The Australian College of Midwives Ltd v The Owners - Units Plan NO. 1475 (Unit Titles)
[2022] ACAT 73
•6 September 2022
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
THE AUSTRALIAN COLLEGE OF MIDWIVES LTD v THE OWNERS – UNITS PLAN NO. 1475 (Unit Titles) [2022] ACAT 73
UT 36/2021
Catchwords: UNIT TITLES – whether owners corporation is responsible to maintain air-conditioning plant – whether air conditioning plant is common property – where the air-conditioning plant was affixed to parts of a building that later became common property upon registration of a units plan – where the plant was installed to provide air conditioning for a small number of commercial unit in a 92 unit multi-storey mixed use commercial and residential building – whether it was intended at the time of affixation that the plant should become part of the common property – consideration of unit title easement rights – where the plant was installed in anticipation of, and to give effect to, statutory rights to use the common property for the provision of air that the relevant unit owners would have on and after registration of the units plan – plant is not common property – owners corporation not responsible to maintain the plant – application dismissed
Legislation cited: Legislation Act 2001 s 139
Unit Titles Act 1970 (repealed) ss 5, 24, 27
Unit Titles Act 2001, ss 5, 34, 35, 183, 184
Unit Titles (Management) Act 2011 ss 21, 22, 23, 24
Cases cited:Belgrave Nominees Pty Ltd v Barlin-Scott Airconditioning (Aust) Pty Ltd [1984] VR 947
Bennett v The Owners – Units Plan No 932 [2016] ACAT 57
Castro v The Owners – Units Plan No 246 [2016] ACAT 111
National Australia Bank Ltd v Blacker [2000] FCA 1458
TEC Desert Pty Ltd v Commissioner of State Revenue [2010] HCA 49
The Owners – Units Plan No 3908 v SDNM Pty Ltd [2019] ACAT 74
List of
Texts cited:P. Butt, Land Law (Lawbook Co., 6th ed, 2010)
A. J. Bradbrook, C. E. Croft and R. S. Hay, Commercial Tenancy Law (LexisNexis Butterworths, 3rd ed, 2009)
Tribunal:Senior Member M Orlov
Date of Orders: 6 September 2022
Date of Reasons for Decision: 6 September 2022
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) UT 36/2021
BETWEEN:
THE AUSTRALIAN COLLEGE OF MIDWIVES LTD
Applicant
AND:
THE OWNERS – UNITS PLAN NO. 1475
Respondent
TRIBUNAL:Senior Member M Orlov
DATE:6 September 2022
ORDER
The Tribunal orders that:
The application is dismissed.
………………………………..
Senior Member M Orlov
REASONS FOR DECISION
Introduction
This dispute relates to a ten-storey concrete building with three basement levels that was subdivided by the registration of Units Plan No 1475 on 29 April 1996 pursuant to the Unit Titles Act 1970 (repealed). The ground floor contains eight commercial units numbered 1 to 8. The first floor contains seven commercial units numbered 9 to 15. The second to ninth floor contains 77 residential units numbered 16 to 92. All the units are class A units.[1]
[1] Unit Titles Act 1970 (repealed) section 5 (definitions)
The applicant is the registered proprietor of the lease of unit 12, which is a commercial unit located on level 1, and has owned the unit since early 2013.
The respondent is the owners corporation for Units Plan No 1475.
A dispute has arisen whether the owners corporation is responsible to maintain and, if necessary, replace the two air-conditioning systems servicing half of level 1, including the applicant’s unit. It is common ground that the systems do not perform satisfactorily and are uneconomic to repair.
The matter was listed before me for decision on the papers, based on the parties’ assurances that there was no factual dispute and their written submissions dealt with the legal issues comprehensively. However, when I read the papers, it became apparent that a critical issue was whether the air-conditioning systems were fixtures and therefore common property. There was apparent agreement that the air-conditioning systems were fixtures – although it would be more accurate to say that the owners corporation did not dispute that they were fixtures – and the parties prepared their respective submissions on the assumption that this was common ground. However, as I pointed out to the parties at a directions hearing after I was allocated to decide the matter, the question whether in given circumstances a chattel has become a fixture and therefore part of the land to which it has been affixed is a question of law that is insusceptible to being determined by agreement of the parties.
The parties were given the opportunity to file and serve further evidence and submissions and the matter was listed for an oral hearing, where both parties were represented by counsel.
At the end of the hearing, I gave the applicant leave to file and serve some additional evidence and submissions going to the issue whether the air-conditioning plant was installed before or after registration of the units plan. The respondent did not object, and ultimately chose not to provide any material in response.
Factual background
The building, known as City Plaza, was redeveloped as a mixed use commercial and residential development pursuant to an application for development approval lodged on 7 April 1994. The original building appears to have been built in the late 1960s for the ANZ Bank. As constructed, air-conditioning was provided to the ground floor, mezzanine and first and second floor levels from a plantroom located on the roof.[2] As part of the redevelopment of the building prior to the registration of the units plan, the original system was replaced by air-conditioning systems comprising eight air-conditioning units known as “AC 1” to “AC 8”.
[2] Carrier Airconditioning Pty Ltd drawings for the ANZ Bank Civic Centre dated July 1967
As originally designed, AC 5 to AC 8 serviced the first-floor commercial units on a shared zone system. AC 5 and AC 8 worked in tandem to control half of the floor – namely, units 12 to 15 – and AC 6 and AC 7 controlled the other half.
AC 5 and AC 8 are York YCS029D split ducted air-conditioning units. Each unit has a condenser located in basement level 1 and an air-handling unit located in a plant room on the first floor. Correlating the apparent location of the condensers shown in photographs[3] with the easement diagram,[4] it appears that the condensers are installed in an area designated as a proposed utility access easement in basement level 1. Both air-conditioning units use R22 refrigerant (HCFC) which is now a banned substance and in the process of being phased out. It appears that the efficiency of R22 systems reduces considerably in colder temperatures. To increase the capacity of the system under such conditions, AC 5 had two banks of duct heaters installed to provide temperature mutualisation across the commercial units it serviced, while AC 8 had one bank of heaters. These increased the capacity of the system by about 50%.
[3] See photographs annexed to the witness statement of Alex Boundy
[4] Sheet 2 of 31 of Units Plan No 1475
Originally three temperature sensors assisted in the logic control of the system. Two were designated for zone 1 and zone 2 of AC 5 and one was designated for AC 8. Each unit was controlled by a Climazone D4 programmable controller.
The original operation and control of the system is explained in Mechanical Services Report Number 211028-A dated 28 October 2021, which was prepared by ROC Mechanical Services on instructions from Civium Strata, the strata manager for the units plan (the ROC report). The report says:
As per design intent, a typical unit will operate as below
· When the selector switch is in the Manual position or the Auto position with an active time setting from the time clock, then the indoor fan will run.
