NORBEL (ACT) INVESTMENTS PTY LIMITED & UNITS PLAN 819 (Civil Dispute) - [2012] ACAT 14

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

NORBEL (ACT) INVESTMENTS PTY LIMITED & UNITS PLAN 819 (Civil Dispute) [2012] ACAT 14
XD 11/613
Catchwords: CIVIL DISPUTE – Unit Titles Act 2001 – whether unit owners corporation was in breach of its obligations - Application for compensation/damages - Tribunal’s jurisdiction in relation to ACAT dispute under the Unit Titles Act 2001

List of legislation: ACT Civil and Administrative Act 2008, section 18
Legislation Act 2001, section 238
Unit Titles Act 2001, sections 34, 35, 37, 51, 55, 125

List of cases: In the Application of the ACT Civil and Administrative
Tribunal v Abbey and Mack [2010] ACTSC 140

Tribunal: Ms J. David Senior Member

Date of Orders:  27 February 2012
Date of Reasons for Decision:         27 February 2012
AUSTRALIAN CAPITAL TERRITORY            )
CIVIL & ADMINISTRATIVE TRIBUNAL       )          XD 11/613

BETWEEN:

NORBEL (ACT) INVESTMENTS PTY LIMITED
Applicant

AND:

UNITS PLAN 819
Respondent

TRIBUNAL: Ms J. David, Senior Member

DATE: 27 February 2012
ORDER
1.That the Applicant’s application for an order in terms of Order 14 set out in the Application is dismissed.

