Gazebo Penthouse Pty Limited v The Owners - Strata Plan No 73943

reasons for decision BACKGROUND 1.The former Gazebo Hotel was redeveloped into residential units and two commercial units between 2002 and 2005. 2.The developer was 2 Elizabeth Bay Pty Ltd. The guiding mind in the development of the Hotel, several decades ago, and the redevelopment in to the Strata Plan was Mr Sydney Fischer. He was the sole director of the companies involved. Mr Fischer is the sole director of the applicant company. 3.The strata plan comprises two buildings: the Tower Building and the Court Building. The Tower Building has 61 residential apartments and three lifts. The Court Building has 100 apartments and two lifts. 4.Level 18 of the Tower Building was formerly a roof top area. It was developed by one of Mr Fischer's companies into a habitable floor. It became lot 61. 5.Lift No 3 became the only lift servicing lot 61. 6.The strata plan 73943 was registered by the Developer 11 August 2005 7.The applicant is the proprietor of lot 61 in the Tower Building, Level 18. 8.The applicant acquired lot 61 in August 2006. 9.By-law 43 was registered in 2005 with the Strata Plan. 10.By-law 43 is in the following terms: 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 and forms part of the common property ("Exclusive Services"). 43.2 The owner is responsible for the ongoing repair and maintenance of the Exclusive Services. 43.3 In the event that the Owners 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 Service to be in keeping with this by-law. The costs 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 Owners Corporation as the case may be, on demand. 11.Lift No 3 was exclusively used by lot 61 between the period 2005 and 2011. In 2009 Mr Fischer gave a key to Lift No 3 to the occupiers of level 17 to use mainly when their children were staying with them. 12.On 11 January 2011 the Executive Committee met and noted in the Minutes that all lifts are common property and there is no restriction in place to prevent all residents from using them. 13.On 6 July 2011 the Owners Corporation's lift contractor re-programmed Lift No 3 to respond to calls from all residential floors in the Tower Building. APPLICATION 14.On 3 November 2011 the applicant applied for an interim and a substantive order by an Adjudicator. 15.The application for an interim order sought to have the respondent restore forthwith exclusive use of Lift No 3 in the Tower Building to the owner of lot 61, and thereafter not to interfere with the exclusive use of the lift by the applicant pending determination of the substantive application or earlier expiry of the interim order. 16.The substantive application sought an order for the Owners Corporation to restore forthwith exclusive use of Lift No 3 in the Tower Building to the owner of lot 61, and thereafter not interfere with the exclusive use of the lift by the applicant, subject to the lawful appeal or variation of by-law 43. 17.An interim order was made in the applicant's favour by an Adjudicator on 4 November 2012. The respondent was ordered not to interfere with the use by the applicant, its officers, servants, agents or invitees of the lift providing access to level 18, Tower Building SP 73943. 18.The respondent appealed against the decision to grant an interim order on 1 December 2012. 19.On 2 February 2013 the Tribunal revoked the interim order. 20.The applicant's substantive application was decided by an Adjudicator on 22 March 2012. 21.The application was dismissed. 22.The Adjudicator formed a view that by-law 43 makes no specific reference to Lift No 3 or indeed any other lift. Therefore, there could not be a grant of exclusive use of Lift No 3 to the applicant. 23.The Adjudicator decided the practice of all parties for a number of years was to conduct themselves in a manner consistent with there being no exclusivity granted by by-law 43. 24.The Adjudicator was satisfied that Lift No 3 has always been common property and remains so. 25.The Adjudicator was satisfied that, except for the times when Lift No 3 was being used for moving large furniture, the applicant effectively had sole access to Lift No 3. 26.The Adjudicator was not satisfied that re-programming of Lift No 3 amounted to alteration of common property for which approval in general meeting has not been given. 27.The present appeal is by the proprietor of lot 61 against the Adjudicator's decision. 28.The appeal was filed in the Tribunal on 12 April 2012. 29.The following are the grounds of appeal: 1.The Adjudicator erred in finding that by-law 43 could not confer exclusive rights in respect of the lift without a specific nomination of the lift in the by-law. 2.The Adjudicator erred in construing by-law 43 according to the subsequent conduct of the parties. 