The Owners Units Plan 3323 v Makeham (Appeals) - [2024] ACAT 46

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

THE OWNERS - UNITS PLAN 3323 v MAKEHAM (Appeals) [2024] ACAT 46

AA 25/2023 (UT 19/2023)

Catchwords: APPEALS (UNIT TITLES) – responsibility of owners corporation to maintain common property – meaning of ‘common property’ – whether a unit’s doors and windows opening onto a unit subsidiary of the unit (in this case, a balcony) are common property – no error in finding the doors and windows are not common property – appeal dismissed
Legislation cited: Legislation Act 2001 s 140
Unit Titles Act 2001 ss 7, 9, 10, 12, 13, 14, 15, Dictionary
Unit Titles (Management) Act 2011 ss 10, 19, 20, 24, 125, 129, Dictionary

Cases cited:Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation [1981] HCA 26
McMillan & Anor v Owners Corporation – Units Plan No 79 [2019] ACAT 86
Project Blue Sky Inc v Australian Broadcasting Authority [1988] HCA 28

Tribunal:Presidential Member G McCarthy
Presidential Member J Lucy

Date of Orders:  1 July 2024
Date of Reasons for Decision:      1 July 2024
Date of Publication:  8 July 2024
AUSTRALIAN CAPITAL TERRITORY          )
CIVIL & ADMINISTRATIVE TRIBUNAL     )          AA 25/2023

BETWEEN:

THE OWNERS - UNITS PLAN 3323
Appellant

AND:

PATRICIA MAKEHAM
Respondent

APPEAL TRIBUNAL: Presidential Member G McCarthy
Presidential Member J Lucy

DATE:1 July 2024

ORDER

The Tribunal orders:

The order of the Original Tribunal made on 8 August 2023 is set aside and replaced with the following order:
The resolution adopted on motion 4 of the general meeting of Units Plan 3323 held on 9 January 2023 is repealed.

………………………………..

President Member G McCarthy

For and on behalf of the Appeal Tribunal

REASONS FOR DECISION

Introduction

The issue in this appeal was whether the Tribunal was correct to find that an owners corporation is not responsible for the cost of repairs to windows and doors of a unit in a units plan, opening onto courtyards and balconies that form part of the unit. We have found that it was.

Background

The appellant (the Owners Corporation) was established for units plan 3323, comprising four units (the Units Plan). Each of the units is a “class A unit”, as that term is used in the Unit Titles Act 2001 (the UT Act).
On 9 January 2023 at a general meeting, the members of the Owners Corporation (being the owners of the units)[1] considered a motion to authorise expenditure of Owners Corporation funds to repair and repaint wooden doors and windows on units 1 and 2 of the complex (the Motion) and resolved to do so (the Resolution). The doors and windows of those units, in each case, opened onto a balcony, terrace or courtyard forming part of the unit.
[1] Unit Titles (Management) Act 2011 s 10
On 11 May 2023, the owner of unit 3 in the complex - the respondent, Ms Makeham - applied to the tribunal under section 125(2) of the Unit Titles (Management) Act 2011 (the UTM Act) for an order that the Resolution was void for irregularity or, alternatively, that the Tribunal amend the Resolution “to reflect the application of the McMillan decision.”
By the “McMillan decision”, the respondent was referring to a decision of this Tribunal, McMillan & Anor v Owners Corporation – Units Plan No 79 (McMillan).[2] Her argument was that the doors and windows the subject of the Resolution were not common property, such that the Owners Corporation was not responsible for their maintenance.
[2] [2019] ACAT 86
On 8 August 2023, the Tribunal (the Original Tribunal) heard the application and made an order setting aside the Motion. The Owners Corporation requested reasons for the decision, which the original tribunal provided on 16 October 2023.

