The applicant makes submissions that a right of exclusive use and enjoyment arises for the benefit of a lot upon that lot becoming exclusively serviced by the lift within the meaning of by-law 43. The right of exclusive use and enjoyment once having arisen will persist until the by-law is either repealed or varied or revoked. The actions of the respondent or the owners of other lots do not terminate the rights of exclusivity. The exclusive service created under by-law 43 exists even if the lift is capable of providing services to the lots when reprogrammed.
They also make submissions that the Tribunal should not determine the question by reference to the exclusive service that exists at present because clearly the lift changed in July 2011. The Tribunal must determine whether a right exclusive use and enjoyment of lift 3 exists under by-law 43 and the answer to that question can only be determined depending on whether lift number 3 exclusively serviced the relevant lots at the relevant point prior to 6 July 2011. If it is determined that the lift exclusively serviced the lots then it follows that the reprogramming in July 2011 interfered with any pre-existing right of exclusive use enjoyed by the applicant under by-law 43.
Hammil J highlighted a distinction between 'servicing' and 'use' in relation to by-law 43 and so the use of lift 3 even by resident of a lot may not constitute the servicing of the lot.
The applicant relies on the statement of Mr Fischer that at the time of refurbishing the lift and prior to registration of the strata plan Mr Fischer, as principal of the developer intended that levels 16, 17 and 18 would have the right to use lift number 3 exclusively of the other apartments, with the exception that it would be available for use in the event of an emergency. Mr Fischer stated that he instructed the engineers, EMF Griffiths Pty Limited, to prepare specifications for the refurbishment accordingly.
The specifications required the supply and installation of a new group system for the three lifts in the tower building. Lift number 3 was for level B, G 16, 17 and 18. In that regard the applicant referred to clauses 3.5, 3.6, 3.8 and 3.11 of the schedule and lift call configuration for the tower. Lifts 1 and 2 were to be available to all of levels 1 to 17 along with the ground floor and all basement parking levels. The invitation to tender of Otis Elevator Company Pty Ltd required that the equipment comply with the performance specifications issued by EMF Griffiths. Mr Fischer stated that the works were carried out in accordance with the specifications and were completed by 20 December 2004.
Accordingly the common property, which came into existence upon registration of strata plan 73943 on 11 August 2005, included by-law 43 and the lift system as described in the EMC Griffith specifications. Mr Fischer gave evidence that on registration he understood that use of lift 3 would be exclusive to level 16, 17 and 18 except in the event of an emergency. In this regard, the lot owners needed a particular key to use the lift, a copy that would be retained by the owners of the lots on those levels.
The applicant refers to minutes of an Executive Committee meeting of 8 September 2009 in which the Executive Committee instructed the building manager to ensure that any technicians working on the lift report to the concierge before accessing the penthouse floors because the floors were supposed to be locked off from access by anyone other than the residents of those lots at all time.
In November 2010 the Executive Committee instructed the building manager to investigate whether lift 3 could be used for all residents and that on 20 of January the Executive Committee noted that there was no restriction in place to prevent all residents from using them. Mr Gregory Marsh of Thiesson Krupp Elavator Australia Pty Limited attended the Tower building and reprogrammed the lift to respond to calls on each of the levels from 1 to 18.
It was conceded that after registration of the strata plan there had been occasions when people had used the lift to move large furniture. Mr Fischer stated that at first this only occurred with his express consent and after giving notice, but that as time passed it occurred even without notice being given and without objection from the applicant.
The applicant relies on the observations of Young JA in Casuarina Rec Club Pty Ltd v The Owners - Strata Plan No 77971 [2011] NSWCA 159 at [50] to [54], to demonstrate that those who choose to acquire an interest in as strata acquire the interest with notice of the by-laws having had an opportunity to satisfy themselves about the meaning and effect of the by-laws. Accordingly in this case a person acquiring an interest in the strata scheme has the opportunity to ascertain and make enquiries about any by-law, including by-law 43.
The applicant made submissions that although the lift was capable of being reprogrammed, the reprogramming constituted an alteration to common property because the common property came into existence at the time the plan was registered and that was inclusive of the lift system as it was then programmed. The operating system itself was an integral part of the lift and the Owners Corporation's power of management do not prevail over the ordinary rights of an owner to use common property.
In relation to the lift being used to move large furniture to and from other levels, the applicants made submissions that an owner who is entitled to exclusive use may choose to allow others to use it. The use of the lift for occasional transport of furniture, whether express or implied, does not affect the exclusive rights which they suggest is created by by-law 43.
In relation to the lift accommodating a stretcher, the lift was constructed in compliance with the relevant building codes and development requirements. Those requirements relate to the construction of the building rather than the subsequent management or use. In accordance with the principals in Halliday v Nevill [1984] HCA 80 at [6], [7] and Plenty v Dillon [1991] HCA 5 at [4], the by-law does contain an implied condition that the use of the lift be permitted for the lawful purpose of stretchers. They maintain that the benefit extends beyond the residents of the lots in the strata scheme, to all others that may be on the lot, being a range of people who may or may not have an interest in the lot. In that context the lift services people not lots. They allege it is the responsibility of the respondent to make arrangements to accommodate the use of the lifts in an emergency. In summary, they maintain that by-law 43 should be understood to exclusively service the three lots despite its occasional emergency use or use of the lift by residents of other lots or people with the express or implied consent of the applicant.
In relation to the maintenance of the lift and the agreed fact that the applicant has not borne the cost for maintenance and repair of the lift, the respondent has a remedy pursuant to by-law 43. It may undertake the maintenance and repair of the lift and recover the expense from the benefited owners. They maintain that it is the respondent who has chosen not to seek the expenses if they have incurred any.
