CARDEN and VALLELONGA
[2017] WASAT 150
•24 NOVEMBER 2017
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: STRATA TITLES ACT 1985 (WA)
CITATION: CARDEN and VALLELONGA [2017] WASAT 150
MEMBER: MS H LESLIE (MEMBER)
HEARD: 1 AUGUST 2017
DELIVERED : 24 NOVEMBER 2017
FILE NO/S: CC 70 of 2017
BETWEEN: CILLA CARDEN
Applicant
AND
CARMEL VALLELONGA
First RespondentTOAN VU
Second RespondentOWNERS OF 18 ROCHFORD WAY GIRRAWHEEN STRATA PLAN 52391 & ORS
Third Respondent
Catchwords:
Appointment of administrator Factors to be considered Turns on own facts - Common property boundaries - Lot boundaries - Maintenance obligations of strata company - Owners standing to enforce by-laws
Legislation:
Strata Titles Act 1985 (WA), s 3AB, s 35, s 83, s 83(1), s 90, s 102, s 102(1), s 102(2), s 102(1)(f)
Result:
Application to appoint administrator dismissed
Summary of Tribunal's decision:
The applicant is the owner of a lot in a three lot strata scheme in Girrawheen and brought an application to the Tribunal for orders that an administrator be appointed to the strata company.
It was clear from the applicant's evidence that she had lost trust in the other owners (and they in her) and in the Council of Strata Owners (such as it operates and to which reference will be made) and, in particular, in the owners' ability to deal collaboratively with various matters including alleged by-law breaches by owners.
Evidence was received from the three owners as witnesses.
Having considered all of the evidence, the Tribunal was not satisfied that the Council of Strata Owners was either dysfunctional or incapacitated as alleged by the applicant in respect of the issues complained of and the application to appoint an administrator was dismissed.
Category: B
Representation:
Counsel:
Applicant: In Person
First Respondent : In Person
Second Respondent : In Person
Third Respondent : In Person
Solicitors:
Applicant: N/A
First Respondent : N/A
Second Respondent : N/A
Third Respondent : N/A
Case(s) referred to in decision(s):
Fraser and The Owners of Morgan Mews, Strata Plan 45385 [2011] WASAT 102
Gawor and The Owners of Dawesville Caravan Park Old Coast Road Mandurah, Strata Plan No 14644 [2009] WASAT 170
Jamieson Bruce McKinnon & Ors and Halina Wendy Adams & Ors [2003] VSC 116
Maguire v The Owners of Roslyn Strata Plan 35960 [2014] WASC 28
Parker and The Owners of Timberside Villas Strata Plan 27426 [2006] WASAT 254
Payne & Ors and Owners of Strata 39733 & Ors [2016] WASAT 90
Wong v Reid [2016] WASC 59
REASONS FOR DECISION OF THE TRIBUNAL:
Background
The applicant is the owner of a lot in a three lot strata scheme running along a cul-de-sac in Girrawheen. The first and second respondents are the other two owners.
The applicant purchased her lot (Plot 3) in 2007. According to the minutes of the Council of Strata Owners (Council), in November 2007, the then appointed strata management company Strata Personal Management handed the strata administration to one of the owners who had been elected as Chairman of the Council. In October 2008 at the Council's Annual General Meeting (AGM), it was agreed by the then owners that the applicant take over those duties.
On 19 November 2009, a substantive application relating to this strata scheme between the applicant and the two previous owners of the other two lots was filed. That matter was concluded in 2010 when, by order of the Tribunal, the matter was withdrawn on the basis of an agreement by the parties to appoint an independent strata manager. It appears that that independent management arrangement did not continue for very long and at some point, the applicant again took on the responsibilities of the strata management.
In June 2014, the first respondent purchased her lot, (Plot 1) being the lot at the cul-de-sac end of the property. In December 2015, the second respondent purchased his lot, (Plot 2) being the middle lot of the three.
In 2016, a substantive application was made to the Tribunal by the applicant against the respondents in similar terms to the earlier application. It is not in dispute that, again, the matter was withdrawn on the basis of an agreement reached by all the parties that an independent strata manager be appointed. It is not in dispute that the first and second respondents have since resiled from the agreement reached.
In January 2017, the applicant applied a third time to the Tribunal under s 83(1) of the Strata Titles Act 1985 (WA) (the ST Act). The applicant's application was, again, for the appointment of a strata manager. She purported to make the application in the name of the strata company. At a directions hearing, the name of the applicant was amended to the applicant's name and, when scope of the Tribunal's jurisdiction was explained to the applicant, an amendment was accepted to allow her application to be treated as an application under s 102(1)(f) of the ST Act for the appointment of an administrator.
