For the past 12 years, Strata Communities in Victoria had understood that lot owners (not Owners Corporations) were responsible for the waterproofing of external balconies belonging to private lots.

Last week, that understanding was seriously shaken up.

In Damjanovski v Owners Corporation 1 Plan No. PS503570D¹ (Damjanovski), the Supreme Court overturned a decision of VCAT to find that the screed, waterproof membrane and tiles of a balcony were common property and not within a private lot.

However, the implications should not be overstated as the Court was clear about what questions remain unanswered.

What determines a boundary location?

In Victoria, the boundary between what is common property and what belongs to a lot is determined by notations on a Plan of Subdivision.

The three most common types of boundaries are at:

1. The ‘Exterior Face’: where the boundary lies at the exterior of the building;
2. The ‘Median‘: where the boundary lies at the mid-point between the surfaces of the vertical and horizontal building elements along boundary lines (excluding elevated floors or suspended ceilings); and
3. The ‘Interior Face’: where the boundary lies at the interior surface of a lot.

Since 2011, there have been regulations which helpfully assist with the understanding of where those boundaries lie (the Regulations).²

The precise location of a boundary is relevant to determining whether a lot owner or an Owners Corporation is responsible for maintaining or repairing specific building elements. This is a common issue in water ingress cases, where there is a need to determine who is responsible for maintaining the parts of a building which keep water out.

That question has been the subject of controversy for ‘Interior Face’ boundaries.

Damjanovski decision

Since 2014, VCAT has consistently held that the ‘Interior Face’ of the floor of a lot lies at the upper surface of the concrete slab and that any coverings on top of the slab, including a screed, waterproof membrane and tiles, form part of the private lot.³

On 8 October 2026, the Supreme Court in Damjanovski overturned a 2025 VCAT decision on that same issue.

Whilst recognising the difficulty in determining the precise location of a boundary across a layered structure (structural slab, screed, waterproof membrane and tiles), Justice Harris determined that the ‘Interior Face’ of a lot lies at the finished surface of the floor (upper face of the tiles) and not the surface of the bare underlying structural slab beneath it.

The applicable plan of subdivision in Damjanovski pre-dated the 2011 Regulations and so the Supreme Court held those Regulations were not relevant to interpreting the lot boundary on the plan.

Does this mean Owners Corporations are now responsible for all balcony repairs?

No.

The decision in Damjanovski is only relevant to ‘Interior Face’ boundaries.

Any boundary along an Exterior Face or Median boundary will not be impacted by the decision.

There can also be other relevant notations on a plan of subdivision which determine the issue.

Does this impact post-2011 subdivisions?

No, but it does point to uncertainty for them.

It is now unclear whether an ‘Interior Face’ boundary in a post-2011 subdivision lies at the upper face of the structural slab or the upper face of the finished surface.

Justice Harris was very clear that it was “unnecessary to resolve [that] question” given the Regulations did not apply to the subdivision in Damjanovski.

However, Justice Harris did highlight ambiguity around that issue.

Relevantly, regulation 10(4)(a) of the Regulations states that:

“Interior Face lies along the interior face of any wall, floor (upper surface of elevated floor if any), ceiling (underside of suspended ceiling if any), window, door or balustrade of the relevant part of the building. Any internal coverings, waterproof membranes and fixtures attached to walls, floors, and ceilings are included within the relevant parcel” (our emphasis).

Previous VCAT decisions have affirmed the industry perception that this means internal coverings and waterproof membranes sit within the private lot side of a boundary.

However, Justice Harris in Damjanovski expresses “some reservations” about that approach given the term “relevant parcel” could refer to either a lot or common property given ‘parcel’ is defined in the Regulations to include both.

Justice Harris is explicit that this creates ambiguity given “it is not entirely clear whether the statement that they are ‘included within the relevant parcel’ means that it is included in the parcel of which the structural element forms part… or the parcel of the space on the other side of the interior face… That is not resolved by the language of the definition in [the] Regulations.”

This is likely to be the subject of further controversy for post-2011 subdivisions.

On the one hand, Justice Harris observes that the diagrams in the Regulations “may suggest” inclusion of some coverings within common property, which suggests the “relevant parcel” is common property.

On the other hand, given the word “within” precedes the words “relevant parcel” in the regulation, we anticipate Owners Corporations will argue that the “relevant parcel” is the lot which sits “within” the relevant ‘Interior Face’ boundary and not ‘outside it’ in common property.

Does this shift the financial burden of repairs?

Justice Harris acknowledges in Damjanovski that the fee levying provisions of the Owners Corporations Act 2006 (Vic) (OC Act) mean that a lot owner may still carry the financial burden of balcony repairs even if they are common property.

Specifically, section 24 of the OC Act provides that when levying special fees and charges for extraordinary items of expenditure:

1. the cost of repairs which wholly or substantially benefit some or one lot but not all lots, must be levied on the basis that the lot owner who benefits more pays more (benefit principle);⁴ and
2. an OC may levy special fees on a lot owner relating to repairs arising from the particular use of a lot by the lot owner (particular use principle).⁵

Justice Harris specifically acknowledged those principles may be relevant to who ultimately pays for balcony repairs, irrespective of the finding that the relevant repairs were to common property.

Those issues were not determined in Damjanovski and may yet be remitted to VCAT for further consideration.

Any application of the benefit principle would still need to be subject to the procedural requirements set out in OC v Grundl,⁶ and Damjanovski by no means gives a green light to an OC to use the particular use principle in levying fees for balcony works.

Key takeaways:

Whilst there will undoubtedly be a need to re-think repair responsibilities for some pre-2011 subdivisions, we caution Strata Communities against seeing Damjanovski as a ‘blanket rule’ for anything.

The Court was clear that:

1. the decision turned on the specific notations of that particular Plan of Subdivision;
2. there remains unanswered ambiguity for post-2011 subdivisions governed by the Regulations; and
3. the fee levying provisions of the OC Act still impact who actually pays for the works.

This article was written by Jacomb Bell, Partner.

¹ [2026] VSC 656

² Subdivision (Registrar’s Requirements) Regulations 2011; Subdivision (Registrar’s Requirements) Regulations 2021.

³ Owners Corporation PS508732B v Fisher (Owners Corporations) [2014] VCAT 1358; Leung v Harris (Building and Property) [2018] VCAT 1630.

⁴ Section 24(2A) of the OC Act.

⁵ Section 24(2B) of the OC Act.

⁶ Owners Corporation PS407621Y v Grundl (Owners Corporations) [2017] VCAT 1550.