Alebakis and Wang

[2013] WASAT 160

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL

STREAM:   COMMERCIAL & CIVIL

ACT: STRATA TITLES ACT 1985 (WA)

CITATION:   ALEBAKIS and WANG [2013] WASAT 160

MEMBER:   MS L WARD (MEMBER)

HEARD:   DETERMINED ON THE DOCUMENTS

DELIVERED          :   25 SEPTEMBER 2013

FILE NO/S:   CC 495 of 2013

BETWEEN:   PETER ALEBAKIS

NICOLE MAREE ALEBAKIS
Applicants

AND

YU WANG
Respondent

Catchwords:

Strata Titles Act ­ Two lot scheme ­ Order to enable quorum in two lot scheme ­ Failure or refusal to attend general meeting ­ Proprietor in default acting unreasonably ­ Fit and proper person under the scheme

Legislation:

Strata Titles Act 1985 (WA), s 3, s 10, s 51A, s 51A(3), s 103B, s 103B(2), s 103B(3), s 31A ­ s 31K, Div 3 Pt III

Result:

Application successful in part

Summary of Tribunal's decision:

The applicants wish to convert the current two lot strata scheme to a survey-strata scheme.  As required by the Strata Titles Act 1985 (WA), an extraordinary general meeting was convened on two occasions. The respondent refused to attend either of the meetings. The applicants applied for an order under s 103B of the Strata Titles Act 1985 (WA) to enable a quorum in a two lot scheme. The Tribunal found that the respondent had acted unreasonably in refusing to attend the two extraordinary general meetings of the strata company.

The Tribunal appointed the respondent's son to exercise the powers of voting as specified in the order.

Category:    B

Representation:

Counsel:

Applicants:     N/A

Respondent:     N/A

Solicitors:

Applicants:     Equitas Lawyers

Respondent:     Bowen Butchbinder Vilensky

Case(s) referred to in decision(s):

Nil

REASONS FOR DECISION OF THE TRIBUNAL: 

Introduction

1. Peter and Nicole Alebakis (the Alebakis) own one of two lots in a residential strata development in the Perth suburb of Shelley.  The second lot is owned by Yu Wang (Ms Wang).

2. The strata scheme was registered in 1971 and, as was common at the time, the only building on the parcel, comprising two adjoining lots sharing a common wall, is situated centrally within the parcel and surrounded by common property.

3. The Alebakis wish to convert the current strata scheme to a survey‑strata scheme.  Upon such a conversion, the parcel would be divided so that, as well as each owner's respective part of the building, each lot would comprise an equivalent share of the surrounding common property.

4. It appears that one of the reasons for the Alebakis' desire to convert to a survey­strata scheme is in order to facilitate their plans to demolish their built lot and re-build.  The requirements of the Strata Titles Act 1985 (WA) (ST Act) to obtain the approval of other lot owners, particularly for such an extensive rebuild, are less stringent in the case of a survey­strata scheme than those for a strata scheme.

5. As required by the ST Act, the Alebakis sought to convene a meeting of the strata company for the purpose of putting their proposal for conversion to a vote.  The ST Act requires a unanimous resolution in order for a conversion to proceed.

6. Ms Wang has made known her opposition to any conversion to survey‑strata.  It appears that underlying her opposition is her concern that the demolition of the Alebakis' built lot may compromise the integrity of her own lot, assuming that she did not want to demolish her lot at the same time.

7. Ms Wang has refused to attend two extraordinary general meetings (EGMs) of the strata company convened by the Alebakis for the purpose of putting their conversion proposal to a vote.  The first EGM was proposed for a date prior to the commencement of the Alebakis' application to the Tribunal; the second was convened subsequently.  Ms Wang's refusal to attend each meeting, either personally or by proxy, has resulted in the meetings being abandoned.

8. The Alebakis brought their application under a provision of the ST Act empowering the Tribunal to order that a fit and proper person be appointed to exercise voting rights where a proprietor of a lot in a two lot scheme has refused to attend a general meeting.  They argue that the Tribunal should make the order that a nominated fit and proper person be appointed to exercise Ms Wang's right to vote in respect of their conversion proposal, based on their claim that Ms Wang has acted unreasonably in refusing to attend the two general meetings.

