AWARENESS PUBLICATIONS PTY LTD and THE OWNERS OF FAIRWAY MEWS
[2011] WASAT 165
•20 OCTOBER 2011
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
STREAM: COMMERCIAL & CIVIL
ACT: STRATA TITLES ACT 1985 (WA)
CITATION: AWARENESS PUBLICATIONS PTY LTD and THE OWNERS OF FAIRWAY MEWS [2011] WASAT 165
MEMBER: MR T CAREY (MEMBER)
HEARD: DETERMINED ON THE DOCUMENTS - FINAL SUBMISSIONS PROVIDED 1 SEPTEMBER 2011
DELIVERED : 20 OCTOBER 2011
FILE NO/S: CC 448 of 2011
BETWEEN: AWARENESS PUBLICATIONS PTY LTD
Applicant
AND
THE OWNERS OF FAIRWAY MEWS
Respondent
Catchwords:
Strata titles Bylaws Whether invalid Whether procedural requirements met 'Special resolution' Substance of bylaw requiring external management where proprietor not residing in lot Whether impact upon ability to manage selfmanaged superannuation fund, and concerns about operation and enforcement of bylaw, sufficient for invalidity Costs of amendments
Legislation:
Strata Titles Act 1985 (WA), s 3C(1), s 3B(2), s 41(2), s 42(2), s 42(4), s 81(7), s 81(7)(a), s 93, s 93(3)(b), s 93(3)(c), s 103H(8), s 115, Sch 3, cl 12(10)(a)
Result:
Application successful in part and unsuccessful in part
Category: B
Representation:
Counsel:
Applicant: Self-represented
Respondent: Mr R Kronberger
Solicitors:
Applicant: Self-represented
Respondent: Atkinson Legal
Case(s) referred to in decision(s):
Casuarina Rec Club Pty Ltd v Owners Strata Plan No 77971 [2011] NSWCA 159
Mackie v Henderson [2011] WASCA 180
White v Betalli [2006] NSWSC 537; (2006) 66 NSWLR 690
REASONS FOR DECISION OF THE TRIBUNAL:
Summary of Tribunal's decision
The applicant sought the invalidation of by-laws in similar terms notified on a strata scheme in 2008 and 2002 respectively. Both by-laws required that any proprietor of a lot who did not reside at the strata complex engage a licensed real estate agent to manage his or her property. The respondent agreed that the by-law notified in 2008 was invalid, but there was no such agreement in relation to the earlier by-law, which formed the substantial controversy between the parties in the proceeding before the Tribunal.
The applicant contended for the invalidity of the 2002 by-law on the ground that when it was enacted, the by-law was not the subject of a special resolution as required. The applicant also argued that the by-law was defective in substance in a number of respects, which ought give rise to its striking out.
The Tribunal considered the requirements of a special resolution for the purpose of passing a by-law. Although the evidence before it going to the formalities of the meeting at which the by-law was enacted was incomplete, the Tribunal found that the applicant's submissions on the issue were founded upon the misconception that a failure by a number of proprietors to cast a vote might result in non-compliance with the rules applying to special resolutions (provided that a sufficient quorum was present, which was not raised by the applicant). It therefore rejected the applicant's challenge based on a failure to comply with the legal requirements for a special resolution.
The Tribunal was also not persuaded to make an order invalidating the earlier by-law based on alleged substantial difficulties. The first of these concerned an alleged inconsistency between the by-law and the applicant's management of property as a self-managed superannuation fund, the Tribunal finding that the individual characteristics of a proprietor's ownership can have no impact upon the by-law's enforceability.
Further alleged deficiencies or uncertainties said to flow from the bylaw were found to be overstated or non-existent, and not giving rise to invalidity upon the criteria available in the relevant section of the Strata Titles Act 1985 (WA). The Tribunal referred to judicial commentaries which indicate the almost inviolable nature of by-laws by reason of their notification on the registered strata plan.
The Tribunal therefore declined to declare the earlier by-law invalid. It did so, however, in relation to the 2008 by-law by consent. It considered and dismissed the respondent's application for costs arising from certain amendments by the applicant to its application.
