In my opinion, it doesn’t matter whether the gazebo is on Common Property or on the garden space of the Lot concerned, because if it’s on Common Property then it’s a “addition”, and if it’s not, then it’s something “affecting or changing the appearance of the Lot”; either way (in NSW) the Lot Owner needs to seek the Consent of the Owners Corporation (O/C) to erect it and Jimmy’s Special By-Law (SBL) comes into play.
With reference to the responsibility for insurance of the Gazebo, that’s the Lot Owners problem and a SBL would formailse that, and if it’s damaged by a failure of the Common Property (e.g. the retaining wall) or as a consequence of the O/C addressing that failure then it’s covered by the O/C’s insurance.
One point of clarification regarding the insurance of “lot owners fixtures”. That’s a top-up cover provided on a per Lot basis which only comes into play if the value of a Claim exceeds the total sum insured for the Plan; like in the circumstances of a total loss. As I understand it, a “lot owners fixture” is defined as a structural improvement made by a Lot Owner and fixed to the Common Property, such that if the item was removed, then the Common Property would be left in a damaged state.