9. Ms Wang contends that she has not acted unreasonably, and points to what she considers are her reasonable concerns about the Alebakis' intention to demolish their built lot.  She also disagrees with the Alebakis' choice of their lawyer as the fit and proper person to exercise her voting right.

10. Having regard to the parties' respective positions, and the relevant statutory scheme to which I will refer shortly, the issues for determination are:

    1)Do the concerns held by Ms Wang give rise to an acceptable reason for refusing to attend either of the EGMs convened by the Alebakis, with the result that the refusal is not unreasonable?

    2)If the grounds for an order under s 103B of the ST Act are made out, who is an appropriate fit and proper person?

Relevant statutory scheme

1. Division 3 of Pt III of the ST Act, comprising s 31A – s 31K, is dedicated to the conversion of strata schemes to survey-strata schemes.

2. Section 31A of the ST Act limits the application of Div 3 to 'single tier strata schemes' which were registered before 1 January 1998.

3. A 'single tier strata scheme' is defined in the definitional s 3 of the ST Act to mean a strata scheme (relevantly) in which no lot or part of a lot is above or below another lot. The parties' scheme is compliant with this condition. The registration date for the scheme being prior to 1 January 1998, the scheme at the centre of the dispute is a single tier strata scheme.

4. Section 31C(1) of the ST Act provides that a strata company may, by unanimous resolution, resolve that the scheme be converted to a survey‑strata scheme.

5. Various requirements for such matters as specification of easements to be created for the survey‑strata scheme, documents to accompany the notice of resolution, certificate of a licensed surveyor and the like are referred to in Div 3.  No question arises in relation to any of those matters in this proceeding.

6. Division 3 also provides for registration of a notice of resolution for conversion to survey‑strata, and a number of effects of registration.  Again, none of those matters are relevant to the determination of the present matter.

7. Section 103B of the ST Act, under which the application is brought, provides:

   (1)Where a proprietor of a lot in a two‑lot scheme (the proprietor in default) has failed or refused to attend a general meeting of the strata company, the proprietor of the other lot may apply to the State Administrative Tribunal for an order under this section.

   (2)An order under this section is an order appointing a fit and proper person to exercise such powers of voting under this Act in respect of the lot of the proprietor in default as the State Administrative Tribunal shall specify in the order.

   (3)On the making of an application by a proprietor under subsection (1), the State Administrative Tribunal may make an order under this section if satisfied that the proprietor in default has acted unreasonably in refusing to attend a general meeting of the strata company.

8. I will now deal with each of the issues for decision in turn.

Has Ms Wang established an acceptable reason for refusing to attend and vote at the EGMs?

1. Ms Wang concedes that she has failed or refused to attend the general meetings convened for the purpose of considering the Alebakis' proposal for conversion.

2. The basis of Ms Wang's refusal to attend the meetings seems to be based on the premise that attendance at a general meeting to vote on resolutions (or, at least, a resolution of the type put by the Alebakis) is necessary only in order to vote in favour of the resolution.

3. Section 31C of the ST Act has the effect that unless the Alebakis could secure Ms Wang's vote in favour of their proposal in addition to their own, the resolution would fail. It is unclear why, rather than refusing to attend any meeting, with the consequence of this application under s 103B of the ST Act, Ms Wang did not simply attend the meeting, personally or by proxy, and vote against the resolution.

4. The submissions advanced on Ms Wang's behalf deal with her concerns about any further demolition of the Alebakis' built lot and the history of the parties' negotiations, including the Alebakis' initial proposal to convert the parcel into two freehold lots and the conversion proposal.  Clearly, she is not happy with the undertakings, or lack thereof, she has received from the Alebakis, given the potential for damage to her lot if the Alebakis' built lot is demolished.  Nowhere, however, is any explanation given as to why Ms Wang decided to absent herself from meetings at which the resolution was to be considered, when she could have voted the resolution down.

5. In the absence of any submission on Ms Wang's behalf justifying her absence from the strata company's decision‑making process, I have considered any possible prejudice which might be said to arise from her attending a general meeting and voting against the conversion proposal.

6. The only possible prejudice is the prospect of the Alebakis exercising their right under s 51A of the ST Act to seek an order from the District Court declaring the conversion resolution to have been passed as a unanimous resolution, notwithstanding the negative vote of the other proprietor. The court may make such an order if satisfied that the dissenting proprietor acted unreasonably in refusing to agree to the resolution, or it is in the best interests of the proprietors that the order be made: s 51A(3) of the ST Act.

