1. By its fourth amended points of claim, filed on 5 October 2012, the applicant claimed that:
   • (a) The applicant ought not contribute to the cost of the works because:
     1. It derived little or no benefit from the works and those who benefited most from the works should pay, as was required by sections 28(2) and (3) and section 49(2) of the Owners Corporations Act 2006 (the "Act").
     2. The works were not to common property and therefore not within the powers of the owners corporation under sections 4 and 6 of the Act.
   • (b) Payment for the works should not be made from the maintenance fund because:
     1. The payment would be made from funds to which the applicant had contributed, yet it would derive no benefit from the works.
        1. The maintenance plan scheduled the works for 2028/2029.
        2. The payment would deplete the fund's reserves which would then be inadequate and would be below the level set in the plan.
        3. The payment would be in breach of the duties to act honestly and in good faith imposed on the owners corporation by section 5 of the Act.
   • (c) By resolving on the funding scheme for the works, the owners corporation had breached its duty to act honestly and in good faith imposed by section 5 of the Act.
   • (d) In resolving on the plan to carry out the works, the owners corporation was in breach of its duty to exercise due care and diligence under section 5 of the Act, because:
     1. It did not obtain a planning permit.
        1. Its committee told members that a "planning permit application was with Council".
        2. It varied the works, so that they did not comply with a building permit which had been issued for the works.
     2. It failed to tell the owners corporation's insurer about the works.
2. The applicant sought orders to set aside the funding scheme for the works and then require the owners corporation to levy lot owners with balconies for 100% of the cost of the works.
3. The applicant had also previously sought orders to compel the owners corporation to carry out works to lifts in the building. By its fourth amended points of claim, however, the applicant abandoned that claim.

1. Each balcony on the building had a balustrade. The balustrade consisted of a thick top handrail, supported by stanchions. Between the stanchions, small diameter bars were attached to the stanchions by welding. It was these bars, which were a bit like a ladder, which represented the climbing hazard. The works consisted of preparing and painting the balustrades, then cutting off the small diameter bars (except the top and bottom bars). Then a metal sheet was attached to the inner, building side of the bars. The top of each sheet was curved, so that it hung over the topmost bar. The sheet was then attached to the bars with bolts.

1. Ms Mitrakis had been a resident in the building since 1994. Ms Mitrakis' evidence was largely formal in nature, involving tendering of documents. The documents showed that the owners corporation had spent a great deal of time, energy and money on the issues raised by the balustrades; the question of unequal benefit was thoroughly explored; Ms Mitrakis' arguments on behalf of the applicant and the other owners without balconies were put to the owners corporation and were carefully considered; on at least two occasions, the owners corporation sought legal advice about the liability or otherwise of those lot owners who did not have balconies (the first advice on 16 June 2008 was from Messrs Rigby Cooke, the second on 28 April 2010 from Messrs McKean and Park); the form of the funding resolutions was thoroughly examined.
2. Ms Mitrakis resigned from the committee of the owners corporation on 4 September 2009.
3. Ms Mitrakis referred to a letter from the City of Port Phillip to the owners corporation, dated 14 September 2012. The letter said that the council had inspected the building, "revealing new balcony balustrades had been installed at the premises". The letter said that a planning permit had not been granted for those works and required those new balustrades to be removed and reinstated.

1. Michael Loy, a licensed surveyor, gave evidence on behalf of the applicant. His evidence concerned the boundary between the common property and the veranda balustrade on each balcony. Mr Loy provided a witness statement dated 20 July 2011, which he adopted.
2. I note that the plan of subdivision, which was attached to Mr Loy' s witness statement, says that "Location of boundaries defined by buildings: interior face: all boundaries".
3. Mr Loy's opinion, as expressed in his witness statement, was that:
   • 〉 The interior face of the balustrade and the horizontal railing of each balcony is the title boundary between the respective lot and the common property.
   • 〉 If a structure or barrier were attached to the inside face of the balustrade and horizontal bars, it would be located within the respective lot. If attached to the outside face, it would be within common property.
4. In cross-examination Mr Loy explained that the "face" is an indented thing, following the ins and outs of the balustrades. After the plan of subdivision was registered, subsequent changes to the balustrade would make no difference to the registered boundary.