Finally, the applicant made submissions that pursuant to section 65A the Owners Corporation in reprogramming the lift operating system required a special resolution, which it did not seek.
[2]
The Respondent's Case
The respondent made submissions that what is relevant in coming to its conclusion about whether lift 3 exclusively services lot 61 is that the Tribunal must establish the 'nature and content of the common property.'
The respondent refers to the EMC Griffith specifications and notes that the specifications themselves do not 'spell out that lift 3 was to be exclusively for residential levels 16, 17 and 18 and that the specification is of no assistance to the legal question at hand.' The term 'exclusive' in the specifications does not assist in whether, as a fact, lift 3 exclusively services lot 3 because 'exclusive' is used as an engineering term in that context. They indicate that in the statements from the respondents' expert, Mr Smith and the applicants expert, Mr Brinnand, both use the word "exclusive" for the purposes of a priority service for levels 16, 17 and 18 by use of a priority key within the group function managed by the operation of the lifts. The OTIS microprocessor based system was used to drive and control the lift and included a feature which allows a lift technician to disable (or enable) one or more selected landings using the OTIS Maintenance Tool. The respondent's expert Mr Smith confirmed that it was that tool that would have been used for the reprogramming to occur in July 2011. The group control system is an inherent feature of lift 3 and can be reprogramed to answer calls from any level. Accordingly, the fact that the group control system is an inherent feature of the lift that means that the lift can be programmed in any matter of way to service any and all of the levels, meant that lift 3 does not and never did exclusively service lot 61.
They make submissions that consent in relation to the moving of the furniture is irrelevant. If the lift does not exclusively service lot 61 then Mr Fischer's consent is unnecessary. If it is common property than Mr Fischer cannot withhold consent at it would be an improper interference with common property within the meaning of the Act.
In relation to the applicant's failure to pay for the costs of repair and maintenance of the lift they regard this as irrelevant to determining whether lift 3 exclusively services the lot, instead the applicant actually had no such obligation because they had no right of exclusivity.
The respondent makes submissions that section 65A does not apply because the reprogramming could never have altered the applicant's right of exclusivity as the exclusivity never existed in the first place.
[3]
Does Lift 3 Exclusively Service Lot 61? Reasons and Findings
Having considered all the documents and submissions of both parties the Tribunal is not satisfied that lift 3 exclusively services lot 61.
Section 51 of the Act states:
(1) This Division applies to a by-law conferring on the owner of a lot specified in the by-law, or the owners of several lots so specified:
(a) a right of exclusive use and enjoyment of the whole or any specified part of the common property…
The Tribunal finds that by-law 43 was registered with the plans on 11 August 2005. The by-law itself does not expressly confer on lot 61 an exclusive service. The by-law does not refer to lifts. However, that does not in itself prevent the by-law of conferring exclusive use or mean that the lift does not exclusively service the lot. Of course whether by-law 43 confers a right of exclusive use depends on a proper construction of by-law 43.
By-law 43 is extracted in its entirety below:
43.1 The owner of each lot has the right to the exclusive use and enjoyment of any service that exclusively services its individual lot that is located in and forms part of the common property ("exclusive services").
43.2 The owner is responsible for the ongoing repair and maintenance of the Exclusive Service.
43.3 In the event that the Owner or Occupier or person authorised by an Owner fails to maintain the Exclusive Services in accordance with this By-Law, the Original Owner during the initial period or the Owners Corporation following the expiration of the initial period, or any person authorised by it, may undertake any works necessary to maintain the Exclusive services to be in keeping with this By-law. The cost of the Original Owner or Owners Corporation, as the case may be, undertaking such works shall be a debt payable by the Owner to the Original Owner or Owners Corporation, as the case may be on demand.
The Tribunal is bound and agrees with Hamill J's statement at paragraph 72 that the by-law itself does not create a "right to the exclusive use' of that service. Exclusive use and enjoyment arise from the fact that the service "exclusively services its individual lot." The judgment at paragraph 73 refers to examples of matters which the Tribunal may had considered and given different weight, had it of considered the right question. His Honour includes matters such as:
the mechanical capacity of the lift to service levels 1 through 15,
the lifts capacity (unlike lifts 1 and 2) to carry a stretcher,
the fact that it serviced other units for the purpose of moving furniture.
the fact that the lift was programmed in such a way as to allow the occupants of levels 16, 17 and 18 to use lift 3 in the way that they did from 2005 to 2011.
the capacity of a "reasonable third person to enquire from the body Corporate what does by-law 43 refer to" and whether "any particular exclusive use" is "granted under by-law 43".
the evidence of Mr Fischer and the defendant's experts.
The Tribunal is guided by the decision of Hamill J and accepts that these are all relevant factors to be weighed up in determining whether the lift, which is the "service", exclusively services lot 61. The Tribunal also accepts that this is not an exhaustive list of factors which the Tribunal needs to weigh up in determining the question. It will deal with each of the relevant factors in turn.
[4]
The mechanical capacity of lift 3 to be reprogrammed to service levels 1 through 15
The lifts ability to be reprogramed mechanically to service levels 1 through to 15 is not in dispute. Clearly, it can be reprogrammed to do so and that is exactly what happened in 2011. If the lift does exclusively service the applicant's lot then the reprograming would be a breach of the exclusive use by-law. The Tribunal finds and it is not contended that lift 3 forms part of the common property. The Tribunal finds that while lift 3 forms part of the common property, the Tribunal must also determine the nature and content of lift 3. The Tribunal accepts the respondent's submissions on this point. The nature and the contents of the lift include its potential configurations which were in place at the time the plan was registered. At paragraphs 25 to 33 of his report dated 5 October 2012, Noel Smith the respondent's lift and escalator expert details the microprocessor lift control system. He inspected the lift and explains how through the microprocessor group control function a lift technician by using an OTIS Maintenance Tool;
has the ability to disable one or more selected car or landing signals of an individual lift to prevent that lift from serving a particular floor.
