Brosolo and Council of Owners of 25 St Leonards Strata Plan 352 - [2008] WASAT 285

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: COMMERCIAL & CIVIL

ACT: STRATA TITLES ACT 1985 (WA)

CITATION: BROSOLO and COUNCIL OF OWNERS OF 25 ST LEONARDS STRATA PLAN 352 [2008] WASAT 285

MEMBER: MR C RAYMOND (SENIOR MEMBER)
MR R AFFLECK (SENIOR SESSIONAL MEMBER)
MR P WELLINGTON (SESSIONAL MEMBER)

HEARD: 14 JULY 2008

DELIVERED : 1 DECEMBER 2008

FILE NO/S: CC 58 of 2008

BETWEEN: RACHEL ANNE BROSOLO
Applicant
AND
COUNCIL OF OWNERS OF 25 ST LEONARDS STRATA PLAN 352
Respondent

Catchwords:

Strata Titles Act 1985 - Application to enforce obligation of strata company to maintain and repair common property - Whether maintenance obligation affected by reluctance or inability of lot owners to approve necessary works

Legislation:

Building Code of Australia
Strata Titles Act 1966 (WA), Sch Pt 1, Sch Pt 2
Strata Titles Act 1985 (WA), s 3(1), s 3(2), s 35, s 35(1), s 35(1)(c), s 36(1), s 36(2), s 38, s 38(2), s 38(4), s 44(1), s 47, s 47(2), s 79(2), s 83, s 83(1), s 102, Sch 1, Sch 2, Sch 2 bylaw 16

Result:

Application granted

Category: B

Representation:

Counsel:

Applicant: Mr R King (Representative)
Respondent: Mr R Norris (Representative)

Solicitors:

Applicant: Self-represented
Respondent: Self-represented

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

Thomas Baric and The Owners of Killara – Strata Plan 732 (1997) WASTR 878

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

The applicant, the owner of a lot on strata plan 352, applied to the Tribunal under s 83(1) of the Strata Titles Act 1985 (WA) seeking an order that the body corporate conduct a building maintenance report and undertake the necessary repairs.
On the facts of the case, the Tribunal determined that the strata company had failed to adequately maintain the common property. In respect of one of the complaints made by the applicant relating to the condition of the carports, the Tribunal found that, by virtue of the existence of an exclusive use by-law, the individual lot owners were responsible for maintenance and that, consequently, no order could be made against the respondent in these proceedings.
The Tribunal rejected submissions made by the respondent as to the effect of the restrictions on expenditure imposed on it by s 47 of the Strata Titles Act 1985 (WA). The respondent indicated that, unless the Tribunal authorised expenditure on the grounds of the existence of an emergency, the respondent would have to follow the direction of the majority of owners. Further, the respondent could not employ contractors to carry out the work, which the majority of owners did not want done, in the full knowledge that there were not enough funds to pay a contractor, and that obtaining the necessary funds by way of a levy would be, at best, a difficult and lengthy process, and at worst, an impossible process.
The Tribunal held that the strata company's obligation to maintain common property under s 35 of the Strata Titles Act 1985 (WA) is to properly maintain, and that is a standard which must be tested objectively. Further, that there is nothing in the legislation which in any way qualifies that standard by reference to the financial capacity of the owners. Ultimately, if an owner cannot afford to pay his or her share of proper maintenance, the Tribunal expressed the view that the owner would either have to borrow the necessary funds or consider disposing of the property.
The Tribunal accordingly made orders prioritising the necessary maintenance work and requiring that it be undertaken within particular time frames. In order to give effect to these orders, the Tribunal also ordered that the respondent do all things necessary to convene an Extraordinary General Meeting and to cause resolutions to be passed then, and at the next Annual General Meeting, to have budgets passed for the necessary work, authorising the raising of appropriate levies, the taking of legal action to enforce the levies if necessary, and authorising the strata company to borrow funds to meet any shortfall in the recovery of levies existing at the time when funds were required.
The Tribunal also observed that, in the event of noncompliance with its orders, any interested person would be entitled to apply to the Tribunal for the appointment of an administrator to ensure that compliance was achieved.

