What happened

This was an owners corporation dispute heard in the Victorian Civil and Administrative Tribunal (Owners Corporations list). The applicant, Mr Anthony Lieu, a lot owner in the Nightingale Village development, sought orders that the internet levies charged by Owners Corporation PS 831943H be imposed on a user-pay basis under s 12 of the Owners Corporations Act 2006 (Vic), that he be reimbursed the internet levies already paid, and that fee notices be reissued excluding the internet levy (Parties and claim [1]–[2]).

Key factual features agreed or established at hearing:

• The developer contracted (on 21 March 2022) with Sensia trading as Net 360 to provide an embedded fibre network under a Master Services Agreement (MSA), Schedule 1 of which describes the service as a one-line item for unlimited data (Background agreed facts [3]–[4]; Evidence [2.1]).
• Net 360’s infrastructure for the building runs through a single fibre node carrying multiple services: intercom between gate and apartments, remote gate control, calling the lift, fob security and apartment internet use (Evidence [2.1], [2.2]).
• The MSA and the Novation Deed (effectuating the supplier’s contract to the owners corporation) provide a single price for the bundled services and do not permit itemisation of the building functions separately from apartment internet (Evidence [2.3]).
• At the inaugural owners corporation meeting, unanimous resolutions were passed to novate the MSA to the OC and to charge a special levy equally across occupiable lots to recover the bundled service cost (Background agreed facts [5]–[6]).

At hearing Net 360’s witness, Daniel Paolini, gave evidence that the supplier regarded apartment internet as an 'added extra' and that Net 360’s price to the OC does not vary with occupant uptake (Evidence [2.4]–[2.5]). The Tribunal accepted this evidence and the evidence that the infrastructure and contract do not allow current separation of the bundled services (Findings [4]).

The Tribunal held the bundled service was properly characterised by its dominant common-property functions and so fell within s 47(1) of the Owners Corporations Act 2006. Consequently the OC may recover the cost through annual fees based upon lot liability under s 23 and s 28(1), and the applicant’s claim to user-pay treatment and reimbursement was dismissed (Findings [1], [7]–[8]; Orders).

Why the court decided this way

The decision rests on two interconnected determinations: first, the factual finding that the supply from Net 360 is a single bundled service delivered over a single fibre node and governed by a contract that charges a single price without provision for itemisation; second, the legal characterisation of that bundle.

Statutory framework

• s 12 of the Owners Corporations Act 2006 covers services unrelated to common property and provides that an OC may decide to provide such services only by a special resolution, and that the cost must be on a user-pay basis.
• s 47(1) establishes the owners corporation’s obligation to repair and maintain services for the benefit of more than one lot or common property.
• s 23 permits annual fees based on lot liability to meet the cost of common-property services; s 28(1) requires lot owners to pay those fees.

Application to facts

• The Tribunal accepted Net 360’s evidence that intercom, gate control, lift calling and fob security are services the OC must repair and maintain and therefore fall within s 47(1) (Findings [1]).
• Because the infrastructure and MSA do not permit separation of the bundle into discrete cost elements, the Tribunal could not treat apartment internet as a separable non-common-property service subject to s 12’s user-pay regime (Findings [4]–[5]).
• The proper analytical step was therefore to characterise the overall bundle by its dominant function. On the evidence the dominant character was that of core common-property services rather than the accessory apartment internet, and the Tribunal held s 47(1) applied and allowed recovery via lot liability fees (Findings [6]–[8]).

Practical emphasis in the reasons

• The Tribunal’s conclusion follows a pragmatic characterisation approach when contractual and physical segregation is impossible. The supplier’s commercial description of apartment internet as a bonus, and the fact the supplier’s price was unaffected by uptake, supported the conclusion that the bundle’s practical and economic core was the common-property functionality (Evidence [2.4]; Findings [6]–[7]).

Before and after state of the law

Before this decision

• The Tribunal reiterated the established position that "ordinarily" internet service offered by an OC within a lot is unrelated to common property and thus falls within the s 12 user-pay regime (Findings [3]; Costs [2.1]). This principle traces through earlier VCAT authority cited by the Tribunal, notably Noonan v Owners Corporation No [2011] VCAT 1934, which the Tribunal applied for the statutory propositions (Findings [2]; footnotes [3]–[4]).

After this decision

• The decision affirms that where the physical/infrastructural reality and contractual arrangements produce a single bundled service that cannot be costed separately, the classification is determined by the bundle’s dominant character. Where that dominant character is common-property, the owners corporation may lawfully meet the cost via annual fees based on lot liability under s 47(1) and s 23, even though the bundle includes lot-internal internet access. Practitioners should therefore assess not only the functional description of services but whether separation is feasible in practice and under contract.

Limitations

• This is a fact-sensitive outcome. The Tribunal emphasised that the MSA’s one-line pricing and the single fibre node infrastructure were decisive. If a supplier or OC can demonstrate practical and contractual separability, the ordinary s 12 position (user-pay) may apply.