REASONS FOR DECISION
Background

During 2008 the Applicant, Norbel (ACT) Investments Pty Limited (‘Norbel’), purchased units numbered 23, 35 and 45 in Units Plan 819. Mr Noel and Ms Bronwen McCann are the Directors of Norbel.
The Respondent is the Owners Corporation of Units Plan 819 (‘Plan 819’). Plan 819 provides for 87 strata units on the corner of Northbourne Avenue and Girrahween Avenue, Braddon in the ACT. The block of units is known as Capital Executive Apartments Hotel. Stanbritt Pty Limited (‘Stanbritt’), trading as Capital Executive Apartment (‘CEA’), is the assignee of a Licence Agreement (Common Property) (‘Licence Agreement’) with the owners of units in Plan 819 to “carry on the business of licensing apartments for occupation in the Units Plan together with all services necessarily associated therewith” (cl. 2A). The Licence Agreement operates until
3 December 2012. Mr James Stanwell is the sole director and shareholder of Stanbritt. Through various company holdings Mr Stanwell owns or has interest in the majority of units in the block of units.
From 1996 Stanbritt has managed the serviced apartment business under identical individual Serviced Apartment Management Agreements (‘Management Agreements’) with the each of the owners of the units in Plan 819. Clause 6(i) of the Management Agreements provides that CEA is to manage and operate each individual unit as “a serviced apartment” during the term of the agreement, initially for 10 years with provision for a further 10 years subject to certain conditions (Cl 2).
Clause 6(i)(c) of the Management Agreements provides that CEA shall negotiate and arrange for “the provision of utility services to the serviced apartments (including electricity, gas and telephone) and contracts for the supply and provision of the day to day operating supplies”. In 1998, Stanbritt obtained the approval of the Executive Committee of the Owners Corporation of Plan 819 to combine the then existing three meters for the supply of electricity to the units in Plan 819 into one meter; this was to obtain the best price for the supply of electricity to the CEA Hotel. As a result, a single meter was in installed in 1998 for the supply of electricity to all units in Plan 819. Stanbritt has since had a contract with ActewAGL for the supply of electricity to all the units and has supplied electricity to all the units under an identical agreed cost sharing formula with the individual owners of units.
Stanbritt, trading as CEA, operates a gas hot water system operating on gas supplied by ActewAGL under a contract with Stanbritt. Stanbritt pays ActewAGL for the gas supplied.
After Norbel purchased units in Plan 819 in 2008, Norbel commenced negotiations with Stanbritt on the terms of a management agreement for the letting of the three units owned by Norbel as part of the CEA serviced apartment business. Unfortunately, this proved a long and unsuccessful negotiation and, by email dated 10 September 2008, Mr and
Ms McCann advised CEA that they did not wish to enter into a management agreement identical with the other individual management agreements CEA had with the owners of other units.
In that email of 10 September 2008, Mr and Ms McCann made a counter offer of terms for CEA to manage the three units owned by Norbel. By email dated 11 September 2008, Mr Stanwell on behalf of CEA refused the terms offered by Norbel and advised that the only agreement for the management of the Norbel owned units CAE would offer was one identical to the Management Agreements under which CEA managed all the other units in the block. CEA reiterated that position by email dated 17 December 2009, and further stated that, unless Norbel signed the terms of the Management Agreement, the then current informal management arrangement would only continue until 31 January 2010.
Thereafter, Norbel set about making separate and different arrangements for renting its three units, apart from CEA. Norbel engaged the services of Independent Property Management (‘Independent’) and, by letter dated 17 February 2010, Independent advised they had finalized the documentation for a tenancy agreement for one of the three units for a period of 26 weeks at a rent of $360 per week, to commence on 17 February 2010. The tenant was unable to occupy the unit for more than a few nights under that tenancy agreement as on 16 February 2010 (or thereabouts) the supply of electricity and gas/hot water to all three Norbel units was discontinued.