The application and orders sought

The applicant, who is the owner of Lot 11 on strata plan 352, applied to the Tribunal seeking an order 'under the Strata Titles Act 1985 s 83(1) directing the body corporate of strata plan 352 to conduct a building maintenance report and undertake repairs as deemed necessary by such a report'.
The application alleges that a request for this course to be followed had been made on 20 August 2007 but had not been undertaken. A copy of the minutes of a Council of Owners meeting dated 30 August 2007 reflects that it was suggested a building report be obtained to enable a maintenance schedule to be put in place and owners would be able to raise funds for the work as prioritised. It is then recorded that the strata manager would obtain a report.
The grounds for the application were expressed as detailed within an attached report from BSP Construction Consultants (BSP), paid for and commissioned by the applicant due to her concerns about building safety. Further, it is stated that there is confirmation that the long-term lack of suitable maintenance has caused some parts of the building structures to become unstable; and there are serious concerns that this could result in liabilities being passed on to the lot holders should a claim for injury compensation occur associated with this lack of appropriate maintenance; and a lack of funds to conduct this assessment should not be an impediment considering the nature of safety issues involved.
At the initial directions hearing, the parties agreed that the application should be adjourned pending consideration of the issues at an Extraordinary General Meeting of the strata company to be held on 4 February 2008 and the taking of necessary action pursuant to any resolution passed at that meeting. An order to that effect was made on 31 January 2008. Subsequent to the Extraordinary General Meeting, the respondent (Council) provided a submission under cover of a letter dated 18 February 2008, to which was attached the minutes of the meeting on 4 February 2008. The applicant also reported to the Tribunal by letter dated 5 February 2008.
The minutes of the Extraordinary General Meeting reflect that the strata manager advised owners that the cost of obtaining a building report would be approximately $2,500. After discussion, it was resolved that a building report be obtained and a special levy be raised based on the cost of the report. It was further resolved that a copy of the minutes be forwarded to the Tribunal with a request for an adjournment of the next directions hearing (which was scheduled for 21 February 2008) to enable sufficient time for the report to be obtained.
The report from the applicant reflects her concerns that delay in effecting roof repairs might cause further damage to the ceilings of her property. The applicant stated that there had been some internal water damage to the ceiling in one of her rooms, and that having spent a considerable amount of both time and money renovating all internal surfaces of her lot, she considered it 'inappropriate to expect collateral damage to occur due to nothing more than tardy actions by the Council of Owners'.
In the submission from the Council, the Tribunal was informed that the Council had already obtained a comprehensive building inspection report but had not had an opportunity to consider it fully. Further, that steps had been taken to obtain two quotes from roof restoration contractors and that reports were still awaited from the contractors advising on the restoration work that they considered necessary together with a quotation for the cost involved. They were also asked to give an opinion on the urgency of any necessary work.
The Council's submission proceeds to outline that any expenditure would exceed the $65 per unit that the Council is permitted to spend under s 47 of the Strata Titles Act 1985 (WA) (ST Act). Accordingly, the quotations would be put to owners either at the next Annual General Meeting (scheduled for August 2008) or at another Extraordinary General Meeting. The Tribunal was advised that the Council would act in accordance with the wishes of the majority of the 16 owners. The concern was expressed that, where the majority of 16 owners did not see the need to approve expenditure, it is likely that an 'emergency' situation of the type referred to in s 47(2) of the ST Act exists. The submission posed how the Council could possibly employ contractors to carry out work which the majority of owners do not want done, in the full knowledge that it does not have the funds to pay the contractor, and that obtaining the necessary funds by way of a levy will be, at best, a difficult and lengthy process, and at worst, an impossible process.
On and subsequent to 21 February 3008, the Tribunal held a number of directions hearings in an attempt to ensure that the issues between the parties were properly defined and presented in as coherent a form as possible. That included a requirement that the parties prepare a Scott schedule, identifying all work required to be undertaken, providing a timetable for the undertaking of the work, the cost of doing so (to the extent known), and the parties' respective positions in relation thereto.

