Bamblett and Anor and the Owners of Strathearn Strata Plan 1082 - [2005] WASAT 122

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: COMMERCIAL & CIVIL

ACT: STRATA TITLES ACT 1985

CITATION: BAMBLETT & ANOR and THE OWNERS OF STRATHEARN STRATA PLAN 1082 [2005] WASAT 122

MEMBER: MR C RAYMOND (SENIOR MEMBER)

HEARD: ON THE PAPERS

DELIVERED : 31 MAY 2005

FILE NO/S: CC 161 of 2005

BETWEEN: KEVIN TIMOTHY BAMBLETT
DAVID GREIG IRONSIDE
Applicants
AND
THE OWNERS OF STRATHEARN STRATA PLAN 1082
Respondent

Catchwords:

Strata titles - Application for for resolution to be invalidated

Legislation:

Strata Titles Act 1966 (WA)

Strata Titles Act 1985 (WA), s 97(1), s 82, s 71(7)

Result:

The application is granted save in relation to costs.

Category: B

Representation:

Counsel:

Applicants: Self-represented
Respondent: Self-represented

Solicitors:

Applicants: Self-represented
Respondent: Self-represented

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

Bamblett & Anor and the Owners of Strathearn Strata Plan 1082 [2005] WASAT 20

Case(s) also cited:

Nil

MR C RAYMOND (SENIOR MEMBER):

REASONS FOR DECISION

Issue

Whether a resolution passed at an extraordinary general meeting of the strata company held on 20 January 2005 should be set aside on the grounds of inadequate notice and by reason of it being ultra vires the Strata Titles Act 1985 ("the Act").

Applicants

The applicants are Kevin Timothy Bamblett and David Greig Ironside who are respectively the owners of lots 15 and 43 on strata plan 1082.

Strata Plan and Relevant Act

The strata plan was registered on 14 January 1972 pursuant to the Strata Titles Act 1966 (WA)("1966 Act").
In 1985, the 1966 Act was repealed and replaced by the Act.
By virtue of s 42(2) of the Act the provisions set out in schs 1 and 2 thereto are deemed to be the by‑laws of the strata company, save that the by‑laws have been amended on two subsequent occasions in accordance with notifications on the strata company made by the Registrar of Titles. The by‑laws, as amended, are not relevant to the determination of this application.
Unless otherwise specified, all references to sections and schedules are references to the sections and schedules of the Act.

Parcel

The parcel consists of 46 lots within a 24-storey residential building. The address for service of notices on the company is given as 14 Kings Park Avenue, Crawley.
Part of the common property includes an entrance foyer.

Principal Orders Sought

The orders sought by the applicants under s 97(1) of the Act are as follows:
(1)The resolution purported to have been passed by the persons present at a meeting of the corporate of the owners of "Strathearn" strata plan 1082 on 20 January 2005, namely,
"That a sum from reserve levies of $150 000 be set aside to renew the foyer and the entrance of the ground floor of 'Strathearn' be invalidated."
(2)The costs of and incidental to the application be paid by the body corporate to the applicants."

Factual background

An extraordinary general meeting ("EGM") took place on 18 November 2004 but was adjourned because all items of business had not been finalised. A copy of the minutes of that meeting has not been provided.
A notice of an extraordinary meeting to be held on 20 January 2005 was subsequently given, on a date which is not apparent from the papers. The agenda reflected that business arising from the minutes of the meeting on 18 November 2004 would be dealt with. Other items of business were also identified and three proposed motions were included in the notice.
The minutes of what appears to be a meeting of the council dated 13 January 2005 reflects that advice had been received that at the adjourned meeting, only the agenda of the original meeting could be dealt with, so that the additional motions would have to be withdrawn and a new EGM would be needed to deal with the subject matter thereof, which related to the façade of the building. The minutes reflect that there was a discussion about calling a further EGM which would take place after the adjourned EGM.
The applicants state that notice of the further EGM was received 10 hours prior to the meeting. No information to rebut that statement has been put forward by any of the persons opposing the application.
The notice of the new EGM to take place on 20 January 2005 included two proposed motions dealing with the façade and a further motion 3 "that a sum from reserved levies for $150 000 be set aside to renew the foyer and entrance of the ground floor of 'Strathearn'."
The business of the adjourned meeting was concluded at the first meeting on 20 January 2005. Immediately after that meeting was concluded, the new EGM commenced. The minutes of that meeting reflect that the applicant, David Ironside, spoke against motion no 3 relating to the setting aside of funds for the foyer. He pointed out to the meeting that 14 days notice to owners had not been given and that non‑residential owners were not aware of the agenda item. Further, he said the motion implied a building "upgrade" which would require the unanimous approval of all owners. The chairman also spoke against the motion on a different basis by pointing out that funds had been set aside for other matters and he therefore queried how $150000 could be set aside. Supporters of the motion emphasised that "to set aside" was to give an indication of budget".
The motion was put to the meeting and was carried with 20 votes in favour and 15 against.