The Tribunal is satisfied that the lift 3 is common property and has inherent in it a control system which allows it to be reprogrammed when decided to answer calls from different levels.
The Tribunal finds that the reprogramming was simply management of the common property by the respondent much like adjusting heat settings on an air conditioner for example. Member Smith in the original adjudication had also found that and those findings were not disturbed on the Appeal. The Tribunal rejects the applicant's submissions that the fact that the lifts were programmed at registration to service only the three lots in itself indicates a factual and practical exclusivity at the time of registration. Lift 3 has in it an inherent feature that it can be reprogrammed and that does not disappear simply because the lift was originally programmed to only service the three lifts. The lift could be reprogrammed to be used by lot owners on levels 1-15 and indeed it was. The Tribunal does not accept that it is just the use of the lift which constitutes the servicing of the lot. It must be an exclusive use. The fact that it could be reprogrammed to service lots 1-15 is a factor which weighs in favour of the respondents case.
The applicant also makes submissions that the reprogramming is an interference with the right of exclusivity. That submission is rejected. It can only be an interference if the exclusivity in the first place.
[5]
The Lifts Capacity to Carry a Stretcher
It is not in dispute that lift 3 is the lift which is able to accommodate a stretcher and was the one designed to comply with the requirements of the relevant codes and Acts. The applicant submits that these create construction obligations and not management obligations and that there is an implied licence for use in an emergency for anyone regardless of the exclusive use rights of the lift. The Tribunal finds that the lift is the emergency lift which services all floors of the building. The Tribunal finds that this is a factor which weighs in favour of the fact that the lift does not exclusively service lot 61. It must be used to accommodate a stretcher in an emergency.
[6]
The lift services other units for the purpose of moving furniture
It is not in contention that the lift has been used to move large furniture from time to time. The Tribunal accepts that on its own this is not a factor which prevents exclusive use. However taken in consideration with the other factors it is also a factor which weighs in favour of the respondent.
[7]
The fact that the lift was programmed in such a way as to allow the occupants of levels 16, 17 and 18 to use lift 3 in the way that they did from 2005 to 2011
Given the Tribunals findings in relation to the group control function, this point do not carry much weight. Use itself is not the determining factor as to whether a lot has exclusive use of a service. The fact that the original arrangement meant that the lift had been programmed so that it could be used by the three lots does not in of itself confer exclusive use. Consistent with the comments relevantly made by Hamill J at paragraph 75;
The by-law did not then - and does not and cannot now - bestow upon the owner of any particular lot the "right of exclusive use and enjoyment" by reference to the fact of exclusive use. That right derives, on a proper interpretation of the by-law, from the fact that the subject service "exclusively services" the particular lot.
The programming allowed the lift to be used by levels 16, 17 and 18, but that in of itself does not mean that the lift exclusively serviced those levels.
[8]
The capacity of a "reasonable third person to enquire from the body Corporate what by-law 43 refers to" and whether "any particular exclusive use" is "granted under by-law 43"
This ground does not appear to have found much favour with Hamill J. In comments also relevantly made at paragraph 75 he states:
One way of testing this proposition is to consider how the by-law would have been understood by an interested purchaser immediately after the strata plan (along with the by-laws) was registered. At that point, there was no history of use upon which the defendant now relies. In the absence of any history of use, it could not have been said - as it was held by the Tribunal - that the "right of exclusive use and enjoyment emanates from the fact of exclusive use".
His Honour also referred to the case of The Owners of Strata Plan No 3397 v Tate [2007] NSWCA 207 in which at paragraph 71 McColl J (with whom Mason P relevantly agreed) stated:
Exclusive use by-laws may be inspected by third persons interested in acquiring an interest in a strata scheme, whether, for example, by acquiring units, or by lending money to a lot proprietor; such persons would ordinarily have no access to the circumstances surrounding their making; their meaning should be understood from their statutory context and language: NRMA; Lion Nathan.
Hamill J also refers in his reasons to an exchange at paragraph 66 between himself and Senior Counsel for the applicant as to where a prospective purchaser might find the EMF Griffiths specifications, presumably in order to inform himself in relation to the by-law. He sets out the response:
No doubt the body corporate would have to dig them up. I take your Honour's point. I do not mean to suggest they are there on the title or something, they are no doubt not. But my submission does not require that because that wasn't the issue. The issue was as a matter of fact is there exclusive use in a contested hearing before a judicial officer, namely the member, and he investigates the fact. The facts include the specification and the facts establish that yes, there is exclusivity."
The applicant acknowledges at paragraph 24 of its submissions that a person acquiring an interest has an opportunity to make such enquiries as it chooses as to what services if any by-law 43 applies. Little detail about what enquiries they could have made and what would have been publically revealed has been provided.
In his affidavit of 21 February 2012, Mr Donnison who is a resident and previous chairperson of the Executive Committee describes some investigations he made surrounding by-law 43 and whether it conferred an exclusive use of lift 3. These were not investigations he made prior to purchase, but while he was investigating the matter in general. He claims at paragraph 25 that he scrutinised the by-laws for an exclusive use by-law covering lift 3 and found none. He reviewed the minutes of meetings of both the Executive Committee and the Owners Corporation since the Inaugural General Meeting of the strata plan on 15 August 2005 and could not find reference to exclusive use of lift 3. He asked the building manager to make enquiries with the lift maintenance company about "whether lift no 3 had ever been part of the overall lift control system" and that he was advised that "the system was designed for 3 lifts and that it was a very simple matter to re-integrate lift no 3 into the lift management system for the Tower Building."
