It’s not an excuse for your EC to walk away from the issue when there are no funds available.  That’s the purpose of a sinking fund, and too many owners corporations aren’t prepared to put sufficient money aside for future maintenance and replacements.  The sinking fund forecast is now a requirement, and should have identified the need for maintaining this equipment.  It’s up to your OC to get the funds to carry out the replacement works, if the sinking fund doesn’t contain enough, then there are two options left, a special levy on all owners according to unit entitlement or taking out a strata loan. 

@nyonyakay said:
 … what are the OC’s rights and obligations here? And what is that special by-law he should be afraid of?  What part of strata law enables them to use a by-law to pass the buck onto the Owner here?

As you will see from Paragraph 3 of Section 162 of the Act (below) the Owners Corp can pass a special resolution  to decide not to maintain common property provided doing so would not “not affect the safety of any building, structure or common property in the strata scheme or detract from the appearance of any property in the strata scheme.”

A Special Resolution has to be passed at a General Meeting with no more than 25 percent of votes at the meeting voting against (by unit entitlement) .

The air-con owner may well be able to raise those votes, especially since most people don’t attend most meetings most of the time.  Again, the EC need 75 percent of people voting AT THE MEETING, and if they organise themselves properly, they will get that. It’s an easy sell in a proxy farming exercise: “Why should you pay for one person’t aircon?”

However, in a small scheme, a penthouse owner might already have the UEs required to defeat the motion.

If I were in your friend’s shoes, I would go to the EC and say, “OK, you fix it this time and I will sign a document and agree to a by-law taking responsibility for repairs and maintenance into the future.”

Or I would point to the last part of Section 62 which clearly and significantly states that the adjudicator has the power to overturn a special resolution in cases like this.  In other words, the owners corp could fix the A/C and be done with it, or face a legal battle and then have to fix it anyway.

This is what the Act says: 

62   What are the duties of an owners corporation to maintain and repair property?

(1)  An owners corporation must properly maintain and keep in a state of good and serviceable repair the common property and any personal property vested in the owners corporation.

(2)  An owners corporation must renew or replace any fixtures or fittings comprised in the common property and any personal property vested in the owners corporation.

(3)  This clause does not apply to a particular item of property if the owners corporation determines by special resolution that:

(a)  it is inappropriate to maintain, renew, replace or repair the property, and

(b)  its decision will not affect the safety of any building, structure or common property in the strata scheme or detract from the appearance of any property in the strata scheme.

Note. The decision of an owners corporation under subsection (3) may be reviewed by an Adjudicator (see section 138).