Support for the application

Two documents signed by 17 other owners, ie: in addition to the applicants, have been filed.
One document signed by seven other owners and the applicants states that the application is supported on the grounds that there is no current need for repair, maintenance to the foyer and entrance of Strathearn. Further that they object to the sum of $150 000 being "set aside" from Strathearn's reserves, for the purposes of an unspecified, needless upgrade and state that they believe their funds have been improperly appropriated.
The other document signed by 10 owners state that the money's in the "Reserve Fund" were raised with the implicit understanding that the funds would be used maintenance, not for possible upgrades. Further, that the proposal to freeze such a sum of money for an unspecified period of time and with no outline of a plan or proposal of work is unsatisfactory and sets an unfortunate and ill-considered precedent for the future management of the building. In addition, it is submitted that the motion was passed under contentious circumstances, namely insufficient notice, at an EGM and therefore should be overturned.

Opposition to application

Mr Wayne Marron filed a submission which may be summarised as follows.
1.The resolution is not in itself a commitment to spend funds but to merely have a sum set aside, that the strata company is flush with funds, which it has not been able to spend because "we are moribund and cannot make rational" (sic‑decisions).
2.At an information evening some five months before "the subject petition" (presumably a reference to the resolution) was passed, 25 out of 35 owners present indicated they wanted to change the foyer and entrance but this was ignored by the chairman on the night and for three or four months after, as well as at a number of council meetings, where it was raised by him (Mr Marron), continuously.
3.At a meeting on 18 November (2004) a chairman accepted, without notice from the floor, the motion to spend $35 000 on louvres to screen the cars in the garage from intruders. This was narrowly defeated because those who opposed it considered to be the issue of low priority.
4.There was a concern that money was going on such (low priority) matters, which resulted, at his suggestion, in Ms Britton moving the motion no in issue at the meeting on 20 January 2005.
5.While 25 people had indicated they wanted some change foyer and entrance, there is a wide divergence of views between that group as to how to go about it.
6.He wanted to make sure that wasteful expenditure was curtailed or that at least a meaningful debate continued on issues of expenditure, whereas the pattern has been for the controlling group to "bully" things through. The resolution has the effect of causing no expenditure to be incurred as it has taken up all excess funds over and above the one project which he promoted relating to a façade restoration and conservation.
7.It is unlikely that agreement will be reached on the foyer and entrance for at least a year or two. In any event (if and when agreement is reached) it will be necessary to come back to a full owners meeting with quotations with whatever idea or ideas have emanated from the group.
8.The annual general meeting occurs on 19 May 2005 and there will be an election of new council members. It is possible that the existing controlling group will no longer be in control.
9.It is his intention to remove suppression of either or both progressive and conservative groups at Strathearn and to allow a majority to prevail, whatever that is.
Ten further written submissions were received in opposition to the application. They are all in identical form and submit that the application should be dismissed as it is a requirement that once owners have agreed on any change that is wanted two quotations must be obtained and be taken back to the owners in an extraordinary general meeting or annual general meeting for their approval before any expenditure is made. There is no need for the application and it should be dismissed. One of these submissions is signed by Mr Marron, four purported to have been signed by proxies, although there is nothing to prove any authority to sign on behalf of the owners concerned. One such proxy relates to Lot 27 the owner of which is Gladys Stirling. Gladys Stirling is a signatory to one of the documents filed in support of the application.
On 5 May 2005 Mr Marron sent a facsimile to the Tribunal advising that the second named applicant's wife had recently passed away and requesting that the decision be withheld pending Mr Ironside's contact with the Tribunal. He further advised that he would speak with the owners for whom he acted as their proxy and that these would be faxed to the Tribunal. No further communications have been received.

