It’s quite possible that the “new walls” you refer to would be Common Property IF they form the boundary of your Owner’s renovation to his Lot, thus making the Owners Corporation (O/C) responsible for all maintenance and repairs. Similarly, your O/C’s Insurance may not provide cover for any parts of the Building that are not shown on the Strata Plan.
You’re on the right track by suggesting that the Lot Owner engages and pays for the services of a Surveyor to re-draw the Strata Plan, but that should be followed by the Owner engaging a Valuer to determine the current value of the original Lot, and the value of the extended Lot.
Information from the Surveyor and the Valuer can be used by your O/C to undertake a Strata Sub-Division, the Form for which can be lodged together with a revised Schedule of Unit Entitlements, where only the renovated Lot is revised.
This is a much simpler and significantly cheaper version of the process that a Developer might undertake to strata a new building, and it’s all possible in NSW under the Provisions of the Strata Schemes (Freehold Development) Act 1973, which is administered by the NSW Land & Property Information (LPI) – the old Lands Dept.
Have a browse on http://www.lpi.nsw.gov.au and then contact them by phone. They’re very helpful, and may suggest an even easier way to achieve what I’m recommending; your O/C must do it though!