Factual background
This application concerns a nine lot residential strata titled complex located in the Perth suburb of Connolly.
The applicant, Awareness Publications Pty Ltd (Awareness), seeks the invalidation of a by-law of the strata company which was the subject of a resolution on 22 April 2008 and notified on the strata plan registered with the Registrar of Titles (Landgate) on 12 August 2008 as Bylaw 2 (Bylaw 2 12.08.08).
Bylaw 2 12.08.08 is in the following terms:
PROPERTY MANAGEMENT
From the 15/11/2001 any owner that does not reside in the lot/unit shall use the services of a professional licensed real estate management to manage the property. The owner's management must notify The Corporate Body at Number 10/200 Fairway Circle Connolly 6027 of any change's [sic] regarding the occupants of the property. The owner's management is responsible to give any new occupier a copy of all the by[-]laws.
As the application progressed in the Tribunal via a series of directions hearings, it became apparent that the parties agree that Bylaw 2 12.08.08 was a proper subject for invalidation. The basis of that invalidation was a failure to comply with s 42(4) of the Strata Titles Act 1985 (WA) (ST Act), requiring that notice of any additional or amended bylaw be the subject of notification to Landgate in prescribed form within three months of the relevant resolution. In the case of Bylaw 2 12.08.08, the notification occurred outside the three month period.
By the parties' conduct of their respective cases in the Tribunal, the controversy between them centred upon an earlier bylaw, which, in the absence of its invalidity, was what remained once Bylaw 2 12.08.08 fell by the wayside. The earlier bylaw, expressed as Bylaw 16, was passed at a general meeting of the strata company on 15 November 2001 and notified on the strata plan on 1 February 2002 (By-law 16 01.02.02).
By-law 16 01.02.02 is substantially, but not completely, the same as Bylaw 2 12.08.08. It states:
As from the 15th November 2001 any owner not residing in the lot/unit shall use the services of a professional licensed real estate agent to manage the property. The owner must notify the Corporate Body at 10/200 Fairway Circle Connolly 6027 of any changes to the occupants of the property. The owner's management is responsible to give any new occupant a copy of all the by[-]laws.
By-law 16 01.02.02 was itself by way of substitution of an earlier bylaw, in the following terms:
As from the 28th September 1998 any person purchasing into the Strata Company but not residing in the lot shall use the services of a professional Property Manager to manage the property.
Awareness contends that By-law 16 01.02.02 is invalid and should be repealed. The strata company is opposed to such an outcome.
Issues for Tribunal's determination
Initially, the application was brought in the name of Mr Alan Bamford, and cited Sch 3 cl 12(10)(a) of the ST Act as the provision giving rise to the Tribunal's power to grant the relief sought. Neither of these incidents of the original claim turned out to be apposite, resulting in the application being amended (on 11 August 2011) by substituting Awareness as applicant, and (on 23 June 2011) by describing the application as being brought under s 93 of the ST Act, in respect of By-law 2 12.08.08 only. Bearing in mind the focus of the controversy as I have described it, it is also obviously necessary that I determine the question of the validity or invalidity of By-law 16 01.02.02, and I will regard the 23 June 2011 amendment as extending the application's scope to the earlier bylaw.
In addition to the substantive issues of invalidity of bylaws, the strata company also seeks an order for costs in connection with the amendments. In doing so, it relies upon s 81(7) of the ST Act.
Validity of By-law 16 01.02.02
Awareness claims that the bylaw is invalid, and should be repealed, on two broad grounds:
a)the legal requirements for passing the bylaw were not met; and
b)the substance of the bylaw runs counter to the arrangements in place for the management by Awareness, as a self-managed superannuation fund, of its proprietary interests, and the bylaw has a number of unsatisfactory aspects in terms of its operation.
Awareness, which is not legally represented, has not articulated which of the legal bases for the relief it seeks under s 93 of the ST Act apply. Section 93 of the ST Act provides:
(1)Any person entitled to vote at a meeting of a strata company (including both a first mortgagee and a proprietor who is a mortgagor of a lot) may apply to the State Administrative Tribunal for an order under this section.