The parties' positions

The applicant relies on the original BSP's building inspection report, dated 9 January 2008, attached to the application and on the three reports and quotations obtained by the Council. The first, dated 11 February 2008, is from Advanced Roof Restoration, the second, dated 20 February 2008, is from Prestige Roof Restorations, and the third, dated 7 March 2008, is from Bower Roof Plumbing.
The Council relies on a report, dated 5 March 2008, prepared by Mr Barry Jones of the ArchiCentre Building Advisory Service (ArchiCentre), arguing that, on a proper reading, the report does not support any major repairs to the roof cover. Mr Jones' curriculum vitae (Exhibit A) reflects that he holds a graduate diploma in architecture, a post graduate diploma in property and that he is a registered builder in Western Australia. He has operated in Western Australia since 1989 in the principal area of diagnosing building defects and providing building contract advice. He undertakes rectification of structural defects to residential and commercial building. The Council disavowed reliance on all of the quotations for roof repairs which it had obtained (save to a limited extent on the Prestige Roof Restorations report), and based on criticisms made by Mr Jones at the hearing, its position is understood to be that a specification for any necessary roof repairs will have to be drawn up by an independent person.
The Scott schedule reflects the parties' positions in relation to each of the 23 work items identified. It emerged at the hearing that there is general agreement about the priority to be accorded to the work items, with the exception of two items. Firstly, in relation to the roof, there is disagreement as to the extent of work which is necessary and the urgency to be accorded to it. The second item which is disputed relates to the painting of the carports within the parcel. In the circumstances, it is not necessary to set out the Scott schedule in any detail. The items will be identified and discussed to the extent necessary below.
The applicant's overall position remains as stated in her application. A number of other submissions have been received from or on behalf of the applicant including a lengthy responsive statement to submissions made by the Council and by persons notified pursuant to s 79(2) of the ST Act. It is not necessary for the Tribunal to attempt to resolve many criticisms raised about the conduct of particular Council members or owners of other lots. Most of the repair work is conceded to be necessary, and the Tribunal's task is to determine what repair work, if any, is necessary in respect of the items in dispute and to prioritise and set a program for all work which needs to be undertaken, subject, of course, to the concerns raised by the Council with regard to funding.
It is sufficient to note the following from the further submissions made by the applicant. Reference is made to the submission filed on behalf of Council in February 2008, as referred to above, which reflects concern about the ability to raise funds, and in particular to a submission received from the owner of Lot 10 (referred to as Unit 10), Mr T Burke, supporting the Council's plan to act on the ArchiCentre report, but concluding that, due to shortage of funds in the body corporate account, any restoration work is not possible at the present time.
As the documents filed generally refer to unit numbers rather than lot numbers, the Tribunal will do likewise unless the context makes it more appropriate to refer to a lot or lots.
The issue of insurance cover is raised by the applicant. Attached to the submission is a copy of a letter dated 17 March 2008 from CHU Underwriting Agencies Pty Ltd (CHU). It is clear from the content that CHU is the insurer of the property. In the letter, CHU refers to 10 particular repair items which are identified as being 'potential liability hazards … which [are] areas of concern that require maintenance'. Those matters are reflected in the Scott schedule. In addition, the letter refers to the roof and notes that a number of independent reports have been made available to it. While CHU states it is not expert in those matters 'if they are the cause of potential liability issues, as with all maintenance, the onus is on the strata company to ensure that common property is maintained …' Reference is then made to s 35 of the ST Act and it is stated that:
[I]f the strata company fails to take action to rectify these issues, then liability claims arising due to lack of maintenance or repair could see policy coverage in jeopardy.
The submission also refers to the alleged failure of the Council to produce a long-term financial plan or maintenance schedule. A number of criticisms are then raised concerning the strata manager and it is submitted that an administrator seems the logical answer to ensure the complex is properly managed with complete impartiality ‑ unless the Council produces a funding plan, work schedule with actual completion dates and employs a manager capable of handling the processes involved.
The applicant also raises a concern in its responsive submission to a submission made by Mr Patrick Miller, a notified person, then being the owner of Unit 16 (the owner reflected in the strata roll is given as Miltal Investments Pty Ltd, which is presumably a company with which Mr Miller is associated). Mr Miller's submission reflects that the strata company had incurred costs of some $10,600 in respect of work carried out on the rear carport structure. It is pointed out for the applicant that exclusive use has been granted in respect of the carport structures and it is submitted that Council has used funds wrongly in carrying out this work approximately 18 to 20 months ago. It is submitted that this needs to be addressed.
As the entire application is based upon the alleged failure to maintain common property and the state of repair of the carport has been addressed in the Scott schedule and in evidence before the Tribunal, it is necessary to determine where responsibility lies for the maintenance of the carports. However, to the extent that the applicant might wish for any alleged wrongful use of monies to be addressed, that is not the subject of the application and the processes which have been followed have not afforded notified persons an opportunity to deal with that issue.
The Council's position has advanced since the initial submission filed in February 2008. Having had an opportunity to study the ArchiCentre report, the Council relies on it to identify the work which is necessary. The Council's concern about funding as previously expressed is not changed, and indeed, was emphasised again in closing submissions.
It is to be noted that in a response on the letterhead of the strata company's strata manager, Digital Strata Management & Consultancy (DSM&C) which was countersigned by the strata manager and Mr Norris as Chairman of the Council of Owners, the Tribunal was informed that the Council has requested ArchiCentre to carry out the task of evaluating and prioritising the items listed in the ArchiCentre report. In relation to the condition of the roof, the Tribunal was advised:
… It should be noted that the expert opinion provided to Council by Prestige Roof Restorations starts with the comments 'the roof structure was found to be in excellent condition and no medial [sic] work was needed' and 'the tiles are in average condition'.
The response goes on to dispute that any water damage had occurred following heavy rainfall in the previous month (February 2008).
Submissions were filed by five other lot owners. They were all supportive of the approach taken by the Council. Reference has already been made above to the response from Mr Burke of Unit 10. Ms D Plummer, the owner of Unit 14, filed a lengthy submission with a number of attachments. A number of allegations were made in an attempt to impugn the credibility of the applicant and Mr King. None of these criticisms were developed at the hearing by the Council, and it is not necessary for the Tribunal to determine them, given its role as outlined above. The outcome of the matter is not dependent on credibility. The final hearing was conducted by the parties making submissions on the effect of the various building reports. The only witness called to give evidence was Mr Jones and he was subjected to cross‑examination. No credibility issues were addressed. The condition of the building as summarised in various reports, and in particular, that of the ArchiCentre report relied upon by the Council, speaks for itself.
The response from Ms C Baskerville, the owner of Unit 12, simply supports the position of the Council. Mr J Blake, the owner of Unit 2, makes the point that the building was constructed in 1970 and that he believes the complex to be in quite good condition for its age. He asserts that, after heavy rainfall in February, no leaks or damage were reported to the Council.
Reference has already been made to the response from Mr P Miller. He holds the degree B.Architecture (Honours) and the Diploma Applied Science (Arch Draft), and at the time of the response, was the owner of Unit 16. He expresses support for the ArchiCentre report. In considering the report and in response to the applicant's claim for immediate rectification work to the building, Mr Miller states he does not agree that all the items within the ArchiCentre report are of an urgent nature, with the exception of the tiled roof cover, described as generally defective and requiring overhauling, with reference in particular to:
(a)cracked roof tiles which require replacing (not including minor chipped tiles) and
(b)some gutter joints which are leaking and require resealing.
Mr Miller joins with Mr Jones in criticising the proposal for painting of roof tiles and endorses the comment that work undertaken by roof repair companies, such as those which quoted, should be avoided. He agrees that the rectification work should be carried out by an appropriate qualified roof tiler and roof plumber, further that the tiles can be purchased from salvage yards for half the price and would more suitably match the existing.
In relation to the management of the parcel, Mr Miller says:
I find the management of the available funds at 25 St Leonards Street, to be beneficial to all owners without overspending and therefore I do not wholly agree with Miss Rachel Brosolo that previous rectification works were poorly managed in the past, and also highlight the rear carport structure which at the time of the repair, that the Council of Owners directed, had the entire asbestos roof removed, the steel structure sanded/grinded back as best as possible to remove rust (without disassembly or on-site sandblasting) and painted with primer and top coat. The structure was then reroofed and plumbed. In my opinion the $10,600 for the scope of work was well worth the gain without the need to provide an entirely new structure and unnecessary expense which the Council of Owners would have difficulty in raising.
I find the building, structures and grounds to be in good condition despite the age, and agree with Miss Brosolo that a more qualified person should be made available for the on-site supervision of future works, however I stress the importance of researching and choosing quality tradesmen in the first instance.
Therefore, in conclusion, and in the interest of all owners including Miss Brosolo, I believe that all items within the ArchiCentre report should be scheduled with an associated program, highlighting the urgency of the item, a timeframe for rectification and possible funds (quotes) to carry out the works. This would enable all owners to be made aware of the pending levies which may arise and the timeframe for which to allow for them if unavailable from the funds obtained from the standard strata levies.