Considerations

Firstly, as to Mr Marron's suggestion that the decision be withheld, it is surprising that such an application should be made by an opponent to the relief sought when the person most obviously affected is one of the applicants. This request was not forwarded to the applicants for comment because I did not consider it necessary to do so. The applicants have consistently expressed their desire for a decision to be made as soon as possible. In fact their correspondence with the Tribunal demonstrates frustration at the process, which had to be followed, in order to ensure that those opposing the applications had a fair opportunity to put their case. I determined that the decision should not be delayed on the ground stated.
Within Mr Marron's main submission is a suggestion that the decision should be delayed until after the annual general meeting.
There was in my view, no valid reason for following that course. However, as it transpires, the finalisation of these reasons for decision has been delayed beyond the date of the AGM in any event.
The evidence of the applicants as to the short notice given for the EGM held on 20 January 2005 has not been gainsayed.
Schedule 1, by‑law 11 requires not less than 14 days notice of every general meeting specifying the place, the date and the hour of the meeting and in case of special business, the general nature of that business, shall be given to, amongst others, all proprietors, although any accidental omission does not invalidate any proceedings at such meetings. By‑law 12 deems that all business shall be deemed special that is transacted at an annual general meeting, with the exception of the consideration of accounts and election of members to the council, or at an extraordinary general meeting.
I accordingly find that the notice of the extraordinary general meeting failed to comply with and was in breach of by‑laws 11 and 12.
Section 97 of the Act provides as follows.
"97. Power of referee to invalidate a resolution or election
(1)Where, pursuant to an application by a proprietor or first mortgagee of a lot for an order under this section, the State Administrative Tribunal considers that the provisions of this Act have not been complied with in relation to a meeting of the strata company, the State Administrative Tribunal may, by order —
(a)invalidate any resolution of, or election held by, the persons present at the meeting; or
(b)refuse to invalidate any such resolution or election.
(2)The State Administrative Tribunal shall not make an order under subsection (1) refusing to invalidate a resolution or election unless it considers —
(a)that the failure to comply with the provisions of this Act did not prejudicially affect any person; and
(b)that compliance with the provisions of this Act would not have resulted in a failure to pass the resolution, or have affected the result of the election, as the case may be."
Section 97 of the Act refers to provisions which have not been complied with in relation to a meeting of the strata company. This would clearly apply to the requirements for calling and passing resolutions as referred to, for example in s 3AC, B and C, CA and D. These provisions relate to resolutions without dissent, special resolutions, the necessary notice periods and the quorum for meetings. Similarly s 49 and s 50 deal with the holding of the first annual general meeting and for powers of voting at meetings
Section 97, in my view operates to provide the Tribunal with specific power to invalidate any resolution in breach of provisions of the Act, such as those referred to above which relate to meetings of the strata company.
Does the resolution passed at the 20 January 2005 EGM constitute a breach of any provision of the Act either because of the procedures followed or by reason of its subject matter?
It is by‑laws 11 and 12, referred to above, which prescribe the procedure which must be followed for the convening of an extraordinary general meeting and the notice requirements in respect thereof. On the face of it a breach of the by‑laws is not a breach of the Act. However, it is to be noted that s 44(2) of the Act prescribes that the council of the strata company shall be constituted and shall perform its functions in accordance with and in the manner provided by the by‑laws of the strata company.
By –law 11(3) provides that the council may, whenever it thinks fit and shall on a requisition in writing made by proprietors entitled to a quarter or more of unit entitlements to the lots convene an extraordinary general meeting. It is the strata company which has the responsibility of complying with by‑laws 11 and 12. I have already held that the provisions thereof were breached. It is therefore the strata company which has breached the by‑laws and, in my view, by doing so, the council has breached its obligation under s 44(2) of the Act to perform its functions in accordance with and in the manner provided by the by‑laws. Insofar as the particular by‑laws relate to a meeting of the strata company, the breach of s 44(2) falls within the requirements of s 97(1) of the Act enabling SAT to invalidate a resolution if it considers that the provisions of the Act have not been complied with in relation to a meeting of the strata company. I am fortified in this conclusion by the express provision in s 97(1) that SAT may invalidate an election held by the persons present at a meeting. The Act does not in itself prescribe the holding of elections, that process being instead prescribed by various provisions of the by‑laws.