The Tribunal also notes the following comment from Mr Donnison starting at paragraph 22:
22. I, and as far as I know, every other resident of Gazebo thought that Gazebo Penthouse Pty Limited had exclusive use of Lift No.3 and if that were the case, I thought that Gazebo Penthouse Pty Limited should have been paying for its maintenance.
23. Further investigation revealed that, for some reason. Lift No.3 was 'isolated' from the lift management system that also controlled Lifts 1 and 2. Thus, the only way to use the lift was by a special key that had been issued only to the owners or residents of level 18 and the Building Manager.
24. I asked the Building Manager to confirm that Lift 3 was common property and she told me she believed that it was.
The trigger to Mr Donnison's enquiries had been his discovery while preparing budgets that the respondent had been paying for the maintenance of all lifts in the building including lift 3 (paragraph 21).
There is little evidence before the Tribunal which would indicate that when a third person interested in acquiring an interest in the strata scheme inspected it records, such a persons would have ordinarily had access to the circumstances surrounding the making of the by-law. By-laws are in place so that parties are on notice about their rights and obligations. The Tribunal agrees that their meaning needs to be understood from their statutory context and from the language of the by-law itself. Certainly the EMF Griffiths specifications dated November 2001 which are relied on by the applicant are not referred to in the by-law.
While the case of The Owners of Strata Plan No 3397 v Tate refers to an earlier statutory scheme which may not be strictly applicable to the present scheme, the Tribunal finds that the principals articulated by Her Honour at paragraph 71 are helpful:
Whichever be the appropriate characterisation, exclusive use by-laws should be interpreted objectively by what they would convey to a reasonable person: Lion Nathan;
6. In interpreting exclusive use by-laws the Court should take into account their constitutional function in the strata scheme in regulating the rights and liabilities of lot proprietors inter se: Parkin; Lion Nathan.
7. Unlike the articles of a company, there does not appear to be a strong argument for saying exclusive use by-laws should be interpreted as a business document, with the intention that they be given business efficacy: cf NRMA (at [75]). That does not mean that an exclusive use by-law may not have a commercial purpose, and be interpreted in accordance with the principles expounded in cases such as Antaios Cia. Naviera S.A., but due regard must be paid to the statutory context in so doing;
8. An exclusive use by-law should be construed so that it is consistent with its statutory context; a court may depart from such a construction if departure from the statutory scheme is authorised by the governing statute and if the intention to do so appears plainly from the terms of the by-law: Re Taylor;
9. Caution should be exercised in going beyond the language of the by-law and its statutory context to ascertain its meaning; a tight rein should be kept on having recourse to surrounding circumstances: Lion Nathan.
In considering this factor the Tribunal finds that it carries little weight in favour of the applicant's case. Interpreting this by-law objectively it is difficult to see how the reasonable third party could have become aware that the lift exclusively services the lot. Further, it was also servicing two other lots.
[9]
The relevance of evidence of Mr Fischer and his experts and the proper construction of the by-law
Given that it would be difficult to interpret by-law 43 as conferring exclusive use the Tribunal does not find the background to the making of the by-law and Mr Fischer's intention that the by-law exclusively service the lot prior to the refurbishment or his instructions about exclusivity bear much weight in deciding whether on registration of by-law 43, lot 61 was exclusively serviced by lift 3. Similarly, Mr Fischers consent in relation to the moving large items of furniture is irrelevant if it was not an exclusive use by-law in the first place. Accordingly the Tribunal does not give these grounds much weight.
The Tribunal finds that in weighing up all the relevant factors, by-law 43 when properly constructed does not mean that lift 3 exclusively services lot 61 or the lots on levels 16 and 17.
[10]
Section 65A of the Act and unauthorised reprogramming
The applicant regards the respondent's reprogramming of the lift on 6 July 2011 as unauthorised and states that it required a special resolution pursuant to section 65A of the Act. Relevantly the section reads:
(1) For the purpose of improving or enhancing the common property, an owners corporation or an owner of a lot may take any of the following action, but only if a special resolution has first been passed at a general meeting of the owners corporation that specifically authorises the taking of the particular action proposed:
(a) add to the common property,
(b) alter the common property,
(c) erect a new structure on the common property.
(6) The provisions of sections 52 (3), 54 (2) and (3) and 55 apply to a by-law made for the purposes of this section in the same way as those provisions apply to a by-law to which Division 4 of Part 5 of Chapter 2 applies.
It is not in dispute that a special resolution was never passed in accordance with section 65A prior the reprogramming of the lift operation in July 2011.
After considering the submissions and evidence on this point the Tribunal adopts and agrees with the reasoning stated by Adjudicator Smith stating:
I do not accept that re-programming of a lift amounts to alteration of common property. It is no more than utilising the mechanical and/or electronic capabilities of common property to achieve the management obligations imposed on the Owners Corporation pursuant to s61(1) of the Act.
The Applicant has suggested that the use of the words "alter" by the Mr Smith, the respondent's experts and Mr Marsh the lift mechanic in describing the mechanical reprogramming suggests that it is an alteration within the meaning of section 65A (1)(b) of the Act. The Tribunal rejects that assertion. To use an example articulated by the respondent, one might use the word "alter" in describing the changing of the temperature for the air-conditioner, yet it would be absurd to suggest that it is an alteration of common property. The reprogramming simply made use of the functionality of the existing property and that is not an alteration of the common property as intended by section 65A. The Tribunal agrees that it was done to optimise the services of the lift for the benefit owners as described by Mr Donnison in his affidavit dated 21 February 2012 at paragraph 2 and so no special resolution was required and consequently there is no breach of section 65A.