1. Geoffrey Shepard gave evidence on behalf of the owners corporation. He has been a member of the committee of the owners corporation since early 2008 and its chairman since 2010.
2. There had been two incidents, in 2007 and 2009, when bars had fallen off balustrades and into the street. In doing the works, the owners corporation wanted to do what was right, what was safe and was efficient.
3. The owners corporation had engaged Phillip Chadwick, an engineer, as the project manager for the works. It relied on Mr Chadwick, on the contractor which carried out the works, ARSS and on Australian Building Permit Consultants, which it also engaged to provide advice about what permits were required. He had insisted that the owners corporation should not take responsibility for obtaining necessary permits.
4. In 2009 when the owners corporation was considering installing new balustrades, the owners corporation had thought that it would need to obtain a planning permit. After that, the plan was changed to simply modifying the balustrades and the owners corporation was advised that a planning permit would not be needed. That advice was given by the contractor, ARSS and by Australian Building Permits Consultants.
5. After the owners corporation received the letter dated 14 September 2012 from the City of Port Phillip, Mr Shepard spoke to a Mr Coates at Port Phillip. Mr Coates told him that the owners corporation could apply for a retrospective planning permit and that Mr Coates did not think that the issue of such a permit would be a problem.

1. Justine Ashby gave evidence on behalf of the owners corporation. She is an employee of the company which acts as the manager of the owners corporation and she had the day-to-day management of the affairs of the owners corporation.
2. The owners corporation engaged a firm called Australian Building Permits Consultants to get whatever permits were required for the works. At one stage, the total replacement of the balustrades was being discussed. If that had been done, planning permits would have been required, as she understood it. The owners corporation was advised to that effect. The owners corporation was advised that, for the limited works which were ultimately carried out, a building permit was required, but not a planning permit.

1. Evidence was given on behalf of the owners corporation by Gregory du Chateau. Mr du Chateau had prepared a report dated 26 July 2011 about the matter of the precise location of the boundary where the lot and the common property met. Mr du Chateau's report was tendered in evidence. Mr du Chateau's expertise is in relation to:

Administration and enforcement of building control, including responsibility as building surveyor and fire safety consultant.... He has broad experience and technical expertise on the Building Acts, Building Regulations, the Building Code of Australia and associated relevant Australian Standards.

1. In Mr du Chateau's report he expressed the opinion that.

The perimeter of the lot is measured to the main structural elements or members, which in my opinion is the upright and the top handrail member.

... It is my opinion that the design of the proposed handrails/balustrade system which incorporates new material, bracing or lining within the envelope of the structure, this material is then located within the common property as defined.

1. Mr du Chateau was of the opinion that the boundary of the lot was to be found at the front (that is, the building side) of the top handrail on the balustrade and down the front of the stanchions. The metal bars welded between the stanchions were not structural (and therefore to be ignored). The only structural elements were the top handrail of the balustrade and and the stanchions. This would mean that the boundary was a flat plane between the front edge of each stanchion, placing the boundary closer to the building. This would have the effect that that the metal sheet which was attached to the balustrade in the course of the works would lie in the common property.

1. The applicant, in its fourth amended points of claim alleged that the works were not to common property and that the respondent had no power to do works other than on common property. Both parties called witnesses to give evidence on the issue of whether or not the works were carried out on lots or on common property.
2. Mr Noy, giving evidence on behalf of the applicant, said that the metal sheets (whose attachment to the balustrades was part of the works) lay within the lot owner's property. Mr du Chateau, on behalf of the owners corporation, said that the sheets lay within common property.
3. Both Mr Loy and Mr du Chateau agreed that all of the balustrades was common property. While the works may have involved attaching part of the metal sheet inside the lot, the works themselves were clearly done to common property, the balustrades, to rectify defects in the balustrades.