(2)An order under this section is an order for one or more of the following
(a)a declaration that a by‑law or an amendment or repeal of a by‑law is invalid;
(b)the repeal of a by‑law;
(c)the repeal of an amendment to a by‑law;
(d)the re‑instatement of
(i)a by‑law that was repealed or deemed by subsection (4) to be repealed; or
(ii)any provision of a by‑law that was amended or deemed by subsection (4) to be amended.
(3)On the making of an application under subsection (1) the State Administrative Tribunal may make an order under this section if satisfied that the by‑law or the repeal or amendment of a by‑law
(a)was made without power;
(b)was not made in accordance with this Act or the regulations or any other requirement that ought to have been observed; or
(c)should not have been made having regard to the interests of all proprietors in the use and enjoyment of their lots or the common property.
(4)An order under this section, when recorded under section 115, has effect according to its tenor and subject to any order with respect thereto made by a superior court; and in particular an order has effect
(a)where subsection (2)(a) applies, as if its terms were an exercise of the power to repeal or amend the by‑laws; and
(b)in any other case, as if it were the exercise by the strata company of its powers in respect of by‑laws.
(5)This section does not apply with respect to a by‑law made or deemed to be made under section 42(8).
I can indicate that if the first broad ground relied upon were found to apply, I would have no difficulty in making orders in the nature of those sought, on the basis that the by-law in question was not made in accordance with the ST Act (s 93(3)(b) of the Act). The second broad ground is more problematic. Presumably, Awareness would argue that the alleged deficiencies upon which it relies leads to the alternative conclusions that the by-law was not made in accordance with a requirement that ought to have been observed (s 93(3)(b) of the ST Act) and that the by-law should not have been made, having regard to the interests of all proprietors in the use and enjoyment of their lots (s 93(3)(c) of the ST Act).
I now turn to Awareness' first broad ground.
Failure to comply with the legal requirements for a valid by-law
Because the subject matter of the strata company resolution on 15 November 2001 was the adoption of a Sch 2 by-law, a special resolution was required: s 42(2) of the ST Act. Awareness' short point is that the resolution passed on that day did not satisfy the requirements of a special resolution.
Unfortunately, Awareness did not provide complete details of the voting on the resolution passed on that day. No minutes of the meeting on that day are before me. All I can go on is the exposition of Awareness' argument that the special resolution requirements were not met.
According to Awareness' points of claim:
Although the resolution at the meeting on 15 November 2001 was 'unanimous', proprietors for Lots 4, 8 and 9 did not attend. Therefore, more than 25% of proprietors … did not cast a vote.
It is common ground that the nine lots comprising the scheme have, and had as at 15 November 2001, an aggregate unit entitlement of 1,000. Awareness observes, correctly, that in order to pass a special resolution, it was necessary that:
•4.5 of the lot proprietors voted in favour;
•lots in favour accounted for at least 500 unit entitlements; and
•lots voting against not accounted for 250 unit entitlements.
Awareness accepts that the proprietors who were present and voted cast a unanimous vote in favour of the motion. However, it states that the proprietors of Lot 4, Lot 8 and Lot 9 did not attend. Critically, given the conclusion urged upon the Tribunal by Awareness, those proprietors 'did not cast a vote'.
It is not the case, as Awareness contends, that there can be no special resolution where more than 25% of proprietors do not cast a vote. The definition of special resolution in s 3B(2) of the ST Act, accurately produced in Awareness' points of claim, is to no such effect. Section 3B(2) of the ST Act states:
Except where subsection (3) applies, a special resolution is passed if
(a)it is supported by votes, within the meaning in subsections (4) and (5)
(i)having a value of not less than 50% of the aggregate unit entitlement of the lots in the scheme; and
(ii)of the proprietors of not less than 50% of the lots in the scheme;
and
(b)the votes, within the meaning in subsections (4) and (5), against the resolution
(i)do not have a value of 25% or more of the aggregate unit entitlement of the lots in the scheme; or
(ii)are not cast by the proprietors of 25% or more of the lots in the scheme.
