Owners corporation loses appeal and must fix failed bathroom waterproofing in a townhouse (NCAT, 2026)

What happened

The lot owner owns lot 4, a two-storey townhouse in a strata scheme of six lots. The strata plan was registered on 7 November 1990. The lot owner claimed that the owners corporation had breached its duty under section 106 of the Strata Schemes Management Act 2015 (NSW). That duty is to properly maintain common property and keep it in a state of good and serviceable repair. The owners corporation is the body made up of all the lot owners, and common property is the part of the building that is not inside any one owner's lot.

At a hearing on 19 November 2024 the parties agreed on most of the repair work. The tribunal made orders by consent, meaning orders both sides agreed to. The owners corporation was to have qualified contractors carry out several items from a structural engineer's report dated 20 June 2024 within 12 months. The one issue left open was the bathroom and ensuite work in item 3.1 of that report. The parties agreed this issue would be decided on written submissions, without a further hearing.

The parties agreed on several facts. The wall between the bathroom and the bedroom, and between the ensuite and the bedroom, is lot property, meaning it belongs to the individual lot rather than to the common property. Water was getting through that wall from the ensuite and bathroom into the bedroom. The waterproofing of the wall, if there was any, was defective. They also agreed that the right scope of repairs was the one set out in item 3.1 of the engineer's report.

On 23 October 2025 a Senior Member of the tribunal found that the owners corporation was responsible for this work. The owners corporation appealed to the Appeal Panel, which heard the appeal on 30 April 2026.

What each side wanted

The lot owner asked the tribunal to order the owners corporation to carry out the bathroom and ensuite waterproofing work in item 3.1 of the engineer's report. On appeal, the owners corporation argued that the Senior Member should have found the work was needed to lot property, mainly because the water was coming through an internal wall that belongs to the lot. It said the work was therefore not its responsibility, and that this part of the lot owner's application should have been dismissed.

What the tribunal decided

The Senior Member's order of 23 October 2025, made under section 106 of the Strata Schemes Management Act, required the owners corporation to engage a suitably qualified and licensed contractor. That contractor was to carry out the necessary waterproofing works in the main bathroom and ensuite of the lot, in line with item 3.1 of the engineer's report. Under the earlier consent orders, if the lot owner succeeded on this issue, the bathroom work was to be done within 6 months of the proceedings being decided.

On 6 October 2026 the Appeal Panel refused leave to appeal and dismissed the appeal. Leave to appeal means the tribunal's permission to bring the appeal. The Senior Member's order therefore stands.

The panel did not decide costs straight away. Each party may file written submissions on the costs of the appeal, of no more than 5 pages, within 14 days of the orders being published. Each may then reply to the other within a further 14 days. The submissions must also say whether costs can be decided on the papers, without a hearing, under section 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW). No amount of money was ordered in the published reasons.

Why the tribunal decided it that way

Because the strata plan was registered in 1990, the question of what is common property and what is lot property had to be worked out under the Strata Schemes Development Act 2015 (NSW). The owners corporation's case on appeal rested on the agreed fact that the leaking wall itself is lot property.

The Senior Member's reasons, as quoted in the appeal decision, found there was enough evidence that the bathroom and ensuite needed work to the waterproofing membrane, even without an invasive investigation by either side's expert. The Senior Member accepted the evidence of the lot owner's engineer, who pointed the shower head at the bathroom wall and saw moisture coming through into the bedroom. The owners corporation's own engineer had also said that the waterproofing system had failed. The Senior Member agreed with the lot owner that a waterproofing membrane is one continuous system that cannot be replaced piece by piece. The Senior Member also agreed that any replacement had to meet the current standard, AS3740-2021.

The published text provided is cut off at this point. It does not include the rest of the Senior Member's reasoning or the Appeal Panel's own reasons for refusing leave and dismissing the appeal. Those reasons cannot be summarised here.

What this means if you are in a similar position

This decision shows that the tribunal looked beyond the fact that a leaking wall was lot property. It considered the evidence about the waterproofing system as a whole, and it treated the membrane as one continuous system that could not be repaired in pieces. Expert evidence was important. The lot owner's engineer carried out a simple water test, and the owners corporation's own engineer agreed the waterproofing had failed.

If you are in a similar position, the decision also shows how much a dispute can be narrowed by agreement. Here the parties settled most of the repair items by consent and agreed key facts, leaving only one question for the tribunal. It also shows that an appeal within the tribunal may need permission, and that permission can be refused. Every strata building and plan is different, so the outcome in this case may not apply to another one.

In disputes like this, the step most people take first is to put the problem to the owners corporation in writing, ideally with a report describing the defect and the repairs needed. If that does not resolve it, they then make an application to the tribunal.

How to apply: our step-by-step guide to a NCAT application. More decisions: NCAT cases and strata and body corporate.

Source: The Owners – Strata Plan No. 37812 v Herbert [2026] NSWCATAP 313 (read the full decision). This summary was prepared from the published decision for general information. It is not legal advice, and the tribunal’s own reasons are the authoritative record.