1. The owners corporation had a maintenance plan and a maintenance fund. The maintenance plan provided for the balcony balustrade works, but for them to be done in 2028/2029. An owners corporation may pay for things not covered by a maintenance plan if payment is approved by special resolution. The owners corporation did pass such a resolution.
2. The applicant claimed that applying money from the maintenance fund to the works would be a breach of section 49(2) of the Act as "the Works are to the benefit of lot owners other than the Applicant and is (sic) funded by contributions made by the Applicant, according to its lot liability".
3. The Act does not prevent the maintenance fund from being used for works which confer a differential benefit. The scheme contained in sections 28(3) and 49(2) does impose the principle of "who benefits more pays more", but only in relation to collecting funds, not in relation to how existing funds are spent.
4. I wish to comment on the applicant's argument which drives this claim, namely, that any monies to be spent on the works should have been raised from the unit owners in proportions which reflected the differential benefit which the works would confer. While the owners corporation passed two resolutions, one for the apportioned levy of $65,000 and the other for the un-apportioned payment from the maintenance fund, it seems clear enough to me that they constituted a single scheme of apportionment. The applicant sought to deal with each resolution separately. There is no reason why the two resolutions should be treated separately, in isolation from each other.
5. Other criticisms which the applicant made about paying for the works from the maintenance fund were that the works were not urgent and that the payment undermined the fund. The works did not need to be urgent - section 44, which the owners corporation followed in authorising the payment, says nothing about urgency. As for undermining the fund, that is a matter of opinion. In that regard, I note with interest the evidence of Ms Ashby, who observed that "this owners corporation have always been quite prudent in terms of having additional funds above the general administration to enable them to keep the building in good order". Obviously, paying for the works would reduce the fund, but I saw nothing in the evidence to suggest that doing so was unreasonable.

1. The fourth amended points of claim said about the 14 September 2012 letter from the City of Port Phillip (which said that a planning permit had been required for the works, which now must be removed):
   • (a) That it would derive no benefit from the works, as they had to be removed.
   • (b) That it was oppressive to use maintenance fund monies, to which the applicant had contributed, to fund works in breach of a planning scheme.
   • (c) The owners corporation in the carrying out of the works had failed to exercise due care and diligence, in breach of its duties under section 5 of the Act.
2. These claims were all attacks on the competence of the owners corporation in not obtaining a planning permit. The evidence showed that the claims were without foundation. The evidence of Ms Ashby and Mr Shepard made it plain that the owners corporation had considered the issue of permits, had engaged Australian Building Permit Consultants to obtain any permit needed and that it relied on its advisers in relation to this matter.

1. In addition to the matters to which I have referred above, the applicant claimed that the owners corporation had acted in breach of its section 5 duty of due care and diligence by:
   • 〉 varying the works, so that they did not comply with a building permit obtained for the works by the owners corporation and
   • 〉 failing to tell the owners corporation's insurer about the works.
2. These claims are merely criticisms of the way in which the owners corporation carried out the works. As such, they are not relevant to the matters in dispute between the parties; the parties' dispute concerns the funding of the works, not the way in which the works were to be carried out.

1. The applicant said that it derived little or no benefit from the works and that the funding resolutions failed to correctly make owners with balconies pay more for the works.
2. Section 28 of the Act, says:

(1) The owners for the time being, and any purchaser in possession of, and any person entitled to receive the rents and profits from, a lot are liable to pay any outstanding fees, charge, contribution or amount owing to the owners corporation in respect of that lot.

(2) A lot owner is not liable to pay or contribute to the funds of the owners corporation a proportion of any amount required to discharge a liability of the owners corporation exceeding the lot owner's liability.