The fundamental constituents of this provision are minimum requirements for the combined vote in favour, and limitations upon the combined vote against. Where some proprietors simply do not vote, as appears to have occurred in this case, then, subject to a sufficient quorum having been present, no basis for invalidation of the special resolution arises.
In relation to quorum, by a similar method of extrapolation from the figures presented by Awareness, the strata company observes that the absence of the proprietors of Lot 4, Lot 8 and Lot 9 did not mean there was a lack of a sufficient quorum. The formula for a 'sufficient quorum' is provided by s 3C(1) of the ST Act: 50% of the lots and 50% of the aggregate unit entitlement. Awareness did not seek to argue a lack of a quorum, and I am satisfied that a proper quorum was present.
Accordingly, the challenge to the validity of Bylaw 16 01.02.02 on the ground of failure to comply with the legal requirements of a special resolution fails.
I will now deal with Awareness' second ground of alleged invalidity.
Alleged substantive difficulties with the by-law
The first matter raised by Awareness that the by-law runs counter to Awareness' management, as a self-managed superannuation fund, of its property can be dealt with shortly.
Without pretending to unpick the various trustee/beneficiary relationships existing in respect of Mr Bamford and his superannuation fund, on whose behalf, it appears, the strata lot in question is held, these relations can, in my view, have no impact upon the enforceability of a bylaw purporting to prescribe a form of management in a particular circumstance (namely, where the owner does not reside at the lot). Regardless of however, or by whomever, the lot is held, the strata company is empowered to impose conditions or limitations upon proprietors by way of by-laws, provided they do not extend beyond the strata company's power to make by-laws under s 41(2) of the ST Act. Awareness has not raised any possible breach of s 41(2) of the ST Act by the strata company in this instance.
Awareness then points to a number of alleged unsatisfactory operational or enforcement aspects of a compulsory requirement for nonresident proprietors that they engage a professional licensed real estate agent to manage their lot. It queries whether it is the owner or the agent who should attend meetings and vote. It also queries the practicality of an agent complying with obligations to notify the strata company of a change in the occupants and providing new occupants with the by-laws. It raises the failure of the by-law to refer to whether, once appointed, the agent is to be the recipient of notices and documents.
These alleged deficiencies or uncertainties have led Awareness to conclude that the by-law offends the essence of by-laws as indicated by Landgate's Guide to Strata Titles, that they are practical, enforceable, unambiguous and non-discriminatory.
The first observation I make is this: Although the description of the desirable attributes of by-laws appearing in the Landgate publication is a laudable checklist, compliance with which is desirable in the drafting of strata company by-laws, they are not qualities the breach of which will necessarily, at least, result in the granting of relief under s 93 of the ST Act. In particular, the attributes described do not qualify as 'any other requirement that ought to have been observed' for the purposes of s 93(3)(b) of the ST Act. It is also drawing a long bow, in my opinion, to claim that any failure to meet the description has the result that the bylaw should not have been made, having regard to the interests of all proprietors in the use and enjoyment of their lots for the purposes of s 93(3)(c) of the ST Act.
Nor do I accept the specific complaints raised concerning the operation of the by-law. It is not for me to resolve, on this application, the legalities surrounding which of the proprietor personally, or the agent or its representative in the case of a corporate estate agent, is entitled to attend and vote at meetings. What I can say is that a consideration of the ST Act and the standard by-laws relating to those matters is capable of producing the required answers. Awareness has not explained its assertion of difficulties associated with an agent providing notification of a change of occupants; I can think of none. Bylaw 12 01.02.02 requires the owner to provide such notification in any event. Similarly, no explanation is given as to why it is not practical for the agent to provide occupants with the by-laws. As for the omission of the by-law to state whether or not the agent is to be the appropriate recipient of documents concerning the strata scheme, it seems that this is the logical inference to be drawn from its compulsory involvement in the case of a non-resident proprietor, and that this is insufficient cause to strike down the by-law.
I have also borne in mind the following judicial commentaries of the circumstances in which powers to declare a by-law invalid or to repeal it are to be exercised.