In his Affidavit dated 22 September 2011, Mr Stanwell stated that on 16 February 2010 he directed an employee of Stanbritt to turn off the supply of electricity to two of the units owned by Norbel (later electricity was turned off to the third unit), and to turn off the hot water supplied to all three of the units owned by Norbel, on the basis that no management agreement had been entered into between Stanbritt and Norbel for the supply of services. Mr Stanwell stated that the supply of cold water to each of the three units was not turned off.
The non-supply of electricity and hot water to all three of the units owned by Norbel continued until on or after the hearing on 12 December 2011 when, as a result of consent terms in these proceedings, the parties advised the Tribunal that the supply of electricity and gas hot water had been reinstated to all three units.
Stanbritt has continuously argued that it is inconsistent with the Crown Lease and the purpose clause of Plan 819 for the Norbel owned units to be used for leasing as long term or full time residential apartments. Stanbritt bases that opinion on Clause 3(c) of the Schedule to Plan 819, which provides that units 6-87 are to be used for the purpose of either of a motel suite or a serviced apartment or both. Stanbritt argues that ‘Motel’ is defined in Clause 6(f) of the Plan 819 to mean “premises for the reception and accommodation of travelers”. There is no definition of serviced apartment in Plan 819 but the Territory Plan 2008 defines it to mean:
“’Serviced apartment’ means an apartment that is used as a commercial accommodation unit.”
‘Commercial accommodation unit’ means a room or suite of rooms that is made available on a commercial basis for short-term accommodation. …”
For clarification of the use of the units in Plan 819, on 15 March 2010 Stanbritt applied to ACT Planning and Land Authority (‘ACTPLA’) for a Controlled Activity Order which was refused by ACTPLA. ACTPLA refused to make the order on the basis there was a lack of evidence of occupation contrary to the purpose clause. ACTPLA commented in its decision that Norbel intended to seek approval to change the use of the units to residential purposes in the long term , however, it did not consider an alleged intention to use the units for other purposes was a breach of a Crown Lease.
In its Application to the Tribunal, Norbel stated it had requested support from the Owners Corporation to vary the purposes clauses of its units to include residential and commercial offices. In his Affidavit dated 21 November 2011, Mr McCann included a copy of a letter from Ms Keane, Independent Body Corporate Pty Limited (IBC) on behalf of the Owners Corporation, in which she advised that the Executive Committee of the Owners Corporation would not support any application to vary the Crown Lease or the Units Plan at that time.
At the hearing on 12 December 2011, the Tribunal dismissed or made orders by consent in respect of all the Orders sought by the Norbel, except Order 14 on which it reserved its decision. Norbel sought the following Order 14:
“That the OC (Owners Corporation”) pay Norbel an amount equivalent to the rent that would have been received for Norbel’s property for the period with effect commencing 1 March 2010, being a reasonable date soon after the units would have been tenanted but for the utilities being cut off and ending within 1 month of this order so as to allow a reasonable time to lease the units. The amount is to be calculated based upon the leases agreed to be entered into by Norbel with property agent Independent Property Management.”
At the hearing on 12 December 2011 both parties informed the Tribunal that, although an application had been made by Norbel to join Stanbritt as a party, neither Stanbritt nor
Mr Stanwell had been joined in these proceedings.
These reasons provide the Tribunal’s reasoning and decision on Order 14 sought by the Norbel. I apologise for the lateness of these reasons, as the parties were advised at the hearing on 12 December 2012, the delay has been due to health reasons.

