
The implications of this verdict for all parties will likely encourage this decision to be challenged and it will be up to the appeal courts to determine if this decision was “wrong”.
Conclusion & Takeaways
Case law has gradually let the boundaries of common property intrude further and further into what was previously considered part of the lot property. This increases the risk on individual owners for damaging common property and the financial burden on owners corporations for repairing and maintaining property previously considered as lot property. It will also likely increase the administrative difficulties for owners corporations as they will have to keep track of carpets and paint within private lots.
The key takeaway for lot occupants and owners corporations is clear; establish when carpets, floorboards, tiles, paint, and all other surface fixtures were incorporated into lots. This information should then be clearly communicated and shared so that all parties within the scheme are aware of what constitutes part of the common property and hence whether they will be liable for spilling wine or chipping paint. Owners Corporations should also consider by-laws setting out the requirements for cosmetic works (over and above those set out in section 109 of the Act) and consider whether or not to try to apportion liability for the work.
This is general information and should not be considered to be legal advice. You should obtain legal advice specific to your individual situation.
Authors: Andrew Fairfield & Allison Benson