In White v Betalli [2006] NSWSC 537; (2006) 66 NSWLR 690, 699, at [46], White J spoke of the consequence of invalidity of a by-law as conferring 'a windfall to the plaintiff, who bought her property knowing that her use of it was subject to the rights of the owner from time to time of lot 2'.
In Casuarina Rec Club Pty Ltd v Owners Strata Plan No 77971 [2011] NSWCA 159, at [51] [52], Young JA said:
[T]he original by-laws accompany the strata plan and people who buy a lot in the strata scheme buy with notice of the by-law, so that it can hardly ever be said that the by-law creates an injustice… It must be observed that for that very reason it is rare that an original by-law…will be held to be invalid [51].
Both commentaries were cited with approval in the recent decision of Edelman J in Mackie v Henderson [2011] WASCA 180 at [41].
The by-law in question was passed by the strata company as far back as 2001, when it replaced an earlier by-law having similar effect effective from 1998. This must, on the basis of the judicial observations, militate strongly against striking it down in 2011.
I am not satisfied on either of the broad grounds raised by Awareness that Bylaw 16 01.02.02 is, nor should be declared, invalid.
Respondent's costs application
The strata company seeks, in the event that the application is dismissed, an order for costs in the sum of not less than $500 pursuant to s 81(7) of the ST Act.
Section 81(7) of the ST Act is in the following terms:
The State Administrative Tribunal cannot make any order for the payment of costs in connection with an application for an order except -
(a)when allowing an applicant to amend the application, to compensate persons for time unnecessarily spent in connection with the application; or
(b)under section 103H(8).
Section 103H(8) of the ST Act, dealing with variations of unit entitlements, has no application to this matter. Therefore, the costs application stands or falls on the basis of Awareness' amendments to its application.
The import of s 81(7)(a) of the ST Act is that a costs order may be granted where necessary to compensate a party for time effectively wasted by reason of an amendment of the application.
The strata company relies upon the following grounds for a costs order:
a)the original application failed to comply with the Tribunal's filing requirements by not including title particulars, a copy of the strata plan or relevant by-laws;
b)the wrong person was named as the applicant;
c)the application was made under an inapplicable provision of the ST Act; and
d)each amendment necessitated additional attendances by the respondent, additional research and re-documenting of submissions.
Ground a) is different in character from the allowable basis for a costs order under s 81(7)(a) of the ST Act (compensation arising from amendment of an application), and therefore does not justify any costs order.
As for the naming by the applicant of Mr Bamford as the applicant initially, and the reference to an inapt provision of the ST Act, these are not matters which would normally be sufficient to ground a costs order. That the applicant is not legally represented makes the 'errors' associated with the naming of the applicant and identification of the appropriate provision under which the application was pursued both explicable and excusable. I also take notice of the fact that, in relation to Awareness' lot, the strata company, in matter CC 332/2011, named Mr Bamford as respondent in its application seeking, amongst other matters, recovery of strata fees from the lot proprietor. In those circumstances, it is hardly surprising that the current application, being later in time than the strata company's application directed to the same proprietor, was brought in Mr Bamford's name.
I have taken 'each amendment' in ground d) to refer to the amendments to correctly identify the applicant under the provision of the ST Act and which the application was pursued. For the reasons I have given, neither amendment was of such a nature as to give rise to the making of an adverse costs order against the applicant. In addition, the respondent's submissions do not particularise the amount claimed in the nonspecific way of the application, nor are any details justifying the minimum amount of $500 given.
In these circumstances, the application for costs is refused.
Conclusion
There will be an order by consent pursuant to s 93 of the ST Act dealing with the invalidity of Bylaw 2 12.08.08. The application will otherwise be dismissed, as will the respondent's application for costs. I note the requirement, under s 115 of the ST Act, for the applicant to arrange for a copy of the certified order to be lodged with Landgate.
Order
The Tribunal's order shall be in the following terms:
1.By consent, there is a declaration that Schedule 2 Bylaw 2, the subject of Notification K682134 lodged on 12 August 2008, is invalid.
2.The application is otherwise dismissed.
3.The respondent's application for costs is dismissed.
I certify that this and the preceding [53] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MR T CAREY, MEMBER
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