By orders of 6 February 2017, the application was programmed through hearing. There followed numerous directions hearings and further programming orders.
Various submissions, photographs and documents, together with proposals from two individual prepared to take on the role of administrator, were filed prior to the hearing, and the hearing ultimately took place on 1 August 2017. Evidence was received from the three owners as witnesses. It is common ground that the appointment of an administrator will be an expensive imposition on the parties (as appears from the costings lodged by the applicant.)
Legislation
Section 102 of the ST Act sets out when an administrator may be appointed and the powers and duties the administrator may perform. Sections 102(1) and (2) state:
(1)Where
(a)in consequence of the making of an order under this Part a duty is imposed on a strata company; or
(b)a duty is otherwise imposed by this Act or the by laws on a strata company; or
(c)a duty is imposed by this Act or the by laws on the chairman, secretary or treasurer of a strata company or on the council of a strata company; or
(d)a judgment debt is owed by a strata company,
the State Administrative Tribunal may
(e)in the case referred to in paragraph (a), on the application of the person who obtained the order so referred to; or
(f)in a case referred to in paragraph (b) or (c), on the application of a person having an estate or interest in a lot the subject of the scheme concerned; or
(g)in the case referred to in paragraph (d), on the application of the judgment creditor,
by order appoint an administrator (being a person who has consented in writing to the appointment) to perform that duty and any other duty specified in the order or to pay that judgment debt, as the case may require.
(2)If it appoints an administrator under subsection (1), the State Administrative Tribunal may also order that the administrator shall have and may exercise and perform ‑
(a)all of the powers, authorities, duties and functions of the strata company for the parcel to which the order relates or of the chairman, secretary or treasurer of that strata company or the council of that strata company; or
(b)any one or more of those powers, authorities, duties or functions as specified in the order; or
(c)all of those powers, authorities, duties and functions except those specified in the order.
Issue for determination
The applicant's principal concern appears to be what she says is the persistent noncompliance by the respondents with strata regulations and by‑laws and their breaching of those by-laws. She complains that 'we are at this point because as always [the first respondent] never agrees to anything'; 'as [the respondents] are not willing to adhere to strata by-laws therefore making our disputes unresolvable, we require someone who is independent of our group to take over management. Our property has devalued because no one but myself is willing to upkeep the gardens and the building properly nor put up suitable privacy screening to stop pollution and disturbances of the peace'; 'Our strata group has been put in a position of dispute and is unable to resolve our issues'; 'this group is not capable of managing due to disagreements'.
The applicant claims that the respondents have neglected to cooperate in appointing an outside strata manager. She claims that they have no interest in complying with the by-laws and that the strata group has become dysfunctional in respect of all issues. She complains about the impact upon her of noise (of small children), cooking smells, smoking odours and reflected light from patio lighting, all emanating from the second respondent's property. She complains about the lack of attention by the respondents to their repairs and maintenance obligations (as further detailed herein). She no longer wishes to manage the affairs of the strata group and wishes to hand the responsibility over to someone independent.
The first and second respondent dispute that the strata group is dysfunctional and claim that the applicant is only prepared to run things 'her way' and that they do not have a say in the affairs of the strata company. They submit that:
•employing an administrator is unaffordable and unnecessary given the relative simplicity of the affairs of the strata company, and that the owners should be given the opportunity to continue to run the strata company;
• that the first respondent is willing to take over responsibility for the books and accounts of the strata company, the convening of meetings and keeping of minutes;
•that given the availability of a majority vote mechanism to determine matters, there is no reason why the strata company cannot continue to operate effectively; and
•that if the applicant is unhappy with decisions taken by majority vote, for example in relation to the enforcement or nonenforcement of particular by-laws, she has the option of making an application to the Tribunal in her own right as an owner.
The respondents' case, put simply, is that a strata manager/administrator:
cannot resolve the main issue … which is that the applicant refuses to acknowledge the equal rights of all strata Council members. The respondents want the strata run by the Council members. The applicant has continuously threatened Council members with a return to the Tribunal if Council members do not agree with her demands.
Strata Company processes
A bundle of documents comprising the purported minutes of all strata meetings since August 2014 was put into evidence. These bear the dates 24 August 2014, 12 November 2014, 21 December 2015, 17 February 2016, 3 March 2016, 3 August 2016 and 15 November 2016. What is clear from the documents is that at no time during the period since either of the respondents have owned their lots has there been an election of office bearers for the strata company.