(3) Sub-section (2) does not apply to an amount payable to an owners corporation for repairs, maintenance or other works that are undertaken by the owners corporation on common property or a lot and which are wholly or substantially for the benefit of some or one, but not all, of the lots affected by the owners corporation.

(2) An owners corporation may recover as a debt the cost of repairs, maintenance or other works undertaken wholly or substantially to the benefit of some only of the lots from the lot owners, but the amount payable by those lot owners is to be calculated on the basis that the lot owner of the lot that benefits more pays more.

1. These sections apply to an owners corporation's raising of funds to pay for works which have been done or are to be done. The sections therefore apply to the levy of $65,000.
2. It is obvious that, lacking a balcony, the applicant would not enjoy a direct, physical benefit from the works. By contrast, unit owners with balconies would enjoy the obvious benefit of having balustrades which are safe, painted and maintained. The applicant asserted that placing the metal sheets on the balustrades also increased the privacy enjoyed by lot owners with balconies. That might have been the case for lots on the lowest floors, but would not apply as one went higher up the building. In any event, the metal sheets also had a negative aspect in that they would have had the effect of blocking the view, particularly for people who were sitting down.
3. In its fourth amended points of claim, the applicant said that it "would derive little or no benefit from carrying out of the works to the balustrades". A moment's reflection shows that not to be so. The benefits which the applicant would derive were numerous: there was less chance that personal injury claims would be brought against the owners corporation; there was the peace of mind which the applicant's shareholders and officers would enjoy, knowing that the apartment building was now safer for its occupants and visitors; and there was the fact that the appearance of the building had been improved - all the balustrades had been prepared and painted.
4. Did the works confer more benefit on a balcony owner that on the applicant? Perhaps, but the evidence was clear that this is a matter to which the owners corporation had turned its attention, after a long period of debate and that the owners corporation had made an apportionment. Such apportionments are, of necessity, matters of judgement, not of science. It appeared to me on the evidence that the allocation of benefit in the ultimate funding resolutions was one which was within the range of what would be reasonable. In these circumstances, it would be inappropriate for the Tribunal to substitute its judgement for that of an owners corporation which was highly aware of the issue, was fully aware of the facts and had made what appeared from the evidence to be a careful decision.
5. My findings on this point deal with the funding resolutions in their final form. I realise that in their original form the funding resolutions did not recognise any difference in benefit to lot owners. It was only after the applicant issued these proceedings that the funding resolutions in their final form were passed. While I do not need to make any finding about the funding resolutions in their original form, I do wish to record that, on the evidence before me, I think it would have been open to the owners corporation to decide that there was an equal benefit to all unit owners. While owners with balconies did obtain the benefit of having freshly painted, safe balconies, they suffered the disadvantages of interference with their view by the metal sheets and the inconvenience caused by the doing of the works.
6. The hearing was conducted by the applicant on the basis that it sought the relief set out in its fourth amended points of claim, namely that the funding resolutions be set aside and the owners corporation be ordered to levy lot owners with balconies for 100% of the cost of the balcony works.
7. The applicant's written submissions filed on 8 November 2011, said that the applicant sought the following orders:
   1. That Special Resolution 4 and New Resolution 3 [the funding resolutions] be set aside.
   2. That the Owners Corporation is authorised to strike a Special Levy to cover the cost of the works undertaken to the balconies. The Special Levy shall be calculated and charged on a formula that recovers:
      1. 20% of the costs from all lot owners in proportion to their lot liability (reflecting that all lot owners obtain some benefit) and
      2. 80% of the costs from those members with balconies in proportion to their lot liabilities.
8. The effect of this submission is that the applicant concedes that it did derive a benefit from the works. The dispute, therefore, is now only about the correctness of the proportional allocation which the owners corporation made in the funding resolutions. I have already said above that I see no reason why this Tribunal should interfere with the assessment of that proportional allocation by the owners corporation.

1. For the reasons stated above, I find that the applicant has failed to make out its case. I will order that the application be dismissed and I will reserve liberty to apply on the question of costs.