Key passages with plain-English translation

1. Findings [1]:

   • Text: The Tribunal finds the intercom, remote gate access, lift calling and fob security are services the OC must repair and maintain and so fall within s 47(1).
   • Plain English: Those elements are common-property services; the owners corporation is responsible for them and may fund them through regular fees.

2. Findings [4]:

   • Text: The single fibre node infrastructure and the MSA do not permit delineation within the bundle to separate common-property from non-common-property services.
   • Plain English: The network and contract bundle everything together and do not allow the OC or supplier to split the bill for building services versus apartment internet.

3. Findings [7]:

   • Text: The bundle is better characterised by core OC common-property services rather than discretionary apartment internet usage.
   • Plain English: Although the bundle includes apartment internet, its primary purpose and cost-driver are the building-wide systems, not individual residents' internet use.

4. Findings [8]:

   • Text: Therefore the bundle falls within s 47(1) and the cost may be included in OC annual fees based on lot liability.
   • Plain English: The owners corporation was right to charge the levy through regular fees shared according to lot liability; the applicant’s challenge fails.

5. Costs observations [2.2]–[2.3]:

   • Text: The MSA/Novation Deed did not expressly describe the inclusion of common-property services; this was only disclosed in oral evidence.
   • Plain English: The written agreement did not spell out that building systems were bundled with apartment internet; that fact emerged only during the hearing.

What fact patterns trigger this precedent

This decision is triggered when:

• A developer or OC has an embedded network in which multiple services (building intercom, gate control, lift calling, fob security) and apartment internet are delivered over the same physical infrastructure (a single fibre node or equivalent) (Evidence [2.1]–[2.2]).
• The contract with the supplier contains a single bundled price or otherwise does not permit itemisation or separate charging for the distinct functional elements (Evidence [2.3]; Findings [4]).
• The supplier’s commercial model does not vary the price according to individual uptake, indicating the economic incidence lies with the bundled building functionality (Evidence [2.4]).
• Under those conditions the Tribunal will characterise the supply by its dominant function; if that is common-property, the OC may recover costs through lot liability fees rather than being constrained to a user-pay mechanism.

Conversely, if the supplier and OC can demonstrate, by contract and infrastructure, a practicable separation of apartment internet from building systems, the ordinary s 12 position (user-pay and special resolution requirement) would remain the starting point (Findings [3]; Costs [2.1]).

How later courts have treated it

The judgment itself does not cite later appellate or Tribunal treatment of this particular decision. The Tribunal applied earlier VCAT authority (Noonan) for statutory propositions, but there is no discussion in the decision about subsequent treatment by other courts or Tribunals. Therefore practitioners should treat the decision as a fact-driven VCAT determination applying the statutory scheme and prior VCAT reasoning. Any persuasive value in other jurisdictions or on appeal will turn on similarity of infrastructure and contractual facts and whether an appellate court affirms the characterisation approach used here.

Still-open questions

1. Proving separability: The Tribunal’s decision turns on the existence of infrastructure and contractual barriers to cost separation. What precise technical or contractual evidence will be sufficient to demonstrate separability is not exhaustively defined. A supplier’s ability to identify and bill per-premises usage despite a shared node, or to provide a contractual schedule itemising common vs lot services, may change outcomes. The decision suggests such evidence would be decisive, but leaves room for argument over what technical measures suffice (Findings [4], Evidence [2.1]–[2.3]).

2. Contractual drafting risk: The Tribunal observed the MSA and Novation Deed lacked express description of the common-property elements. That raises questions for developers and OCs about the sufficiency of contract drafting to notify lot owners of bundled common-property services, and for courts assessing good faith and transparency. The decision suggests that transparency in contractual description matters, particularly for costs orders, but the extent to which imperfect drafting affects statutory classification was not determined (Costs [2.2]–[2.3]).

3. Interaction with consumer and telecommunications regulation: The decision is strictly statutory under the Owners Corporations Act. It does not address any potential overlay of telecommunications regulation or consumer protections that might require separate billing or notices when individual internet access is provided. Whether such regulatory instruments could force separation or affect characterization remains an unanswered question from this judgment.

4. Appeals and hierarchy: This is a VCAT Member decision applying VCAT precedent (Noonan). The deference an appellate court would pay to the factual findings and the characterisation approach is an open question. Firms and OCs operating embedded networks should monitor any appeal or higher court treatment to see whether the 'dominant character' approach is endorsed at appellate level.

Practical takeaways for practitioners

• Examine the technical architecture and the contract carefully. If a supplier’s infrastructure and contract permit itemisation and separate pricing, a user-pay approach under s 12 remains viable. If not, the owners corporation can characterise the bundle as common-property and fund it via lot liability fees.
• Ensure contracts (MSAs/novation deeds) accurately describe whether services are intended to supply common-property functionality; lack of clarity risks contested proceedings and cost consequences.
• When advising clients, distinguish between the legal classification question (statutory provision invoked) and the factual separability question (technical/contractual evidence). Both are decisive under this decision (Findings [4]–[7]).

This deep dive is grounded exclusively in the Tribunal’s reasons in Lieu v Owners Corporation PS 831943H [2023] VCAT 1229 (Member K Knights) and cites the paragraphs indicated in the reasons.