chai said I feel that the word external to “external appearance of a Lot” has significance here. In my opinion, and without any legal experience or knowledge of any VCAT precedence, I don’t think the OC is able to demand the lot owner revert the painted interior of a lot to the original unfinished appearance.
I think I understand your dilemma: How can “external appearance” refer in fact to an “internal” area?
Under s.5.2 of Schedule 1 of the Owners Corporations Act 2006 an OC can make rules about the “external appearance of lots”. IMO VCAT has also made it clear in published cases such as Owners Corporation PS508732B v Fisher that “external appearance” means the appearance of even the internal parts of a lot from outside the lot:
Owners Corporation PS508732B v Fisher
At 20:
Further, lot owners should have the ability to control the choice of tile within the lot (subject to any rule relating to the external appearance of the lot).
If you substitute the word “tile” with “paint”, you’d have your situation.