VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL
civil DIVISION
OWNERS CORPORATIONS LIST	VCAT REFERENCE NO. OC32/2023
CATCHWORDS	
Applicant lot owner in Nightingale development alleges the levy for internet service within the apartment is a service under s 12 of the Owners Corporations Act 2006 (‘OC Act’) and that accordingly the cost of internet service within the apartment can only be charged on a user pay basis. Nightingale development internet infrastructure provided by Net 360 via a single fibre node transporting multiple common property services including intercom from the gate to apartment, remote control access of gate, calling the lift, fob security as well as non-common property unlimited internet use within the apartment. Find cost of bundle of common property services and non-common property services is not divisible. Find that the dominant characterisation of the bundle of internet service is for common property services: s 47(1) of the OC Act applies and OC annual fees based upon lot liability. Noonan v Owners Corporation No 2 PS 409115E (Owners Corporation) [2011] VCAT 1934 applied.	

APPLICANT	Mr Anthony Lieu	
RESPONDENT	Owners Corporation PS 831943H	
WHERE HELD	Melbourne	
BEFORE	K Knights, Member	
HEARING TYPE	Hearing	
DATE OF HEARING	12 September 2023	
DATE OF ORDER	3 November 2023	
CITATION	Lieu v Owners Corporation PS 831943H (Owners Corporations) [2023] VCAT 1229	

OrderS
1	The application is dismissed for the written reasons provided.
2	The respondent has leave to make an application for costs within 60 days of this order. Any application for costs must be supported by written submissions in support of that application and sent to the Tribunal and the applicant within 60 days of this order.
3	The principal registrar is directed to refer any application for costs and submissions to Member Knights for directions.