Before turning to address the Scott schedule items, it is necessary to give consideration to whether the maintenance of the carports is the responsibility of the strata company. It is necessary, therefore, to refer to the strata plan and by‑laws.

The strata plan and by‑laws

The strata plan was registered on 31 July 1970. The parcel contains a double storey building containing Lot 1 to Lot 8 on the ground floor and Lot 9 to Lot 16 on the first floor. There are three demarcated carport areas. A notification of change of by‑laws was registered on 22 January 1997, being Notification G378689. A copy of Notification G378689 has been provided. It reflects that, by resolution without dissent, the by‑laws contained in Sch Pt 1 and Pt 2 of the Strata Titles Act 1966 (WA), as amended, were repealed, and that the Sch 1 and Sch 2 by‑laws of the ST Act were adopted. Further, a by‑law 16 was added.
By‑law 16 provides that the registered proprietor of each lot will be entitled to the exclusive use and enjoyment of that part of the common property as is marked on the attached sketch as being for the use of each lot respectively. The attached plan is unfortunately a poor copy, but it appears that carports have been allocated to Lots 11, 3, 10, 9, Lot 2 and Lot 1 on the western side of the building, all within a single demarcated area. On the northern side of the building, it appears that the allocation of carports are made in favour of Lots 16, 7, 15, 6, 14, 5, 13, 4, 12. There is one car parking space in relation to which the number is not legible, but it is most likely Lot 8. These appear to be the rear carports to which Mr Miller refers.
The scheme is not a single tier strata scheme as defined, because there is one lot above each ground floor lot. Consequently, the definition of 'lot' and 'floor plan' as set out in s 3(1), read with s 3(2), of the ST Act have the effect that the inner surface of the building is the boundary of each lot and the horizontal boundary of each lot is the upper surface of the floor and under‑surface of the ceiling in each lot.
Consequently, and consistent with the basis in which parties have approached the case, the entire roof space is common property; so is each carport.
However, the effect of s 42(11) of the ST Act is that the proprietor for the time being of a lot in respect of which an exclusive by‑law is in force, such as that referred to in Notification G378689, unless excused by the by‑law, is responsible for the performance of the duty of the strata company under s 35(1) of the ST Act in respect of the common property, or the part of the common property, to which the by‑law relates. The by‑law does not excuse the lot owners from that responsibility.
The obligation to maintain the structures falls primarily on the individual lot owners who have been granted exclusive use of the carports. While these owners are responsible for the performance of the duty of the strata company under s 35(1)(c) of the ST Act, the strata company is nevertheless not entirely discharged from that duty. The strata company is entitled to require individual lot owners to perform the duty. If they fail to do so, the strata company is empowered under s 38(2) of the ST Act to carry out the work. It may then recover the cost of doing so pursuant to s 38(4) of the ST Act in a court of competent jurisdiction. It has a discretion whether or not to follow that course. But, if the circumstances are such that it should take that action but fails to do so, an application for an order requiring the strata company to take that action can be brought under s 83 of the ST Act. As no claim has been made against any individual owners, no circumstance has arisen for the Council to take any steps under s 38 of the ST Act.
It follows that, in this application, no order can be made against the Council, in respect of the carport.

The obligations of the Council of Owners

Under s 44(1) of the ST Act, the functions of the strata company shall, subject to the ST Act, and to any restriction imposed or direction given at a general meeting, be performed by the Council of the strata company.
Section 35(1)(c) of the ST Act provides that a strata company shall keep in good and serviceable repair, properly maintain and, where necessary, renew and replace the common property, including the fittings, fixtures and lifts used in connection with the common property, and do so whether damage or deterioration arises from fair wear and tear, inherent defect or any other cause.
It is submitted for the Council that the effect of s 47 of the ST Act is that the Council is restricted in incurring expenditure, except as authorised under that section, which exceeds the sum obtained by multiplying the prescribed amount, being $65 per lot. Further, unless emergency expenditure is authorised by the Tribunal, or less than 25% of proprietors would object to incurring expenditure in excess of that amount (and implicitly it is understood that more than 25% of owners are likely to object), the expenditure could only be incurred if approved at a general meeting of the strata company. We accept that Council is correct in identifying that it must operate subject to those restrictions.
However, the restrictions imposed under s 47 of the ST Act do not alleviate the strata company from meeting its obligations under s 35. If a strata company does not discharge any duty imposed on it by the ST Act, or by an order of the Tribunal, the remedy is for the Tribunal to appoint an administrator to perform that duty under s 102 of the ST Act.
The obligation under s 35 of the ST Act is to properly maintain. That is a standard which can be tested objectively. There is nothing in the legislation which in any way qualifies that standard by reference to the financial capacity of the owners. This conclusion is consistent with previous decisions of the Strata Titles Referee. In Thomas Baric and The Owners of Killara ‑ Strata Plan 732 (1997) WASTR 878 (Baric), the learned Strata Titles Referee stated with reference to the strata company's duty under s 35 of the ST Act:
I do not regard the proper repair and maintenance of the 'Killara' building as being discretionary. I regard it as being a mandatory obligation.
I appreciate that the necessary works involve cost factors which may create difficulties for some or even many proprietors of lots in the scheme but, in the event of major damage to or deterioration of the building or the death of or injury to any person as a result of the necessary remedial works not being carried out, the cost to lot proprietors could be much more than the cost of carrying out repair and remedial works now.
The order made in the Baric matter required that the strata company arrange to have particular building works carried out and that it raise a levy sufficient to meet the costs involved in the undertaking, completion and supervision of that work. The learned Strata Titles Referee declined to appoint an administrator at that stage, but stated that his view on this issue might be affected by the action taken by the council of management and the members of the strata company in relation to the order made.
The Tribunal has seen glimpses of the tension which obviously exists between the parties in this case, in other matters which have come before the Tribunal, but the issue has not been raised as squarely as in this case. With the increasing age of buildings constructed many decades ago which are owned under strata title, it can be expected that there will be an increase in the number of disputes in which some owners wish to carry out maintenance immediately and other owners either wish to delay maintenance or do not recognise the need for it at all. New owners who have paid current, and often very high, market value prices for a strata property may be able to better afford a standard of maintenance, which older owners, often on fixed or limited incomes, find difficult to afford. What is the proper standard of maintenance will be a matter which will have to be determined on the facts and circumstances of each. But there can be no avoidance of the obligation to carry out that proper standard of maintenance.
The difficulties foreshadowed by the Council in raising funds can be met by appropriate orders, consistent with the order sought by the applicant in these proceedings and necessary to make the order sought effective, which require the Council to do all things necessary to hold a general meeting, or meetings, at which resolutions must be passed in accordance with the Tribunal's order. The resolutions to be passed can include a resolution for the raising of the necessary levies, the authorising of the strata company to commence action against defaulting owners, and authorising the strata company to raise necessary funds by borrowing, in the event of any shortfall by the date when the works must be undertaken. A breach of any one of these orders will provide a basis for the appointment of an administrator to carry out the duties of the strata company. Obviously, the appointment of an administrator would have the result that the owners will become liable to bear the costs of the administrator.
The ST Act provides these mechanisms to preserve the effectiveness of the entire scheme of strata title ownership. Ultimately, if an owner cannot afford to pay his or her share of proper maintenance, that owner will either have to borrow the necessary funds, or consider disposing of the property. While that result would be unfortunate, it is no different to the owner of a property held under a conventional freehold title, who realises that it has become too expensive to maintain.

