1. This dispute related to a ten-storey concrete building known as City Plaza that was subdivided by the registration of Units Plan No 1475 in April 1996. The ground floor contains eight commercial units numbered 1 to 8. The first floor contains seven commercial units numbered 9 to 15. The second to ninth floor contains 77 residential units. All the units were class A units.
2. The applicant was the owner of unit 12. The respondent was the owners corporation for Units Plan No 1475.
3. A dispute arose as to whether the owners corporation was responsible to maintain and, if necessary, replace the two air-conditioning systems servicing half of level 1, including the applicant’s unit. It was common ground that the systems did not perform satisfactorily and were uneconomic to repair.
4. AC 5 to AC 8 serviced the first-floor commercial units 12 to 15.
5. At a general meeting held in October 2021, the owners corporation passed a resolution to decommission and remove the indoor and outdoor air-conditioning system units and approve the use of common property to install separate unitary systems to provide air-conditioning services.
6. By an amended application lodged in January 2022, the applicant sought:
(a) an order pursuant to section 129(1)(b) of the Unit Titles (Management) Act 2011 (UTM Act) requiring the owners corporation to exercise its maintenance function as required by section 24 of the UTM Act; and
(b) a declaration that the October 2021 resolution was of no effect.
7. The applicant’s case was that the owners corporation was liable to maintain AC 5 and AC 8 pursuant to section 24(1)(b), or alternatively, section 24(1)(e) of the UTM Act.
8. To succeed in its claim under section 24(1)(b), the applicant had to establish that AC 5 and AC 8 were fixtures at law and therefore part of the common property.
9. If they were common property, the owners corporation (to succeed in its defence) had to establish that it had power under section 21(1)(b) to sever the fixtures and dispose of them as chattels without being required to replace them.
10. To succeed in its claim under section 24(1)(e), the applicant had to establish that:
(a) AC 5 and AC 8 were facilities for the provision of a utility service mentioned in section 35 of the 2001 Unit Titles Act; and
(b) the utility service was provided for the potential benefit of all units.
11. The question whether a chattel had become a fixture focused primarily on the affixer’s intention in affixing the chattel to the land. The nature of the chattel and the degree of annexation remain pointers to the relevant intention but are not determinative. If the relevant intention was the better use or enjoyment of the land, the item is likely to be a fixture, whereas if it was the better use or enjoyment of the item, it is likely to be a chattel. If the intention was that the item should remain in place permanently or for a substantial period, it is likely to be a fixture, whereas if the intention was that it should remain in place for a temporary purpose, it is likely to be a chattel.
12. The design life of AC 5 and AC 8 was purportedly about 25 years.
13. ACAT held that the question whether, at the time of installation of AC 5 and AC8, the plant was intended to become part of the common property upon subdivision of the land could not be divorced from a consideration of the statutory easement rights that the owners of units would acquire over the common property upon registration of the units plan.
14. Thus, on and after registration of the units plan the owners of units 12 to 15 each had a statutory right to use the common property for the provision of air through or by means of ducts or other reasonable means, and such ancillary rights as were necessary to make the right effective.
15. The design intent of AC 5 and AC 8 was to provide an adequate supply of cooled and heated air to maintain comfortable temperature conditions in units 12 to 15 only. The plant was not installed for the better use or enjoyment of the common property. Nor was it installed for the potential benefit of all unit owners. AC 5 and AC 8 were installed in anticipation of, and to give effect to, the statutory rights to the provision of air through or by means of ducts or other reasonable means that the owners of the relevant units would have over the common property on and after registration of the units plan.
16. The evidence did not support the applicant’s submission that AC 5 and AC 8 were a fundamental part of the building’s fabric. There might be circumstances where facilities for the provision of a utility service, including utility conduits, were incorporated into a building in a way that would make it appropriate to describe them as part of the ‘fabric’ or structure of the building. Obvious examples may include stormwater drainage and sewerage lines, water reticulation pipes and electricity supply cables incorporated as part of the structure of a building. ACAT held that this case, however, was quite different.
17. Consequently ACAT held that when the plant comprising AC 5 and AC 8 were affixed to parts of the building, they were not intended to become part of the land and they did not become part of the common property upon registration of the units plan on 29 April 1996. Nothing had happened since then to change the outcome. A5 and AC 8 were not and never had been common property.
18. It followed that the applicant’s claim that the owners corporation must maintain AC 5 and AC 8 as common property pursuant to section 24(1)(b) of the UTM Act should be dismissed.
19. It was also unnecessary to decide whether the respondent’s answer to the claim had substance.
20. The applicant’s claim that the owners corporation must maintain AC 5 and AC 8 pursuant to section 24(1)(e) of the UTM Act failed on the facts. Contrary to the applicant’s original written submissions, the evidence did not establish that AC 5 and AC 8 were facilities for the provision of a utility service for the potential benefit of all units. AC 5 and AC 8 were designed and installed to service one half of level 1 only.