FINDINGS AND REASONS
Liability of Owners Corporation

At the hearing on 12 December 2011 Norbel made oral submissions in relation to the liability of the Owners Corporation of Plan 819 for the non-supply of utilities to its three units. Similar submissions were made in the Affidavit of Mr McCann dated 21 November 2011.
Firstly, Norbel argued that, under section 51(d) of the Unit Titles Act 2001 (‘UT Act’), an owners corporation must maintain all facilities associated with the provision of the utility services including utility conduits. “Utility services” are defined in the dictionary of the UT Act to include the supply of water for drinking and utility use, together with gas and electricity. Norbel submitted that this section, taken together with sections 34 and 35 of the UT Act, place the onus on the Owners Corporation of Plan 819 to ensure that the Norbel owned units had utility services provided.
Section 34 UT Act provides that in relation to an estate (defined in the dictionary to the UT Act as ‘a unit or common property’):
34 Unit title easement rights
This division applies to the following rights (unit title easement rights) that the owner of a benefited estate may have against the owner of a burdened estate:
(a)...
(b) rights to utility services, and to their provision by any reasonable
form of utility conduit (including rights for the collection, passage and
drainage of rainwater by encroaching eaves, gutters, downpipes or similar
structures);
(c) all ancillary rights necessary to make the rights mentioned in paragraphs (a)
     and (b) effective, including a right of entry by the owner of the benefited
     estate at all reasonable times on the burdened estate for the inspection and
maintenance of—
(i) any building on the estate; and
     (ii) facilities for any utility service on the estate; and
(iii) any utility conduit on the estate.
Section 35 of the UT Act provides as follows:
35 Easements given by this Act
(1) On and after the registration of a units plan, the owner of an estate (a benefited estate) has against the owner of another estate (the burdened estate) any unit title easement rights that are necessary for the reasonable use and enjoyment of the benefited estate.
(2) A unit title easement right under this section is an easement annexed to the benefited estate.
Norbel submitted that, taken together, sections 34, 35 and 51(3) of the UT Act place the onus on the Owners Corporation of Plan 819 to ensure that Norbel had utility services supplied to its units to enable it to have reasonable use and enjoyment of the units. Contrary to this responsibility, the Owners Corporation have repeatedly advised Norbel that the non-supply of utilities was not a “body corporate matter”, that the Owners Corporation did not have responsibility under the UT Act to ensure Norbel’s units had electricity and gas supplied.
In his Affidavit of 21 November, 2011 Mr McCann stated that Norbel arranged for an electrician to install meters to measure electricity consumed in the three Norbel owned units. The electrician and Mr McCann inspected the entire electrical system on
19 February 2010. The electrician was refused access to CEA in early September 2010. There was no evidence as to who denied the electrician access. Norbel emailed
Mr Stanwell, and the solicitors acting for the Owners Corporation, on 28 September 2010 seeking a suitable time for the electrician to attend CAE. No reply was received to that email. Norbel made no further attempts to install separate meters.
In his above Affidavit Mr McCann also set out numerous email attempts made since December 2009 by Norbel to meet with the Owners Corporation Executive to discuss the supply of electricity and gas to its three units. Ms Keane from Independent Body Corporate Pty Limited (‘IBC’) advised Norbel by letter dated 10 May 2010 that the Executive Committee of the Owners Corporation would not meet with him. Concerning access to utilities and services by Norbel for its units Ms Keane stated as follows:
“If you believe that Norbel is being denied access to a specific item of common property please advise what that item is. However, you should not confuse the rights as a unit holder to use common property with a right to have consumable services such as electricity supplied to a unit. As you have already been advised neither the owners’ corporation nor the Committee are responsible for the supply of services like electricity, gas or garbage disposal to individual units. Access to these services by unit owners is procured by the unit owners through their agreements with Stanbritt Pty Limited (Stanbritt) as operator of the hotel. The Committee understands that you have not reached an agreement with Stanbritt and therefore it is your own responsibility to procure the services for Norbel’s units by other means.”
Norbel claimed that, as a result of the electricity and gas hot water being turned off, it was unable to lease its three units from approximately March 2010 to December 2011. As a consequence, Norbel claimed it suffered loss of rent on the three units for the period from February 2010 to approximately December 2011. Norbel calculated the damages claimed on the basis of the rent of $360 per week for each unit during the whole period. This was the rent for which Independent Property group had leased one unit prior to the utilities being turned off.