3.The Adjudicator erred in construing by-law 43 by placing weight upon the contention that the Owners Corporation has not requested payment of the maintenance and cleaning of the lift. 4.The Adjudicator erred in finding (or inferring) that the applicant not objecting to "the continued use over the years of the lift to bring furniture, etc into and out of the building" was inconsistent with the right of exclusive use and enjoyment of the lift. 5.The Adjudicator erred in finding that the respondent has not interfered with the applicant's exclusive use of Lift No 3, and that any interference was limited to the events of 11 October 2011. 6.The Adjudicator erred in failing to find that Lift No 3 has been designed to be used exclusively by the Penthouse levels (except for transporting persons by stretcher). 7.The Adjudicator erred in finding that the alterations and additions to the lift were "no more than utilizing the mechanical and/or electronic capabilities of common property to achieve the management obligations imposed on the Owners Corporation pursuant to s 61(1) of the Act." 8.The Adjudicator erred in failing to find that alterations and additions to the lift had not been authorised by the Owners Corporation. 9.The Adjudicator erred in his findings of fact and in weight given to his findings. 30.On 16 April 2012 the applicant filed a fresh application for adjudication, SCS 13/21045. An order was sought pursuant to s158 of the Act that a by-law be made to allow exclusive use and enjoyment of Lift No 3 to lots 60, 61 and 166. This application was transferred for determination to the Tribunal in June 2013 pursuant to s164 of the Act. 31.Lots 60 and 166 did not make submissions or take part in the proceedings. 32.The parties agreed that the evidence in one matter is the evidence in the other. 33.The Tribunal was, as outlined by the respondent, to deal with two questions in this appeal: (a)Does Lift No 3 exclusively service the applicant's lot, such that it has a right to the exclusive use and enjoyment of Lift No 3 under the scheme's by-laws? (b)If not, should the Tribunal make an exclusive use by-law giving the applicant that right? APPLICANT'S EVIDENCE 34.The applicant relied on the following in the appeal; a.All of the documents, submissions and statements in the Adjudication Files SCS 11/53748 and SCS 13/21405. b.Two folders of documents (Ex A), dated 17 August 2012 and documents, dated 16 September 2013. c.Applicant's submissions, dated 25 November 2013. d.Applicant's submissions in reply, dated 16 December 2013. 35.The applicant submitted that the language of by-law 43 confers a right of exclusive use of Lift No 3 on lot 61, level 18 and lot 166 and 60, levels 16 and 17. 36.The applicant stated that the Adjudicator erred in finding that by-law 43 could not confer exclusive rights in the lift without specific nomination of the lift in the by-law. 37.The applicant contends that the word exclusive in by-law 43 is to be construed by reference to its own language and its statutory context. There is no evidence, or suggestion of any other service which could possibly come within that description in by-law 43. 38.The applicant refutes the argument by the respondent, made to the Adjudicator, that Lift No 3 never provided an exclusive service to Gazebo, level 18. The applicant asserts that until July 2011, Lift No 3 was never available to levels 1-15.The Adjudicator made a finding to this effect in his Reasons for Decision. This finding, the applicant submitted, has not been challenged by the respondent. 39.The applicant stated that the respondent seeks to challenge the right given to lot 61 in by-law 43 because the language used in the by-law is to give exclusive right to an individual lot. The respondent argued that prior to 2011 exclusive services were given by Lift No 3 to 3 levels; 16, 17 and 18, which is more than one individual lot, specified in by-law 43. 40.The applicant's answer to the argument that by-law 43 may not permit exclusive right to more than an individual lot is in three parts: 41.Firstly, the applicant points to the Specification for Modernisation of Passenger lifts prepared in 2001 by EMF Griffiths Pty Ltd, Consulting Engineers. At 3.6 Lift 3 Priority "Penthouse Service", among other, the following is specified: "Lift 3 shall operate in a simplex directional collector system for penthouse residents on levels 16, 17, 18. Emergency services shall override all security as appropriate". The applicant says the specification is unambiguously clear, Lift No 3 was to be exclusively used by the 3 levels only, 16, 17 and 18. The applicant submitted that by-law 43 was directed at confirming, and reiterating, and securing what was stated in the specification. 42.Secondly, the applicant submitted that s52 of the Act clearly envisages that a right of exclusive use of common property may be conferred upon the owners of a number of lots, not just one. Section 52 states; How does an owners corporation make, amend or repeal by-laws conferring certain rights or privileges? (1)An owners corporation may make, amend or repeal a by-law to which this Division applies, but only: with the written consent of the owners of the lot or lots concerned and, in the case of a strata leasehold scheme, and (a) in accordance with a special resolution. 