K Knights
Member			

APPEARANCES:		
For Applicant	In person	
For Respondent	Mr Lipshutz, solicitor	

Reasons
Parties and claim 
1	The applicant, Anthony Lieu (‘Mr Lieu’), brings this claim against the Owners Corporation 1 PS 831943H (‘OC’) seeking orders that the internet levies be in accordance with a user pays system and that Mr Lieu be reimbursed the internet levies and reissued fee notices without the internet levies and associated costs.
2	Mr Lieu submits the internet is a service the OC may decide to provide to lot owners under s 12 of the Owners Corporations Act 2006 (Vic) (‘OC Act’) and that accordingly the internet levy can only be charged on a user pay basis.
Background agreed facts
3	In December 2019, Mr Lieu entered into a contract of sale to purchase an “off the plan” apartment in Nightingale Village (‘Nightingale development’).
4	It was a term of the Nightingale contract of sale, that Mr Lieu acknowledged and agreed that the vendor (‘Developer’) may, or may permit the OC, to install and operate an embedded internet network for the Nightingale development.
5	On 21 March 2022, the Developer entered into a Master Services Agreement (‘MSA’) for the provision of embedded fibre services by Sensia trading as Net 360 (‘Net 360’).
6	Under the MSA, Net 360 provides an unlimited quantity of data at a monthly cost of $[Amount – confidential].
7	On 6 June 2022, the inaugural OC general meeting was held. The Developer was the sole proprietor of the lots in the subdivision. Consequently, all resolutions passed at the inaugural OC general meeting are unanimous resolutions.
8	Unanimous resolutions passed at the inaugural OC general meeting included the following:
a.	The OC will enter into an Embedded Fibre Network Novation Deed with Net 360 to provide an embedded fibre network to the OC (‘Novation Deed’).
b.	To charge a special levy to all occupiable lots (including the retail lot) for the amount of $[Amount – confidential] based on an equal liability basis which equates to $[Amount – confidential] per occupied lot to be recovered on a quarterly basis.
9	Nightingale OC rule 4.2 provides the following:
The OC must ensure that the costs of maintaining any joint services such as storm water drains, plumbing, sewerage, electricity and TV/Foxtel, internet and any other services to the common property is born by the members in accordance with their lot liability. 
Evidence
10	At the hearing, Mr Lieu gave evidence for himself and Daniel Paolini, head of product engineering with the internet service provider, Net 360, gave evidence for the OC. 
11	Mr Paolini of Net 360 gave evidence as follows:
a.	In Schedule 1 of the MSA, the Net 360 embedded fibre service is a “one line” item that Net 360 provides dedicated connectivity to the internet. But in fact that fibre service includes multiple services including intercom from the gate to apartment, remote control access of gate to permit visitors through the gate, calling the lift, fob security and unlimited internet use for the occupant within the apartment. 
b.	As a matter of infrastructure all of the services (i.e. intercom, remote control of gate, calling the lift, fob security and internet use within the apartment) run through the single fibre node. The infrastructure would need to be changed to separate out the building internet services (i.e. intercom, remote control of gate, calling the lift and fob security) from occupant internet use within the apartment.
c.	The agreement between the Developer and Net 360 in the MSA and upon the Novation Deed, the agreement between the OC and Net 360 is that there is the one price for the bundle of services that run over the single fibre node. The agreement does not allow for the cost of the building internet services (i.e. intercom, remote control of gate, calling the lift and fob security) to be identified or itemised separately from occupant internet use within the apartment.
d.	As part of the negotiations between Net 360 and the Developer, Net 360 offered the internet use within the apartment as an added extra or bonus that Net 360 believe is a benefit to the Nightingale occupants. It makes no difference to the price Net 360 charge the OC for internet service under Schedule 1 of the MSA whether the Nightingale occupants access the internet within the apartment or not.
e.	The Developer did obtain a VC81 occupancy certificate that the telecommunications of the building that Mr Lieu lives in was satisfactory for habitation purposes.
12	Mr Lieu challenges the OC evidence given by Net 360’s Mr Paolini that it is not possible to separate out the cost of internet service to Mr Lieu’s apartment. Mr Lieu points to the fact that in his apartment he has a Net 360 modem with a unique ID access. Mr Lieu argues that since Net 360 has control over the internet service to his apartment that this internet service can be separated from the building internet services.
13	Mr Paolini of Net 360 agrees that each apartment has a Net 360 modem with a unique ID access but says that because of both the single fibre node infrastructure built by Net 360 for the Developer and the one line item for all internet services in Schedule 1 of the MSA, it is not possible with the existing infrastructure and commercial agreement for Net 360 or the OC to separate out the cost of use of the internet service in any one apartment.
14	Mr Paolini says that if Mr Lieu does not utilise the Net 360 modem with unique ID access to access the available internet service then under the MSA that makes no difference to Net 360’s monthly charge to the OC for internet connectivity for all Schedule 1 services.
Findings and the law
15	I find that the internet services for intercom from the gate to apartment, remote control access of gate to permit visitors through the gate, calling the lift and fob security are all for services that the OC must repair and maintain in relation to a lot that is for the benefit of more than one lot and the common property (‘common property services’) and accordingly are services that fall within s 47(1) of the OC Act. 
16	Under s 23 of the OC Act, the OC may set annual fees based upon lot liability to meet the cost of the OC common property services that fall within s 47(1) of the OC Act. Under s 28(1) of the OC Act the lot owners are required to pay these fees.
17	Ordinarily, internet service offered by an OC within a lot, such as Mr Lieu’s apartment, would be a service that is unrelated to the common property (‘non-common property service’) and so fall within s 12 of the OC Act. Where the service is unrelated to the common property the OC may only enter into an agreement to provide the service by special resolution and the cost of the provision of the service to the lot owners must be on the user pay principle rather than lot liability.
18	I find on the evidence of Mr Paolini of Net 360 that the single fibre node infrastructure built by Net 360 for the Developer does not presently permit a delineation within the bundle of internet services that Net 360 provides to the OC that could separate out the common property services to the OC from the non-common property internet service made available to Mr Lieu within his apartment.
19	Given that the bundle of internet services that Net 360 provides to the OC cannot be separated as a matter of both infrastructure and agreement, I must determine whether that bundle is best characterised by those services that relate to the common property such as intercom from the gate to apartment, remote control access of gate to permit visitors through the gate, calling the lift and fob security versus the non-common property service of internet use within the apartment.
20	In his evidence, Mr Paolini of Net 360, referred to the internet use within the apartment as being an added extra or bonus. 
21	I find on the evidence of Mr Paolini of Net 360 that the bundle of internet services that Net 360 provides to the OC are better characterised by the core OC common property services rather than the discretionary non-common property services of internet use within the apartment. Accordingly, I find that the appropriate characterisation of the bundle of internet services that Net 360 provides to the OC are common property services.
22	It follows from my finding that the appropriate characterisation of the bundle of internet services that Net 360 provides to the OC are common property services that the bundle of internet service falls within s 47(1) of the OC Act and within the OC annual fees based upon lot liability. For that reason Mr Lieu’s application for orders that the internet levy be reimbursed or removed from the OC annual fees and levied on a user pay basis is dismissed.
Costs
23	The solicitor for the OC requested that costs be reserved. It is appropriate to reserve costs. 
24	I make the following observations that at this stage and without the benefit of submissions from the parties, I perceive to be relevant to the OC’s foreshadowed application for costs. It is hoped that the observations are of assistance to both parties in any discussions that they may undertake in relation to costs:
a.	Ordinarily, internet service offered by an OC within a lot, such as Mr Lieu’s apartment, would be a service that is unrelated to the common property and so fall within s 12 of the OC Act. Where the service is unrelated to the common property the OC may only enter into an agreement to provide the service by special resolution and the cost of the provision of the service to the lot owners must be on the user pay principle rather than lot liability.
b.	The description of internet service provided by Net 360 in the MSA and Novation Deed does not articulate that the internet service includes internet service to common property such as intercom from the gate to apartment, remote control access of gate to permit visitors through the gate, calling the lift and fob security.
c.	It was only when Mr Paolini of Net 360 gave his evidence at the hearing that it was articulated that:
i.	internet service to common property such as intercom from the gate to apartment, remote control access of gate to permit visitors through the gate, calling the lift and fob security was bundled with non-common property internet usage within the apartment under Schedule 1 of the MSA; and
ii.	because of both infrastructure and agreement it is not possible to separate out the cost of non-common property internet usage within the apartment.
25	The above observations do not constrain the parties from making their own submissions and/or raising new matters in relation to costs. 

K Knights 
Member