Has the strata council discharged its maintenance obligations?

General maintenance (excluding the roof)

In assessing what repairs need to be undertaken, the Tribunal has had regard to all of the material which has been filed by the parties and notified persons, as well as documents tendered during the oral hearing.
We shall commence with the ArchiCentre report. It is written in a precise style and therefore to summarise it would almost mean repeating it. It includes evidence of:
•steel balustrades corroding, causing concrete balconies and staircase edges to spall;
•crazing of top surfaces of balconies, which has allowed migration of water into the concrete;
•mortar joints which have eroded;
•timber balustrade mitres are rotten due to inadequate protection;
•cracking of retaining walls;
•no sealing alongside the edges of fibrocement panels between the upper and lower windows, allowing rainwater to migrate into the wall structure and possibly into units;
•a tiled roof cover described as being generally defective and requiring overhauling;
•paving slab paths that are undulating;
•cracking of the bitumen driveway;
•shrubs, and in particular, trees, around the property which require pruning and proper management;
•landscaping and reticulation, which require improving and proper management;
•minor surface rusting, which is bleeding through the paint film on carport structures; and
•displacement of mortar at both ends of steel lintels over brick openings to the front of Unit 12 and Unit 13, and also over Unit 5 window opening.
This evidence of lack of maintenance is provided by the Council's expert witness. Excluding, for the moment, the condition of the roof, because Mr Jones gave evidence which, if accepted, affects that issue, the other matters are sufficient to support a finding that the buildings have not been adequately maintained for a considerable period of time.
The ArchiCentre report, excluding the roof issue, supports the general criticism made by the applicant that there has been no proper maintenance program. That state of affairs is implicitly acknowledged in the submission made by Mr Miller, in support of the Council. That statement refers to the management of the 'available funds' to be beneficial to all owners without overspending. Mr Miller does not wholly agree with the applicant that previous rectification works were poorly managed, which means that he partly agreed with that statement. Thus, evidence provided to support the Council establishes the applicant's case.
Mr Norris tendered income and expenditure statements for the strata company covering the period from June 2004 to mid‑May 2007, together with the budget for the 2007/2008 year. The following can be noted.
The annual budget was $13,230 for the 2004/2005 year, of which $3,902.50 was allowed for general maintenance. In the 2007/2008 year, the budget increased to only $14,720, with $5,209 allowed for general mainteance. There was effectively no increase in the overall budget for the 2006/2007 year or for general maintenance ($3,950), although the expenditure in that year was $22,716.41. Included in that amount was $14,347 in respect of general maintenance. Although this was not explained, it appears that much of that expenditure is likely to relate to the carport work discussed above. The accounts reflect that a balance of $3,722 was carried forward into the 2007/2008 year. This may or may not explain why the strata company failed to obtain a building report as had been suggested at the Council meeting on 20 August 2007.
The 2004/2005 budget included $3,902.50 for general maintenance. Only $2,809.48 was spent during that year under that item. The 2006/2007 budget allowed $5,409 for general maintenance. The unexpected level of expenditure against that item, probably due to the carports, was met in part by a special levy of $3,500 and in part from the funds carried forward from the previous year of $9,043. It is self‑evident that there was no budget allowance for this expenditure.
When regard is had to the level of expenditure on general maintenance, the unbudgeted expenditure in 2006/2007, and the list of maintenance items identified in the ArchiCentre report (excluding the roof at this stage), there is a more than sufficient basis to find, as we do, that maintenance of the buildings has not been well programmed, and that insufficient funding has been provided for necessary maintenance. The corroding flanges supporting balustrades and rotting timber balustrades point to years of lack of adequate maintenance.
There is nothing to indicate that the strata company has established a reserve fund, under s 36(2) of the ST Act, to meet contingent expenses. While it was not obliged to do so, that would have been a prudent course, given the age of the building. Although a de facto reserve was built up, that arose through not carrying out budgeted maintenance, when quite clearly there was maintenance required. If a dedicated reserve fund is not provided, owners cannot complain when significant amounts have to be levied to meet expenses which must be incurred.