[11]
Matter SCS 13/21405 and the proposed by-law
The applicant made an application for adjudication of the matter on 16 April 2013. The application was referred to the Tribunal for determination pursuant to section 164 of the Act on 17 June 2013. The application is made by lot 61 pursuant to sections 158 and 169 of the Act that a special by-law be made and that the respondent does all things necessary to register the by-law pursuant to section 209 of the Act.
The proposed special by-law is as follows:
Notwithstanding anything to the contrary in by- law 43 registered with strata plan 74943 and on the conditions set out in this by-law, the owners for the time being of lots 60, 61 and 166 shall have a right and exclusive use and enjoyment of lift No.3 in the Tower Building (the Lift).
For this purposes of this by-law, the Lift No. 3 shall include the lift housing and all operating equipment serving only lift number No. 3.
Conditions:
The owner for the time being of Lot 61 shall be solely responsible for the proper maintenance and keeping in state of good and serviceable repair of the Lift.
Notwithstanding anything to the contrary in this by-law, the Lift may be used:
to transport a person by stretcher to or from an apartment in the Tower Building;
to transport furniture, which by virtue of its size cannot be transported in another lift in the Tower Building, in or out of an apartment, provided that the occupiers of lots 60, 61 and 166 are given not less than 72 hours written notice.
In this by- law, "occupier" of a lot includes an owner who occupies the lot.
It is uncontroversial that on 12 April 2012 the applicant proposed a by-law to the respondents and that under that by-law the Owners Corporation would have continued to be responsible for the maintenance and repair of lift 3. On 4 October 2012, an Extraordinary General Meeting was held to consider the by-law and the matter was adjourned for further consideration. On 7 March 2013, an Annual General Meeting was held and the issue was considered. By that stage there were two alternative by-laws. One proposed by the respondent which required that they remain responsible for the maintenance. The second proposed by the applicant was the same as the one that they had originally proposed except that the applicant would become responsible for maintenance. The by-law proposed by the respondent was defeated and all lot owners opposed it. The applicant proposal was defeated with the margin being 66% - 34%.
The applicant made submissions that the refusal to make the by-law was unreasonable. The effect of the proposed by-law would have the effect of giving lot 61, 166 and 60 exclusive use of lift no 3.
[12]
The Applicant's Case
The Tribunal has considered all the documents and submissions provided by the parties in relation to the application even if they have not specifically been referred to in these reasons. In summary the applicant submits the following as grounds as to why the refusal of the respondent to make the by-law was unreasonable:
For 6 years prior to 6 July 2011, the three lots enjoyed use as a matter of fact. They claim this was to the knowledge of the other lot owners generally. The proposed by-law simply confirms that right and the applicant's reasonable expectation in that regard.
From the moment of registration the lift was as a matter of fact deliberately programmed not to service every floor. It was programmed only to service the three upper level lots.
In relation to the lift being used as an emergency lift to accommodate a stretcher or large furniture, the issue is simply overcome by contemplation in the by-law and does not make the denial of the by-law by the owner's corporation reasonable.
Significant consequences flow for the applicant from the failure of the respondent to agree to the by-law. In his statement dated 17 August 2012, Mr Fischer states that lot 61 was originally built for him and according to his requirements. He claims the reprogramming of the lift has now resulted in inability to access the lift at certain times. In this regard Mr Fischer refers to incidents starting at paragraph 13 of his statement.
….
On one occasion only I have been unable to call a lift to Level 18, while on level 18. On 7 October 2011, three associates and I were unable to descend from level 18 via the lift because it had been locked off without notice to allow someone to move in what to move out of an apartment on a lower floor. We were obliged to walk down the 18 levels via the fire escape and to leave on the ground floor. I was unable to contact the building manager to arrange for the lift to be returned to normal service perhaps because, as I have found, the mobile telephone service is not good in the building, and it is non-existent in the basement.
14. I am aware of one other occasion when the lift could not be called to level 18, when required. On about 13 June 2012, an employee Chris Stark also had to walk from level 18 to the Ground Floor.
15. Frequently, my staff and I have been unable to take the lift up from the ground floor to level 18 because it is being used for the movement of furniture. On those occasions, the lift has been unavailable for several hours
Mr Fischer explains that the reprogramming has led to an inability to let the premises for either residential or commercial as he is unable to assure a tenant appropriate means of access and egress. He suggests that residing in the apartments is no longer viable.
The applicant also makes submissions that the reprogramming has led to substantial loss in monetary value of the penthouse beyond the loss of rent. The applicant relies on a report from Alan Hyam, who states he is a Barrister-at-law and a consultant valuer. In his report he finds that the diminution in market value of the property is $1.95 million. He notes at page 16 of his report:
In my experience purchases of prestige apartments, such as the level 18 Strata Lot, expect reliable lift access to and from their apartments, particularly when they are located on the upper floors of apartment buildings. It appears to me that such an expectation was recognised and met by the previous policy which reserved lift No 3, ordinarily, for the exclusive use of the Strata Lots on Level 16, 17 and 18 of the Tower Building in the subject property. A delay in accessing a lift to a prestigious apartment, or the prospect of having to walk down several levels of fire stairs, is a significant disincentive to potential purchases of such apartments, and would cause them to pay significantly lower prices for apartments which do not have reliable lift access. In high-rise buildings it is important that penthouse apartment have dedicated lift access as lifts which service all floors are in the main slow to respond to calls from upper floors. The situation is exacerbated when lifts are sometimes use for the purpose of delivering items of furniture and large parcels, items of equipment's and parcels etc.
