Jimmy, if by a “lease” you mean a licence under Cl 65B, then that would indeed be a less cumbersome means of allowing the Owner to use as opposed to own a portion of the Common Property.
I’m just not sure about that Owner then extending the built-construction of their Lot onto the area covered by a licence, after all the proposal is not for a fairly simple construction such as a tacked-on patio or a carport but rather for the more integrated and substantial construction of a bathroom and its associated plumbing, drainage, power etc.
Not saying it can’t be done under a licence, but just that I wouldn’t do it; but then I am the arch conservative and a stickler for gold-plating everything (a euphemism for doing it properly)!