Relevant legislative provisions

Section 24(1)(b) of the UTM Act imposes an obligation on an owners corporation for a units plan to maintain the common property. It states:
24 Maintenance obligations
(1) An owners corporation for a units plan must maintain the following:
(a) for a staged development—the common property included in a completed stage of the development;
(b) for a development that is not a staged development—the common property;
…
The term ‘common property’ is defined in the Dictionary to the UTM Act to have the meaning given to it by section 13 of the UT Act. ‘Common property’ is defined in section 13 of the UT Act to mean, relevantly, “all the parts of a parcel identified as common property” in the units plan.
The term ‘units plan’ is defined in the Dictionary to the UTM Act to have the meaning given to it by the Dictionary to the UT Act. The Dictionary to the UT Act provides that ‘units plan’ means “the units plan under section 7”. Section 7(2) of the UT Act provides that once documents, including diagrams showing the subdivision and the schedule of unit entitlement, have been registered, the units plan “consists of the registered documents as amended from time to time under this Act”.
Section 9 of the UT Act provides:
9 Units
(1) A unit is a part of a parcel shown in a unit title application or a units plan as a unit.
(2) After a units plan is registered, a unit of the units plan includes any unit subsidiary shown on the units plan as annexed to the unit. (emphasis added)
Pursuant to section 12(b) of the UT Act, in the case of a registered units plan, a ‘unit subsidiary’ is “a part of a parcel identified as a unit subsidiary annexed to a unit” in the units plan.
Sections 14 and 15 of the UT Act provide:
14 Common boundaries—internal
If a floor, wall or ceiling separates a class A unit or a unit subsidiary from common property or another unit or unit subsidiary, the common boundary lies along the centre of the floor, wall or ceiling, unless otherwise specified in the relevant unit title application or units plan.
15 Common boundaries—external
If a class A unit or a unit subsidiary is bounded by an external wall of the building containing the units, then, unless otherwise indicated in the relevant unit title application or units plan—
(a) the boundary of the unit or unit subsidiary lies along the centre of the wall; and
(b) the part of the wall outside the boundary is common property.

Original Tribunal’s reasons

The Original Tribunal determined Ms Makeham’s application by applying the decision in McMillan.
The applicant in McMillan sought a review of a resolution that an owners corporation was not responsible for replacing a glass door leading from the living room of a unit onto the unit’s balconies. The applicant contended the glass door was part of the boundary wall, and that the exterior of the wall, including the glass door, was common property pursuant to section 15(b) of the UT Act.
The applicant in McMillan argued that, because, he said, the external side of the glass door was common property, the owners corporation was obliged to maintain it under section 24(1)(b) of the UTM Act.
The Tribunal in McMillan rejected that argument. It upheld the resolution of the owners corporation. It found that, even if each of the glass doors was a “wall” within section 14 of the UT Act, that wall did not border common property. Rather, it bordered a unit subsidiary of the unit (being the balconies). The glass door was therefore not an exterior part of the building for the purposes of the UTA Act, and its maintenance was therefore not the responsibility of the owners corporation.[3]
[3] [2019] ACAT 86 at [43]-[64]
The Original Tribunal in the proceeding below found, applying McMillan, that the work proposed to the wooden windows and doors of units 1 and 2 was the responsibility of the owners of those units, and not the responsibility of the Owners Corporation. The Tribunal accordingly set aside the Motion.

