A recent NSW Court of Appeal ruling has major implications for strata living. The decision clarifies that while an owners corporation must repair and maintain common property, it is not required to upgrade or modernise facilities simply because new technology or infrastructure is available.

This precedent means owners corporations can now legally reject proposals from lot owners that amount to improvements rather than like-for-like replacements.

The Case Behind the Ruling

The dispute began back in 2006 at the Hunter Connection retail centre under Wynyard Station. A restaurant owner subdivided his lot to open multiple food outlets. The City of Sydney Council approved the subdivision, on the condition that each outlet had proper ventilation to extract cooking fumes.

The owner applied to connect his new lots to the existing exhaust ventilation system. While technically possible, the system was already at full capacity. The only solution was to upgrade the system—an expensive and disruptive project for the owners corporation. The request was rejected.

Initially, the Supreme Court ruled in favour of the restaurant owner, citing Section 62 of the Strata Schemes Management Act, which requires owners corporations to “renew or replace” fixtures or fittings in common property.

But on appeal, Judge Barrett overturned that decision.

What the Court Said

Judge Barrett explained that “renewal or replacement” means maintaining functional equivalence—not upgrading or modernising.

To illustrate, he compared replacing a single lightbulb with another bulb (renewal) versus replacing it with a grand chandelier (upgrade). Similarly, swapping a flimsy brushwood fence for a brick wall would qualify as renewal, but enhancing capacity for new demands (like a larger ventilation system) goes beyond this obligation.

In short: owners corporations only need to repair or replace like-for-like. They do not have to fund improvements.

What This Means for Strata Owners

This ruling provides clarity for owners corporations and lot owners alike:

• Maintenance is mandatory – Common property must always be kept in good repair.
• Upgrades are optional – Modernising or enhancing facilities is not a legal obligation.
• Committees have discretion – Owners corporations can still choose to adopt upgrades if budgets and community priorities allow.
• Lot owners must fund improvements – If a proposed change benefits one lot owner more than the community, that owner may need to bear the cost.

Metro Strata’s Advice

At Metro Strata, we encourage committees to balance legal obligations with the long-term value of the property. While the law doesn’t force upgrades, sometimes adopting new technology—whether energy-efficient lighting, better ventilation, or modern security—adds real value to the scheme.

The key is transparency: owners corporations should clearly communicate the difference between required maintenance and optional enhancements so that expectations are managed, and budgets are respected.

Final Word

The NSW Court of Appeal has made it clear: owners corporations must maintain, but not modernise. Strata communities now have certainty on where their obligations begin and end.