The applicant also states that there is no evidence before the Tribunal about why the 66% constituent members voted against the motion and that an inference should be made that what motivated the members was unreasonable. They state that the only real matter which was disclosed by Mr Donnison was the question of cost and repair of the lift and that was addressed by Gazebo's proposed by-law. They refer to circulars which they state were put out by the Chairman and were blatantly twisted.
There is no evidence to suggest any unsatisfactory delays or other problems of the other lot owners between the years from 2005 to 2011 when they did not have access to the lift.
[13]
The Respondents' Case
In summary the respondent made the following submissions as to why the refusal of the respondent to make the by-law was not unreasonable.
There was never any registered by-law which granted the applicant exclusive use in the first place.
Lift three has the ability and has always had the ability to be programmed to service each and every floor.
The Building Code of Australia requires that an emergency lift must be provided to serve all floors in the building.
The applicant still has full, free and unrestricted access to lift 3 and the objection really relates to the applicant having to share the lift with other lot owners. In relation to Mr Fischer's claims of inability to access the lift. The respondent states Mr Fischer could only be locked out if lift 3 was being used for removals. The respondent claims that this is overcome in any case by the fact that the applicant has access to the fire escape and Mr Fischer has access to the fire key as the director of the applicant. In his affidavit dated 11 November 2013, Mr Donnison states that bookings for furniture removal are only accepted between the hours of 9am to 5pm weekdays and 9am to 12.30pm Saturdays and that a concierge can be contacted by a dedicated mobile phone during those times as they are within the time of duty.
By agreeing to the by-law the respondents would have given away a valuable asset for no consideration. They rely on the valuing of the lift by Mr Hyam to support the fact that the lift is a valuable asset also to the Owners Corporation. The effect of agreeing to the making of the by-law denies the other 92 lots the use of three lifts for the benefit of 3 lots.
As the developer it was open to Mr Fischer that the lift was designed and installed to be dedicated to the use of only lot 61, this could have been achieved by the entrances to the other floors being bricked up. However, the respondent suggests that this was never viable because in the event this was done the relevant building code would not have complied to accommodate a stretcher.
The respondent also relied on the applicant's expert evidence from Mr Brinnand who they say under cross examination indicated that the third lift would create an improvement in the lift service available to all other owners.
The respondents rely on the affidavit of Mr Donnison dated 2 October 2013 and his observations of the Annual General Meeting of 7 March 2013 in which he remembers questions being asked by the members. He recalls:
8. I recall that what there were about 50 or more people in the room, most of whom were owners of the lots in the Owners Corporation.
9. I recall that Sid Fischer, the principal of Gazebo Penthouse Pty Ltd and 2 Elizabeth Bay Road Pty Ltd, the developer of the Owners Corporation's building, was present and that he said words to the effect"
"I'm happy to allow others to use the lift for moving large objects or for emergency with prior notice."
10. I recall that other owners asked questions in words to the following effect:
"What happens if someone has a heart attack in the middle of the night? How do we get access to lift three then?"
"This proposed by law only deals with the costs of maintenance and repair. What about replacement? What about capital costs?"
11. I recall noting that there was no response to either of those questions from Sid Fischer, Brenton Fischer, Aleco Vrisakis, or anybody else in the group attending the meeting with Mr Fischer.
12 I note that the proposed by-law submitted to the meeting by Gazebo Penthouse Pty Ltd does not address how lift 3 would be used in an emergency after hours. A special key would be needed by any other person to operate the lift once it switched over to the exclusive use of Gazebo Penthouse Pty Ltd. If the concierge has a copy of the key and is not available or not on duty, there would be nobody within the building who has a key to access the lift. I understand that the fire brigade has a key that overwrites the priority use key, but it is my understanding that the ambulance service does not.
[14]
The Relevant Law
Section 158 of the Act relevantly states:
158 Order with respect to by-laws conferring exclusive rights or privileges over common property
(1) An Adjudicator may make an order prescribing the making, amendment or repeal, in terms of the order, of a by-law if the Adjudicator finds:
(a) on application made by an owner, that the owners corporation has unreasonably refused to make a by-law of the kind referred to in section 51, or
(b) on application made by an owner or owners corporation, that an owner of a lot, or the lessor of a leasehold strata scheme, has unreasonably refused to consent to the terms of a proposed by-law of that kind, or to the proposed amendment or repeal of such a by-law, or
(c) on application made by any interested person, that the conditions of such a by-law relating to the maintenance or upkeep of any common property are unjust.
(2) In considering whether to make an order under this section, an Adjudicator must have regard to:
(a) the interests of all owners in the use and enjoyment of their lots and common property, and
(b) the rights and reasonable expectations of any owner deriving or anticipating a benefit under a by-law of the kind referred to in section 51.
(3) An Adjudicator must not determine an application referred to in subsection (1) (a) by an order prescribing the making of a by-law in terms to which the applicant or, in the case of a leasehold strata scheme, the lessor of the scheme is not prepared to consent.
(4) For the purposes of subsection (1), an Adjudicator may determine that an owner has unreasonably refused consent even though the owner already has the exclusive use or privileges that are the subject of the proposed by-law.
(5) An order under this section, when recorded under section 209, has effect as if its terms were a by-law (but subject to any relevant order of a superior court).
Section 169 of the Act allows the making of ancillary orders.