Appeal

The Owners Corporation appealed from the Original Tribunal’s decision on the grounds that the following two findings of the Original Tribunal were unsafe:
(a)the evidence of Ms Makeham should be preferred to the evidence of other owners; and
(b)the decision in McMillan was good authority and binding.
The Owners Corporation also claimed in written submissions that it was denied procedural fairness in the original proceeding, because the Original Tribunal allowed factual evidence to be given without any opportunity to cross examine the person giving that evidence despite a request that evidence be given by affidavit. However, at the appeal hearing, Mr Lander,[4] representing the Owners Corporation stated this ground was not pressed.[5] He stated the Owners Corporation relied only on its ground that McMillan was not correctly decided. He submitted “the external wall [of a unit] and half the distance between that wall and the internal”[6] is common property.[7]
[4] Mr Lander is an owner of unit 2, a member of the Owners Corporation Executive Committee and a solicitor
[5] Transcript of proceeding 21 May 2024, page 10, lines 34-46
[6] Transcript of proceeding 21 May 2024, page 8, lines 4-12
[7] Transcript of proceeding 21 May 2024, page 9, lines 9-31
In his written submissions, Mr Lander contended McMillan was not good authority to the contrary for the following reasons:
(a) The balcony was a unit subsidiary and formed part of the unit as a whole (s10 UTA). However, subsidiaries are not necessarily contiguous with the main structure of the unit, for example, a designated storage unit in the basement.
(b) Section 15 UTA applies where a unit is bounded by an external wall. Senior Member Robinson was willing to find that the wall in question with the door to the balcony was an external wall (49)(57). This was an important finding.
(c) In this event, s 15 UTA (not Section 14) applies, and says that the boundary of the unit is half-way through the wall and the outer half is common property, which has obvious and clear limitations and implications on how the unit owner could deal with such a wall.[8]
[8] Appellant’s written submissions dated 23 February 2024, page 1
Mr Lander also submitted the Tribunal in McMillan erred in finding that doors must open onto common property to be an external wall. He submitted there was nothing in section 15 of the UT Act that adds a requirement that a door (or doors) must open onto common property (in order for the external side of the door to be common property), rather than onto a contiguous unit subsidiary. He submitted the Tribunal in McMillan “impermissibly conflated ss 14 and 15 of the Act.”[9]
[9] Appellant’s written submissions dated 23 February 2024, page 2 at [4]
Mr Lander submitted at the hearing of the appeal that for outside walls, half the width of the wall is common property, “and that is the definition all over Australia”.[10] He agreed there was nothing in his submissions to verify whether that is so “one way or another”, but contended, “I don’t think I need to … [w]ith respect, sir, it’s common knowledge by people who own real estate.”[11] He submitted, without evidence, that this was the basis upon which insurance is generally carried out: an owners corporation is responsible for insuring all external walls.[12]
[10] Transcript of proceeding 21 May 2024, page 6, lines 8-9
[11] Transcript of proceeding 21 May 2024, page 6, lines 25-37
[12] Transcript of proceeding 21 May 2024, page 3, lines 39-46
The respondent submitted the windows and doors were not common property because they opened onto the unit owner’s property. She also submitted they were not part of the structure. As she put it:
Now, these doors and windows that need maintenance and repair really aren’t part of the wall. I mean, the wall – the structure, rather. They fit within the structure, but they don’t have any structural integrity of any sort. I mean, they can be taken out and the wall is not going to fall down.[13]
[13] Transcript of proceeding 21 May 2024, page 8, lines 27-31
Noting there were four units in the units plan, the respondent said it would be inequitable for a quarter of the cost of maintaining another unit owner’s doors or windows, or later replacement of the doors and/or windows, to fall to her.