Roof maintenance

The Council commissioned three quotations and reports from specialist roof repair firms.
A report written by Advanced Roof Restoration stated that the roof is badly degraded with nearly 800 broken tiles 'which are letting a lot of water into the ceilings during heavy rain'. On any basis, it appears that the statement within quotations is exaggerated. We shall revert to the extent of leaking alleged in respect of the applicant's Unit 11. As stated above, the quotation to replace broken tiles, re‑bed ridge caps where necessary, re‑point all bridge caps, clean and sterilise the roof, and finally provide a paint cover is $27,200. In a breakdown of its quotation, Advanced Roof Restoration noted that 792 broken tiles had been counted, but that an allowance to replace 1,600 tiles was costed.
In a quotation from Bower Roof Plumbing which was for restoration of the roof in much the same manner as the Advanced Roof Restoration quotation, including painting, allowance was made for 600 tiles and the total cost was $23,320.
The Prestige Roof Restorations quotation did state, as submitted by Ms Plummer, that the roof structure was found to be in excellent condition and no remedial work was needed. The report further stated that the tiles were in average condition. The report proceeded to outline the work that was necessary, and that description included a statement that there were a lot of tiles broken on the roof 'some are minor and some need to be changed to stop current or future leaks'.
In a breakdown of the quotation which was for a total amount of $43,208, an amount of $2,000 was provided for changing all tiles that leak. While the cost per tile is not given, we note that the Bower Roof Plumbing quote was based on a charge of $4.50 per tile. Using that as some guide, it would suggest that Prestige Roof Restorations contemplated using at least 400 tiles to replace tiles which could result in leaks.
The ArchiCentre report stated in relation to the roof:
1.11The tiled roof cover is generally defective and requires overhauling.
Cracked roof tiles require replacing.
Loose hip and ridge tile caps require re‑bedding.
Leaves and debris require removing from gutters and valley flashings.
Some gutter joints are leaking and require resealing.
The Council disputed that there was any general problem with the roof leaking. In the submission from the Council filed on 13 March 2008, it was stated that the conclusion by Prestige Roof Restorations that the roof structure was in excellent condition and no remedial work was necessary, and that the tiles were in average condition was borne out by no damage being reported following heavy rainfall in the previous months. It is not entirely clear what the Prestige Roof Restorations report is meant to convey by reference to the roof structure. We take that to mean that the roof framing was inspected.
We note that the income and expenditure statements tendered by Mr Norris at the hearing reflect that the ceilings of Lot 11 and Lot 16 were repainted during the 2004/2005 year, and that during the 2006/2007 year, repairs were carried out to a vent cap which was a water entry point to Lot 11 and that the ceiling of Lot 11 was repainted again. Including in the Council's papers for hearing was a tax invoice dated 2 June 2008 from Hatch Services WA for an amount of $326.70. The invoice job description reflects an attendance on a roof leak in respect of Lot 11; that tiles were found to be misaligned, approximately 45 tiles were aligned and re‑nailed to batons where they were loose. Three broken tiles were repaired, as were five channels and five ridges.
Finally, the quote from Bower Roof Plumbing, which was commissioned by the Council, includes as a first item of the work to be undertaken 'find and repair all leaks as noted'.
It is clear to us, and we find that recurrent water leaking has been experienced through the roof in the vicinity in Lot 11, which has resulted in water damage to that property.
Mr Jones gave oral evidence for the Council. He downplayed the description of the roof as set out in [1.11] of his report. He said that he had been on the roof and, in his view, only approximately 50 tiles required to be replaced. However, when he was pressed on this issue, he conceded that his estimate was tongue‑in‑cheek, and later, that it was a bit glib. We are not impressed that an expert witness should approach the giving of evidence to the Tribunal in this manner. It casts doubt on his oral evidence, which, on its face, is inconsistent with his written ArchiCentre report conclusion that the roof cover is generally defective and requires overhauling.
The BSP report commissioned by the applicant identified many of the matters dealt with in the ArchiCentre report. But, it also identified concerns relating to two timber collar tie beams and a roof tile batten which had moved. If Prestige Roof Restorations examined the roof framing, these mattes were obviously missed because we cannot accept that the roof structure, if intended to refer to the roof framing, can be described as being in excellent condition. The collar tie beams need to be properly fixed and cannot otherwise provide the structural support for which they are designed.

When regard is then had to the Hatch Services WA invoice for repairs to the roof in June 2008 to address leaks from the roof into the applicant's unit, there is cause for concern. The repairs included the realignment of some 45 tiles. This suggests the possibility of some structural movement of the roof.

Conclusion on maintenance

We find that the Council, and therefore the strata company, has failed to discharge its maintenance obligations generally as reflected in the maintenance items identified in the ArchiCentre report (excluding the roof item). Those are matters for which the strata company was obliged to make adequate provision as and when maintenance was required. Section 36(1) of the ST Act requires that a strata company shall establish a fund for administrative expenses that is sufficient in the opinion of the company for the control and management of the common property, for the payment of any premiums of insurance and the discharge of any other obligation of the strata company. The annual budgets should have made adequate allowance for those items of work to be carried out, and the strata company breached its duties under s 35(1)(c) of the ST Act by not carrying out the repairs which could then be identified.
In relation to the roof, we also find that the Council, and therefore the strata company, has failed adequately to meet its maintenance obligations. While the Council attended on an ad hoc basis to complaints about the roof leaking, it should have ascertained that more general work was required in relation to cracked roof tiles, loose hip and ridge tile caps and leaking gutters. These are matters which should have been attended to annually. Of particular concern is that the Council does not appear to have responded in any way to the specific roof framing issue raised by BSP. Mr Jones does not appear to have been instructed to report on that matter. The only comment on the roof structure is from Prestige Roof Restorations, whose report, in some respects, has been disavowed by the Council. It is a matter which calls for attention, particularly having regard to the repairs carried out by Hatch Services WA, on which we have commented above.
Having established that the strata company's maintenance obligation cannot be avoided by the majority of owners not approving the carrying out of the necessary work, and that there has been a breach of those maintenance obligations, we shall now assess and prioritise the work identified in the Scott schedule.