In determining whether the Owners Corporation has unreasonably refused to make a by-law Tribunal must have regard to the factors set out in section 158(2)(a) and section 158(2)(b) of the Act.
The test of reasonableness has been considered by the High Court in George v Rockett [1990] HCA 26; [1990 170 CLR 104 where it was said (at 112)
The test of reasonable is an objective test which requires the existence of facts which are sufficient to induce that state of mind in a reasonable person
What is reasonable must be determined objectively. For a decision to be reasonable requires the existence of facts which are "sufficient to induce that state of mind in a reasonable person". (Also see George v Rockett [1990] HCA 26; [1990] 170 CLR at 112).
[15]
Findings and Decision
The Tribunal does not find that the Owners Corporation has unreasonably refused to consent to the making of the by-law. The onus is on the appellant to demonstrate that the Owners Corporation's decision was unreasonable. The Owners Corporation does not have to prove that it acted reasonably in refusing its consent to the proposed by-law.
[16]
The interests of all owners in the use and enjoyment of their lots and the common property
As noted above, in considering whether to make an order under section 158, The Tribunal must consider the interests of all owners in the use and enjoyment of their lots and the common property. The Tribunal finds from the evidence of Mr Donnison that questions were posed at the meeting in relation to consent of the by-law and that there was a real concern as to cost of maintenance and repair of lift number 3, about it being an emergency access lift and about replacement costs and capital costs.
In relation to the concerns about the emergency lift, the Tribunal finds that the Building Code of Australia required that an emergency lift must be provided to service all floors in the building. The Tribunal is satisfied those are grounds which would make it reasonable for the owners to refuse to consent to the making of the by-law. The applicant maintains that they have made provisions for this in the by-law, however, on careful reading of the proposed by-law, very little detail is provided as to how it would be done beyond the fact that the lift may be used "to transport a person by stretcher to or from an apartment in the Tower Building". The by-law is silent as to anything else relating to the emergency lift.
The Tribunal agrees that the by-law would result in giving away a benefit on behalf of the Owners Corporation. However, the Tribunal does not find that the valuation provided by the applicant's expert, Mr Hyam, is a real indication of the respondent's monetary loss if any. The Tribunal refers to the evidence of the applicant's lift expert Mr Brinnand. In his statement dated 17 August 2012, Mr Brinnand states at paragraphs 8 and 9 that the two lifts should in his experience satisfactorily handle the requirements of the residents on level 1 to 17 and goes on at paragraph 9:
On the other hand, in my opinion, based on my experience, the services to the Level 18 penthouse would be seriously affected should Lift No.3 be available when tenants are moving in or out as Level 18 occupants and users would have no means of accessing their floor, or departing from it, until such time as the lift returned to normal services.
Under cross-examination when Mr Brinnand replied as follows when asked about the impact of three lifts servicing the levels as opposed to two:
Q. But, in any event, there will be a significant improvement?
A. Most definitely
Q. And one of the ways then to address the problem you identified in the final sentence of paragraph 8, that major delays would occurred should one lift be out of service would be to have three lifts so that if one lift is out of service, two lifts are then available to cater for the demand?
A. That would be cute
Having considered the evidence on this point the Tribunal is satisfied that the use of the three lifts does provide a significant improvement of the service to the owners and that giving it away would affect the interests of all owners in the use and enjoyment of their lots and the common property. Having access to three lifts does provide a significant improvement in the service of the lots.
The Tribunal refers to circulars which the applicant claims demonstrates that circulars put out by the Chairman were blatantly twisted and did not properly inform the members. They suggest that is an indication that the decision made by the members was unreasonable. Having considered the evidence on this point the Tribunal does not find it particularly persuasive as influencing the Members at the meeting to make an unreasonable decision.
[17]
The rights and reasonable expectations of any owner deriving or anticipating a benefit under a by-law
The Tribunal finds that the applicant still had free and unrestricted access to lift 3. Mr Fischer detailed one occasion in which he had to walk down the fire stairs. In cross-examination Mr Fischer explained that he had only lived in the apartment two or three months after the refurbishment and he does not currently use it. In his affidavit of 21 February 2012, Mr Donnison stated that removals in the apartment are not common and only occurred on average twice per month. He also stated that bookings are only accepted within certain periods and that was at times when the concierge was on duty. The concierge also has a mobile phone. The Tribunal notes that Mr Fischer alleges that mobile reception is not good in the building. The Tribunal finds that the instances when such a situations would occur would be quite limited and accepts from Mr Donnison's evidence that these matters can be resolved by contacting the concierge on duty by phone. The Tribunal is also satisfied that Mr Fischer who controls the developer retains a fire door key for access should that occur. The Tribunal accepts from the evidence that Mr Fischer controls the developer and that he can retain the key or a duplicate and that on the rare occasion that he is locked out, he can access lower levels to access the lifts, in particular level 15.
Further, in cross examination Mr Fischer admitted to having a priority key which could call lift no 3 to the floor they are waiting on. The respondent claims that the priority is postponed if it is being used by the resident of another floor. There is very little evidence to suggest exactly what delay has resulted for the applicant as a result of the lift being reprogrammed. Mr Brinnand refers to delays when the lift is being used for furniture, but nothing in general about waiting times. Mr Hyam states in his report:
In high rise buildings it is important that penthouse apartments have dedicated lift access as lifts which service all floors are in the main slow to respond to calls from the upper floors.
However that does not explain the delays for lot 61. In the main the Tribunal does not find any significant delays to the applicant in relation to the lift and the real issue seems to be only on the rare occasion when the lift is locked out for furniture.