7. It might be argued that by attending one of the EGMs and voting against it, Ms Wang would thereby be facilitating the making of an application under s 51A of the ST Act by the Alebakis. However, given the Alebakis' right to put, at a general meeting of the strata company, their conversion proposal, their additional right to seek to have overturned an unfavourable outcome at a general meeting can hardly be regarded as a prejudicial incident of Ms Wang's negative vote at the meeting. To the contrary, to my mind, any refusal to attend the meeting designed to thwart the Alebakis' s 51A review right would properly be seen as an attempt to interfere with that statutory right, thereby satisfying the pre-condition of the making of an order under s 103B of the ST Act that the defaulting proprietor has acted unreasonably.

8. It is not relevant to my determination to consider the outcome of any s 51A application made as a consequence of the failure of the parties to agree on the conversion proposal. Ms Wang's concerns, supported by engineering evidence, about the potential for demolition of the Alebakis' built lot may or may not be relevant to such an outcome. The important point is that the ST Act directs a proprietor of a lot in a two lot scheme wishing to convert the scheme to a survey‑strata scheme to seek the approval of the proprietor of the other lot, and regulates the approval procedure, culminating in a possible court review. It is not for the other proprietor to countermand that procedure by refusing to participate.

9. By reason of the above, in my view, no acceptable reason for failing to attend either of the EGMs at which a resolution for conversion to survey-strata was to be put to a vote has been established on behalf of Ms Wang. In terms of s 103B(3) of the ST Act, I am satisfied that Ms Wang has acted unreasonably in refusing to attend either EGM.

Who is an appropriate fit and proper person?

1. The Alebakis contend that the Alebakis' solicitor, Ms Kerry Davis, would be appropriate as a fit and proper person for appointment under s 103B of the ST Act to exercise the voting powers of which Ms Wang has refused to avail herself.

2. Just as Ms Wang's arguments to justify her stand need to be considered in light of the statutory scheme regulating proposals for conversion to survey‑strata, the features of that scheme need to be borne steadily in mind in the identification of, essentially, a substitute person casting a vote on the proposal for Ms Wang.  The appointment of the substitute should not be based upon an imperative that the resolution be passed.  The only imperative is that the substitute can be expected to cast his or her vote in a manner which can be readily accepted as Ms Wang's vote.

3. I do not consider Ms Davis to be an appropriate substitute for Ms Wang. To have as Ms Wang's substitute her protagonists' lawyer would, in my view, be quite unsatisfactory. This, of course, is not to suggest that Ms Davis does not satisfy the fit and proper person test under s 103B(2) of the ST Act. However, by fulfilling the role of Ms Wang's substitute, she would be bound by the instructions of the Alebakis. This would inevitably result in the unanimous resolution required, and would be an anomalous situation given that, as things stand, Ms Wang is plainly opposed to the proposal.

4. Ms Wang suggests that Ms Wang's son, Mr Zile Yu, would, if required, be suitable for appointment as a fit and proper person, and indicates that Mr Yu has given his consent to his appointment under s 103B of the ST Act. He is fluent in English, while Ms Wang has little or no proficiency in English. Mr Yu has a Bachelor of Commerce degree and is completing a Bachelor of Laws degree with the University of Sydney.

5. In my view, Mr Yu is appropriate for appointment to exercise his mother's powers of voting on the Alebakis' conversion proposal.  That, of course, is not to say that he must vote in favour of the proposal, or, indeed, against it.  That will be a matter between Mr Yu and Ms Wang.  However, in light of the history of the matter and Ms Wang's nomination of Mr Yu, I would expect that Mr Yu will attend any future general meeting of the strata company when the conversion proposal is considered and cast a vote on that proposal.

Order

1. By reason of the reasons I have expressed above, the Tribunal will issue an order in the following terms:

   1.Pursuant to s 103B of the Strata Titles Act 1985 (WA), Mr Zile Yu is appointed to exercise such powers of voting otherwise exercisable by the respondent at any general meeting of the strata company at which a resolution for conversion to a survey‑strata scheme proposed by the applicants is considered.

I certify that this and the preceding [33] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

___________________________________

MS L WARD, MEMBER