Assessment and prioritising of Scott schedule items

The parties were all agreed that the ArchiCentre report identified a number of matters which were to be regarded as safety issues and should be accorded priority. These were all items dealt with in the CHU letter referred to above.
At the conclusion of Mr Jones' evidence, in which he addressed all the matters referred to in the ArchiCentre report, the Tribunal asked him to prioritise the order in which the necessary works should be taken. He responded to the following effect. All reference to item numbers is to the item numbers appearing in the Scott schedule.
1)The corners of the balconies needed to be supported. We understand this to be a reference to the corrosion around the bottom flange of the steel balustrades which has caused the concrete balcony to spall (item 11).
2)Roof cover. Mr Jones stated that, although the roof may not be leaking, a number of tiles could allow water ingress. He stated that one would not want to discover the problem in storm conditions.
3)The fencing off of retaining walls. We understand this to be a reference to the need for provision of balustrading or handrails (item 8).
4)Balcony balustrading and handrails (item 10).
5)All other work should form part of a regular maintenance program.
As we have already mentioned, the BSP report also identifies that a roof tile batten has moved from its original position next to the kitchen skylight (this is assumed to be above Unit 11) and that two timber collar tie beams inside the roof framing have moved from their original position. These are matters which require repair and are to be taken to be included in all subsequent references in these reasons for decision and in the Tribunal's order to roof repairs.
In prioritising the Scott schedule items, we have taken into account that there was some $3,700 carried forward into the 2007/2008 financial year and that the budget for general maintenance in that year was $5,209. There is no evidence of the extent to which that has been expended. Accordingly, we shall set dates by which work must be undertaken. In doing so, we will allow sufficient time for a special levy to be raised and our orders will make provision for this. However, if there are funds available for general maintenance, the work should be carried out, in accordance with the priorities set, to the extent of the available funds. The intention of the orders that we will make is that work be carried out on or before a particular date so that work can be carried out immediately to the extent of available funds. On that basis, we prioritise the work to be undertaken as follows.
Item 1 to item 11 are agreed safety issues to be given first priority. However, the Council states that item 12 is proposed to be completed at the same time as item 11, as the same contractor will be used. Accordingly, item 1 to item 12, inclusive, are to be given priority. It is understood that some minor items may have already been completed. In any event, to the extent that there are available funds, they should be used to carry out as much of this work as is possible without delay, but the Tribunal's order will require that the work be completed on or before 30 April 2009 to allow time for a special levy to be raised. The items are:

Item No	Work Description
1	The concrete slabs near drying area need levelling
2	The concrete slabs at side need levelling
3	The uneven lip to the concrete entry path must be rectified
4	All grey concrete path and step edges need to be painted or provided with safety strips
5	The underside of staircases need signs or barriers
6	The concrete steps from the carpark need handrails or painted edges
7	The bitumen driveway cracks and holes to be sealed
8	The retaining walls near Unit 3 and Unit 5 require handrails or balustrades
9	The taps near the front letterbox require painting or boxing
10	The upper balcony railings need to be altered to meet current Building Code of Australia requirements
11	The steel balustrade bottom flanges need repair
12	The top surface of balconies and stairs need waterproofing

Item 5 (rotten timber balustrade mitres) falls away, as this work will be included within item 10 above.
Thereafter, priority must be given to the roof repairs. The Council, in closing submissions, and Mr Jones, in his evidence, raised concerns about using any of the contractors who had provided reports. It was put that there is an inherent conflict of interest in that the contractors had an interest in exaggerating the work necessary. Mr Jones was particularly critical of the supposed benefit of painting roof tiles. His recommendation was that the work be carried out by an appropriate roof tiler and roof plumber. The degree of variation in the reports and quotations provided by the roof restoration contractors creates doubts about the scope of works recommended by each. It is clear to us, and we find, that, taking all reports together, there is a significant amount of maintenance required. It is desirable that an independent architect or building consultant define that scope and participate in the process of identifying an appropriate contractor or contractors to carry out the necessary work. It may well be that the necessary work can be carried out at a cost which is much lower than the quotes provided to date.
We do not consider that Mr Jones is the appropriate person to be appointed for the above purposes. He has given evidence on behalf of the Council and there have been features of that evidence with which the Tribunal is not satisfied. Expert witnesses giving evidence before the Tribunal are required to be completely objective. That objectivity was not demonstrated by the glib way in which Mr Jones dealt with the number of defective tiles. The Tribunal was also not impressed with his evidence in relation to the carports. The Tribunal considers that there are engineering issues that are raised and that Mr Jones' evidence that the carports are structurally sound is not reliable. The Tribunal, having the benefit of the knowledge of an engineer member, is concerned that there are structural issues that need to be properly addressed.
In all the circumstances, the Tribunal considers that the architect or building consultant to be appointed for the above purposes, should be a person who has no connection with either party and who has sufficient training and experience in dispute resolution to act with an appreciation of the opposing views of the parties so as to arrive at an objectively determined specification of what work is necessary. For that reason, the Tribunal will order that an architect or building consultant be appointed who is a member of the Institute of Arbitrators and Mediators Australia, and who has no connection with the parties.
We consider that the terms of engagement of the architect or building consultant should require that he or she inspect the roof framing and roof cover in order to properly define the scope of necessary works, manage a process for selection of an appropriate contractor or contractors and supervise the work. That work should include the carrying out of necessary repairs or replacement of guttering. The roof repairs therefore include item 18 (tiled roof cover is defective and requires overhauling) and item 19 (gutters and attachments need attention). All of this work is to be commenced by not later than 30 April 2009 and must be completed as soon as possible thereafter. The Tribunal's orders will make provision for the passing of all resolutions necessary to make the order sought by the applicant effective.
There are thereafter a number of items which require attention but which are not urgent. Given the level of expenditure that will be incurred during the 2008/2009 year as a result of the matters dealt with above, these items of work can be carried out and budgeted for during the 2009/2010 financial year. The Tribunal's order will require that the work be carried out on or before 30 June 2010. The work which falls into this category is as follows:

Item No	Work Description
1.	Mortar joints in brickwork needs re-pointing
2.	Fibre panels between upper and lower windows need sealing
3.	Condition of steel lintels to be reviewed and any maintenance carried out

The following items, for the reasons given, do not require to be covered by any order of the Tribunal.
There was no evidence given in relation to item 14 (stormwater disposal system needs maintenance) to demonstrate that any remedy is required. We accept Mr Jones' evidence that there is no reason for concern with the minor cracks which have appeared within the retaining walls. This is raised by item 16 (cracks in retaining walls). The Council should keep this matter under review as part of an ongoing and systematic maintenance program. Item 20 (shrubs and trees require proper management) and item 21 (landscaping and reticulation require improving) were not pressed.
We shall deal separately with item 22 (carport paint bleed through).

The carport structure

For the reasons given above, it is not appropriate that the Tribunal make any orders relating to the maintenance of the carport structures in these proceedings.
Because of the Tribunal's concern about the structural issues which have been raised, it would be prudent for the individual lot owners to cooperate and share the cost of a structural engineer reviewing the carport structures. The lot owners are responsible for any works required to the carports. That applies also to any future maintenance which is necessary in the future. In relation to the evidence before the Tribunal concerning the rust marks bleeding through the carport paint, it is evident that some future maintenance is required. There is nothing to indicate that this is urgent, but it would be prudent for that to be reviewed on an ongoing basis. Some maintenance may be required in the near future for aesthetic reasons.

Orders of the Tribunal

For the above reasons, the Tribunal will issue orders as follows.
1.On or before 30 April 2009, the respondent must cause the following works to be commenced and completed as soon as practicable thereafter:
1.1(a) The concrete slabs near drying area need levelling
(b)The concrete slabs at the side of the building need to be levelled
(c)The uneven lip to the concrete entry path must be rectified
(d)All grey concrete path and step edges need to be painted or provided with safety strips
(e)The underside of staircases need signs or barriers
(f)The concrete steps from the carpark need handrails or painted edges
(g)The bitumen driveway cracks and holes to be sealed
(h)The retaining walls near Unit 3 and Unit 5 require handrails or balustrades
(i)The taps near the front letterbox require painting or boxing
(j)The upper balcony railings need to be altered to meet current Building Code of Australia requirements
(k)The steel balustrade bottom flanges need repair
(l)The top surface of balconies and stairs need waterproofing;
1.2the roof repairs, including any structural work and guttering.
2.On or before 30 June 2010, the respondent must cause the following works to be commenced and completed as soon as practicable thereafter:
2.1The mortar joints in brickwork needs re‑pointing
2.2The fibre panels between upper and lower windows need sealing
2.3The condition of steel lintels to be reviewed and any maintenance carried out.
3.In order to give effect to the order made in 1, 1.1 and 1.2 above, the respondent is to do all things necessary to:
3.1convene an Extraordinary General Meeting (EGM) of the members of the strata company by no later than 14 February 2009 to have a special budget passed to cover the work described;
3.2cause resolutions to be passed at the EGM:
3.2.1authorising the strata company to raise a special levy payable in full on or before 31 March 2008 to cover the estimated cost of carrying out such work and the engagement of an architect or building consultant pursuant to order 5 below;
3.2.2authorising the strata company to commence legal proceedings against any lot owner who fails to pay the levy in whole or in part;
3.2.3authorising the strata company to borrow any monies required as a result of any shortfall in levies recovered, or as a result of costs for the necessary work exceeding the estimated cost.
4.In order to give effect to orders 2, 2.1, 2.2 and 2.3 above, the respondent must do all things necessary:
4.1at the next general meeting to have a budget passed which includes a sufficient allowance to cover the cost of carrying out the necessary work;
4.2to cause resolutions to be passed at that general meeting:
4.2.1authorising the strata company to raise a levy, payable in not more than three quarterly instalments commencing on 30 September 2009, to cover the estimated cost of carrying out such work;
4.2.2authorising the strata company to commence legal proceedings against any owner who fails to pay the levy, or any instalment thereof;
4.2.3authorising the strata company to borrow any monies required, as a result of any shortfall in levies recovered.
5.Further, in order to give effect to orders 1, 1.1 and 1.2 above, the respondent must engage an architect or building consultant, who is a member of the Institute of Arbitrators and Mediators Australia, and is independent of the parties in these proceedings, in order to:
5.1inspect the roof framing and roof cover, including gutters;
5.1.1prepare a specification of the necessary repairs including repair or replacement of the gutters;
5.1.2manage a process for appointment of an appropriate contractor or appropriate contractors to carry out the work; and
5.1.3supervise the completion thereof.
5.2The cost of the engagement of such architect or building consultant is to be included in the estimated cost of carrying out the work for the purposes of establishing a budget and raising a levy in accordance with the above orders.
As indicated, in the event of any failure to comply with these orders, it will be open to any interested person to apply to the Tribunal for an order for the appointment of an administrator to ensure that compliance is achieved.

I certify that this and the preceding [93] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MR C RAYMOND, SENIOR MEMBER