It appears that the issue relating to the moving of large furniture exists regardless of whether there is a by-law or not. In his statement Mr Brinnand also refers to this as an issue. Under cross-examination Mr Brinnand conceded that he had not measured the extent to which the problem might arise in the building because he was "not privy to when people move in or move out." Indeed, the proposed by-law itself envisages that the lift can be used by the other owners to transport large furniture, provided that the occupiers of lots 60, 61 and 166 are given not less than 72 hours written notice. The lift would still be required to move large items of furniture. At present, even without the exclusive, it seems there is a process in place where occupiers book in when they want to transport large furniture. The issue of the use of the lift for large furniture and emergencies remain regardless of whether the lift exclusively services the three lots or not. Similarly, if the premises are tenanted the lift is still the lift used by other levels as an emergency lift or for the transport of large items of furniture. The extent to which that aspect changes if an exclusive use by-law exists is not entirely clear from the evidence. The Tribunal does not find that this is a matter which has much weight in terms of the reasonable expectations of the applicant.
Given it's finding above, the Tribunal is not satisfied that the reprogramming has resulted in the premises being unable to be let for either residential or commercial or that residing in the premises is no longer viable. Certainly the report of Mr Brinnand does not lead to that conclusion and in particular in his answers under cross-examination he does not explain that precisely. It may make it less lucrative in terms of rents, although no evidence showing the difference has been presented on this point.
The Tribunal's accepts the Hyam report, that not having exclusive use of lift three means a difference in value of $1.95 million to the applicant. The Tribunal has found that by-law 43 never entitled the applicant to exclusive use of the lift from the time of registration. The Tribunal accepts that at the time the applicant believed otherwise. However, objectively and from the time of registration, it cannot be said that that the applicant was entitled to an exclusive use by-law. Therefore, the applicant cannot have lost anything, even if the lift was programmed in a certain way, because the exclusive use never existed. However, it is agreed that if the by-law is granted it would substantially increase the value of the unit and that is something the Tribunal must weigh as one of the factors in favour of the applicant in terms of the expectation.
Having considered the evidence and submissions, The Tribunal is satisfied that the interests of all owners in the use and enjoyment of their lots or of the common property would be adversely affected by the proposed exclusive use by-law.
Having weighed up the factors in sections considered sections 158(2) (a) and (b) of the Act, the Tribunal does not find that the respondent's refusal to consent to the making of the by-law was unreasonable. The Tribunal is not satisfied that the applicant has discharged the onus of establishing that the respondent's refusal to consent to the making of the proposed by-law was unreasonable. Issues relating to the improved service that three lift would give to lot owners and to use of the lift as the emergency lift and the lift to remove furniture are persuasive. Even though they have been in part dealt with by the by-law, they have not been dealt with in any details. On an objective standard, it is not unreasonable that the lot owners would refuse the making of the by-law. On that basis this application for the making of the by-law is refused as the Tribunal is not satisfied that the respondent unreasonably consented to the making of the by-law. The orders are made accordingly.
T Simon
Senior Member
Civil and Administrative Tribunal of New South Wales
4 August 2015
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 18 September 2015
Parties
Applicant/Plaintiff:
Gazebo Penthouse Pty Limited
Respondent/Defendant:
Owners Corporation SP 73943
Legislation Cited (1)
Strata Schemes Management Act 1996(NSW)
Cases Cited (7)
What the Tribunal Must Decide
The applicant submits that the entire case is remitted to the Tribunal, not only the issues related to the question of law upon which the appeal succeeded. The Tribunal is obliged to determine all questions of fact and law relevant to the application. They agree that does not however mean that there is an obligation on the Tribunal to rehear all the same evidence. The Tribunal may on the remittal exercise a abroad discretion as to how the matter should be concluded and dealt with in a fair and just way. In this regard they rely on Walker Corporation Pty Limited v Sydney Harbour Foreshore Authority [2009] NSWCA 178. The applicant submits that the best guideline is that undisturbed findings should stand and that the Tribunal should determine outstanding issues;
on the existing evidence in accordance with law, subject to the admission of any further evidence and any leave to amend, which lie the discretion of the Tribunal.
The respondent agrees with the applicant's summation of the relevant principles in relation to the remitter except that the Tribunal must ignore the decision and reasons of the Member in the first instance except insofar as they are required to understand the judgement of Hammil J. The Tribunal should make its own findings of fact and law on the proper construction of by-law 43 based on the evidence that was before the Tribunal and any evidence the Tribunal sees fit to allow.
The Tribunal agrees with the party's positions in relation to what it must consider in relation to the remitter, including the additional caution by the respondent. The first application it must decide is the appeal pursuant to section 177 of the Strata Schemes Management Act 1996 (NSW) (the Act) against the order of the Adjudicator in matter SCS 11/53748. In that regard the Tribunal has considered annexure "A" which is the amended application received on 25 February 2015.
The Tribunal is satisfied that it has jurisdiction to decide the matter. The adjudication was decided on 22 March 2012 and the appeal was lodged 12 April 2012 and in accordance with section 177 of the Act the appeal was filed within time.
In that regard the primary issues that the Tribunal must consider is whether lift three exclusively services lot 61.
The Tribunal is also satisfied that it must decide the application for adjudication, SCS 13/21405 which was lodged on 16 April 2012 and subsequently transferred to the Tribunal.
It should also be noted that the parties provided an agreed bundle of evidence consisting of two folders which they relied on and further documents and submissions. The parties in their written and oral submissions have not referred to the relevance of many of those documents. However, even if they have not been specifically referred to they have been considered by the Tribunal and the Tribunal refers to them in its reason depending on the relevance to the matter at hand.
The Tribunal will briefly set out each of the party's respective position as to whether lift 3 exclusively services Lot 61.