Meetings have clearly been called and attended but, at least as they are recorded in the minutes, the processes followed fall considerably short of the mark. Indeed the last few sets of minutes become less and less an objective record of the business of the Council as time goes on and as the disputes between the parties regarding behaviour and compliance with the by-laws appear to have escalated. Points of view of all owners are not set down. Nothing contentious is put to a vote. No resolutions are recorded.
Consideration
The relevant law was recently summarised by the Tribunal in Payne & Ors and Owners of Strata 39733 & Ors [2016] WASAT 90 at [50]. It is as follows:
Section 102 of the ST Act gives the Tribunal power to appoint an administrator to perform a duty imposed by the Act on the strata company. However, it is clear by the use of the word 'may' in s 102(1) of the Act that the Tribunal is called upon to exercise a discretion as to whether an administrator should be appointed.
In Maguire v The Owners of Roslyn Strata Plan 35960[2014] WASC 28, Martin J, in commenting on a similar discretion under s 90 of the ST Act, commented at [62]:
The senior member was called upon to exercise the s 90 discretion in a context of rights afforded under s 43(1)(b) of the Strata Titles Act to inspect documents, then under s 43(1a) to request copies, all of which should be exercised within reasonable bounds and monitored by SAT to guard against the serious potential of misuse, oppression and pettiness. If a requesting person is perceived by SAT to be acting unreasonably, oppressively or obsessively by invoking such a provision, then it more than falls within the purview of SAT, by the discretion under s 90, to inhibit untoward conduct.
The Tribunal does not imply that the applicant in the present case was seeking to misuse s 102 but the Tribunal must be satisfied that the appointment of an administrator is necessary based on the evidence before it.
In 2003, Justice Bongiorno, in the Victorian Supreme Court, in dealing with similar legislative requirements as are under consideration here, in Jamieson Bruce McKinnon & Ors and Halina Wendy Adams & Ors [2003] VSC 116 (McKinnon v Adams) at [20], stated:
To justify the appointment of an administrator the body corporate concerned must be affected by some incapacity, or must be acting so dysfunctionally as to render the provision of appropriate services to unit holders and/or care of the common property either non-existent, or so beset by difficulties as to render the body corporate unable to function at what the Court considers to be a satisfactory level. There may or may not be financial difficulties or even financial impropriety affecting the body corporate's capacity to function but there must be some deficiency in its operational capacity sufficient to justify the Court's intervention in the interest of some or all of the unit holders.
Then in 2006, this Tribunal in Parker and The Owners of Timberside Villas Strata Plan 27426 [2006] WASAT 254 (Parker) at [9], the Tribunal stated:
The appointment of an administrator should be a remedy of last resort[.]
In 2009, in Gawor and The Owners of Dawesville Caravan Park Old Coast Road Mandurah, Strata Plan No 14644 [2009] WASAT 170 at [69], the Tribunal further stated:
The scope for intervention by the Tribunal in the day-to-day internal management decisions of a strata company and its council is, under the ST Act, generally quite specific; usually quite limited; and often only available as a last resort: see, for example, the circumstances where an administrator may be appointed by the Tribunal to run the affairs of a strata company: see s 102 of the ST Act.
And, finally, in 2011 in Fraser and The Owners of Morgan Mews, Strata Plan 45385 [2011] WASAT 102 (Fraser and The Owners of Morgan Mews), the Tribunal at [48] stated:
[I]t is accepted that an administrator should not be appointed under s 102 of the ST Act merely due to an internal conflict between owners or an allegation that a Council is not performing well[.]
There are currently three owners and therefore three members of the Council which is mandated by the ST Act to manage the strata company business. There is no formally appointed strata manager.
The business of the strata company appears to have progressed, to a greater or lesser degree, on the basis that the applicant has simply continued to manage and control the affairs of the strata company. There is conflicting evidence (between the two respondents on the one hand and the applicant on the other) as to the willingness or otherwise of either or both of the respondents to be involved in the tasks required of the strata company. The applicant claims they have been unwilling and uncooperative and that she has essentially had to 'do everything' and at her cost. The respondents say they have been unable to have a say in the business of the strata company because of the applicant's desire to control everything in order to have things done the way she wants them done. They claim not to have had any reasonable access to records or to receive copy accounts in a timely way. What is obvious is that the relationship between the parties has soured. Most of what each side says is disputed by the other.