Having concluded that a breach of a provision of the Act has not been complied with in relation to a meeting of the strata company it remains necessary to consider whether the order invalidating the resolution should be refused on the basis that, as set out in S 97(2); (a) the failure to comply with the provisions the Act have not prejudicially affect any person; and (b) that compliance with the provisions of the Act, would not have resulted in a failure to pass the resolution.
The motion in question was carried with 20 votes in favour and 15 against. In these proceedings those against the motion in supporting the application has increased to 17 owners. Those in favour of the motion and opposing the application have decreased from 20 to 11 owners, but includes four proxy votes without any authority being established. On the face of it, one of those proxy votes which relates to Gladys Stirling, should be disregarded because Gladys Stirling personally signed one of the documents filed and supported the application. In circumstances where the support for the resolution appears to have waned while those opposing it has increased, there is no basis on which to conclude that the resolution would still have been passed had there been compliance with the provisions of the Act.
In my view, in these circumstances, it is appropriate that an order should be made invalidating the resolution.
The applicants further contend that the resolution is ultra vires because it relates to an upgrade of common property which it is contended is not covered by the Act. This is a point of considerable importance but it falls to be determined only if an upgrade of the foyer is authorised by the resolution. The resolution as passed was:
"That a sum from reserve levies of $150 000 be set aside to renew the foyer and entrance of the ground floor of Strathearn."
The minute itself reflects that the supporters of the motion emphasised that "to set aside" was to give an indication of budget. Those who supported the motion and who have opposed this application have emphasised the same point.
If there is any ambiguity in the motion it is to be resolved by the circumstances surrounding it. The minute shows its intended purpose was merely to set aside funds, not to proceed with any particular works.
That leaves to one side whether the reference "renew the foyer" refers to an upgrade. The applicants invited the Tribunal to inspect the foyer in order to be satisfied that any works required could only constitute an upgrade. It is doubtful whether a view could determine that question without the parties being given a specific opportunity to make submissions on what work was to be carried out. Mr Marron has informed the Tribunal through his submission that there has been no decision as to what work should be undertaken.
In any event, in view of the conclusion reached that the resolution falls to be invalidated on the above grounds, it is not necessary to determine whether the resolution is ultra vires the Act.
There is no power to award costs under the Strata Titles Act in relation to an application brought under s97 of the Act. There is a discretion to award costs under s 87 of the State Administrative Tribunal Act 2004 (WA) but in my view this is not an appropriate case to exercise that discretion in favour of an award for costs. The starting point is that unless specified in the SAT Act, the enabling Act, or an order of the Tribunal under s 87, the parties are to bear their own costs. There is nothing under the SAT Act or the enabling Act which specifies that costs should be awarded and there is nothing in the circumstances that the application itself, which in my view warrants any departure from the general requirement of the parties bear their own costs.
At the same time as commencing these proceedings, the applicants applied for an interim order restraining the expenditure of any part of the $150 000 set aside by the resolution. That application was dismissed because no urgency was shown – see Bamblett & Anor and the Owners of Strathearn Strata Plan 1082 [2005] WASAT 20.

It is plain that those who supported the motion had no intention of using the funds reserved in any way and that there was no consensus as to what works should be undertaken.
It was open to the applicants to simply requisition an EGM putting forward a resolution revoking the earlier resolution. If the applicants had investigated that course it might have become apparent that the council intended convening the annual general meeting and that might have been brought forward so as to avoid calling a separate meeting.
Mr Marron, who appears to enjoy at the very least a guiding role, in relation to those who favoured the motion referred to the lack of need for the application. The matter could have been dealt with without recourse to legal proceedings.
On the most benevolent construction of what has occurred, the applicants acted out of abundant caution. But, in view of the starting point in relation to costs referred to above, something out of the ordinary would need to be shown for costs to be awarded and that has not been demonstrated.
For the above reasons it will be ordered as follows.
1) The resolution made by the persons present at a meeting of the owners of Strathearn strata plan 1082 on 20 January 2005 namely,
"That a sum from reserve levies of $150 000 be set aside to renew the foyer and the entrance of the ground floor of 'Strathearn' " be invalidated.
2) The parties are to bear their own costs of and incidental to these proceedings.
I certify that this and the preceding 11 pages comprise the reasons for decision of the Tribunal.
______________________
C Raymond
Senior Member