In response, the Respondent submitted that, even if section 125 of the UT Act does enable the Tribunal to order payment of damages (which the Respondent disputed), the causal connection between the utilities being cut off and the damage claimed by Norbel was not established by the evidence. The Respondent submitted it was not liable to Norbel for the consequences of the turning off of the electricity and gas to the units owned by Norbel as under Clause 6(i)(c) of the Management Agreements, Stanbritt (trading as CEA) negotiated and arranged for the supply of electricity and gas to the units. Stanbritt had the contract with ActewAGL for the supply of electricity to the whole block of units and Stanbritt (trading as CEA) operated the hot water system using gas supplied by ActewAGL under contract to Stanbritt. Thus the Owners Corporation was not involved in the supply of electricity and gas to the individual units in Plan 819.
The Respondent also submitted that it was Mr Stanwell and/or Stanbritt who ordered the maintenance man to turn off the electricity and gas supply to the three units owned by Norbel. Mr Stanwell and/or Stanbritt did this “completely off their own bat” without the agreement or direction of the Owners Corporation which did not know it had occurred and did not sanction it.
The Respondent also submitted that the long period that the utilities were turned off was significantly contributed to by the Applicant’s actions in that Mr and Ms McCann were away on an extended holiday after lodging the Application to the Tribunal, which contributed to the hearing of the Application being delayed. Also, negotiations to end the dispute were being undertaken for a considerable period during the time the utilities were turned off and the time settlement terms were agreed. There is more evidence needed to establish the causal connection between the turning off of the utilities and the period of loss of rent claimed.
In relation to Norbel’s submissions on the combined effect of sections 34, 35 and 51 of the UT Act, the Tribunal is of the opinion that section 51 sets out the general duties of owners corporations to include maintaining -
(d) all facilities associated with the provision of the utility services mentioned in section 35 (Easements given by this Act), including utility conduits;
Section 51(d) does not give an owners corporation the general duty to supply, or to maintain the supply of, the actual utilities to the individual units through the facilities, merely the duty to maintain the facilities such that the utility services can be supplied to units. The action of Stanbritt in ordering the turning off of the electricity supply and the gas hot water goes to the actual supply of the electricity and gas hot water itself, not to the maintenance of the facilities associated with the provision of the supply. The facilities were still available to carry electricity and gas hot water to the Norbel owned units, it was the electricity and gas hot water that were stopped from passing through the facilities.
The argument that an owners corporation has a duty to supply the electricity and/or gas to units in a units plan is contrary to the general practice in the ACT that unit owners negotiate contracts direct with ActewAGL. No resource was found that states the legislature intended to change that practice in passing the UT Act. Management of units plans does not involve the supply of the actual utilities to the individual units, but does include maintaining the facilities through which the utilities are supplied.
Norbel would have been better advised to request the owners corporation at an earlier date to carry out work for the provision of separate facilities for services to the units owned by Norbel and to seek an ordinary resolution for that purpose under section 37 of the UT Act. If such a resolution was refused there are procedures under the UT Act for Norbel to pursue and to obtain an order for the provision of separate facilities for services to its units.
The Tribunal is also of the opinion that sections 34 and 35 of the UT Act do not alter the above interpretation of section 51(d) as those two sections apply to the rights as between individual owners of units under a units plan, not to a duty of an owners corporation concerning the provision of facilities. Thus Norbel’s submission concerning the effect of these two sections on section 51(d) is not accepted.
There was no direct evidence identifying the person who actually denied the electrician access in early September 2010. Whilst recognizing that the general rule of statutory interpretation exemplified by section 238 of the Legislation Act 2001 - that the delegation of a function, or part of a function, does not relieve the appointer of the appointer’s obligation to ensure that the function is properly exercised - the Norbel submission that the Respondent is responsible for the actions of either Stanbritt and/or Mr Stanwell in turning off the electricity and gas hot water, or for the non-reconnection of the electricity and gas after Norbel advised the owners Corporation of the non-supply, is not accepted. Such an interpretation would mean that all owners corporations could be responsible for the actual supply of electricity and/or gas to individual units in units plans, whereas the owners of each unit negotiate individual supply contracts directly with ActewAGL.