43.Thirdly, the applicant says that it is the applicant's interpretation of by-law 43, rather than the Owners Corporation's which serves the evident purpose of the by-law. The applicant contended that the language of by-law 43 easily and readily accommodates the conferring of "exclusive" use of Lift No 3 on all three levels, 16, 17 and18 because s8(b) of the Interpretation Act 1987 states that a word or expression in any Act or instrument in the singular form includes a reference to the word or expression in the plural form. 44.There are several other matters submitted by the applicant to illustrate the historical circumstances surrounding by-law 43. The applicant states that Mr Fischer acquired the Gazebo on level 18 in 2006. Mr Fischer's statements are referred to, to note that the purchase was made on the understanding that Lift No 3 would be available only to the 3 Penthouse levels. 45.There were exceptions made in the exclusive use of Lift No 3 when the lift was required to move large furniture or if the lift was required to carry a stretcher in emergency cases. 46.The applicant concedes that it did not pay separately for any maintenance and repairs of Lift No 3. The applicant says that he was never asked to pay for any maintenance or repair costs. He is willing to meet his obligations in this regard. 47.The applicant contends that reprogramming of Lift No 3 in 2011 by the Owners Corporation, to make it available to all 18 levels, had obvious and considerable impact on the Gazebo. 48.The applicant refers to the report prepared by Mr Alan Hyam, Consultant Valuer, dated 16 August 2012. The report states (pps.16-17) that purchasers of prestigious apartments, particularly if they are located on upper levels of apartment buildings expect reliable lift access. It would be a disincentive to potential purchasers and they would pay significantly lower prices for apartments which do not have reliable lift access. 49.The prospective purchaser would face a prospect of having to walk down18 levels of fire stairs in the event if Lift No 3 was held up on any other floor. There is no exit to any other level from the stairwell, between level 18 and the ground floor 50.It is stated in the Valuer's Report that if exclusive use of Lift No 3 is not available to lot 61 there would be a diminution in value of $1.95 million. 51.The applicant points out that level 18 occupant does not have a key and cannot gain access to lift lobbies on any of the floors between level 18 and ground level. 52.Mr Fischer states the Gazebo would not be able to let the premises. It would not be viable for him to live on level 18. The use of level 18 for business purposes is made uncertain without exclusive access to Lift No 3. 53.The applicant submitted that the respondent conceded that no resolution has been passed at the meetings of the Executive Committee in November 2010 and January 2011 to alter the programming of Lift No 3 in the way it occurred in 2011. 54.The applicant states that the absence of a special resolution by the Owners Corporation to alter the programming of Lift No 3 is fatal to the Owners Corporation's case on the appeal. That is, the Owners Corporation did not comply with the requirements of s65A (1) of the Act. 55.Section 65A is in the following terms: 65A Owners Corporation may make or authorise changes to common property (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. The applicant claims that altering the reprogramming of Lift No 3 was done without the special resolution of the Owners Corporation and was therefore unauthorised and impermissible. 56.The applicant asserts that the Adjudicator made an error when he concluded that reprograming of Lift No 3 was 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 s 61(1). The applicant maintains that the re-programming the operation of a lift system which is a part of common property, to operate in a completely different way, amount to altering that system, and thus the common property. 57.The applicant notes that the dictionary meaning of "alter" is to make different in some respect; modify. The applicant contends that the person who re-programmed Lift No 3 described in his report the tool that he used to make the change as "a key pad, by which one could alter the operation of the software"...The applicant contends that the action taken by the respondent in July 2011 to alter the programming of Lift No 3 system was unauthorised and has to be reversed. It is submitted the Tribunal should order the restoration of the pre-existing status quo in relation to Lift No 3. SCS 13/21405 APPLICATION THAT A BY-LAW BE MADE, SECTION 158 AND 169 58.The applicant applied for an order to be made by an Adjudicator, in the alternative to the restoration of the rights to the exclusive use of Lift No 3. Section: 158, 169