Notwithstanding that, it does appear that the non-contentious business of the strata company such as the paying of the electricity bill for the bore, the payment of bore repairs and the paying of the strata insurance for the complex has been achieved successfully. As these bills fall due, monies are called for and, it seems, have been forthcoming from each of the owners to pay the bills. A strata company bank account is maintained and used, albeit only for limited purposes. Meetings of the Council, including the mandatory AGM, have been called and attended.
The areas of common property to be managed by the strata company are very limited and comprise only the garden and lawn section running along the front of the lots adjacent to the street and including grass and shrubs and the reticulation system that water the same. The ongoing maintenance of these items has become contentious. Although strictly the responsibility of the strata company, it appears to be common ground that the parties previously agreed that each would take care of the section of the common property garden and lawn and reticulation adjacent to their respective lots. A dispute has arisen because of disagreement about the standard to which the two respondents have attended to those tasks in respect of the areas in front of their two units. The photographs show that the applicant has clearly done a great deal of work in her garden area. The areas adjacent to the respondents' units present to a lesser standard. The applicant clearly expects the other owners to meet something close to her standard. The matter has been complicated by the second respondent's loss of work and thus difficult financial circumstances. The first respondent's evidence is that she employs a gardener to tidy up the garden in front of her unit (which is rented out). She claims that she and the second respondent have maintained their areas of common property largely as they were when they purchased the units. This is disputed by the applicant who alleges that the areas have deteriorated significantly. How this matter will be dealt with ongoing clearly needs to be resolved by the strata company, since the garden area forms part of the common property. It does not seem to the Tribunal that this is as a result of dysfunction in the strata company but rather that it involves a difference of opinion as to what it is reasonable to expect of the respondents in all the circumstances. It is a matter that requires debate and a resolution by the Council. To this point, the proper processes of the Council have simply not been correctly brought to bear to adequately address this matter.
What is important is that, pursuant to s 35 of the ST Act, the strata company controls and manages the common property for the benefit of 'all the proprietors' and that usually involves a certain amount of balancing between various parties' interests, which may from time to time be perceived as fair or unfair by one or other of the proprietors.
As stated earlier, the applicant submitted on more than one occasion that the Council was dysfunctional and incapacitated in respect of the issues complained of. In the circumstances, the relevant question is whether the Council is, in the words of Bongiorno J in McKinnon v Adams, acting 'so dysfunctionally as to render the provision of appropriate services to unit holders and/or care of the common property either non-existent, or so beset by difficulties as to render the body corporate unable to function at what the [Tribunal] considers to be a satisfactory level.'
The Tribunal acknowledges that is not a prescriptive test and there may well be circumstances where, although the Council have not reached the level of dysfunctionality described by Bongiorno J, there may still be good reason to appoint an administrator, and each case will need to be decided on its merits.
An issue was raised in relation to building maintenance. There appears to be some confusion in the minds of the parties as to whether the obligation to repair and maintain the building stock falls to the individual owners or to the strata company. There has never been a building repair levy or a maintenance fund and the first respondent, at least, has suggested that this ought to be put in place by the Council. The applicant appears to want the two respondents to take care of their own maintenance and painting on the basis of what she says was the informal agreement between them all that this is how these matters would be managed. There is disagreement about the standard to which the two respondents, (particularly the second respondent), have attended to maintenance tasks in respect of their two units. The performance of maintenance has been complicated by the second respondent's loss of work and thus difficult financial circumstances.
Notwithstanding the alleged informal agreement, the parties all appear to be under the misapprehension that the building itself is common property. This is in fact not correct. As appears from the strata plan document that is in evidence, the boundaries of the lots which are buildings shown on the strata plan are the external surfaces of those buildings as provided by s 3AB of the ST Act. This means that, save for a shared party wall between Plot 2 and Plot 3, the walls that comprise each unit out to and including the external surfaces of the walls are owned by the individual lot owners and are their responsibility to paint and maintain. The fact that the strata company may have resolved to take out strata insurance over the whole of the building structure, as it can do under the ST Act, does not alter this position. It is therefore the case that, since it is not common property, the maintenance of the building itself is not part of the responsibility of the strata company. It is for the individual owners.
To the extent that there is a dispute about maintenance and painting not done, this becomes a question not of the failure by the Council to properly paint and maintain the building, but rather of the extent to which the individual respondents are in breach of their obligations under the bylaws regarding the external appearance of and proper maintenance of their lots.
The applicant points to the failure to enforce the by-laws as indicative of the 'dysfunctional' state of the strata company. The Tribunal does not accept this. It is a matter that requires debate and a resolution by the Council. To this point, the proper processes of the Council have simply not been correctly brought to bear to adequately address this matter. In the present case, there is clearly an internal conflict between the applicant and the other owners, and an 'impasse' between them may well have been reached. However, as stated in Fraser and The Owners of Morgan Mews, that is not grounds for appointing an administrator under s 102 of the ST Act.