Consideration

We begin by responding to Mr Lander’s submission that we should find the windows and doors to be common property because that is how comparable legislation operates in other parts of Australia. We do not accept that submission, made without reference to any comparable legislation in another part of Australia, nor any decision to support the construction for which he contended. Nor do we consider insurance practices, as claimed, are relevant for the purpose of interpreting and/or applying the applicable provisions of the UT Act and/or the UTM Act.
In our view, determination of this appeal should be done by construing and applying the relevant legislation.
The starting point for considering whether the Owners Corporation is required to maintain the wooden doors and windows in question is section 24(1)(b) of the UTM Act, which requires the Owners Corporation to maintain the common property. There was, appropriately, no suggestion by either party there was an obligation to maintain the doors and windows in question under a provision other than section 24(1)(b).
As indicated above, the term ‘common property’ is defined in the Dictionary to the UTM Act, per section 13 of the UT Act, to mean “all the parts of a parcel identified as common property” in the units plan. In this case, the Units Plan does not identify the wooden doors and windows in question, or the wall in which they are placed, as common property.
On one view, that is the extent of the necessary inquiry: the Owners Corporation does not have an obligation to maintain the wooden doors and windows because they are not identified as common property in the Units Plan.
A premise of the Owners Corporation’s submission is that the term “common property” in section 24(1)(b) of the UTM Act may (or should) be construed by reference to section 15 of the UT Act. The submission was unpersuasive. It is inconsistent with the definition of ‘common property’ in the UTM Act, which adopts the meaning in section 13 of the UT Act, which makes no reference to section 15. Further, section 24(1)(b) does not expressly permit reference to section 15 of the UT Act for the purpose of construing ‘common property’, and it was not explained by the Owners Corporation by what principle or mechanism section 15 of the UT Act could affect the meaning of a term in another (albeit related) Act, or section 24(1)(b) in particular.
Nevertheless, and assuming in favour of the Owners Corporation that the definition of ‘common property’ in the UTM Act may take part of its meaning from section 15 of the UT Act, we do not accept section 15 has the effect for which the Owners Corporation contended.
The Owners Corporation focused on the question whether the units (units 1 and 2) were bounded by an external wall of the building, and whether the windows and doors in question formed part of that wall. However, even if the Owners Corporation was correct in its submission that the wooden windows and doors form part of an external wall, the submission overlooks the proviso in section 15, namely, “otherwise indicated in the relevant unit title application or units plan”. In this case, the site plan forming part of the units plan,[14] shows some external walls adjoining common property (marked “CP” on the site plan), and other walls adjoining balconies, terraces and courtyards (marked “B”, “T” and “CY” on the site plan) that form part of a unit. In our view, the site plan indicates that the exterior walls adjoining common property form part of the common property, and those adjoining another part of a unit (i.e. the unit’s balcony, terrace or courtyard) are not.
[14] Pursuant to s 7(1)(a) of the Unit Titles Act 2001, “diagrams showing the subdivision” are documents forming part of the units plan
There are other reasons why we reject the Owners Corporation’s submission.
The Owners Corporation argued it was not necessary for the door to open onto common property, rather than onto a contiguous unit subsidiary, to be part of an external wall. Assuming in the Owners Corporation’s favour that “an external wall of the building” includes any window or door in that wall, and that the walls adjacent to a private courtyard, terrace or balcony may be described as “external walls”, it does not overcome the difficulty that the units in question are not “bounded” by such walls as required under section 15. The boundary of each unit is shown in the site plan. As the Owners Corporation acknowledges, the courtyards, terraces and balconies are unit subsidiaries which, in each case, form part of the applicable unit.[15] In other words, each unit is not bounded by the walls in question, which are between the unit and a unit subsidiary which, together, constitute the unit per the definition of “a class A unit”. [16]
[15] Unit Titles Act 2001 s 10
[16] Unit Titles Act 2001 s 10(2)
We recognise section 15 refers to “a class A unit or a unit subsidiary”, which contemplates a distinction between the two. However, in our view, that is to address a unit subsidiary that is not contiguous with a unit, such as a car park which is bounded by an external wall of the building containing the units. In such a case, the effect of section 15 is that the boundary of the car park would lie along the centre of that wall, and the part of the wall outside the boundary would be common property.
We do not accept the submission that the Tribunal in McMillan impermissibly conflated sections 14 and 15 of the UT Act. The basis for this submission appears to be the Tribunal’s comment that the glass doors opened “not onto common property, but onto a unit subsidiary.” The Tribunal reasoned, with reference to section 14, that the boundary between the unit and unit subsidiary lies on the midpoint between them. However, the Tribunal went on to say that “it probably does not matter, because at no point does the window/door, whether a wall or not, border common property.”[17] We agree.
[17] McMillan at [59]
It is a well-established principle of statutory construction that an Act be interpreted on the prima facie basis that its provisions are intended to give effect to harmonious goals.[18] Further, in working out the meaning of an Act, the provisions of the Act must be read in the context of the Act as a whole.[19]
[18] Project Blue Sky Inc v Australian Broadcasting Authority [1988] HCA 28 at [70]
[19] Legislation Act 2001 s 140
Section 14 is headed “Common boundaries—internal”, whereas section 15 is headed “Common boundaries—external.” In our view, section 14 is directed to what may be termed “internal boundaries.” It applies, for example, to a boundary between units; to a boundary between one unit and “another unit or unit subsidiary”; and to a boundary between a unit and internal common property, such as a stairwell.
Section 15, on the other hand, applies to a boundary which is an external wall (unless otherwise indicated in the relevant unit title application or units plan). It is legitimate, in our view, to construe section 15 in light of section 14. That is, the statutory context indicates that the term “external wall” is intended to apply to walls on the outside of the building which are not immediately adjacent to a private space such as a balcony or courtyard. That conclusion is supported by the circumstance that it is unlikely the legislature intended part of a wall within a unit to be “common property”.
Mr Lander referred to the likely consequences of the construction adopted by the Original Tribunal in the proceeding below, and in McMillan, to support his view that it was incorrect. We accept that consequences of a construction of a provision may be relevant to ascertaining legislative intention and consequently the meaning of a provision.[20]
[20] Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation [1981] HCA 26 (1981) 147 CLR 297 at 320-321
Mr Lander submitted that if the part of a wall or door facing towards a balcony or courtyard is not common property, the unit owner could decline to repair it, even if this would cause structural damage and aesthetic issues for other unit holders. He also said it would be “illogical”[21] for there to be a need to split a bill between the Owners Corporation and a unit owner, when work was done on the external walls and the unit owner’s walls at the same time, because the Owners Corporation insurance would not cover the whole expense.
[21] Appellant’s written submissions dated 23 February 2024, page 2 at [12]

