Many lot owners question why they must contribute to repairs for parts of the building they don’t directly use especially when fees relate to balconies, lifts, or other shared areas.
But in strata, “use” isn’t the only factor the law considers. A key principle determines how costs should be shared fairly, even when the benefit isn’t obvious.
Understanding this principle can prevent unnecessary disputes and promote transparent, equitable decision-making.
Key takeaways:
- The Benefit Principle means repair costs are shared fairly, with owners contributing based on how much they directly or indirectly benefit.
- VCAT cases like Mashane and Chambria confirm that even owners without direct use of an area (e.g., no balcony) may still benefit and therefore must contribute.
- Committees must follow a structured, good-faith process when apportioning extraordinary levies to avoid disputes, errors, and Tribunal intervention.
The general rule and its exception
Under the Owners Corporations Act 2006, fees are usually levied based on lot liability, meaning each owner contributes according to the size or share of their lot.
However, the law recognises that some repairs benefit certain owners more than others. In such cases, the Benefit Principle applies, requiring owners who gain the most from the work to pay more.
For example, if balcony repairs are required, owners with balconies may contribute more than those without. Even owners without balconies may still enjoy indirect benefits, such as a safer building, fewer insurance risks, and improved appearance.
Key cases illustrating the benefit principle
Mashane Pty Ltd v Owners Corporation RN328577 [2013] VCAT 118
In the Mashane case, one lot owner sought to avoid contributing to balcony rectification costs, claiming no direct benefit. VCAT determined that the owners corporation must fairly apportion costs, taking into account indirect benefits. Member Buchanan noted that benefits included enhanced safety, reduced liability risk, and improved building appearance.
This case demonstrates that even if an owner does not directly use a repaired area, they may still receive some benefit.
Chambria Pty Ltd v Owners Corporation 347127 [2019] VCAT 1349
In Chambria, a lot owner challenged the owners corporation’s application of the benefit principle under the Owners Corporation Act to levy fees for works needed to comply with a building order.
The owners corporation engaged an independent expert to assess fair cost allocation. VCAT upheld their decision, noting that as long as the OC acts in good faith and considers each lot’s benefits, the Tribunal is unlikely to intervene.
Senior Member Vassie also outlined a clear 7-step approach for determining fees for extraordinary works:
- Consider whether all lots benefit substantially or if some benefit more than others.
- If all lots benefit equally, levy fees based on lot liability.
- Failure to consider benefit distribution is a legal error.
- If some lots benefit more, apply the benefit principle under the Owners Corporation Act to allocate costs proportionately.
- Decide the extent to which each lot benefits and apportion accordingly.
- If owners cannot agree on allocation, the Tribunal may decide.
- For extraordinary expenditure exceeding twice the annual fees, a special resolution is required, except in urgent cases.
Practical tips for lot owners
Before challenging a levy or disputing repair costs, it helps to understand how your Owners Corporation applies the Benefit Principle and what your rights and responsibilities are. These points can guide you in assessing whether a fee has been apportioned fairly:
- always review how your owners corporation determines extraordinary levies
- even if you don’t directly use an area, your lot may still gain safety, structural, or amenity benefits, which can lawfully justify your share of the costs
- disputes frequently arise when Committees overlook indirect benefits, apply the principle inconsistently, or fail to document their reasoning
- seek advice early if you believe your contribution is unfair, to avoid protracted disputes or tribunal applications
Expert support for owners and Committees with Owners Corporations Victoria
Owners deserve clear communication, fair levies, and proactive management.
At Owners Corporation Victoria, we assist owners and Committees by reviewing and advising on management agreements, helping with appointing or changing a manager, guiding Committees through tenders and contracts, and resolving disputes, defects, and management issues.
If your Melbourne apartment is facing any of these challenges, contact us today and make confident decisions for your owners corporation.