All parties have expressed the desire to live harmoniously together despite their difference of view on particular issues. Although there have clearly been disagreements between the parties and much ill-feeling, the Tribunal accepts that there is a genuine desire on the part of the respondents, given the opportunity, to make the process work without the expense of an administrator and to move forward with all issues in a reasoned and measured manner. It is in their interests to do so in order to avoid further proceedings in the Tribunal.
The strata company has statutory obligations to manage the strata for the benefit of all owners and those who control it cannot arbitrarily ignore the reasonably expressed concerns of an owner. Despite the applicant's expressed reservations, the Tribunal is satisfied that, given the opportunity, the respondents will approach the matter in a reasonable fashion. Given their wish to participate more actively in the process and to consider and deal, by majority vote if necessary, with the issues that present themselves, in the view of the Tribunal they should be given that opportunity. Whilst acknowledging that the applicant has endeavoured to just get on and get things done, the Tribunal is satisfied that the proper formalities and meeting processes of a strata company as mandated by the ST Act have not been able to be accessed by the respondents. This, in conjunction with a lack of understanding in the respondents that they were entitled to insist upon such a process, is what has resulted in the impasse in decision-making rather than any dysfunction or incapacity in the strata company.
Although the applicant is unhappy with the prospect of decisions with which she does not agree being made by majority to deal with issues, this is an insufficient reason for the appointment of an administrator. Decision by majority is within the contemplation of the legislation and provides a decision‑making mechanism for the parties regarding the areas of strata business where there is disagreement currently. The applicant has other relief available to her under the civil law to protect her rights of enjoyment.
This application must be used only as an application of 'last resort' as per Parker. There are a number of other avenues available to the applicant as owner under the ST Act to pursue what appears to be her principle concern, that it, the enforcement of the by-laws and to ensure the strata company undertakes its duties diligently. Regarding the by-laws, Beech J in Wong v Reid [2016] WASC 59 at paragraph [24] [25] said as follows:
By ground 6, Mr Wong contends that Mrs Reid did not have power to make an application for the enforcement of the by-laws, or for the remedying of a breach of the strata company by-laws, and that that was the substance of her application.
Ground 6 is founded on an assumption that the strata company has an exclusive right to enforce the by-laws. I do not accept that. It is true, as Mr Wong's ground asserts, that s 35(1)(a) of the Strata Titles Act provides that a strata company shall enforce the by-laws. The effect of that section is that one of the functions and duties of the strata company is to enforce the by-laws. That does not mean that the only person or entity with any power to enforce the by-laws, or to ask the Tribunal to make an order enforcing the by-laws, is the strata company. Section 83 of the Strata Titles Act empowers the Tribunal to make an order to rectify a complaint with respect to the exercise or performance of or failure to exercise or perform a power, authority, duty or function conferred or imposed by the by-laws (or the Act) in connection with a strata scheme. Section 83(1) provides for a wide range of persons upon whose application the Tribunal may make such an order. Those classes of person include the strata company, an administrator, a proprietor of a lot, a person with an estate or interest in a lot, or an occupier or resident of a lot. Thus, by s 83, it is open to a person within any of the classes of person set out in s 83 to enforce the by-laws by an application under that section. As the proprietor of a lot, Mrs Reid was within one of those classes.
Conclusion
Therefore, based on the evidence before it, the Tribunal is not satisfied on the facts of this case that the Council is either dysfunctional or incapacitated to the degree alleged by the applicant in respect of the issues complained of.
On the contrary, in the Tribunal's view, the strata company, through the Council, has been nominally operating despite not really adhering to proper process. It ought be given the opportunity to see if, by use of proper process including the availability of decision by majority vote, it can operate effectively.
The Tribunal must be satisfied that it is necessary and/or prudent to appoint an administrator on the evidence before it. In this case, the Tribunal is not so satisfied. Nor is the Tribunal satisfied that it can be said at this stage, given the way that things have been run to this point, that there has been a refusal, failure or inability on behalf of the Council to deal with the issues. Nor is the Tribunal satisfied that there is any other good reason at this point to appoint an administrator.
The application to appoint an administrator will therefore be dismissed.
Orders
1.The application to appoint an administrator under s 102 of the Strata Titles Act 1985 (WA) is dismissed.
I certify that this and the preceding [41] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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MS H LESLIE, MEMBER
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