· Reference is made to the room sensor connected to the D4 controller and the system will select to run in either heating or cooling. In the case of 2 or more sensors connected to the same unit, a unified command is averaged from the sensors.
· If sensors are reading above setpoint then the compressors will start in cooling, stage 1 and 2 being determined by the programmable controller.
· Through this function the system offers 2 stages of cooling.
· If the sensors are reading above setpoint; the reversing valves will energise and the compressors will start in heating. Again stage 1 and stage 2 being determined by the programmable controller.
· Auxiliary to the compressor stages, the programmable controllers will review settings in their individual zones, and where the AC heating capacity is not adequate to get the system to design temperature, a signal is sent to energise the zone’s duct heater.
· The duct heaters are interlocked with high limit switches to stop them from overheating and burning out.
· The duct heaters are also interlocked with a differential pressure switch which prevents them from turning on in the absence of defined air flow in the duct.
While the units are individual in nature, their operation is interdependent and there is a heavy reliance on the field sensors. This set up allows the system to offer a more homogenous comfort control across different zones and tenancies.[5]
[5] ROC Report at page 4
An Air Conditioning Condition Report for the ground floor and first floor tenancies prepared by Grosvenor Air Conditioning in June 2016 on instructions from Civium Strata, records that Grosvenor had recently upgraded the controls for AC 5 and AC 8 and installed after-hours push button switches to give the tenants better access.
The ROC report has this to say about the controller upgrade works:
Before our tenure of service works were done to replace the installed Climazone programmable controllers.
Replacement controllers installed were Schneider Line-Voltage Fan Coil Room Controller, SE8000 Series.
From reverse reconfiguration of the upgrade works, we identified the following
· 2 controllers were installed to independently run the AC units as standalone systems.
· ACM [the owner of unit 12] had control of one unit and Labor Party [the owner of the other units] has control of the other unit.
· All the duct heaters in both AC units were not integrated into the new controls.
· The new control system relies purely on the compressor system and when it is inadequate there is no redundancy.
· The temperature sensors of the new controllers are in constant conflict as they are affected by air from opposing systems. The units will constantly fight each other and will not achieve equilibrium.
Partial decommission works by the works contractor meant that all duct heaters and associated relays were left functional within the mechanical services switchboard. These works carried out reduced the system base capacity by 33%, meaning there was no way these systems could ever attain conditions even running at their best.[6]
[6] ROC Report at page 5
The ROC report notes at page 6 that while the controller upgrade immensely undermined the capacity and the design intent of the system there are other factors contributing to its current poor performance including that:
· The system was installed in 1995 making it 26 years old. Age alone would have an impact on the system efficiency. While some components are still operational, they may no longer be operating at peak and will result in reduced performance.
· The heat loading of the building has changed and to that effect will affect the efficiency of the AC system. 26 years ago the heat loading per square metre would have been less, due to lesser electronic componentry which is now a must for most office settings.
· Transient leakage throughout the system. Flare, compression joints and silicon or rubber seals would be losing tightness and subtle leakage will occur throughout the whole system.
· Efficiency losses in compression capacity will also reduce the overall performance of the system.[7]
[7] ROC Report at page 6
The ROC report concludes:
While age of the system plays a factor in loss of capacity, the system would still have retained its operational design intent.
However, a controls change not only reduced the system capacity by 33%, it altered how the units worked and interacted together to offer conditioned space. This has negatively impacted the system and should have been reviewed first before being implemented.
There are age issues with the system that make repairs not cost effective, as either replacement parts are obsolete or in the case of the refrigerant banned from non-essential use.[8]
[8] ROC Report at page 6
An earlier report prepared by S4B Studio on instructions from Civium Strata in September 2020, concluded that the air-conditioning systems servicing the retail and commercial units were nearing the end of their economic life and were not economic to repair. S4B recommended replacing AC 1 to AC 8 with individual air-conditioning systems servicing each unit.
At a special general meeting held on 20 October 2021, a reduced quorum of members of the owners corporation passed the following resolution:
(1) That the Owners Corporation approve the decommission and removal of
·indoor and outdoor air system units in the Plant Rooms on Level 1 and Ground, and in the Basement on Levels 1 and 2, including
·associated pipework and ductwork on common property, and
·electrical work (switchboard), which has metered electricity through the common electricity meter.
(2) That the Owners Corporation approve the use of common property in the Plant Rooms and Basement for the affected units to install separate unitary systems to provide air-conditioning services to their units at their cost. The Executive Committee is authorised to make decisions on placement of new equipment on common property.
(3) That the Owners Corporation approve the cost to decommission and remove old equipment to be borne by the Owners Corporation within the Sinking Fund Plan.
It appears that all affected unit owners, except the applicant, have agreed to install separate air-conditioning systems to service their unit at their cost. The evidence suggests that some have done so already, but the extent to which the abovementioned resolution has been actioned remains unclear.
The applicant contends that AC 5 and AC 8 are common property, which the owners corporation is responsible to maintain. As the units no longer work properly and are uneconomic to repair, the applicant contends that the owners corporation is responsible to replace the systems at its cost.
The relief sought
By an amended application lodged on 25 January 2022, the applicant seeks:
(a)an order pursuant to section 129(1)(b) of the Unit Titles (Management) Act 2011 (UTM Act) requiring the owners corporation to exercise its maintenance function (in relation to air-conditioning units which service the Labor Party centre zone and the Midwives Australia Centre zone and are common property) as required by section 24 of the Act;
(b)a declaration pursuant to section 129(1)(e)(ii) of the UTM Act that the resolution purported to have been made by the owners corporation on 20 October 2021 is of no effect as a resolution under section 21(1)(b) of the Act.
The parties’ submissions
The applicant’s written submission
The applicant initially identified the following main issues for determination:[9]
(a)First, whether AC 5 and AC 8 is common property, which the owners corporation therefore must maintain and, if necessary, replace under section 24(1)(b) of the UTM Act?
(b)Second, whether the owners corporation must maintain and, if necessary, replace facilities associated with the provision of air-conditioning (including AC 5 and AC 8) under section 24(1)(e) of the UTM Act?
(c)Third, whether section 21(1)(b) of the UTM Act permits the owners corporation to sever any fixture that is common property and dispose of it as personal property, if authorised to do so by an ordinary resolution?
[9] Written submissions of the applicant lodged on 27 January 2022
The applicant submitted that the first two issues should be answered in the affirmative and that the resolution passed on 20 October 2021 is invalid and, in any event, does not alter the result.
With respect to the first issue, the applicant submitted:[10]
(a)AC 5 and AC 8 are installed on common property.
(b)AC 5 and AC 8 do not service unit 12 exclusively and therefore, by their nature, are ‘common’.
(c)Electrical and maintenance work commissioned and levied by the owners corporation is indicative of the AC units being common property, rather than being owned individually by unit owners.
(d)A conclusion that AC 5 and AC 8 is common property would be consistent with the decision of a differently constituted tribunal in Units Plan No 3908 v SDNM Pty Ltd (SDNM), which held that “both the new and original infrastructure, in so far as it is located outside the lot and subsidiary entitlements of an individual unit owner is part of the common property”.[11]
(e)The meaning of ‘maintenance’ given by the Dictionary for the UTM Act includes ‘repair’ and ‘replacement’.
(f)As the owners corporation accepts that AC 5 and AC 8 require replacement, the responsibility to do so lies with the owners corporation under section 24(1)(b).
[10] Written submissions of the applicant lodged on 25 January 2022 at [3.1] – [3.8]
[11] [2019] ACAT 74 at [108]
With respect to the second issue, the applicant submitted:[12]
(a)Air-conditioning is a ‘utility service’ and AC 5 and AC 8 are ‘utility conduits’ for the purpose of section 24(1)(e) of the UTM Act.
(b)It is irrelevant that AC 5 and AC 8 service six units, rather than all units, because the test in section 24(1)(e) relates to ‘potential’ rather than ‘actual’ use. Potentially, AC 5 and AC 8, or the broader AC system of which they form part, could service all the units in the units plan.
(c)The applicant’s position is supported by the decision of a differently constituted tribunal in Bennett v The Owners – Units Plan No 932 in which the owners corporation was ordered to “carry out all repairs necessary to ensure full operation of the air-conditioning and heating system so that the applicant’s unit is properly and appropriately air-conditioned and heated”.[13]
(d)As the service of air-conditioning is provided for the potential benefit of all units, the owners corporation is required to maintain the facilities and utility conduits associated with the provision of the service, including AC 5 and AC 8.
(e)Alternatively, it is open for the Tribunal to find that section 24(1)(e) was intended to capture services provided for the potential benefit of a class of unit holders, referring to a passing remark by a differently constituted tribunal in Castro v The Owners – Units Plan No 246.[14]
[12] Written submissions of the applicant lodged on 25 January 2022 at [4.1] – [4.12]
[13] [2016] ACAT 57 at [28]. See also at [21] which explains the rationale for the decision.
[14] [2016] ACAT 111 at [29]
With respect to the third issue, the applicant submitted:[15]
(a)The owners corporation’s assertion that under section 21(1)(b) of the UTM Act, the owners corporation may, if authorised by an ordinary resolution, sever any fixture that is common property and dispose of it as personal property, is untenable for two reasons.
(b)First, on its proper construction, section 21 does not apply to common property.
(c)Second, in any event, it is a pre-condition to a decision to dispose of property under section 21(1)(b) that there must be an earlier decision under section 21(1)(a) to hold such property for a use in accordance with its functions. As there was no such decision, the attempt to authorise the owners corporation to dispose of AC 5 and AC 8 by ordinary resolution is ineffective.
(d)Third, even if the resolution is valid, it cannot absolve the owners corporation from the obligation to maintain AC 5 and AC 8. As they form part of an entire system, it may be necessary to decommission the original system. Accordingly, it is open to the Tribunal to declare that the resolution is valid only to the extent that it enables the owners corporation to carry out its maintenance obligations – i.e., does not authorise the owners corporation to decommission and not replace AC 5 and AC 8.
The respondent’s written submissions
[15] Written submissions of the applicant lodged on 25 January 2022 at [5.1] – [5.12]
The respondent identified the following issues for determination:[16]
(a)First, on the premise that AC 5 and AC 8 are fixtures on the common property, is the owners corporation entitled to sever the fixtures and dispose of them as chattels? This is said to give rise to two sub-issues – namely:
(i) whether any provision in the UTM Act withdraws from the owners corporation the power to sever fixtures on common property; and
(ii) whether section 21(1)(b) of the UTM Act empowers the owners corporation to dispose of chattels that were formerly fixtures?
(b)Second, if AC 5 and AC 8 are severed and disposed of as chattels, does the owners corporation have an obligation to continue to provide the services that AC 5 and AC 8 provided previously. This is said to give rise to the following sub-issues – namely:
(i) whether section 24(1)(b) or section 24(1)(e) of the UTM Act imposes on the owners corporation an obligation to supply air-conditioning services perpetually; and
(ii) whether there is any other basis for requiring the owners corporation to supply air-conditioning services to the applicant?
[16] Respondent’s submissions lodged on 21 February 2022
The respondent submitted that these issues must be framed in the context of the ‘practical operation’ of the UTM Act, specifically:
(a)whether the UTM Act requires all unit owners to contribute rateably to the outgoings in respect to a fixture that services only one unit owner; and
(b)whether the UTM Act prohibits the owners in a units plan from severing and decommissioning obsolete fixtures?
The respondent submitted that for AC 5 and AC 8 to form part of the land identified as common property, they must have been installed as fixtures on the land, referring to TEC Desert Pty Ltd v Commissioner of State Revenue (Western Australia) [2010] HCA 49 at [23]. The respondent did not dispute that AC 5 and AC 8 were installed on the common property and that “AC 5 and AC 8 would, but for their severance, have become fixtures on the land”.[17] However, the respondent submitted that it may maintain common property by removing or decommissioning fixtures that are no longer serviceable or are obsolete technology. Once fixtures are severed, they regain their former character as chattels and no longer form part of the land. Thus, on the premise that AC 5 and AC 8 form part of the common property because they are fixtures, once they are severed from the land and disposed of, the common property will no longer be in a state of disrepair.[18]
[17] Respondent’s submissions lodged on 21 February 2022 at [10]
[18] Respondent’s submissions lodged on 21 February 2022 at [32]
Further, it was said that there is nothing in section 24(1)(b) of the UTM Act that requires an owners corporation to provide a minimum standard of service or utility in perpetuity and that it is open for all lot owners to decide unanimously to retire a particular service or utility.[19]
[19] Respondent’s submissions lodged on 21 February 2022 at [33]-[34]
The respondent submitted that the applicant has not established any presently enforceable right to a particular utility service, specifically the continued supply of air-conditioning services. The respondent claimed that section 24(1)(e) of the UTM Act does not apply because AC 5 and AC 8 are not the subject of any unit title easement rights pursuant to section 35 of the Unit Titles Act 2001 – which is a precondition to the operation of section 24(1)(e) – and in any event are not provided for the potential benefit of all units.[20]
The applicant’s supplementary written submission
[20] Respondent’s submissions lodged on 21 February 2022 at [40]-[44]
The applicant noted the respondents’ concession that from the time of their installation, AC 5 and AC 8 were fixtures on land identified as common property and submitted that since AC 5 and AC 8 had not yet been severed from the land they remain fixtures and therefore remain subject to the owners corporation’s obligations to maintain the common property.[21]
[21] Supplementary written submissions of the applicant lodged on 15 March 2022 at [2.1] - [2.4]
The applicant disputed the respondent’s construction of section 21(1)(b). It argued that section 21(1)(b) applies only to property that the owners corporation has been authorised by ordinary resolution to hold for a use in accordance with its functions. AC 5 and AC 8 are common property and not property ‘held’ by the owners corporation pursuant to an ordinary resolution.
The applicant dismissed as absurd the respondent’s submission that an owners corporation could discharge its maintenance obligations in relation to the common property simply by resolving to sever and not replace parts of the common property that had become unserviceable or obsolete.
In answer to the respondent’s argument that section 24(1)(e) of the UTM Act does not apply because AC 5 and AC 8 are not subject to any unit title easement rights, the applicant submitted that, as the owner of the benefited estate – namely, unit 12 – it has enforceable unit title easement rights against the owner of the burdened estate – namely, the common property – under which it has rights for the reasonable use and enjoyment of AC 5 and AC 8 and the associated conduits. It also claimed that to the extent that such easement rights do not have a statutory foundation, the right would exist as an implied easement by virtue of past conduct between the parties.[22]
The applicant’s further written submissions
[22] Supplementary written submissions of the applicant lodged on 15 March 2022 at [6.1]-[6.7]
In further written submissions filed on 28 April 2022, the applicant submitted that the Tribunal can be comfortably satisfied that AC 5 and AC 8 are affixed to the common property for three reasons:
(a)First, the respondent does not dispute that AC 5 and AC 8 are affixed to the common property.
(b)Second, photographic and documentary evidence shows that the air-conditioning units, switchboards and controllers are located in the Level 1 Plant Room and the condensers are located in the Level 1 Basement – both areas being common property – and are sufficiently connected to the building to make them fixtures.
(c)Third, the conclusion that air conditioning systems of this nature form part of the common property is consistent with SDNM, which it was said decided that air conditioning infrastructure located on common property and serving more than one unit was “on any reasonable construction, common property”.[23]
[23] Applicant’s further submission lodged on 28 April 2022 at [3]-[6]
The applicant submitted that sections 24(1)(b) and 24(1)(e) of the UTM Act “have different but complementary purposes and effects”[24] The purpose of section 24(1)(e) is to make it clear that an owners corporation can, and in some circumstances must, access, inspect and maintain services and conduits that exist in or connect to private (i.e., not common) property where those facilities connect to air-conditioning plant on common property. The corollary, it was said, is that section 24(1)(e) operates to extend the owners corporation’s maintenance obligations to ducting, piping, cabling and other system components or facilities used to deliver connecting services to and in a private unit, provided the utility service is provided for the potential benefit of all unit holders. It is sufficient to meet that requirement that all unit owners can connect to the core plant. If some but not all unit owners can connect to the air-conditioning plant, those unit owners may need to pay for the maintenance of any of their own connecting conduits.
[24] Applicant’s further submission lodged on 28 April 2022 at [7]
Thus, the applicant concluded, the owners corporation is liable to maintain the air conditioning plant that forms part of the common property “irrespective of whether utility services that facilitate connection to the AC plant are provided for the potential benefit of all unit owners”.[25]
The parties’ oral submissions
[25] Applicant’s further submission lodged on 28 April 2022 at [15]
At the hearing on 6 May 2022, counsel for the applicant submitted that the air-conditioning plant “forms…a fundamental part of the building’s fabric and has done so since inception”.[26] He relied on Belgrave Nominees Pty Ltd v Barlin-Scott Airconditioning (Aust) Pty Ltd[27] where the issue was whether air conditioning plants installed on the roof of two buildings being redeveloped as a three-storey office complex were fixtures. The chillers were installed on a platform constructed on the roof of each building. The chillers were not affixed to the platforms but were connected to the water reticulation system by means of flanges and bolts and water supply lines were connected to a water pump secured to each platform. Water pipes were fitted to each building to circulate hot or cold water as required throughout each floor. Electric supply cables forming part of the structure of the building were connected to an electrical junction box fitted to the chillers. The court concluded that the air conditioning plants were intended to be fitted permanently to each building and therefore were fixtures. Counsel for the applicant relied on the following statement by Kaye J at page 951, which he submitted was directly on point:
Facts from which the inference may be drawn that the plants were intended to be affixed permanently to the building are: the very nature of air conditioning plants; the defendant who carries on the business of suppliers and fitters of such plant, supplied positioned and connected up the air conditioning plants as a sub-contractor; the plaintiffs are the registered proprietors of the freeholds; the chillers were positioned on the platforms and connected up by pipes t the water pumps fitted to each platform which in turn were connected to the reticulation system of each building; and the plants, when fitted, formed an essential part of the buildings necessary for their use and occupancy as modern office premises.
[26] Transcript of proceedings 6 May 2022, page 6, lines 24-25
[27] [1984] VR 947
At this time there was no direct evidence to establish whether AC 5 and AC 8 were installed before or after registration of the units plan. Counsel for the respondent accepted that if the air-conditioning plant was installed in its existing locations before registration of the units plan and was found to be a fixture at that time, upon registration of the units plan it would be part of the common property.[28]
[28] Transcript of proceedings 6 May 2022, page 24, lines 37-44
At the end of the hearing, I directed the respondent to produce to the applicant the as-built documentation package referred to at page 67 of the report by S4Bstudio.com.au, a copy of which was attached to the response filed on 2 November 2021. The purpose of doing so was to establish, if possible, whether AC 5 and AC 8 had been installed before or after registration of the units plan.
The applicant’s further evidence and submissions
Pursuant to the leave granted at the hearing, the applicant filed a bundle of documents on 27 May 2022, which it submitted established that “the air-conditioning plant was installed on common property prior to the depositing of the units plan and that the air-conditioning plant formed – and was intended to form – part of the fabric of the building prior to the registration of the units plan”.[29] The respondent did not respond to the further evidence or submissions.
Relevant legislation
[29] Applicant’s written submissions relating to the tender bundle lodged on 27 May 2022 at [2]
As mentioned earlier, Units Plan No 1475 was registered on 29 April 1996 under the Unit Titles Act 1970 (repealed).
Unit Titles Act 1970 (repealed)
Under the repealed UT Act, on and after registration of the units plan, a parcel was subdivided in the manner specified in the diagrams in the units plan.[30] A ‘parcel’ was defined as so much of the land comprised in proposals for the sub-division of a parcel of land or in the units plan, as the case may be.[31] ‘Common property’ meant so much of a parcel as was not within a unit.[32] The boundaries of the units, any unit subsidiaries and the common property were ascertained in accordance with the diagrams and section 14 and 15.[33] Relevantly, section 15 provided that where a class A unit or unit subsidiary was separated from common property by a floor, wall or ceiling, the boundary lay along the centre line of the floor wall or ceiling. Where a class A unit or unit subsidiary was bounded by an external wall of the building, the boundary of the unit or unit subsidiary lay along the centre line of the external wall and so much of the wall as was outside of the boundary was common property.
[30] Unit Titles Act 1970 (repealed) section 24
[31] Unit Titles Act 1970 (repealed) section 5 (definitions)
[32] Unit Titles Act 1970 (repealed) section 5 (definitions)
[33] Unit Titles Act 1970 (repealed) section 24
Section 27 provided for the creation of statutory easement rights:
(1) In this section –
“proprietor”, in relation to the common property, means the corporation;[34]
[34] ‘corporation’ meant the body corporate constituted pursuant to section 29 of the Unit Titles Act 1970 (repealed)
“tenement” means a unit or the common property, as the case may be.
(2) On an after the registration of the units plan, the proprietor of each tenement (in this section called “the dominant tenement”) shall be deemed to have over each other tenement (in this section called “the servient tenement”) such of the rights specified in the next succeeding sub-section as are necessary for the reasonable use and enjoyment of the dominant tenement.
(3) The rights referred to in the last preceding sub- section are –
(a)…
(b)rights for the collection, passage and provision of water, sewerage, drainage, garbage, gas, electricity and air, and other services of whatsoever nature (including telephone, radio and television services), through or by means of pipes, wires, cables, ducts, or other reasonable means; and
(c)such ancillary rights as are necessary to make the rights referred to in the last two preceding paragraphs effective, including rights of entry by the proprietor of the dominant tenement and his agents, servants and workmen at all reasonable times on the servient tenement for the purpose of –
(i)inspecting, maintaining or repairing the servient tenement; or
(ii)inspecting, maintaining, repairing, replacing, renewing or restoring any pipe, wire, cable, duct or other material.
(4) A right created by this section shall be deemed to be an easement appurtenant to the dominant tenement in relation to which it is enjoyed.
(5) And easement created by this section subsists notwithstanding that the same person is the proprietor of both the dominant and servient tenements.
(6) …
Thus, on and after registration of Units Plan No 1475, the proprietor of each unit was deemed to have such rights over the common property for the passage and provision of water, sewerage, drainage, garbage, gas electricity, air, and other services through or by means of pipes, wires, cables, ducts or other reasonable means, as are necessary for the reasonable use and enjoyment of the unit and such ancillary rights as are necessary to make the aforementioned rights effective.
Unit Titles Act 2001
The Unit Titles Act 2001 (2001 UT Act or new Act) repealed the Unit Titles Act 1970.[35] Pursuant to section 184(1) of the new Act, if the registration of a units plan was still current immediately before the commencement day,[36] the units plan is taken to be registered under new Act.
[35] Unit Titles Act 2001, section 183
[36] relevantly, 5 October 2001
Thus, Units Plan No 1475 is taken to be registered under the new Act. Whatever was common property under the repealed UT Act remains common property under the new Act.
Section 35 of the new Act provides:
(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.
(3) An easement given by this section exists even if the same person is the owner of both the benefited and burdened estates.
(4) A person carrying out work in the exercise of a unit title easement right under this section must make good any damage done in carrying out the work.
‘Unit title easement rights’ are defined in section 34 to include:
(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.[37]
[37] ‘Estate’ is defined in the Dictionary for the new Act as a unit or common property (in this context)
The Dictionary for the new Act includes the following relevant definitions:
(a)‘Estate’ in relation to a unit title easement right given by the Act, means the unit or common property benefited or burdened by the right.
(b)‘Utility conduit’ means a conduit of any kind for the provision of a utility service, and includes, for example, pipes, wires, cables and ducts for a utility service.
(c)‘Utility services’ includes, among other things, “gas, electricity and air services (including air-conditioning and heating)”.
Because Units Plan No 384 is taken to be a units plan registered under the 2001 UT Act, pursuant to section 35(1) the owner of each unit has against the owners corporation any unit title easement rights over common property that are necessary for the reasonable use and enjoyment of the unit, including rights to utility services and to their provision by any reasonable form of utility conduit. The nature of such rights is discussed later in these reasons.
Unit Titles (Management) Act 2011
Certain provisions that were enacted initially in the 2001 UT Act were relocated to the Unit Titles (Management) Act 2011, which commenced on 30 March 2012. The following sections are relevant.
Section 21 applies to dealings with common property and provides:
(1) An owners corporation for a units plan may, if authorised by a special resolution, on conditions and for purposes stated in the resolution –
(a)grant or vary an easement over any part of the common property; or
(b)take or vary an easement granted for the benefit of the common property; or
(c)release an easement granted for the benefit of the common property.
(2) The owners corporation may not transfer, sublet or mortgage, at law or in equity, its interest in the common property.
Section 22 applies to dealings in property generally and provides:
(1) An owners corporation for a units plan may, if authorised by an ordinary resolution –
(a)hold property for use in accordance with its functions; or
(b)dispose of that property.
(2) However, the only interests in land that an owners corporation may hold, at law or in equity, are as follows:
(a)the lease of the common property;
(b)an easement granted for the benefit of the common property;
(c)a registered charge under section 96 securing an amount payable to the corporation;
(d)an interest in the common property of a community title scheme that includes the land subdivided by the units plan.
Section 23 deals with the installation of sustainability and utility infrastructure on common property. The Dictionary of the UTM Act defines those terms as follows:
sustainability infrastructure –
(a) means infrastructure or equipment that –
(i)if installed in relation to a units plan –
(A)improves the environmental sustainability of the units; or
(B) reduces the environmental impact of the owners corporation and the units owners; and
(ii)if installed in relation to a unit –
(A) improves the environmental sustainability of the unit; or
(B) reduces the environmental impact of the unit; and
(b) includes related utility service connections and equipment.
…
utility infrastructure means infrastructure and equipment necessary for, or related to, the provision of utility services.
Section 23 provides:
(1) An owners corporation for a units plan may, if authorised by an ordinary resolution –
(a)approve the installation of sustainability or utility infrastructure on the common property; and
(b)approve the financing of the installation of the sustainability or utility infrastructure; and
(c)grant an easement or any other right over any part of the common property for the purpose of the installation, operation or maintenance of the sustainability or utility infrastructure.
(2) The owners corporation may only approve the installation, and financing, of sustainability or utility infrastructure under this section if satisfied, after considering the following, the long-term benefit of the proposed infrastructure is greater than the cost of installing and maintaining the infrastructure:
(a)a site plan of the proposed infrastructure;
(b)a maintenance plan for the proposed infrastructure;
(c)if the proposed infrastructure is to be financed by a third party – the terms of the financing arrangements;
(d)the direct and indirect costs of the proposed infrastructure;
(e)the long-term environmental sustainability benefits of the proposed infrastructure;
(f)any other matter prescribed by regulation.
(3) …
(4) …
Section 24 sets out the owners corporations maintenance obligations. Relevantly, by section 24(1)(b) the owners corporation must maintain the common property and, by section 24(1)(e) it must maintain facilities associated with the provision of utility services, including utility conduits, but only where a utility service mentioned in section 35 of the 2001 UT Act is provided for the potential benefit of all units.
The issues
The applicant’s case is that the owners corporation is liable to maintain AC 5 and AC 8 pursuant to section 24(1)(b), or alternatively, section 24(1)(e) of the UTM Act.
To succeed in its claim under section 24(1)(b), the applicant must establish that AC 5 and AC 8 are fixtures at law and therefore part of the common property.
If they are common property, the owners corporation must establish that it has power under section 21(1)(b) to sever the fixtures and dispose of them as chattels without being required to replace them.
To succeed in its claim under section 24(1)(e), the applicant must establish that:
(a)AC 5 and AC 8 are facilities for the provision of a utility service mentioned in section 35 of the 2001 UT Act; and
(b)the utility service is provided for the potential benefit of all units.
The applicant submitted in the alternative that it was open for me to find that section 24(1)(e) was intended to capture services provided for the potential benefit of a limited class of unit holders[38] relying on a passing comment by Senior Member Robinson (as she then was) in Castro v The Owners – Units Plan No 246:
I note here that it is not clear to me that the cabling for an electricity system can easily be divided into parts, such that one part can be said to be for the benefit of one owner and not another. An argument could be made that section 24(1)(e) is instead intended to capture a kind of service that is very clearly limited or targeted to certain unit holders – for example, a pay-tv service for a select number of unit owners. However, the applicant neither advanced this argument, nor put forward any evidence contrary to that submitted by the owner’s corporation, and in the circumstances I have little option but to accept that the electricity cable in issue was solely for the benefit of the applicant. In such circumstances, the UTMA Act does not require the owners corporation to maintain it.[39]
[38] See paragraph 25(e) above
[39] [2016] ACAT 111 at [29]
If the applicant was serious about this submission, it needed to explain, among other things, how the words of limitation in section 24(1)(e) – “if a utility service…is provided for the potential benefit of all units” – can give rise to the constructional choice on which the argument must depend, and why, consistently with section 139(1) of the Legislation Act 2001, the interpretation for which the applicant contends is the one that would best achieve the purpose of the Act. The applicant did not address these issues and made no effort to develop the argument in its other written submissions. Counsel for the applicant did not press the submission at the hearing. Accordingly, I propose to disregard this issue.
Consideration – the claim under section 24(1)(b)
General principles relevant to whether an item attached to land is a fixture
A fixture is an item that has been attached to land in circumstances where, in law, it becomes part of the land. The question whether, in given circumstances, a chattel has become a fixture is a question of law, which is incapable of being settled by agreement between parties.[40]
[40] A. J. Bradbrook, C. E. Croft and R. S. Hay, Commercial Tenancy Law (Lexis Nexis Butterworths, 3rd ed., 2009) at page 265 referring to Melluish v BMI (No 3) Pty Ltd [1996] AC 454 (HL) per Lord Browne-Wilkinson at 473
Where previously the question whether a chattel has become a fixture turned on the degree of annexation of the chattel to the land, the present rule focuses primarily on the affixer’s intention in affixing the chattel to the land. The nature of the chattel and the degree of annexation remain pointers to the relevant intention but are not determinative. If the relevant intention was the better use or enjoyment of the land, the item is likely to be a fixture, whereas if it was the better use or enjoyment of the item, it is likely to be a chattel. If the intention was that the item should remain in place permanently or for a substantial period, it is likely to be a fixture, whereas if the intention was that it should remain in place for a temporary purpose, it is likely to be a chattel. Intention is ascertained objectively. Modern authority requires all the surrounding circumstances to be considered, including the nature of any interest the person bringing the item onto the land may have in the land.[41]
[41] See generally P. Butt, Land Law (Lawbook Co., 6th ed, 2010) [3.03] – [3.10]. See also the detailed discussion of the principles by Conti J in National Australia Bank Ltd v Blacker [2000] FCA 1458 per Conti J at [9]-[16] referred to with approval in TEC Desert Pty Ltd v Commissioner of State Revenue (Western Australia) [2010] HCA 49 at [23]-[26]
In TEC Desert Pty Ltd v Commissioner of State Revenue[42], the High Court said:
Accordingly, some statement of basic principle is appropriate. In the seventh edition of Megarry and Wade’s The Law of Real Property, the following appears:
“The meaning of ‘real property in law extends to a great deal more than ‘land’ in everyday speech. It comprises, for instance, incorporeal hereditaments: and it includes certain physical objects which are treated as part of the land itself. The general rule is ‘quicquid plantatur solo, solo cedit’ (‘whatever is attached to the soil becomes part of it’). Thus if a building is erected on land and objects are permanently attached to the building, then the soil, the building and the objects affixed to it are all in law ‘land’, i.e. they are real property, not chattels. they will become property of the owner of the land, unless otherwise granted or conveyed.”
To this may be added the statements by Conti J in National Australia Bank Ltd v Blacker. There, with reference to a number of decisions, including that of Walsh J in Anthony v The Commonwealth, he said:
“There is a variety of general principles which should be considered in assessing whether an item of personal property has become attached to land in a manner designed to achieve a specific objective or variety of objectives, such as to become a part of the realty and therefore, a fixture. Whether an item has become a fixture depends essentially upon the objective intention with which the item was put in place. The two considerations which are commonly regarded as relevant to determining intention with which an item has been fixed to the land are first, the degree of annexation, and secondly, the object of annexation.” [43]
[42] [2010] HCA 49
[43] [2010] HCA 49 at [24]
However, there is no single test to determine whether an item is a chattel or a fixture.[44] Referring to the unpredictability of outcomes produced by the law of fixtures, Emeritus Professor Peter Butt observed:
Since each case must be determined according to its own circumstances, it cannot be assumed that an item held to be a fixture (or chattel) in one case will receive the same characterisation in another case.[45]
The time at which intention must be assessed
[44] National Australia Bank Ltd v Blacker [2000] FCA 1458 per Conti J at [16], referring to McIntosh v Goulburn City Council (1985) 3 BPR 97197 at 9374.4 per Mahoney JA with whom Priestley and McHugh JJA agreed
[45] P. Butt, Land Law (Lawbook Co., 6th ed, 2010) [3.10]
The bundle of documents filed on 27 May 2022 pursuant to leave granted to the applicant at the end of the hearing, satisfy me that the air-conditioning systems servicing the ground floor and level 1 commercial and retail areas, including AC 5 and AC 8, were installed during the redevelopment of the building in anticipation of its subdivision by registration of a units plan. The intention with which the plant was installed in parts of the building that were intended to be common property upon registration of the units plan must be determined at the time of installation.
Degree of annexation
Where an item is affixed to the land to any extent – i.e., it does not merely rest by its own weight – it is presumed to be a fixture and the burden of proof lies on the party asserting that it is not a fixture.[46]
[46] National Australia Bank Ltd v Blacker [2000] FCA 1458 per Conti J at [17]
It is common ground that the plant comprising AC 5 and AC 8 is installed in parts of the building that are now common property. The evidence relating to the degree of annexation is not particularly satisfactory. The applicant’s counsel described the evidence as “slight” but did not make submissions as to what conclusions the Tribunal should draw from this.
Two photographs annexed to the statement of Alex Boundy, filed on behalf of the respondent, show the condensers located on metal platforms suspended by metal rods from the concrete ceiling of basement level 1. They appear to be resting on the platforms by their own weight. Another photograph shows the air handling units apparently resting by their own weight on the floor of the level 1 plant room. There is no evidence to show whether the duct heaters are affixed to the building and, if so, how. It is nevertheless apparent from the design and physical configuration of AC 5 and AC 8, as described in the ROC report, that the plant is connected to the building electrical supply, piping for the water reticulation system, and air ducts servicing units 12 to 15, all of which are affixed to the building.
I am satisfied therefore that the plant and other items comprising the air-conditioning systems known as AC 5 and AC 8 are affixed to some extent to the common property and that prima facie they are presumed to be fixtures unless there is evidence establishing that they were not intended to become part of the common property.
The object of annexation
The evidence suggests that the design life of AC 5 and AC 8 was in the order of 25 years. Clearly, the plant was intended to remain in place for a substantial period.
However, the question whether, at the time of installation of AC 5 and AC8, the plant was intended to become part of the common property upon subdivision of the land, cannot be divorced from a consideration of the statutory easement rights that the owners of units would acquire over the common property upon registration of the units plan.
Section 27(4) of the 1970 UT Act provided that a right created by the section is deemed to be an easement appurtenant to the dominant tenement in relation to which it is enjoyed. Section 35(2) of the 2001 UT Act provides that a unit title easement right under the section is an easement annexed to the benefited estate.
Professor Butt has described an easement as “a proprietary right enjoyed by the owner of land to carry out some limited activity on another person’s land”.[47]
[47] P. Butt, Land Law (Lawbook Co., 6th ed, 2010) [16.07]
An easement creates a limited right of use by a person of another’s land. Here the limited rights of use that an owner of the benefited or dominant estate – relevantly, a unit – has over the burdened or servient estate – relevantly, the common property, are defined by statute.
It cannot legitimately be disputed that the provision of air, or air services, is and always was necessary for the reasonable use and enjoyment of the commercial and retail units on the ground floor and level 1 of the building, including units 12 to 15.
Thus, pursuant to section 27 of the 1970 UT Act, on and after registration of the units plan the owners of units 12 to 15 each had a statutory right to use the common property for the provision of air through or by means of ducts or other reasonable means, and such ancillary rights as were necessary to make the right effective, including rights of entry onto the common property for the purpose of inspecting, maintaining, or repairing the common property and inspecting, maintaining, repairing, replacing, renewing, or restoring any pipe, wire, cable, duct, or other material connected with the provision of air.
Following repeal of the 1970 Act the units plan is taken to be registered under the 2001 UT Act, meaning that the owners of units 12 to 15 have the unit title easement rights provided by section 35. Relevantly, each owner has a statutory right to use the common property for the provision of air services by any reasonable form of utility conduit, and all ancillary rights to make those rights effective, including a right of entry onto the common property for the inspection and maintenance of any building, facilities for the utility service and utility conduit located on the common property.
The easement rights necessarily include rights to affix to the common property plant and other items collectively comprising facilities for the provision of air services to the units.
Pursuant to section 34(c) of the 2001 UT Act, and its statutory predecessor, section 27(3)(c) of the 1970 UT Act, the owners of units 12 to 15 have a right of entry onto the common property for the inspection and maintenance of such facilities and utility conduits, which may include repair, replacement, renewal, or restoration, as they see fit.
I should add that there is nothing in section 35, or its statutory predecessor, that gives any rights for the owners of units 12 to 15 to be provided with air services by the owners corporation.
AC 5 and AC 8 were designed and installed as interdependent systems working in tandem to control the supply of air-conditioning to the part of level 1 that, upon subdivision, would comprise commercial units 12 to 15. AC 6 and AC 7 were designed and installed to service the other half of level 1. AC 1 to AC 4 were designed and installed to service what would become the ground floor retail area.
The design intent of AC 5 and AC 8 was to provide an adequate supply of cooled and heated air to maintain comfortable temperature conditions in units 12 to 15 only. The plant was not installed for the better use or enjoyment of the common property. Nor was it installed for the potential benefit of all unit owners. Rather, the plant was installed on what later became common property to provide air-conditioning to units 12 to 15, which was necessary for their reasonable use and enjoyment. In my view, AC 5 and AC 8 were installed in anticipation of, and to give effect to, the statutory rights to the provision of air through or by means of ducts or other reasonable means that the owners of the relevant units would have over the common property on and after registration of the units plan.
The evidence does not support the applicant’s submission that AC 5 and AC 8 are a fundamental part of the building’s fabric. There may be circumstances where facilities for the provision of a utility service, including utility conduits, are incorporated into a building in a way that would make it appropriate to describe them as part of the ‘fabric’ or structure of the building. Obvious examples may include stormwater drainage and sewerage lines, water reticulation pipes and electricity supply cables incorporated as part of the structure of a building. This case, however, is quite different. As described earlier, the most that can be said, based on the evidence, is that AC 5 and AC 8 service one half of level 1 in a 10-story building, and that the plant and other items comprising the air-conditioning systems are affixed to some extent to the common property.
I am not persuaded that the decision of a differently constituted tribunal in SDNM, on which the applicant relies, is of any real assistance in relation to the issue I must decide. The case was concerned primarily with the ownership of electrical and air-conditioning infrastructure in a mixed use commercial and residential complex consisting of two multi-storey building. The infrastructure was modified extensively to enable electricity consumed by each commercial unit to be separately metered and to resolve recurrent disruptions to the supply of air-conditioning to the commercial units. The issue was whether the owners of the commercial units should pay for the works based on the proportion of the works relating to their unit, or whether the cost should be borne by all residential and commercial unit owners in the usual way in proportion to their respective unit entitlements. The tribunal found that the original infrastructure was located primarily on common property. Much of the original infrastructure was incorporated into the new infrastructure. The original infrastructure served more than one unit. Thus, it was said that the infrastructure “was, on any reasonable construction, common property”.[48] Later, the tribunal concluded that “both the new and original infrastructure, in so far as it is located outside the lot and subsidiary entitlements of an individual unit owner is part of the common property”.[49] The works, it was said, “effectively converted infrastructure from common property, which served a number of units, to common property, which only serves individual commercial unit owners”.[50] SDNM turns on its own facts. The correctness of the tribunal’s findings in that case is not an issue that is before me. The issue that I must decide was not considered in that case – namely, whether plant installed to provide air-conditioning for a small number of commercial units, as part of the re-development of an existing office building as a multi-storey mixed use residential and commercial complex in anticipation of the registration of a units plan, was intended to become part of the common property when the units plan was registered.
[48] [2019] ACAT 74 at [91]
[49] [2019] ACAT 74 at [108]
[50] [2019] ACAT 74 at [108]
The applicant submitted that electrical and maintenance work commissioned and levied by the owners corporation is indicative of the air-conditioning units being common property. Conversely, the respondent submitted that historically, the air-conditioning systems were regarded as property owned by the several commercial units that they service and that commercial unit owners have paid for electricity and maintenance costs for the air-conditioners through separate administrative levies.
I doubt whether evidence of subsequent conduct, particularly in more recent years, can be relevant to the question whether AC 5 and AC 8 were affixed to the building prior to the registration of the units plan in April 1996 with the intention that they should become part of the common property upon registration of the units plan. In any event, I found the limited evidence going to these issues to be unpersuasive.
The respondent submitted that the applicant had previously made changes to the control systems for AC 5 and AC 8 in about June 2016 and that this was evidence of consistent conduct – by which I understand the respondent to mean conduct consistent with the applicant regarding the air-conditioning units as its property (or partly its property given that AC 5 and AC 8 service several other units as well). The evidence suggests that the work was done at the direction of the applicant and the Labor Club, which owns units 13 to 15. However, even if that is true, it is at best evidence of their belief or understanding at that time. I do not see how that can be evidence of the intention with which air-conditioning plant was affixed to the building some 20 years earlier and approximately 17 years before the applicant became the owner of unit 12.
Conclusions
For these reasons, I am satisfied that, when the plant and other items comprising AC 5 and AC 8 were affixed to parts of the building, they were not intended to become part of the land and they did not become part of the common property upon registration of the units plan on 29 April 1996. Nothing has happened since then to change the outcome. A5 and AC 8 are not and never have been common property.
It follows, that the applicant’s claim that the owners corporation must maintain AC 5 and AC 8 as common property pursuant to section 24(1)(b) of the UTM Act should be dismissed.
It follows also that it is unnecessary to decide whether the respondent’s answer to the claim has substance – namely, whether the owners corporation can sever a fixture from common property and, if authorised by an ordinary resolution made under section 21(1)(b) of the UTM Act, dispose of it as a chattel. I express no view on that subject.
Consideration – the claim under section 24(1)(e)
The applicant’s claim that the owners corporation must maintain AC 5 and AC 8 pursuant to section 24(1)(e) of the UTM Act fails on the facts. Contrary to the applicant’s original written submissions, the evidence does not establish that AC 5 and AC 8 are facilities for the provision of a utility service for the potential benefit of all units. The ROC report establishes quite clearly that AC 5 and AC 8 were designed and installed to service one half of level 1 only.
I should add for completeness that the applicant’s submission that its position is supported by the decision of a differently constituted tribunal in Bennett v Owners Unit Plan 932[51] lacks substance. The circumstances of that case are not comparable. There the air-conditioning system was a common system providing heating and cooling to each unit in a 160-unit complex. Here the air-conditioning systems provide heating and cooling to 4 out of 92 units, located on one half of a floor in a 10-storey building.
[51] [2016] ACAT 57
It follows, that the applicant’s claim that the owners corporation must maintain AC 5 and AC 8 pursuant to section 24(1)(e) of the UTM Act should be dismissed.
Consideration – the challenge to the 20 October 2021 resolution
The only grounds the applicant identified for its challenge to the validity of the 20 October 2021 resolution depended on the Tribunal finding that AC 5 and AC 8 are common property.
As AC 5 and AC 8 are not common property, the grounds fall away.
The application was conducted by both parties on the assumption that the validity of the resolution depended on whether it was authorised by section 21(1)(b) of the UTM Act. However, the resolution does not mention section 21(1)(b) and there is no evidence that it was, in fact, intended to be made under that section. Further, the apparent reliance on the section as a source of authority to make the resolution in the present application appears to me to be inapt. In terms, the resolution is concerned with the removal of existing facilities for the provision of utility services to the commercial units and their replacement by utility infrastructure installed on common property servicing individual units. Potentially, authority to make such a decision may be found in section 23 of the UTM Act, depending on how the section is interpreted. However, as neither the possible meaning of the section, nor its possible application to the present facts was considered by the parties, it is not appropriate for me to venture into an analysis of the possibilities to determine whether the resolution may be supported, or invalidated, on some other basis.
Accordingly, the applicant’s challenge to the validity of the 20 October 2021 resolution fails.
Conclusion
It will be apparent from the earlier summary of the parties’ submissions that they raised several other issues that I have not discussed in these reasons. Given my decision on the primary issue whether AC 5 and AC 8 are fixtures, it is not necessary to consider the other issues.
As none of the applicant’s claims have succeeded, the application should be dismissed.
………………………………..
Senior Member M. Orlov
| Date(s) of hearing: | 6, 19 May 2022 |
| Counsel for the Applicant: | Mr J Bird, MinterEllison |
| Counsel for the Respondent: | Mr N Li, Kerin Benson Lawyers |
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