The consequences of our preferred construction as identified by Mr Lander do not, in our view, indicate it is incorrect. If a unit owner failed to repair a wall leading onto a balcony or courtyard, such that other unit owners were adversely affected, there may be causes of action by which the other unit owners could seek redress. Additionally, any load-bearing wall is a “defined part” of a building which an owners corporation is required to maintain, even if it is not common property.[22] That means unit owners are only responsible for non-structural walls.
[22] Unit Titles (Management) Act 2011 ss 24(1)(d) and 24(4)
We are not satisfied that any effect our construction of section 24 may have on insurance arrangements provides a persuasive reason to reject it.
To the extent that consequences of the competing interpretations of the term “common property” in section 24(1)(b) of the UTM Act are relevant to ascertaining legislative intention, the consequences weigh in favour of the construction adopted in McMillan and applied by the Original Tribunal in the proceeding below. If the outer part of walls, doors and/or windows opening onto private spaces were common property, an owners corporation would be obliged to give all members of the corporation opportunity for the reasonable use and enjoyment of that part of them.[23] It would also be possible for an owners corporation to grant an easement over that part of them.[24] Neither consequence is likely to have been intended.
[23] Unit Titles (Management) Act 2011 s 19(2)
[24] Unit Titles (Management) Act 2011 s 20(1)(a)
Mr Lander said if we found against the Owners Corporation on the appeal, the Tribunal should:
…make representation to the Attorney [-General] to fix the law so that the law makes sense, so that we don’t have to have owners having to insure individual windows and doors in the superstructure of their complex, which doesn’t happen anywhere else in Australia.[25]
[25] Transcript of proceeding 21 May 2024, page 10, lines 28-32
We disagree. In our view, it is entirely appropriate that an owner be responsible for the maintenance of doors and windows between their unit (the unit) and their balcony, courtyard and/or terrace (a subsidiary unit) forming part of their unit, where all those areas are private areas for the sole use of the unit owner. Also, especially in the absence of any evidence, we are not persuaded that an insurer insures, or would insure, a block of units held under strata plan according to what is common property and what is not for the purposes of the UT Act. We expect insurance coverage would be determined by the policy.
Whilst, for the reasons given, we are not persuaded the original Tribunal erred by finding the proposed work is not the responsibility of the Owners Corporation, we think the order setting aside Motion 4 is not appropriate. It is not the motion that is relevant. It is the resolution arising from the motion, namely that the Owners Corporation pay for the proposed work. Further, section 129(1)(f) of the UTM Act on which the Original Tribunal relied empowered it to make “an order repealing or amending a resolution of a general meeting or executive committee”, not the motion giving rise to the resolution. To address this error, we will set aside the order of the Original Tribunal and make an order repealing the Resolution.
………………………………..

Presidential Member G McCarthy
For and on behalf of the Appeal Tribunal

Date of hearing:	21 May 2024
Applicant:	Mr D Lander (representative)
Respondent:	Ms P Makeham (in person)