Section 51(5) provides that section 55 (3) (d) only authorises the owners corporation to carry out maintenance associated with the provision of utility services if the provision of services potentially benefits all units. The Respondent argued that the installation of separate meters to the three units owned by Norbel potentially did not benefit all units. The reason for the single switchboard being set up in 1998 was to obtain a cheaper price for the supply of electricity for all units in Plan 819. There was insufficient evidence presented by Norbel to determine whether the owners corporation’s general duty to maintain the facilities for the supply of electricity under section 51(3)(d) extended to ensuring that Norbel could physically install separate meters for its three units and that such installation would benefit all units.
For all the above reasons the application for an order in terms of Order 14 sought by the Applicant, Norbel, is dismissed.
In addition to the above reasoning as the basis for the decision, the parties also made submissions on the jurisdiction of the Tribunal to make orders for damages and/or compensation and as to the limits of that jurisdiction. The Tribunal has dealt with that aspect of the submissions below.
Norbel submitted that, whilst there is not specific power given to the Tribunal under the UT Act to award damages and/or compensation against an owners corporation by the UT Act, subsections 125(2) and (3) of the UT Act are sufficiently general to enable the Tribunal to make an order for damages against the Respondent. Those subsections provide:
“(2) The ACAT may make any other order it considers reasonably necessary or convenient to resolve an ACAT dispute.
(3) This section does not limit the orders the ACAT may make in relation to an ACAT dispute.”
The Respondent submitted that section 125(1) UT Act sets out the limits of the ACAT jurisdiction under the UT Act and subsection125(1)(d) limits the Tribunal to ordering a person to pay “not more than $1,000”. Contrary to the Applicant’s submission, when read in conjunction with subsection 125(1)(d), subsections 125(2) and (3) do not operate to extend the Tribunal’s jurisdiction to the amount sought by the Applicant, that is between $80,000-$100,000 in damages/compensation. The Tribunal is limited by section 125(1)(d) to ordering a payment of no more than $1,000.
The parties were unable to refer the Tribunal to any case in which the Tribunal has sought to make an order for compensation and/or damages against an owners corporation under section 125 of the UT Act. Search by the Tribunal has not found any such case. The Tribunal does not accept that the general wording of subsections 125(2) and (3) should be interpreted to extend the jurisdiction of the Tribunal in the way sought by Norbel, that is to enable the Tribunal to order compensation and/or damages against an owners corporation for failure to carry out its duties under the UT Act. Given the list of orders the Tribunal can made that is set out in section 125(1) of the UT Act, subsections 125(2) and (3) should not be interpreted to extend the jurisdiction of the Tribunal, unless specific words were used to give the Tribunal a wider jurisdiction and/or to award damages and/or compensation to provide for an increased monetary amount the Tribunal can order.
The Tribunal is supported in adopting a limited interpretation of the general words in subsections (2) and (3) of section 125 of the UT Act, by the words of Justice Cowdroy in In the Application of the ACT Civil And Administrative Tribunal v Abbey and Mack [2010] ACTSC 140 in relation to the interpretation of the Tribunal’s jurisdiction conferred under section 18 of the ACT Civil and Administrative Tribunal Act 2008 (‘ACAT Act’):
“26. Taking into account the provisions of ss 18 and 19 [of the ACAT Act] and having regard to the object of the ACAT Act, the Court finds that it would be inconsistent with the scheme of the legislation if ACAT, instead of ordering return of the goods, had jurisdiction to award an amount to be paid in excess of the monetary limit imposed by s 18 of the ACAT Act in lieu of a return of the goods. The same finding applies where the goods were destroyed or were otherwise unavailable as envisaged by Direction 84(4).
27. The jurisdictional limit determined by s 18 of the ACAT Act applies to civil dispute applications, which by definition includes goods applications. Accordingly, if a claim for detention of the goods is made and the goods claimed are assessed by ACAT to have a value exceeding $10,000, ACAT has no jurisdiction to deal with such claim.” [Emphasis added]
Considering the UT Act as a whole, section 51 of the UT Act legislates a list of general duties of owners corporations and section 125(1) lists the types of orders the Tribunal can make in the exercise of its jurisdiction under the UT Act. The types of orders listed in section 125(1) are in the nature of orders to ensure parties carry out their functions under the UT Act. The general powers given to the Tribunal to make orders under section 125(2) and (3) should not be read to increase the jurisdiction of the Tribunal to a more general civil jurisdiction under the UT Act.
Section 125 provides for the type of orders the Tribunal can make under the UT Act and amongst a long list of orders in relation to the administration of a Units Plan, subsection 125(1) (d) provides that the Tribunal may make an order “requiring a person to pay to the Territory or someone else an amount of not more than $1,000”. The Respondent submitted that section 125(1)(d) of the UT Act limits the Tribunal to making any order for the payment of money by the Owners Corporation to Norbel to $1,000. If any more general civil jurisdiction was given to the Tribunal under section 125 it is arguable that that jurisdiction is limited to $1,000. Having decided to dismiss the application for an order in terms of the Order 14 sought, no decision was made on this issue.
Finally, the Tribunal notes the Respondent’s submission that section 18 of the ACAT Act limits the Tribunal’s civil jurisdiction to $10,000, unless the parties consent to an increased jurisdiction under section 21 of that Act. At the hearing on 12 December 2011, the Respondent indicated it did not consent to any increased jurisdiction, if that section was applicable to this matter.
For all the above reasons, the decision of the Tribunal is to dismiss the Applicant’s application for an order in terms of Order 14 set out in paragraph 14 above.
PUBLICATION DETAILS
TO BE PUBLISHED
To be completed by Tribunal Staff
PART A  FILE NO:
APPLICANT:
RESPONDENT:
COUNSEL APPEARING:       APPLICANT:
RESPONDENT:
SOLICITORS:  APPLICANT:
RESPONDENT:
OTHER:  APPLICANT:
RESPONDENT:
TRIBUNAL MEMBER/S:
DATE/S OF HEARING:  PLACE: CANBERRA
DATE/S OF DECISION:  PLACE: CANBERRA
PART B
RECOMMENDATION:
FULL REPORT ( )        CASE NOTE ( )        UNREPORTED DECISION ( )
COMMENTS: