CLAY and THE OWNERS OF CARINYA COURT ROCKINGHAM STRATA PLAN 25819

Case •

[2024] WASAT 121

•

11 NOVEMBER 2024

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL

ACT: STRATA TITLES ACT 1985 (WA)

CITATION:   CLAY and THE OWNERS OF CARINYA COURT ROCKINGHAM STRATA PLAN 25819 [2024] WASAT 121

MEMBER:   MS R PETRUCCI, MEMBER

HEARD:   19 JULY 2024, LAST WRITTEN SUBMISSION FILED 13 AUGUST 2024

DELIVERED          :   11 NOVEMBER 2024

FILE NO/S:   CC 88 of 2024

BETWEEN:   MARK GREGORY CLAY

Applicant

AND

THE OWNERS OF CARINYA COURT ROCKINGHAM STRATA PLAN 25819

Respondent


Catchwords:

Strata Titles Act 1985 (WA) - Strata plan - Scheme dispute - Functions of strata company - Functions of council - General meeting of strata company - Extraordinary General Meeting (EGM) - Annual General Meeting (AGM) - Whether notice of AGM invalid - Whether AGM invalid - Whether motions and resolutions passed at AGM void, invalid or should be set aside - Proper management of strata scheme - Financial management - Budget - Who can propose a resolution outside of a general meeting - Proper construction of by-law on debt recovery costs - Tribunal proceedings - Jurisdiction of Tribunal - Dismissing a proceeding - Resolution of scheme dispute - Statutory discretion power to make declarations and orders to resolve scheme dispute or proceeding - History of ongoing dispute

Legislation:

Magistrates Court (Civil Proceedings) Act 2004 (WA)
State Administrative Tribunal Act 2004 (WA), s 9, s 34(1), s 34(5), s 46, s 46(2), s 46(5), s 49
State Administrative Tribunal Rules 2004 (WA), r 42A
Strata Titles (General) Regulations 2019 (WA), reg 89
Strata Titles Act 1985 (WA) (prior to 1 May 2020), s 36, s 36(1), s 36(2), s 36(4), s 42, s 42(12), s 43, s 43(4), s 44, s 97(2)
Strata Titles Act 1985 (WA), s 3, s 14(1), 14(8), s 44, s 44(1), s 44(2), s 91(1), s 97, s 100, s 100(1), s 100(1)(a), s 100(1)(b), s 100(1)(c), s 100(1)(c)(i), s 100(1)(c)(ii), s 100(2), s 100(2)(b), s 100(4), s 100(4)(b), s 100(7), s 101, s 101(1), s 101(2), s 102, s 102(1), s 102(6), s 112, s 119, s 120, s 120(3)(b), s 120(4), s 120(8), s 120(8)(b), s 123, s 123(7)(a), s 127, s 127(1), s 127(3), s 127(3)(a), s 128, s 128(1), s 128(6), s 129, s 129(1), s 129(2), s 129(2)(a), s 129(2)(b), s 130, s 131, s 132, s 132(2), s 133, s 135, s 135(1), s 135(2), s 197, s 197(1)(a)(iii), s 197(1)(a)(iv), s 197(1)(a)(vi), s 197(2), s 197(3), s 197(4), s 199, s 199(1), s 199(3), s 200, s 200(1), s 200(2), s 200(2)(m), s 200(7), s 202, Sch 1, Sch 2, Pt 8, Div 3, Pt 13, Div 4, Pt 4, Sch 5, cl 23(3)
Strata Titles Amendment Bill 2018 (WA)

Result:

Application unsuccessful
Declarations and orders made

Category:    B

Representation:

Counsel:

Applicant : In Person
Respondent : Ms SE Macmillan

Solicitors:

Applicant : N/A
Respondent : Macmillan Legal

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

Adder Holdings Pty Ltd and The Owners of Harbour Pines Strata Plan 23297 [2022] WASAT 120

Aussie Airlines Pty Ltd v Australian Airlines Ltd and Others (1996) 68 FCR 406

Bendall-Harris v Aitken [2008] WADC 112

Byrne v The Owners of Ceresa River Apartments Strata Plan 55597 [2016] WASC 153

Byrne v The Owners of Ceresa River Apartments Strata Plan 55597 [2017] WASCA 104

Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; (1982) 149 CLR 337

Efficient Building Team Pty Ltd and Perth Recruitment Services Pty Ltd [2024] WASAT 25

Giabeni Pty Limited and The Owners of 30 Coode Street Mount Lawley Strata Plan 11321 [2024] WASAT 105

Hapgood­Strickland and The Owners of 119 Doveridge Drive Duncraig (Strata Scheme 12286) [2024] WASAT 65

McDonald and The Owners of the 19th Tee Estate Strata Plan 66901 [2024] WASAT 82

McGeachie & Ors v Clark & Ors [2005] WASC 177

Pearce and Clay [2021] WASAT 142

Tax Practioners Board v van Dyke [2024] FCA 899

The Owners of Mandurah Terrace Apartments Strata Plan 17113 and Russell [2009] WASAT 1

Van Rensburg and Owners of Ocean Marina Pointe Strata Plan 45077 [2023] WASAT 94

REASONS FOR DECISION OF THE TRIBUNAL:

Introduction

  1. William Shakespeare is possibly the greatest dramatist as well as the most influential writer in the history of the English language.  A notable quote, from Shakespeare's 1610-1611 play, 'The Tempest' where Prospero tells Alonso 'Let us not burden our remembrances with a heaviness that's gone' reminds us that forgetting the past does not mean forgetting about the past, but it is about accepting the past as it happened, learning from it, and moving on.

  2. The current proceeding CC 88 of 2024 before the Tribunal concerns the past - in particular, the notice of meeting issued on or about 25 November 2023 (Notice) for the Annual General Meeting (AGM) held on 14 December 2023, and the motions and resolutions arising from that AGM (2023 AGM).  The purpose of the 2023 AGM was to deal with matters, the subject of order 2 made by the Tribunal (differently constituted) by consent of the parties on 24 October 2023, in the previous proceeding CC 1099 of 2023 (see below at [6] to [11] for a brief outline).

  3. The applicant in the current proceeding, Mr Mark Gregory Clay (Mr Clay), is the owner of Lot 18 on strata plan 25819. Very broadly, Mr Clay seeks from the Tribunal, in order to resolve a scheme dispute or the proceeding under s 197(4) of the Strata Titles Act 1985 (WA) (ST Act), declarations and orders under s 199 and s 200 that the Notice and the 2023 AGM are invalid, or in the alternative, if the 2023 AGM is valid then various motions and resolutions passed are either void, invalid or should be set aside.

  4. The respondent in the current proceeding, The Owners of Carinya Court Rockingham Strata Plan 25819 (the strata company) opposes Mr Clay's application.  In broad terms, the strata company urges the Tribunal to make declarations and orders that there was a valid election of members to the council,[1] that the 2023 AGM is valid and resolutions passed are valid.

    [1] See s 3 of the ST Act which defines 'council' as the governing body of the strata company.

  5. In the reasons which follow, I explain why, in my view, Mr Clay's application is unsuccessful. 

Previous proceeding CC 1099 of 2023

  1. In order to understand the current proceeding CC 88 of 2024 before the Tribunal, it is necessary to start by briefly considering the previous proceeding CC 1099 of 2023 (previous proceeding).

  2. On 15 August 2023, Mr Clay commenced the previous proceeding in the Tribunal under s 197(4) of the ST Act seeking orders for the resolution of a scheme dispute or the proceeding. Mr Clay sought various orders and declarations based on what he described as:[2]

    … intractable disagreements between owner groups since 4 December 2021 as to the members of the council[.]

    [2] See document headed 'Final Orders Sought' attached to Mr Clay's application in CC 1099 of 2023 filed with the Tribunal on 15 August 2023.

  3. The reference to the 'owner groups' in the previous paragraph is a reference to the two competing councils[3] of the strata company that were in existence from about December 2021 up to November 2023.  Mr Clay named the council which he says he was the chairperson of as the 'NAB council.'  Mr Clay named the other council which Mr Neal Mobrey Pearce was the chairperson of as the 'Bankwest council'.  Without intending any disrespect to the parties, I will refer to the two competing councils as the 'NAB council' and the 'Bankwest council' in these reasons.

    [3] Above n 1.

  4. In very broad terms, in the previous proceeding, Mr Clay sought orders invalidating the election of the council, invalidating the AGM held on 1 October 2022 and invalidating resolutions passed at that AGM and the meetings held by the council (elected as a result of the decision in an earlier proceeding CC 579 of 2020 (see below at [12] to [14]).  In total, Mr Clay sought 14 orders in the previous proceeding.

  5. The respondent in the previous proceeding was the strata company.

  6. The previous proceeding was referred to a compulsory conference which was held on 24 October 2023.  At that compulsory conference, the parties resolved their dispute and the Tribunal (differently constituted) made the following orders (which includes a note):

    The Tribunal notes that:

    The proceeding concerns a dispute between the parties concerning strata titles.

    While not the subject of orders, the parties have agreed that:

    (a)Mr Pearce or his nominee shall put a motion at any Annual General Meeting or Extraordinary General Meeting following the election of a Council of Owners referred to in the orders below to the effect that works on Unit 10 in relation to the balcony sliding door and balcony shall be given priority to any other works on strata common property other than essential or emergency works.

    (b)Further, the owners of Lots 2, 7, 8, 9, 10 and 18 agree to vote in favour of the above motion and to recommend to other owners that they also vote in favour of the above motion.

    (c)Within 7 days of completion of the said works on Unit 10, the owners of unit 10 shall pay the outstanding interest on levies fixed in the amount of $3,734.25.

    (d)Any legal fees incurred by the strata company in instructing Macmillan Legal shall be paid by the strata company and no reimbursement will be sought from the insurer.

    (e)Any resolutions the subject of these proceedings that are disputed may be put by any party to a [sic] Annual General Meeting or Extraordinary General Meeting before 30 September 2024.

    (f)The balance of the levies and interest as stated in the owner ledgers prepared by B Strata as at 1 October 2019, and attached to these orders, is agreed by the parties as being correct.

    (g)The balance of the levies and interest as agreed above shall form the basis going forward in calculating what is owed by any individual lot owners to the strata company or owed by the strata company to any individual lot owners.

    (h)Save as otherwise agreed, the parties agree that no interest will be raised against any member of the strata company with respect to any amount found to be owed or outstanding in respect of levies determined by the Council to be payable from 1 October 2019 until 14 days after the date of the meeting at which those levies are determined.

    (i)By 31 October 2023, the applicant shall:

    a.Instruct all creditors of the strata company that currently issue accounts to the applicant to issue those accounts to Magixstrata on behalf of the strata company; and

    b.Close the National Australia Bank account BSB XXXXX X Account No XXXXX XXXX and transfer the balance of that account to the Bank of Queensland account BSB XXXXX X Account No XXXXX XXX.

    Pursuant to s 200 of the Strata Titles Act 1985, and to give effect to the agreed terms of settlement, the Tribunal orders by consent:

    1.A general meeting of the strata company shall by 14 November 2023 be convened and presided over by representatives of Magixstrata as Chair and Secretary of the meeting for the sole purpose of electing members of the Council.  All members of the strata company shall be entitled to be nominated as a Council member and to vote at the meeting. Votes shall be taken based on unit entitlement.

    2.A general meeting or extraordinary general meeting of the strata company shall be convened on a date to be determined by the elected Council to set the levies for the 2023/2024 year, set a budget for the 2023/2024 year and consider what the levies were or should have been for the years ended:

    (a)30 September 2020;

    (b)30 September 2021;

    (c)30 September 2022; and

    (d)30 September 2023.

    3.The application is otherwise dismissed.

    4.There is no order as to costs.

    (Tribunal's emphasis)

Earlier proceeding CC 579 of 2020

  1. Some of the issues arising in the previous proceeding CC 1099 of 2023 relate to orders made by the Tribunal in an earlier proceeding CC 579 of 2020 (earlier proceeding) which was also an application made under s 197(4) of the ST Act. I determined the earlier proceeding and published my decision and reasons for decision on 10 November 2021: Pearce and Clay [2021] WASAT 142 (Pearce and Clay).

  2. In the earlier proceeding, there was a scheme dispute between various members of the strata company and Mr Clay in relation to the election of the council.  The applicants were Mr Pearce and Mrs Lesley Pearce, Ms Linda Vane and Ms Therese Ladiszlai.  The respondents were Mr Clay and the strata company.

  3. The application in the earlier proceeding was partly successful.  I made orders invalidating all decisions and resolutions that had been made at the extraordinary general meetings held on 7 March 2020 and 14 March 2020 and the AGM held on 3 October 2020 which had been called by Mr Clay.  All decisions and resolutions made at the extraordinary general meeting called for 17 March 2020 were also held to be invalid.  Further, I made orders requiring a general meeting of the strata company to be held to be jointly chaired by Mr Renato De'Pannone (now deceased) and Mr Clay for the purpose of electing members to a new council.  An order was also made for a further general meeting of the strata company to be convened by the elected council to work through the minutes of the 2019 AGM to confirm or otherwise deal with the items again.

Current proceeding CC 88 of 2024

  1. Having briefly set out details of the previous proceeding and the earlier proceeding which involved one or both of the parties in the current proceeding, I now turn to the current proceeding CC 88 of 2024 (current proceeding) before the Tribunal.

  2. Not long after the Tribunal made final orders in the previous proceeding (see above at [11]), on 14 February 2024, Mr Clay commenced the current proceeding against the strata company in the Tribunal under s 197(4) of the ST Act seeking the resolution of a scheme dispute or the proceeding.

  3. In the current proceeding, Mr Clay asserts that both the Notice and the 2023 AGM (and any resolutions carried) are invalid and calls on the Tribunal to make the following declarations and orders:[4]

    1.By reason that the Notice […] did not comply with s 127(3)(a) and s 129(2)(b) of the [ST] Act, the Notice of Meeting was invalid.

    2.… Notice [...] was invalid, the purported AGM was invalid as are all resolutions voted on at that meeting.

    [4] See order 6 of the orders made by the Tribunal on 1 July 2024 giving leave to the applicant to amend the application by substituting the orders sought and grounds set out in his application dated 14 February 2024 with the orders and grounds set out in the documents titled 'Amended Final Orders Sought' and 'Amended Grounds' filed on 4 March 2024.

  4. In the event the Tribunal declines to make the declarations and orders that the Notice and the 2023 AGM are invalid, then in the alternative, Mr Clay seeks various declarations and orders as follows:

    3.Motion and resolution 2 is invalid having regard to the issues in and the terms of the settlement and orders made in CC 1099 of 2023.

    4.Motion and resolution 3 be set aside by reason that the financial accounts are neither true nor accurate.

    5.Motion and resolution 11 is invalid:

    5.1to the extent that it purports to approve budgets for two years, no budget having been prepared or submitted for approval for the second of those years; and

    5.2because the budget failed to incorporate, in the budget for the year to 30 September 2024 or in a separate Sources and Users of Funds Statement, the current bank balances of the strata company as at 30 September 2023 of $186,400 which evidence that no funds need to be raised by the strata company to meet the proposed budget expenditures.

    6.Motion and resolution 12:

    6.1be set aside by reason that the proposed levies were not needed to satisfy any approved budgets or approved expenditures of the strata company, having regard to the bank balances of the strata company as at 30 September 2023 of $186,400; further and alternatively,

    6.2is void in whole or part by reason that the third paragraph infringes the law prohibiting interests in perpetuity.

    7.Costs.

  5. Before setting out the issues that require determination in the current proceeding, I will briefly set out the relevant procedural history and evidence.  I will start with the three interim applications filed by Mr Clay and the parties attempt to resolve the current proceeding by way of mediation.

Relevant procedural history and evidence

Interim applications

  1. Mr Clay filed three interim applications in the current proceeding.  The following is a brief summary of each interim application and the Tribunal's decision.

  2. On 14 February 2024, Mr Clay filed his first interim application.  It was filed on the same date that Mr Clay filed his application for the current proceeding with the Tribunal.

  3. In the first interim application, Mr Clay seeks a stay on any action by the strata company to recover payment of any outstanding levies from him.

  4. The Tribunal dealt with the first interim application by not making an order, but by accepting an undertaking from the strata company that it would stay, or in other words not take any action to recover the payment of any outstanding levies from Mr Clay, until the Tribunal delivers its decision in the current proceeding.  As I have made my decision for the current proceeding, as set out in these reasons for decision, I will return to the stay of action to recover the payments of outstanding levies from Mr Clay later in these reasons.

  5. On 3 June 2024, Mr Clay filed his second interim application.  In the second interim application, Mr Clay seeks to have set aside the orders made by the Tribunal in the current proceeding on 16 April 2024 by reason that the strata company has failed to comply with various orders.

  6. Counsel for the strata company objected to the listing of an interim hearing and confirmed that it had no intention of filing further documents in the current proceeding.

  7. I heard and determined the second interim application on 1 July 2024 (along with the third interim application filed by Mr Clay).  I made orders on 1 July 2024 striking out paragraph 30 of the strata company's statement of issues, facts and contentions (SIFC) filed on 30 May 2024 which counsel for the strata company had already proposed in its letter to the Tribunal of 6 June 2024.  Apart from that order, I dismissed Mr Clay's second interim application as there would be opportunity at the final hearing on 19 July 2024 for the parties to address all issues raised.[5]

    [5] See orders 1 and 2 of the orders made by the Tribunal on 1 July 2024.

  8. On 20 June 2024, Mr Clay filed his third interim application. In the third interim application, Mr Clay seeks an order from the Tribunal pursuant to s 34(1) and (5) of the State Administrative Tribunal Act 2004 (WA) (SAT Act) for the strata company to provide to him various documents. 

  9. I heard and determined the third interim application on 1 July 2024 (along with the second interim application). I dismissed the third interim application as Mr Clay conceded that he had not followed the requirements as set out in the ST Act to request an inspection of the strata records. I note that, in any event, the strata company gave an undertaking to the Tribunal that they would, through the strata manager, make available to Mr Clay, at short notice, the strata records for him to inspect.[6]

Mediation

[6] See orders 3 of the orders made by the Tribunal on 1 July 2024.

  1. In order to achieve the objectives of the Tribunal as set out in s 9 of the SAT Act, which includes to act speedily and with as little formality and technicality as is practicable, and to minimise the costs to the parties, by the consent of the parties, the current proceeding was referred to mediation on 1 March 2024 and again on 27 March 2024.

  2. The parties were not able to resolve their dispute at mediation.

  3. Following the Tribunal making the usual programming orders for these types of matters, including for the filing of documents including witness statements, the matter was listed for a final hearing for one day on 19 July 2024.

Final hearing

  1. At the final hearing, the Tribunal marked the following documents, which the parties identified as the documents that they intend to rely on as an exhibit:[7]

    Exhibit 1Hearing book (prepared by the Tribunal) dated 19 July 2024 (pages 1 to 1,767) (HB).

    [7] Although forming part of the HB, the parties' contentions and submissions are taken to be submissions, rather than evidence.

  2. I also have had the benefit of the following witnesses statements:

    (a)Mr Clay who filed his witness statement (which included submissions) on 10 July 2024;

    (b)Mr Pearce, who is no longer a lot owner, filed his witness statement on 17 July 2024 but amended and signed it on 19 July 2024;

    (c)Ms Lucia Della-Vedova filed her witness statement on 18 July 2024 but amended and signed it on 19 July 2024; and

    (d)Ms Marietta Metzger of Magixstrata, the current strata manager for the strata company, filed her witness statement on 17 July 2024.

  3. At the conclusion of the final hearing on 19 July 2024, I made orders, by consent of the parties, requiring each party to file closing written submissions, including making written submissions on the following two further issues raised during the final hearing:

    (a)Who may put a proposed resolution to the strata company outside of a general meeting (refer s 120(3)(b) and s 123(7)(a) of the ST Act)?

    (b)What is the proper construction of Sch 1 by-law 17 - Debt recovery costs?

  4. Subsequently, on 12 August 2024, Mr Clay informed the Tribunal that the documents he filed in respect of issue five (of some 30 or so pages) somehow got jumbled and out of order and that he inadvertently filed a defective version of the consolidated Balance Sheet and Proforma Balance Sheet that he had prepared as at 30 September 2023.  Further, Mr Clay noted that in the HB, the final order for the previous proceeding was not attached to the document headed 'Owner Ledger from 1/10/19 to 1/9/20' that was prepared by B Strata.

  5. On 16 August 2024, I granted leave for Mr Clay to file his corrected bundle of documents titled 'Applicant's Bundle of Documents Volume 3' and a copy of the orders made by the Tribunal (differently constituted) on 24 October 2023 in the previous proceeding along with the document titled 'Owner Ledger from 01/10/19 to 01/09/20' prepared by B Strata.

  6. Following receipt of the last of the parties' closing written submissions for the current proceeding, I reserved my decision on 16 August 2024.

  7. Subsequently, on 23 August 2023 the Tribunal issued to the parties a revised HB (incorporating the documents per the order of 16 August 2024 and a copy of the parties' closing written submissions).  I have had regard to the revised HB for the purpose of my determination of the issues in the current proceeding.

  8. I will now set out the issues or questions to be determined by me in the current proceeding, followed by the relevant regulatory framework.  I will then make relevant findings of facts.  Finally, I will address each of the issues or questions for determination in turn.

Issues

  1. The key issues or questions that arise for determination in the current proceeding are:

Issue 1: Whether the Notice is invalid by reason it does not comply with s 127(3)(a) and s 129(2)(b) of the ST Act?

Issue 2:      Whether the 2023 AGM and all resolutions passed at that meeting are invalid by reason the Notice is invalid?

Issue 3:      In the alternative, if the Notice and 2023 AGM are valid, whether motion and resolution 2 is invalid having regard to the issues in and the terms of settlement and the orders made by the Tribunal (differently constituted) in the previous proceeding?

Issue 4:      In the alternative, if the Notice and 2023 AGM are valid, whether motion and resolution 3 should be set aside?

Issue 5:      In the alternative, if the Notice and 2023 AGM are valid, whether motion and resolution 11 is invalid?

Issue 6:      In the alternative, if the Notice and 2023 AGM are valid, whether motion and resolution 12 is void or should be set aside?

Issue 7:      Who may put a proposed resolution to the strata company outside of a general meeting?

Issue 8: What is the proper construction of Sch 1 by-law 17 - Debt recovery costs?

  1. It is first necessary to set out the regulatory framework and factual background against which the consideration of the above issues must be made.

Regulatory framework

The strata plan

  1. On 15 June 1994, strata plan 25819 was registered by the Registrar of Titles.

  2. The strata scheme is known as 'Carinya Court' and is described on the strata plan as:[8]

    The Building the subject of this plan is a group of 18 residential units, of 3 floors and of brick, concrete and iron construction[.]

    [8] HB at page 8.

  3. By notification (instrument G335294) there was a change to the scheme by-laws (addition of Sch 1 by-law 16 - Exclusive use carports). The notification was registered by the Registrar of Titles on 25 November 1996.

  4. Finally, by notification (instrument M519310) there was a further change to the scheme by-laws (addition of Sch 1 by-law 17 - Debt recovery costs, Sch 2 by-law 15 - Penalty for breach of by-law and Sch 2 by-law 16 - Breach of by-laws common property damage). The notification was registered by the Registrar of Titles on 13 January 2014.

  5. Annexure B of strata plan 25819 sets out, amongst other things, the aggregate unit entitlement which for this strata scheme is 235 units.

ST Act

Meetings of strata company

  1. Part 8 of the ST Act concerns the strata company. It sets out the functions, objectives, procedures, councils and miscellaneous provisions relevant to the strata company.

  2. Division 3 of Pt 8 of the ST Act is titled 'Procedures'. Within Div 3 of Pt 8 is subdivision 2 which is titled 'Meetings of strata company'. Requirements for an AGM are set out in this subdivision as are the notice requirements for a general meeting, the requirements for a quorum, the conducting of business at general meetings and resolutions of general meetings (s 127 to s 133). The requirements of these provisions is set out below.

  3. All owners of lots and first mortgagees of those lots must be given at least 14 days' notice of every general meeting (s 129(1) of the ST Act). An AGM is a general meeting. An extraordinary general meeting (EGM) is also a general meeting of the strata company (other than an AGM).

  4. The notice for the meeting must include (s 129(2) read with s 127(3) of the ST Act):

    (a)the date, time and venue of the meeting;

    (b)for an AGM, notice of each of the following items of business:

    (i)election of council members;

    (ii)consideration of accounts; and

    (iii)the presentation of copies of certificates and schedules for the insurance required under the ST Act, current as at the date of the meeting;

    (c)for 'special business,' notice of the general nature of that business; and

    (d)notice of each method of voting, whether by means of an electronic communication or otherwise, that is acceptable to the strata company.

  5. Finally, Sch 1 by-law 4 deals with councils. The by-law is titled 'Constitution of council'. Relevantly it provides:

    …

    (4)If there are more than 3 lots in the scheme, the members of the council must be elected at each annual general meeting of the strata company[.]

    …

    (13)All acts done in good faith by the council, even if it is afterwards discovered that there was some defect in the appointment or continuance in office of any member of the council, are as valid as if that member had been duly appointed or had duly continued in office.

Resolution of scheme dispute

  1. Section 197 of the ST provides for the resolution of certain 'scheme disputes' including an alleged contravention of the ST Act (other than an offence), a dispute about a resolution or decision of a strata company or the council of a strata company, including its validity and any other matter arising under the ST Act or the scheme by-laws (s 197(1)(a)(iii), (iv) and (vi) of the ST Act).

  2. Various disputes are not 'scheme disputes.' These are set out in s 197(3) of the ST Act.

  3. Section 197(4) provides that an application to the Tribunal may be made by a party to the dispute for the resolution of a scheme dispute.

Tribunal proceedings

  1. Part 13 of the ST Act deals with Tribunal proceedings.

  2. In proceedings under the ST Act, the Tribunal may make any order it considers appropriate to resolve the dispute or proceeding (s 200(1) of the ST Act). The types of orders that the Tribunal may make are set out in s 200(2) of the ST Act and include, for example, an order under s 200(2)(m) of the ST Act requiring a person to take specified action or to refrain from taking specified action to remedy a contravention or prevent further contravention of the ST Act or scheme by-laws.

  3. The Tribunal may provide that the order is to remain in force for a specified period, until a specified event or until further order (s 200(7) of the ST Act).

  4. Instead of any order the Tribunal could make under the ST Act, or in addition to any order the Tribunal makes, in a proceeding under the ST Act, the Tribunal may make a declaration concerning a matter in the proceeding (s 199(1) of the ST Act). The types of declaration that the Tribunal may make are set out in s 199(3) of the ST Act and include, for example, a declaration that a specified decision or resolution of a strata company is or is not invalid.

  5. Finally, it is also possible for the Tribunal to make a decision not to make an order. This is provided for in s 202 of the ST Act.

Principles in exercising the Tribunal's discretion to make an order

  1. The power of the Tribunal to make orders to resolve a scheme dispute or the proceeding under s 200(1) of the ST Act is a statutory discretionary power.

  2. In Efficient Building Team Pty Ltd and Perth Recruitment Services Pty Ltd [2024] WASAT 25 at [34] to [43] I explained the Tribunal's statutory discretionary power as follows:

    34The term 'discretion' was explained in Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [200] HCA 47; (2000) 203 CLR 194 at [19] as follows:

    'Discretion' … refers to a decision-making process in which "no one [consideration] and no combination of [considerations] is necessarily determinative of the result".  Rather, the decision-maker is allowed some latitude as to the choice of the decision to be made.  The latitude may be considerable … [or] it may be quite narrow[.]

    35…

    36… However, that is not to say that the statutory power is not without limitation.  As stated by French CJ in Minister for Immigration and Citizenship v Li[2013] HCA 18 (Li) at [23] every statutory discretion, however broad, is constrained by law.

    37Legal reasonableness provides the boundaries within which a decision-maker such as the Tribunal has a genuine free discretion:  Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 505 and Li at [23]. To determine the boundaries of the statutory discretionary power, regard must be had to the scope, subject matter and purpose of the statutory scheme that creates and confers on the Tribunal a discretion to make an order: Li at [67].

    38The scope and purpose of the ST Act provides limits on the exercise of the statutory power by the Tribunal. By its long title, the ST Act is to provide for, among other related purposes, for the subdivision of land by strata titles schemes, the creation of strata titles and the governance and operation of strata titles schemes.

    …

    41Importantly, in exercising its statutory powers, the Tribunal must do so reasonably:  Li at [23]. The same was said in the earlier decision of Kruger & Ors v The Commonwealth of Australia (1997) 190 CLR 1 where Brennan CJ stated at [36]:

    [W]hen a discretionary power is statutorily confined on a repository, the power must be exercised reasonably, for the legislature is taken to intend that the discretion be so exercised[.]

    42In other words, the statutory discretionary power is subject to the presumption of law that the legislature intends the power to be exercised reasonably …

    43… [T]he Tribunal in making its decision as to whether or not to exercise its statutory discretionary power to make an order, must ultimately take all considerations into account.

  3. In deciding whether to exercise the Tribunal's statutory discretion in Giabeni Pty Limited and The Owners of 30 Coode Street Mount Lawley Strata Plan 11321 [2024] WASAT 105 (Giabeni), I  referred to Hapgood­Strickland and The Owners of 119 Doveridge Drive Duncraig (Strata Scheme 12286) [2024] WASAT 65 (Hapgood­Strickland) where the Tribunal was considering whether or not to exercise the statutory discretion in s 200(1) of the ST Act.

  4. In Hapgood-Strickland, the Tribunal at [50] to [51] referred to Bendall-Harris v Aitken [2008] WADC 112 where Bowden DCJ held that for an order deeming a resolution to have passed as a unanimous resolution, the following four factors must be considered:

    (a)the detriment to any owner and the extent, if any, to which it could be said to derogate from the owner's proprietary rights;

    (b)the extent of any costs of the owners;

    (c)the formalisation of longstanding informal arrangements; and

    (d)the creation of certainty between owners and thereby reducing disputes.

  5. I will apply the above principles and factors in determining whether or not to exercise the Tribunal's statutory discretionary power under s 200(1) of the ST Act to make orders to resolve a scheme dispute or the current proceeding.

Principles in exercising the Tribunal's discretion to make a declaration

  1. Similarly, the power of the Tribunal to make a declaration under s 199(3) of the ST Act is a statutory discretionary power.

  2. In Van Rensburg and Owners of Ocean Marina Pointe Strata Plan 45077 [2023] WASAT 94, I considered the principles to be applied in exercising the Tribunal's discretion to grant declaratory relief. At [49] in that decision, I referred to the rules for granting declaratory relief as summarised at [65] in Adder Holdings Pty Ltd and The Owners of Harbour Pines Strata Plan 23297 [2022] WASAT 120 (Adder Holdings) as espoused by Lockhard J in Aussie Airlines Pty Ltd v Australian Airlines Ltd and Others (1996) 68 FCR 406 at 415. Those rules may be summarised as follows:

    •The proceeding must involve the determination of a question that is not abstract or hypothetical.

    •There must be a real question involved.

    •The declaratory relief must be directed to the determination of legal controversies …  The answer to that question must produce some real consequences for the parties.

    •The applicant for declaratory relief will not have sufficient status if relief is 'claimed in relation to circumstances that [have] not occurred and might never happen' or if the Tribunal's declaration will produce no foreseeable consequences to the parties.

  3. Most recently, in Giabeni, I again considered the principles to be applied in exercising the Tribunal's discretion to grant declaratory relief.  At [43] to [46] of that decision, I referred to Tax Practioners Board v van Dyke [2024] FCA 899 and noted the following other factors relevant to the exercise of the discretion by the Tribunal:

    •whether the declaration will have any utility;

    •whether the proceeding involves a matter of public interest; and

    •whether the circumstances call for the marking of the Tribunal's disapproval of the contravening conduct.

  4. I will apply the above principles and factors to determine whether or not to exercise the Tribunal's statutory discretionary power under s 199(3) of the ST Act to make declarations to resolve a scheme dispute or the current proceeding.

  5. Next, I set out the factual background before considering the issues.

Factual background

  1. Having considered the evidence, I make the following findings of fact which are relevant to the issues or questions to be determined by me in the current proceeding:

    (1)Mr Clay is the owner of Lot 18 on the strata plan.

    (2)The strata company is the strata company for the strata complex known as 'Carinya Court'.

    (3)On 10 November 2021 the Tribunal made orders in the earlier proceeding.

    (4)On 24 October 2023 the Tribunal made orders in the previous proceeding.

    (5)A notice for an extraordinary general meeting (2023 EGM) was issued on 26 October 2023 to deal with order 1 of the orders made by the Tribunal (differently constituted) in the previous proceeding.

    (6)The 2023 EGM was held on 13 November 2023 and a council of five members of the strata company was elected.

  2. What is hotly contested in the current proceeding is whether or not the Notice for the 2023 AGM and the 2023 AGM are invalid and further, if the 2023 AGM is not invalid, whether or not the resolutions passed at the 2023 AGM are void, invalid or should be set aside. 

  3. In the reasons which follow, I explain why, in my view, in order to resolve the scheme dispute or the current proceeding between Mr Clay and the strata company that a declaration and an order are to be made that both the Notice and 2023 AGM are not invalid.

Consideration

  1. Before considering each of the issues set out above at [40] in turn, I must first be satisfied that the Tribunal has jurisdiction.

Whether the Tribunal has jurisdiction to determine the dispute?

  1. The jurisdiction of the Tribunal was not challenged by either party. However, and in any event, I am satisfied that the Tribunal has jurisdiction under s 197(4) of the ST Act to determine the scheme dispute or proceeding.

  2. The scheme dispute in this case between Mr Clay and the strata company concerns, amongst other things, the validity of the Notice and the 2023 AGM.

  3. Mr Clay and the strata company are 'scheme participants' as that term is defined in s 197(2) of the ST Act. This is because Mr Clay is the owner of Lot 18 on the relevant strata plan and the strata company is expressly listed as a scheme participant in s 197(2) of the ST Act.

  4. Finally, I am satisfied that the Tribunal may make any order or declaration or both that it considers reasonable to resolve the scheme dispute or the current proceeding (s 199 and s 200 of the ST Act). I will return to the Tribunal's discretionary statutory power to make declarations and orders later in these reasons.

Issues 1 and 2 - whether the Notice and/or 2023 AGM are invalid?

  1. I will deal with issues 1 and 2 together.

Contentions

  1. Mr Clay challenges the validity of the Notice and the 2023 AGM. This is on the basis that the requirements of s 127(3)(a) and s 129(2)(b) of the ST Act were not complied with. In particular, Mr Clay asserts that the Notice fails to include as a specific item of business the election of council members.

  2. Mr Clay urges the Tribunal to make a declaration and an order that both the Notice and 2023 AGM are invalid with the consequence that all resolutions carried at the 2023 AGM are invalid.

  3. If the Tribunal makes a finding that both the Notice and the 2023 AGM are invalid, this will result in the strata company having to call a general meeting to comply with order 2 of the orders made by the Tribunal (differently constituted) on 24 October 2023 as well as having to work through and vote on each of the general business and special business items set out in the Notice (a total of 17 items).

  4. On the other hand, if the Tribunal does not make a finding that the Notice and the 2023 AGM are invalid, then each of resolution 2, 3, 11 and 12 that were carried at the 2023 AGM will need to be individually considered to determine if the resolution is void, invalid or ought to be set aside as asserted by Mr Clay.

  5. It is Mr Clay's contention that every AGM must include a motion for the election of a new council to take place.  In the current proceeding, Mr Clay asserts that the Notice did not include such a motion.  Further, it is Mr Clay's position that item 4 on the Notice cannot be interpreted as a motion for an election to take place at the 2023 AGM.  This is because, according to Mr Clay, item 4 is either a motion to hold a different AGM at some other time for the purposes relevant at that later time, or item 4 is a motion to not hold an election at the 2023 AGM.

  1. In addition, Mr Clay says that even though an election of members to the council was held recently in November 2023, that in itself does not necessitate or justify breaching the ST Act in respect of the requirements for the 2023 AGM.

  2. Mr Clay contends that if the 2023 AGM was not an AGM, then the council is in breach of s 127(1) of the ST Act because more than 15 months have now passed since there was a recognised AGM. Consequently, according to Mr Clay, it would be inappropriate for the Tribunal to simply declare that the 2023 AGM was a general meeting as that would simply validate the breaches inherent in the calling and holding of that meeting.

  3. Counsel for the strata company rejects Mr Clay's position.  The Tribunal is urged by counsel for the strata company to dismiss issues 1 and 2 on the basis that an irregularity in the Notice does not invalidate the 2023 AGM itself nor invalidate the resolutions carried at the 2023 AGM, and that items of business are to be determined individually on their merits having regard to the particular issue and surrounding circumstances.

  4. Further, counsel for the strata company submits that the Tribunal should dismiss Mr Clay's claims in respect of issues 1 and 2 on the basis that his claims are vexatious, misconceived and wholly unreasonable in the circumstances giving rise to the 2023 EGM which arose from orders 1 and 2 made by the Tribunal (differently constituted) in the previous proceeding.

  5. In the alternative, counsel for the strata company implores that the Tribunal exercise its statutory discretionary powers under s 202 of the ST Act to decline to make any order or declaration in relation to the Notice as there would be no practical consequence for the parties. [9]  The reason for this is because the declaratory relief sought by Mr Clay relates to past actions of the strata company or of the council and therefore a declaration or an order of the Tribunal would not produce any real consequences for the parties.

    [9] Closing written submissions of the strata company filed on 13 August 2024 at page 12.

  6. Further, it is the submission of counsel for the strata company that if the Notice contains an irregularity or there is any non-compliance with the ST Act, that on a fair consideration of the issues, the Tribunal should conclude that those members of the strata company who were involved in the decision-making acted in good faith, and with good intention and in the interests of all members of the strata company. In other words, counsel for the strata company submits that if there has been any irregularity in the election of the council, then the Tribunal should find that what was done by the council was done in good faith as provided for in Sch 1 by-law 4(13).

  7. In closing submissions, counsel for the strata company, made the submission that the Tribunal ought to exercise its statutory discretionary powers to make declarations and orders (by reference to orders 1 and 2 of the Tribunal in the previous proceeding) as follows:

    (a)there was a valid election of council members of the strata company (which Mr Clay does not challenge); and

    (b)there was a valid resolution for the confirmation of the election of council members at the 2023 AGM.

2023 EGM

  1. It is useful to start with the 2023 EGM which was held on 13 November 2023.

  2. The 2023 EGM was held to comply with order 1 of the Tribunal (differently constituted) made on 24 October 2023 in the previous proceeding.  The order relevantly provides:

    1.A general meeting of the strata company shall by 14 November 2023 be convened and presided over by representatives of Magixstrata as Chair and Secretary of the meeting for the sole purpose of electing members of the Council.  All members of the strata company shall be entitled to be nominated as a Council member and to vote at the meeting. Votes shall be taken based on unit entitlement.

    (Tribunal emphasis)

  3. The above order was made by the Tribunal (differently constituted) pursuant to s 200 of the ST Act. As already stated, and repeated here, an order under s 200 of the ST Act is an order made by the Tribunal to resolve a scheme dispute or the proceeding. The parties were clearly in dispute about what Mr Clay describes as:[10]

    … intractable disagreements between owner groups since 4 December 2021 as to the members of the council[.]

    [10] See document headed 'Final Orders Sought' attached to Mr Clay's application in CC 1099 of 2023 filed with the Tribunal on 15 August 2023.

  4. To comply with order 1 (see above at [92]), the strata company via the strata manager, called the 2023 EGM. The notice of the 2023 EGM sets out the date, time and venue as required by s 129(2)(a). It also sets out one agenda item for the meeting of 13 November 2023 as 'special business'. This is because all business transacted at an EGM is taken to be special business (s 128(6) of the ST Act).

  5. The agenda item provides:

    SPECIAL BUSINESS

    1.ELECTION OF COUNCIL MEMBERS

    That the Council consists of 5 owners.

    As per SAT Orders made 24th October 2023 it was ordered that all votes shall be taken based on Unit Entitlement.

    Call for nominations of candidates for election to the council

    Conduct a ballot to elect members of the council

    CLOSE OF MEETING

  6. Attached to the notice for the 2023 EGM was a standard form voting paper, proxy form and a nomination for election to council and consent to nomination for election to council form.

  7. I have reviewed the minutes of the 2023 EGM.  I am satisfied and I find that the minutes reflect that the motion for the council is to consist of five members was carried, that the chairperson called for nominations to be a council member and as there were more than five nominations, a ballot vote was conducted and finally the chairperson upon counting the votes by number of unit entitlement announced the five members elected to the council as follows:

    •Ms Della-Vedova (Lot 1);

    •Mr Pearce (Lot 2);

    •Karina Pty Ltd represented by Ms Somas (Lot 4);

    •Ms Ladiszlai (Lot 8); and

    •Ms Vane (Lot 17).

  8. Following the 2023 EGM, all five elected members of the council attended a council meeting on 21 November 2023 where the chairperson (Mr Pearce), treasurer (Karina Pty Ltd represented by Ms Somas) and secretary (Ms Ladiszlai) were elected.

  9. For completeness, I note that Mr Clay does not challenge the notice calling the 2023 EGM nor the validity of the 2023 EGM.

  10. The effect of the 2023 EGM is that the strata company has a council comprised of five elected members. The strata company is therefore run by the elected council in accordance with the conditions specified in the ST Act, the scheme by-laws and subject to any restriction imposed or direction given by ordinary resolution of the strata company. In other words, it is the job of the council to make sure that the duties or functions of the strata company as set out in the ST Act are carried out. I will return to the role of council, later in these reasons, when I consider who may propose a resolution outside of a general meeting.

Notice

  1. I now turn to consider the Notice.

  2. Following the 2023 EGM, the strata manager, on or about 25 November 2023, issued the Notice.  The Notice was attached to an email with the subject heading 'Owners of Carinya Court Rockingham Strata Scheme 25819 - Notice of Extraordinary General Meeting'.

  3. According to Mr Clay, on 26 November 2023, he received a further email from the strata manager that was like the email of 25 November 2023, however it had the subject heading: 'Notice of Meeting Owners of Carinya Court Rockingham 25819'.  Then later the same day, Mr Clay says he received a further (third) email like the email of 25 November 2023, however it had the subject heading: 'AGM Carinya Court Rockingham'.

  4. The result is that over a two-day period in late November 2023, Mr Clay and the other owners (or together the members of the strata company) received three emails concerning a meeting of the strata company to be held in 14 days' time with each email having a different subject heading.  The strata company does not challenge this.

  5. These various iterations of the subject heading to the emails of 25 and 26 November 2023 suggest, in my view, that either the strata manager or the council or both were not clear as to whether to hold an AGM or an EGM in order to comply with order 2 of the orders made by the Tribunal (differently constituted) on 23 October 2023. This is understandable because order 2 of the orders made by the Tribunal (differently constituted), in my respectful view, was not expressed clearly as the order required a 'general meeting or extraordinary general meeting' of the strata company to be held. An AGM is a general meeting and an EGM is also a general meeting that is not an AGM (s 128(1) of the ST Act). In other words, what that Tribunal ordered was a 'general meeting (either a AGM or a EGM) or an extraordinary general meeting (EGM)'. In addition, in circumstances where the strata company was required to call an AGM by early January 2024 in order to comply with s 127(1) of the ST Act, the action of the strata company to call the 2023 AGM when it did, was reasonable in the circumstances.

  6. It is common ground that the meeting called by the strata company was in order to comply with order 2 of the orders made by the Tribunal (differently constituted) in the previous proceeding (see above at [92]).  The purpose of the meeting, as required by order 2 of the orders made in the previous proceeding, required the setting of levies and the budget for the 2023/2024 financial year and to consider what levies were or should have been set for the previous financial years back to the 2019/2020 financial year. 

  7. Ordinarily the setting of the budget is done at an AGM. This is because s 102(1) of the ST Act requires the strata company to prepare a budget for each financial year for submission to, and approval at its AGM. Again, in circumstances where the strata company was required to call an AGM by early January 2024, and to comply with order 2 which required the setting of the budget for 2023/24, the action of the strata company to call the 2023 AGM is reasonable in all of the circumstances.

  8. Returning to the Notice, I am satisfied and I find that the following requirements of s 127(3) and s 129(2) of the ST Act are complied with:

    (a)the date (14 December 2023), time (10 am) and venue (19 Kent Street, Rockingham Gary Holland Community Centre - Meeting Room);

    (b)for the 2023 AGM:

    (i)consideration of the accounts for the financial year ended 30 September 2023 (item 3); and

    (ii)presentation of copies of certificates and schedules for the insurance required under the ST Act, current at the date of the AGM;

    (c)special business (general nature of each special business item set out in items 6 to 17); and

    (d)notice of each method of voting, whether by means of an electronic communication or otherwise, that is acceptable to the strata company (set out in the Notice).

  9. As asserted by Mr Clay, I am satisfied and I find that what is missing from the Notice in item 4 is the word 'election' in the mandatory item 'election of council members' as required by s 127(3) of the ST Act.

  10. It is unfortunate, in my view, that Mr Clay interjected at the 2023 AGM when Mr Pearce moved for an amended motion to be put in respect of item 4 for the council to be elected afresh and to consist of five members of the strata company. While it may be common for nominations for council to be called for in the Notice, nothing in Sch 1 by-law 5 which deals with electing the council at a general meeting requires this. Rather Sch 1 by-law 5 provides:

    (1)the meeting must determine the number of persons of whom the council is to consist (including where there are more than three lots that council must consist of not less than three and no more than seven of the owners);

    (2)the chairperson must call on those persons who are present at the meeting in person or by proxy and entitled to nominate candidates to nominate candidates for election to the council; and

    (3)the nominee to the nomination must consent either in writing furnished to the chairperson or orally at the meeting in person or by proxy.

  11. In this case, I am satisfied and I find that Mr Pearce at the 2023 AGM was seeking to have a council of five members (being the same number that was determined at the 2023 EGM). That satisfies the requirement of Sch 1 by-law 5(1). However, the chairperson did not get to call nominations for council members due to Mr Clay's interjection.

  12. In Adder Holdings the Tribunal (differently constituted) was considering whether the requirements under s 129(2) of the ST Act had been complied with in respect of a notice for an EGM. In that case, the Tribunal made the finding at [30] that the notice of the EGM failed to specify the time of the proposed EGM, the proposed venue or include the method of voting for the meeting. Then, after considering s 97(2) of the ST Act that applied prior to 1 May 2020 (the Prior Act), the Tribunal in Adder Holdings held at [28] that it could not refuse to make an order invalidating a resolution made at a general meeting where the notice requirements for that meeting were not complied with unless it considered that:

    (a)the failure to comply with the notice provisions did not prejudicially affect any person; and

    (b)compliance with the notice provisions would not have resulted in a failure to pass the resolution.

  13. The ST Act does not have an equivalent of s 97(2) of the Prior Act. However, as stated in Adder Holdings at [29], the ST Act contemplates there may be circumstances in which the proceedings at a general meeting are not invalidated, such as the non-receipt of the notice by the owner. Therefore, in my view, it follows that there may be circumstances where the validity of resolutions made at a general meeting of the strata company are not affected by a failure to comply with the notice requirements set out in s 129(2) read with s 127(3) of the ST Act.

  14. In Adder Holdings, it was not necessary to determine whether strict adherence to the notice requirements would have prejudicially affected the applicant in that case or resulted in a different outcome of the EGM because the Tribunal concluded that the resolutions were invalid or of no effect.

  15. In Pearce and Clay, I made findings at [119] that the notices for various EGMs did not comply with the ST Act in circumstances where there were two sets of minutes which were in conflict and therefore it was not clear whether the motion to have an EGM on 17 March 2020 was carried and at [124] where it again was not clear whether not less than 14 days' notice of the EGM to be held on 17 March 2020 had been given. Further, I made a finding at [127] that as there was no council following the 2019 AGM (and therefore all members of the strata company were the council), that Mr Clay had no authority to call the EGM for 7 March 2020 (and subsequently on 14 March 2020).

  16. The circumstances in the current proceeding are very different.  A council was validly elected at the 2023 EGM which Mr Clay does not contest.  I will return to consider whether or not to exercise the Tribunal statutory discretionary powers to make a declaration and/or order that the Notice for the 2023 AGM is invalid or otherwise after I consider the 2023 AGM.

2023 AGM

  1. Agenda item 4 of the 2023 AGM under the heading 'General Business' reads:

    4.COUNCIL OF OWNERS

    That pursuant to the election of the Council of the Strata Company (Council) at the EGM held on 13 November 2023 in accordance with order 1 of the SAT Orders made on 24 October 2023, the Council is constituted by 5 owners being Ms L Della-Vedova (Lot 1), Mr N Pearce (Lot 2), Karina Pty Ltd – represented by Mrs A Somas (Lot 4), Ms T Ladiszlai (Lot 8) and Mrs L Vane (Lot 17) and that as this general meeting has been convened pursuant to order 2 of the SAT Orders for the purpose of setting the levies for the 2023/2024 year, setting a budget for the 2023/2024 year and to consider what levies were or should have been for the years ended 30 September 2020, 2021, 2022 and 2023, an Annual General Meeting be held within 12 months of this general meeting to determine a new council and to set a budget for the 2024/2025 year[.]

    (Tribunal's emphasis)

  2. The above was put as a resolution to be voted on as reflected in item 4 of the voting paper attached to the Notice.

  3. The minutes of the AGM reflect the following for item 4:

    4.Council of Owners

    That pursuant to the election of the Council of the Strata Company (Council) at the EGM held on 13 November 2023 in accordance with order 1 of the SAT Orders made on 24 October 2023, the Council is constituted by 5 owners being Ms L Della-Vedova (Lot 1), Mr N Pearce (Lot 2), Karina Pty Ltd – represented by Mrs A Somas (Lot 4), Ms T Ladiszlai (lot 8) and Mrs L Vane (Lot 17) and that as this general meeting has been convened pursuant to order 2 of the SAT Orders for the purpose of setting the levies for the 2023/2024 year, setting a budget for the 2023/2024 year and to consider what levies were or should have been for the years ended 30 September 2020, 2021, 2022 and 2023, an Annual General Meeting be held within 12 months of this general meeting to determine a new Council and to set a budget for the 2024/2025 year.

    Moved by Mrs Somas Seconded by Mr Pearce

    An amended motion was

    Moved by Mr. Pearce and Seconded by Ms Della-Vedova

    That the Council is being elected afresh and shall consist of 5 owners.

    Mr Clay interjected and advised that since that motion was not on the agenda for this meeting, it cannot be voted on as owners have not been given the opportunity to provide their nominations.  Upon due debate, no vote was taken on the amended motion hence the original motion as so provided for by the agenda to confirm the elected members on Council at the EGM held 13th November 2023 was then voted on.

    The following votes were recorded:

    Votes in favour: 12

    Against: 1

    Motion Carried

  4. An AGM is a 'general meeting' for the purposes of the ST Act (s 128(1) of the ST Act). An EGM is also a 'general meeting' other than an AGM. The notice requirements for all general meetings are set out in s 129(2) of the ST Act.

  5. The election of members to the council must be included in the agenda for each AGM (s 127(3) of the ST Act). This is supported by Sch 1 by­law 4(4) which provides that if there are more than three lots in a scheme, the members of council are to be elected at each AGM of the strata company (with the exception that if the number of lots increases to more than three then at an EGM convened for the purpose).

  6. In my view, it is clear that the ST Act provides that where a scheme comprises more than three lots that the election of council must be undertaken at a general meeting where that general meeting is an AGM (s 127(3) of the ST Act and Sch 1 by-law 4(4)). However, in this case, an order was made by the Tribunal (differently constituted) in the previous proceeding on 23 October 2023 requiring a general meeting of the strata company to be held, at short notice, by 14 November 2023 for the sole purpose of electing members to the council.  As already stated, and repeated here, the order was made by the Tribunal (differently) constituted on 23 October 2023 to resolve the scheme dispute or the proceeding, where following the decision in Pearce and Clay in November 2021, there had been in place two competing councils, the NAB council and the Bankwest council, which is contrary to the ST Act and the scheme by-laws. In other words, the Tribunal intervened in the previous proceeding by the order it made on 23 October 2023 which required a general meeting to be held for the sole purpose of electing members of the council in order to break the deadlock between to the two competing councils.

  7. As previously stated, and repeated here, the first order of the orders made by the Tribunal on 23 October 2023 required a 'general meeting' to be held by 14 November 2023.  That means either an AGM or EGM could have been called.  The strata manager decided to call the 2023 EGM and a council was duly elected.  Mr Clay does not take issue with the notice for the EGM, the 2023 EGM itself or the outcome of the 2023 EGM, being the election of five members to the council.

  1. However, what Mr Clay takes issue with is the Notice for the 2023 AGM by its general business item 4 headed 'Council of Owners' (item 4).  Item 4 was on the voting paper attached to the Notice as a resolution to be voted on, but as Mr Clay points out, nominations had not been called.  Following some debate at the 2023 AGM which did not resolve the issue, the strata manager, Ms Metzger, as the chairperson of the 2023 AGM, proceeded to take a vote on the original item 4.

  2. Counsel for the strata company submits that item 4 provided the members of the strata company the opportunity to discuss the election held the previous month in November 2023 at the 2023 EGM.  It is further submitted by counsel for the strata company that the word 'election' was unfortunately omitted in the heading 'Council of Owners' but that did not preclude either the opportunity for discussion or for the election of members to council if that had been desired by those attending the 2023 AGM.

  3. It is the evidence of council members Ms Della-Vedova and Mr Pearce and of the strata manager, Ms Metzger, that an amended motion was proposed under item 4 to hold an election of council.  That motion was moved by Mr Pearce and seconded by Ms Della­Vedova but lapsed for want of interest after some debate including by Mr Clay seeking for the meeting to be adjourned if an election was to be held.

  4. In addition, it is the evidence of Mr Pearce and Ms Metzger that at no time following the issue of the Notice and during the 14 day period leading up to the 2023 AGM did Mr Clay raise any concern with the wording or content of item 4.

  5. While Mr Clay asserts that it is not his responsibility to make his concerns known prior to an AGM or an EGM, it is, in my view, unfortunate that such a view is taken.  It is also unhelpful for Mr Clay, who takes a very close interest in what is happening at the strata complex, to assert that there is no obligation or expectation on him or on the other owners to inform the council and/or the strata manager of any errors as it is the council and the strata manager who have obligations and duties under the ST Act and who ought to accept any blame for defects in the documents, and their own conduct.

  6. In my view, it is in the best interests of all the lot owners in the strata scheme, that is all the members of the strata company, that all disputes, including any possible errors or omissions noted in documents, are quickly brought to the attention of the council.  Further, in my view, such disputes and corrections to documents should be resolved amicably as soon as possible without the need for an owner or the strata company to resort to filing an application or applications with the Tribunal.  The current proceeding is such a case. 

  7. While I appreciate Mr Clay believes that he expressed his views during the discussion at the 2023 AGM, in my view, the current proceeding could have been avoided, had Mr Clay informed the council of his concern with the wording of item 4 in the 14 days' prior to the 2023 AGM.  However, there may be occasions or circumstances when members of a strata company and the strata company cannot amicably and promptly resolve their dispute or have documents corrected and it is therefore appropriate and reasonable for an application to be made to the Tribunal in order for the Tribunal to intervene to resolve a scheme dispute or the proceeding whereby declarations and/or orders may be made to break the deadlock between members of the strata company or between a member and the strata company.

  8. It is understandable, in my view, that as the council had been elected in November 2023 at the 2023 EGM, that is in the month prior to the 2023 AGM, where the validity of the 2023 EGM or the elected council had not been challenged by Mr Clay, that the council understood that it had complied with the orders of the Tribunal (differently constituted) of 23 October 2023, and that notwithstanding the unusual circumstances of this strata complex, the ST Act and by-laws had also been complied with.

  9. I am satisfied and I find that the minutes of the 2023 AGM reflect that the council understands that the strata company must comply with the requirements of the ST Act, the scheme by-laws and Strata Titles Regulations 2019 (WA) (Regulations) including the requirement to hold an election of council members at an AGM and that an AGM must be held within the timeframe set out in s 127(1) of the ST Act.

  10. I now turn to consider if it is appropriate to exercise the Tribunal's statutory discretion to make the declarations and orders sought by Mr Clay in respect of issues 1 and 2.

Exercise of the Tribunal's discretion - Notice and 2023 AGM

  1. Mr Clay seeks declarations and orders under s 199(3) and s 200(2) of the ST Act that the Notice and the 2023 AGM are invalid.

  2. The strata company rejects Mr Clay's position and submits that the Tribunal should exercise its statutory discretionary powers to make orders and declarations in accordance with orders 1 and 2 of the orders made by the Tribunal (differently constituted) on 23 October 2023, that is, that there was a valid election of the council and that there was a valid resolution at the 2023 AGM for the confirmation of the election of the council.

  3. As I stated in McDonald and The Owners of the 19th Tee Estate Strata Plan 66901 [2024] WASAT 82 at [119], s 200(1) of the ST Act provides that the Tribunal may make an order it considers appropriate to resolve the dispute or proceeding.

  4. The precondition which enlivens the statutory discretion conferred on the Tribunal to make a declaration under s 199(3) of the ST Act or an order under s 200(1) of the ST Act is that the Tribunal must be satisfied there is a scheme dispute or proceeding. Earlier, I determined that the scheme dispute in the current proceeding is between Mr Clay, as the owner of Lot 18 on the strata plan and the strata company as to whether the Notice and the 2023 EGM are invalid.

  5. The discretion conferred by s 199(3) and s 200(1) of the ST Act to make a declaration and/or an order is not limited by any mandatory considerations. However, that is not to say that the statutory power is not without limitation. To determine the boundaries of the statutory discretionary power, regard must be had to the scope, subject matter and purpose of the statutory scheme that creates and confers on the Tribunal a discretion to make a declaration and/or to make an order to resolve a scheme dispute or the proceeding.

  6. The scope and purpose of the ST Act provides limits on the exercise of the statutory power by the Tribunal. By its Long title, the ST Act is to provide for, among other related purposes, 'for the subdivision of land by strata titles schemes, the creation of strata titles and the governance and operation of strata titles schemes'. It follows, in my view, that the Tribunal's statutory task, as revealed by a consideration of the ST Act as a whole and, in particular, s 199(3) and s 200(1) of the ST Act is that if the Tribunal finds that there is a scheme dispute then the Tribunal may make a declaration and/or an order in regards to the operation of the strata scheme to break a deadlock between a member and the strata company.

  7. Importantly, the Tribunal's statutory discretionary power is subject to the presumption of law that the legislature intends the power to be exercised reasonably. Sections 199(3) and s 200(1) of the ST Act are to be construed accordingly.

  8. While I accept Mr Clay feels that he is well intended in his application under s 197(4) of the ST Act, in my view, he has opportunistically seized on an irregularity or non-compliance with a requirement in respect of the Notice concerning item 4 to seek to invalidate the Notice and the entire 2023 AGM.  This is in circumstances where Mr Clay is fully cognisant of, and did not dispute the 2023 EGM or the result of that EGM being the election of the council in compliance with order 1 of the orders made by the Tribunal (differently constituted) in the previous proceeding.

  9. In my view, there would be no practical consequence for the parties if the Tribunal was to make a declaration or an order invalidating the Notice and the 2023 AGM as requested by Mr Clay.  The reasons for this are as follows.

  10. First, Mr Clay's main concern or dispute is about the heading of item 4 'Council of owners'.  In my view, Mr Clay's concern is unwarranted.  This is because Mr Clay did not challenge the 2023 EGM or the election of the council at that EGM.  In other words, Mr Clay accepts there is currently a validly elected council. 

  11. Mr Clay's position that an irregularity in the Notice, due to not having the word 'Election' in item 4 is capable of invalidating the 2023 AGM and all resolutions passed at that meeting, in my view, is an unreasonable overreach.  This is because, when considering the validity of a resolution, the following, as stated in Adder Holdings at [30], needs to be considered:

    [I]t is relevant to the exercise of the Tribunal's discretion whether non­compliance with the notice requirements is unfair to an owner or would have resulted in a different outcome, such as a failure to pass a resolution that would have passed if proper notice had been given.  Answering these questions will, amongst other matters, require an analysis of the number of owners who received notice of the general meeting and, if they attended the meeting, how they cast their vote either in person or by proxy.

  12. I am satisfied and I find that the minutes of the 2023 EGM reflect that all members of the strata company were present at the 2023 EGM either in person or by proxy.  Further, I am satisfied, and I find that a motion was carried that the council is to comprise five owners (or members of the strata company).  Finally, I am satisfied, and I find that the chairperson called for nominations for the position of member of the council and as more than five nominations were received, a ballot vote was conducted where votes were counted by the number of unit entitlement.

  13. Further, I am satisfied, and I find that the minutes of the 2023 AGM reflect that all owners were present in person or by proxy at the 2023 AGM.  I am also satisfied that after Mr Pearce sought to put an amended motion for item 4, for the council to be elected afresh and to comprise five owners, that a resolution was carried 12:1 confirming the election of the council of five members at the 2023 EGM which was convened to comply with order 1 of the orders made by the Tribunal (differently constituted) on 23 October 2023.

  14. Consequently, in my view, even if item 4 did not strictly comply with the requirements of s 127(3) of the ST Act in that the word 'Election' was omitted, and even if the notice provisions in s 129(2) read with s 127(3) of the ST Act had been complied with, the resolution to have a council comprised of five owners being Ms Della-Vedova, Mr Pearce, Karina Pty Ltd represented by Ms Somas and Ms Ladiszlai would not have resulted in a failure to pass the resolution.  This is because the 2023 AGM confirmed the election of that council 12:1 (as set out in the previous paragraph).  In short, I am satisfied, and I find that the failure to comply with the notice obligations did not prejudice Mr Clay as he has not challenged the outcome of the 2023 EGM in the current proceeding or otherwise.

  15. Second, the declaration and orders that Mr Clay seeks relate to past historical or past actions of the strata company and that would not, in my view, produce any real consequences for Mr Clay or for the strata company in circumstances where Mr Clay did not challenge the 2023 EGM or the election of the council at the 2023 EGM.

  16. Third, in the unusual circumstances of this strata complex, where there had been two competing councils, the 2023 EGM was called at short notice to comply with order 1 of the orders made by the Tribunal (differently constituted) on 23 October 2023 and as the strata company had to call an AGM by early January 2024 in order to satisfy the requirements of the ST Act, it was reasonable, in my view, for the strata company to call the 2023 AGM and to also deal with order 2 of the orders made by the Tribunal (differently constituted) on 23 October 2023 to set a budget for 2023/2024 amongst other matters.

  17. Fourth, following McGeachie & Ors v Clark & Ors [2005] WASC 177 at [20], in my view, the Tribunal should be reluctant to interfere in matters voted on at a general meeting of the strata company that are done in good faith. As already stated and repeated here, I am satisfied and I find that the council acted in good faith in calling the 2023 EGM and the 2023 AGM in seeking to comply with the orders made by the Tribunal (differently constituted) on 23 October 2023.

  18. Finally, even if there is an irregularity in the Notice, being the omission of the word 'Election', in my view, in all of the circumstances of the current proceeding, it is reasonable for the Tribunal to intervene to break the deadlock between Mr Clay and the strata company to make a declaration under s 199(3) of the ST Act and to make orders under s 200(2) of the ST Act, not as Mr Clay seeks, but as put forward by the strata company that election of council of the strata company is valid and that there was a valid resolution at the 2023 AGM for the confirmation of the election of the council.  The reasons for this are as follows.

  19. First, the question of whether the Notice and the 2023 AGM are invalid is a real question and not a hypothetical or theoretical one.  The declaratory relief and orders are directed to determining the legal controversy as to the legal status of the Notice and the 2023 AGM.

  20. Second, the declaration and order will have utility and will produce foreseeable consequences for both Mr Clay and the strata company whereby the council can now proceed with its duties and obligations under the ST Act and scheme by-laws.

  21. Third, in the unusual circumstances of this strata complex, where an owner or owners and the strata company have on a numerous occasions resorted to proceedings in the Tribunal, including in Pearce and Clay which, amongst other issues, concerned the validity of an AGM as well as in the previous proceeding CC 1099 of 2023 where the Tribunal was called on again to intervene to resolve a scheme dispute involving two competing councils (see further below at [161]), a declaration and orders of the Tribunal will break the continuing deadlock between Mr Clay and the strata company (or as referred to by Mr Clay as the 'intractable disagreements') and will create certainty for the members of the strata company, and importantly will allow the parties to now move forward and thereby reduce further disputes and litigation.

  22. Finally, in circumstances where the members of the strata company endeavoured to comply with orders 1 and 2 of the orders made by the Tribunal (differently constituted) on 23 October 2023 to hold a meeting for the election of a council, a declaration and orders of the Tribunal in favour of the strata company signals the Tribunal's disapproval of Mr Clay's conduct to opportunistically seize on an irregularity or non­compliance with a requirement in respect of the Notice concerning item 4 to seek to invalidate the entire 2023 AGM in circumstances where Mr Clay is fully cognisant of, and did not dispute the 2023 EGM or the result of that EGM being the election of the council.

  23. In conclusion, it is reasonable, in my view, to exercise the Tribunal's discretionary statutory powers to make a declaration and orders under the ST Act, that despite the irregularity in the Notice which did not include the word 'Election' in the heading of item 4, that there was a valid election of the council and that item 4 of the 2023 AGM is a valid resolution confirming the election of the council.

  24. I now turn to consider each of the other issues where Mr Clay seeks orders from the Tribunal that various motions and resolutions carried at the 2023 AGM are void, invalid or should be set aside.

Issue 3 - whether motion and resolution 2 is invalid?

  1. Mr Clay asserts that the motion and resulting resolution 2 of the 2023 AGM is invalid having regard to the issues in, and the terms of settlement and orders made by the Tribunal (differently constituted) in the previous proceeding.

Agenda item 2

  1. The minutes of the 2023 AGM reflects the following for agenda item 2:

    2.Confirmation of Minutes of last Annual General Meeting

    That the minutes of the last Annual General Meeting held 8 October 2022 and the minutes of the last Extraordinary General Meeting held 28 May 2022 and 13 November 2023 which were previously circulated to all owners be accepted as true and correct records of those meetings.

    Moved by Mr. Pearce Seconded by Ms Della-Vedova

    Votes in favour: 13

    Against: 2

    Motion Carried

  2. Mr Clay contends that the disputes in the previous proceeding were intractable and were accepted by all to be disputes that would take up considerable time, effort and resources of all members of the strata company and of the Tribunal.  According to Mr Clay, the course followed in the mediation in the previous proceeding was not one focused on resolving the specific disputes, but one that focused on avoiding the need to resolve those disputes.[11]  In other words, the mediation outcome, according to Mr Clay, was to draw a line in the sand at the date of the order, 23 October 2023, save for levies which had to be revisited.  Mr Clay said the mediation outcome:

    … cleaned the slate of all of the competing/conflicting decisions made by 'Council NAB' and 'Council BankWest' that couldn't be upheld on some other basis.[12]

    [11] Mr Clay's witness statement filed on 10 July 2024 at paragraphs 79 to 93.

    [12] Ibid at paragraph 92.

  3. Mr Clay is of the view that the final order made by the Tribunal (differently constituted) in the previous proceeding, being the mediated outcome, incorporated and implicitly and effectively set aside all of the general meetings held between 1 October 2019 and 24 October 2023, including the general meeting held on 4 December 2021 and all of the meetings held by each of the two competing councils.

  4. In addition, it is Mr Clay's position that while his application in the previous proceeding was 'otherwise dismissed' (by order 3), it was dismissed on the basis that the dispute no longer needed to be decided because the parties had agreed on a way forward which made deciding the dispute unnecessary - namely by leaving aside the issues with respect to the meetings and elections from and including 12 December 2019 up to the date of the settlement at the mediation on 23 October 2023.  In other words, Mr Clay contends that the issues in the previous proceeding remain undecided.  This is because, as Mr Clay understands it, the previous proceeding was not dismissed for cause, as baseless or with prejudice save to the extent that it could not be revived in a way that could challenge the settlement that was reached.[13]

    [13] Ibid at paragraph 93.

  5. The strata company disagrees with Mr Clay's position and understanding of the mediated outcome.

  6. I do not accept Mr Clay's position that it was implicit in the orders made by the Tribunal (differently constituted) on 23 October 2023 that all general meetings held between 1 October 2019 up to the 23 October 2023 including all council elections were set aside.[14]  My reasons are as follows.

    [14] Ibid at paragraph 103.

  7. First, nothing in the orders made by the Tribunal (differently constituted) in the previous proceeding sets aside expressly or implicitly all general meetings, including all council elections held between 1 October 2019 up to 23 October 2023. 

  8. Rather, unlike the decision in Pearce and Clay where I made an order (see [34]) that all decisions and resolutions made at the extraordinary general meetings held on 7 March 2020, 14 March 2020 and 17 March 2020 and the AGM held on 3 October 2020 were invalid, no such order was made by the Tribunal (differently constituted) in the previous proceeding.  Further, no order was made by the Tribunal (differently constituted) in the previous proceeding setting aside the orders made in Pearce and Clay.

  1. I accept that s 120(3)(b) of the ST Act provides owners more of a say in the running of their strata scheme (as compared to the Prior Act). However, I do not accept Mr Clay's assertion that there is nothing in s 120 of the ST Act and reg 89 of the Regulations to suggest any involvement of the council is required in the procedure of proposing the resolution or voting on the proposed resolution.[27]  Further, I do not accept Mr Clay's assertion that it is the owner who must propose the resolution and who must decide if the council will have any role in the process and what that role might be, if any.[28]  My reasons for this are as follows.

    [27] Mr Clay's closing written submissions filed on 12 August 2024 at page 29.

    [28] Ibid.

  2. First, s 120(4) of the ST Act provides that only a member who is entitled to vote on the resolution may propose a resolution outside of a general meeting. It is not for the member of the strata company, for example Mr Clay, to decide if he is entitled to vote on the resolution, but rather the up to date accounting records of the strata company, which the strata company must keep pursuant to s 101 of the ST Act, must be reviewed to determine whether or not the member is entitled to vote on the resolution. The council, as the representative of the strata company, is required to keep the accounting records, and it therefore follows, in my view, that the council is required to determine if the member is entitled to vote on the resolution and if not, then the member cannot propose a resolution outside of a general meeting.

  3. Second, the strata company is obligated by Div 1 of Pt 8 of the ST Act to carry out various functions including ensuring insurance is in place for the strata scheme (s 97 of the ST Act) and ensuring compliance with the scheme by-laws (s 112 of the ST Act). These functions of the strata company are performed by the council (s 135 of the ST Act and Sch 1 by-law 4(1)). Consequently, if a member seeks to propose a resolution concerning something to do with a function of the strata company, for example to have repairs undertaken of the common property or to propose an alternate insurer for the strata scheme, as those functions are required to be done by the strata company, involvement of the council in the process would, in my view, be required. This is because in performing its functions, the strata company is to have the objective of implementing processes and achieving outcomes that are not, having regard to the use and enjoyment of lots and common property: (a) unfairly prejudicial to or discriminatory to or discriminatory against a person; or (b) oppressive or unreasonable. This is provided for in s 119 of the ST Act.

  4. In my view, s 120(3)(b) of the ST Act properly construed permits a member of the strata company, who is entitled to vote on the resolution, to propose a resolution. That proposed resolution may be put to the members of the strata company either at:

    (a)a general meeting; or

    (b)outside of a general meeting. 

  5. That proposed resolution is a resolution of the strata company (s 123 of the ST Act). As the functions of the strata company are to be performed by the council subject to any restriction imposed by the ST Act or direction given by ordinary resolution (s 119 and s 135 of the ST Act), it is for the council, and not a member of the strata company (for example, Mr Clay), to determine if the proposed resolution is to be put to the vote by members of the strata company at a general meeting or outside of a general meeting. To be clear, it is the duty of council to determine if the resolution is to be put to the vote at a general meeting or outside of a general meeting.

  6. Not all matters require to be voted on at a general meeting.  For example, matters that do not require discussion may be put to a vote outside of a general meeting.  Examples of matters that may not require discussion and therefore may be suitable to put to a vote outside of a general meeting include the request by a lot owner for the approval of alterations or additions to a lot, or the transfer of money from the reserve fund to the administrative fund.  Having a vote outside of a general meeting means that a decision can be reached more quickly (as opposed to waiting for an AGM or EGM) and more conveniently and less costly than an AGM or EGM.

  7. On the other hand, matters that require discussion would generally be best suited to a general meeting.  Examples of such matters requiring discussion include the amendment or addition of by-laws, or any changes to the common property.

  8. In conclusion, in my view it is contrary to the ST Act for a member of the strata company to seek to have a proposed resolution voted on outside of a general meeting, as Mr Clay has sought to do by his proposed resolutions dated 29 June 2024. Therefore, should Mr Clay require his proposed resolutions dated 29 June 2024 to be voted on by the members of the strata company, he will need to forward them to the council, who is to determine if Mr Clay is entitled to vote on the resolutions and if the answer to that question is 'yes' then it is the council who is to decide if the proposed resolutions are to be put to the vote at a general meeting or outside of a general meeting.

  9. For completeness, I note Mr Clay does not seek a declaration or an order in relation to this issue.  However, in my view, it is reasonable to exercise the Tribunal's discretionary statutory powers to break the deadlock between the parties in order to move on by making an order requiring Mr Clay as a lot owner and not a member of council to refrain from issuing proposed resolutions (by way of email or otherwise) outside of a general meeting.  This will create certainty between the members of the strata company and reduce disputes about this issue.

  10. Finally, I turn to consider the last issue in the current proceeding.

Issue 8 - What is the proper construction of Sch 1 by-law 17 Debt recovery costs?

  1. Sch 1 by-law 17 (by-law 17) was registered by the Register of Titles on 13 January 2014 (by notification M519310).  The by-law provides:

    If a proprietor fails, refuses and/or neglects to pay any contributions determined to be due and payable by the proprietor under section 36 of the Act, the proprietor becomes liable (on a full indemnity cost basis) in respect of any legal costs, charges or expenses associated with the demand or recovery of the contributions by the [s]trata [c]ompany or its lawful representative jointly and severally with any person who was liable to pay the contribution.

    (Tribunal's emphasis)

  2. Counsel for the strata company note Mr Clay's concern relates to the meaning and the extent of the term 'full indemnity' in relation to the recovery of indemnity costs from owners in relation to debt recovery actions taken by the strata company.

  3. Mr Clay explained that back in 2013 he was involved in obtaining legal advice regarding the proposed by-law 17.  This was, according to Mr Clay when he was a member of the committee (council).

  4. According to Mr Clay the by-law was only ever intended for use to limit as far as possible the legal costs that the strata company could not recover on taxation in the court when it became necessary for the strata company to resort to legal proceedings to ensure payment of levy contributions under s 36 of the Prior Act (s 100 of the ST Act).

  5. It is Mr Clay's position that aside from the statutory powers of the court, supplemented by the power conferred on the court by by-law 17, there is no entitlement under the ST Act for the strata company, as it is currently doing, to charge any owner for legal costs, charges and expenses associated with any demand or recovery of levy contributions. Therefore, in Mr Clay's submissions, the only amount the strata company is entitled to charge an owner under the ST Act as compensation for late and non-payment of levies is the interest it is entitled to charge by virtue of s 100(4)(b). Finally, Mr Clay says that the strata company remains entitled to notify an owner who has not paid a levy, that the strata company may seek in a proceeding before the court, recovery of the unpaid levy and interest, an amount on a full indemnity cost basis to cover legal costs, charges and expenses incurred in respect of the demand for payment and the recovery of the unpaid levy contribution. Importantly, according to Mr Clay, the strata company is only entitled to demand and recover the amount it claims if a court makes an order in favour of the strata company, or the amount is awarded to the strata company on a taxation of costs in the proceeding.

Proper construction of by-law 17

  1. Before setting out the proper interpretation of by-law 17, it is useful to set out the principles applicable to the proper construction of scheme by-laws, or a statutory contract, as the by-laws are deemed to exist by statute and constituted by the bundle of rights and liabilities created by the ST Act and Sch 1 and Sch 2 to the ST Act.

  2. The principles enunciated in Byrne v The Owners of Ceresa River Apartments Strata Plan 55597 [2016] WASC 153 at [75] to [79] and in the subsequent decision on appeal in Byrne v The Owners of Ceresa River Apartments Strata Plan 55597 [2017] WASCA 104 at [139] to [140] may be summarised as follows:

    •by-laws are to be construed so that they are not inconsistent with the ST Act;

    •by-laws are to be construed objectively, by reference to what a reasonable person would understand the language of the by-law to mean;

    •caution should be exercised in going beyond the language of the by-law and its statutory context to ascertain their meaning.  A tight rein should be kept on having recourse to surrounding circumstances;

    •by-laws are to be construed in the relevant statutory context which includes that the function of by-laws is to regulate the rights and liabilities of strata company and the owners and other persons who have rights or interests in the lots or the common property;

    •by-laws are to be construed in the context of the registered strata plan;

    •by-laws may have a commercial purpose and be interpreted accordingly but due regard must be paid to the statutory context in so doing; and

    •rules of evidence assisting the construction of contracts inter partes do not apply to the proper construction of by-laws:  Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; (1982) 149 CLR 337.

  3. By-law 17 was made pursuant to Div 4 of Pt 4 of the ST Act. Division 4 is headed 'Scheme by-laws' and Pt 4 is headed 'Scheme documents'.

  4. The legislative framework or statutory context of s 44 of the ST Act which concerns the making of by-laws is that s 44(1) of the ST Act (as did s 42 of the Prior Act) enables the strata company, by resolution of the strata company, to make by-laws for the strata scheme provided they are not inconsistent with the ST Act.

  5. Section 42 of the Prior Act was headed 'By-laws'.  This provision was in place when by-law 17 was registered by the Registrar of Titles on 13 January 2014.  Section 42 included a general by-law making power for the strata company.

  6. Relevantly s 42 of the Prior Act provided as follows:

    42.By-laws

    (1)A strata company may make by-laws, not inconsistent with this Act for —

    (a)its corporate affairs; and

    (b)any matter specified in Schedule 2A [matters that may be provided for in the management statement]; and

    (c)other matters relating to the management, control, use and enjoyment of the lots and any common property.

    …

    (6)Without limiting the operation of any other provision of this Act, the by-laws for the time being in force bind the strata company and the proprietors and any mortgagee in possession (whether by himself or any other person) or occupier or other resident of a lot to the same extent as if the by-laws had been signed and sealed by the strata company and each proprietor and each such mortgagee, occupier or other resident respectively and as if they contained mutual covenants to observe and perform all the provisions of the by­laws.

    …

    (8)Without limiting the generality of any other provision of this section other than subsection (1), a strata company may, with the consent in writing of the of the proprietor of a lot, pursuant to a resolution without dissent (or unanimous resolution, in the case of a two­lot scheme) make, under this subsection only and not otherwise, a by-law in respect of that lot conferring on that proprietor the exclusive use and enjoyment of, or special privileges in respect of, the common property or any part of it upon such terms and conditions (including the proper maintaining and keeping in a state of good and serviceable repair of the common property or that part of the common property, as the case may be, and the payment of money by that proprietor to the strata company) as may be specified in the by-law and may, pursuant to a resolution without dissent (…), make a by­law amending or repealing any by-law made under this subsection.

    (9)After the expiration of the period of 2 years that next succeeds the making, or purported making, of a by-law referred to in subsection (8) (including a by-law so referred to that amends, adds to or repeals another by­law), it shall be conclusively presumed that all conditions and preliminary steps precedent to the making of the by-law have been complied with and performed.

    (10)Any by-law referred to in subsection (8) shall, while it remains in force, ensure as appurtenant to, and for the benefit of, the law in respect of which it was made and the proprietor, occupier and (subject to the terms of the by-law) any other resident thereof for the time being.

    (11)The proprietor for the time being of a lot in respect of which a by-law referred to in subsection (8) is in force —

    (a)is, subject to section 43(4), liable to pay to the strata company any moneys referred to in the by-law in accordance with the by-law; and

    (b)is, unless excused by the by-law, responsible for the performance of the duty of the strata company under section 35(1)(c) in respect of the common property, to which the by-law relates.

    (12)Where a person becomes proprietor of a lot at a time when, pursuant to subsection 11(a) or this subsection, another person is liable to pay money to the strata company, the person who so becomes proprietor is, subject to s 43(4), jointly and severally liable with the other person to pay the money to the strata company.

    (13)Any moneys payable by a proprietor to the strata company under a by-law referred to in subsection (8) or pursuant to subsection (12) may be recovered, as a debt, by the strata company in a court of competent jurisdiction.

    (Tribunal's emphasis)

  7. Section 43 of the Prior Act concerns the supply of information and certificates by the strata company.  Section 43(4) is referred to in s 42(12) of the Prior Act.  It provides that in favour of a person taking for valuable consideration an estate or interest in any lot, a certificate given under subsection (1)(c) by the strata company in respect of that lot is conclusive evidence, as at the date of the certificate, of the matters stated in the certificate.

  8. The general by-law making power for a strata company is now found in s 44 of the ST Act. This provision forms part of Div 4 of Pt 4 of the ST Act which is headed 'Scheme by-laws', with Pt 4 headed 'Scheme documents'.

  9. The amendment to the language now found in s 44(1) and s 44(2) of the ST Act provide for 'governance' by-laws and 'conduct' by-laws. While s 44 of the ST Act allocates into two categories the powers of the strata company to make by-laws set out s 42 of the Prior Act, such categorisation is not intended, in my view, to alter or widen those powers.

  10. By-laws that deal with the governance of the strata scheme and which include a by-law dealing with contributions, levies or moneys payable by the owner of a lot to the strata company are governance by­laws (per the definition of governance by-laws in s 3 of the ST Act).

  11. In summary, s 44 of the ST Act, along with the predecessor provision under the Prior Act, enables a strata company to make by-laws that are not inconsistent with the ST Act.

  12. Turning to s 36 of the Prior Act.  It is headed 'Levy contribution on proprietors'.  This provision was in place when the by-law was registered on 30 January 2014.  Amongst other things, s 36 of the Prior Act provided for the recovery of unpaid contributions levied.

  13. Relevantly, s 36 of the Prior Act provided as follows:

    36.Levy of contributions on proprietors

    (1)A strata company shall —

    (a)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; and

    (b)determine from time to time the amounts to be raised for the purposes described in paragraph (a); and

    (c)raise amounts so determined by levying contributions on proprietors —

    (i)in proportion to the unit entitlements of their respective lots; or

    (ii)where a by‑law referred to in section 42B or an order under section 99A is in force, in accordance with that by‑law or order;

    and

    (d)recover from any proprietor, by action in a court of competent jurisdiction if necessary, any sum of money expended by the company for repairs or work done by it or at its direction in complying with any notice or order of a competent public authority or local government in respect of that portion of the building comprising the lot of that proprietor.

    (1a)If a mortgagee of a lot has entered into possession of the lot any contribution in respect of that lot may be levied on the mortgagee.

    (2)A strata company may —

    (a)establish a reserve fund for the purpose of accumulating funds to meet contingent expenses, other than those of a routine nature, and other major expenses of the strata company likely to arise in the future; and

    (b)determine from time to time the amounts to be raised for the purpose described in paragraph (a); and

    (c)raise amounts so determined by levying contributions on the proprietors in proportion to the unit entitlements of their respective lots.

    (3)Except in so far as and to the extent that the by‑laws of a strata company may empower the council of that company to exercise the functions in subsections (1)(a), (b) and (c) and (2), those functions shall be performed by and in accordance with resolutions of proprietors passed at a general meeting of the strata company.

    (4)Any contribution levied under this section —

    (a)becomes due and payable to the strata company in accordance with the terms of the decision to make the levy; and

    (b)if not paid when it becomes due and payable, bears interest on the amount unpaid at the rate of simple interest prescribed, unless the company determines (either generally or in a particular case) that an unpaid contribution shall bear no interest or interest at a lesser rate; and

    (c)including interest accrued under paragraph (b), may be recovered as a debt by the strata company in a court of competent jurisdiction and the strata company may agree to a compromise of such a debt.

    (5)Interest paid or recovered under subsection (4) or (6) shall form part of the fund to which the contribution belongs.

    (6)Subject to section 43(4), a proprietor of a lot is liable in respect of any contribution levied under this section and any interest thereon, jointly and severally with any person who was liable to pay that contribution and interest when that proprietor became the proprietor of that lot, to pay so much of that contribution and interest as was unpaid when he became the proprietor of that lot.

    (Tribunal's emphasis)

  1. The strata company was established on the registration of strata plan 25819 on 15 June 1994 (s 14(1) of the ST Act). Its functions and powers are derived from the ST Act and are subject to the provisions of the ST Act and the scheme by-laws. As already stated, but repeated here, the functions of the strata company are set out in Div 1 of Pt 8 of the ST Act including to undertake the financial management of the scheme (subdivision 3 of Div 1 of Pt 8 of the ST Act) and to represent owners in proceedings (subdivision 4 of Div 1 of Pt 8 of the ST Act).

  2. In regards to the financial management of the scheme, the powers and duties of the strata company are set out in s 100(1) and (2) of the ST Act (and in s 36(1) and (2) of the Prior Act). Importantly, s 100(1)(a) of the ST Act requires the strata company to establish an administrative fund that is sufficient for, amongst other things, other obligations of the strata company. Section 100(1)(b) of the ST Act empowers the strata company to determine the amounts to be raised for payment into the administrative fund. Then s 100(1)(c) of the ST Act requires the strata company to raise the amount so determined by levying contributions on the owners in proportion of unit entitlements of their respective lots (unless the scheme by-laws provide for a different basis).

  3. Section 100(4) of the ST Act (and s 36(4) of the Prior Act) provides the following in regards to contributions levied under s 100 of the ST Act:

    Any contribution levied under this section —

    (a)becomes due and payable to the strata company in accordance with the terms of the decision to make the levy; and

    (b)if not paid when it becomes due and payable, bears interest on the amount unpaid at the rate of simple interest specified in the regulations, unless the company determines (either generally or in a particular case) that an unpaid contribution bears no interest or interest at a lesser rate; and

    (c)including interest accrued under paragraph (b), may be recovered as a debt by the strata company in a court of competent jurisdiction and the strata company may agree to a compromise of such a debt.

  4. Finally, cl 23(3) of Sch 5 to the ST Act which provides transitions provisions in relation to financial management of a strata scheme provides:

    Contributions or other arrangements determined under section 36 as in force immediately before commencement day for any period that continues on or after commencement day are taken to be contributions or arrangements determined under section 100.

  5. The strata company seeks to recover outstanding levies and associated costs under by-law 17. This is appropriately characterised as falling within the strata company's other obligations being incidental to its financial management function for the purpose of s 100(1) of the ST Act (and s 36(1) of the Prior Act). At first blush, it appears, by reference to s 100(1) of the ST Act, for the strata company to meet the associated costs of recovering outstanding levies from the administrative fund.

  6. However, the strata company is not empowered to determine what monies are payable to it by an owner.  This is because the strata company is empowered to determine the amounts to be raised for payment into the administrative and reserve funds (s 100(1)(b) and s 100(2)(b) of the ST Act. The power does not extend to the strata company determining who (or in other words, which owner) may be responsible for payment of the monies.

  7. Further, in the absence of a by-law which provides for a different basis for levying contributions (s 100(1)(c)(ii) of the ST Act) the power of the strata company to levy contributions on lot owners is limited to the proportion of their unit entitlement (s 100(1)(c)(i) of the ST Act). There is no evidence of a by-law before the Tribunal of a different basis for levying contributions and therefore the strata company is limited to levying contributions on owners is in proportion of the unit entitlement of their respective lots.

  8. In my view, it follows that the strata company is empowered to raise amounts determined to be raised for payment into the administrative fund (including for costs associated with recovery of outstanding levies) on the owners but only in proportion to the unit entitlements of their respective lots (and not on a different basis).  Therefore that part of by­law 17 which provides for the strata company to seek recovery of the associated costs of recovery of the outstanding levies from the owner is void. 

  9. For completeness, I note that I am satisfied, that properly construed, by­law 17 does not remove any discretion conferred on the Magistrates Court under the Magistrates Court (Civil Proceedings) Act 2004 (WA), or other court of competent jurisdiction to award costs in debt recovery or other civil proceedings.

  10. Rather, by-law 17 operates as a statutory contract between the strata company and its members whereby:

    (a)the strata company is indemnified in relation to legal costs, charges or expense associated with the demand or recovery of the unpaid contributions; and

    (b)the need for the strata company to apply to the Magistrates Court (or other court) for an award of costs is avoided.

  11. Consequently, in my view, by-law 17 is not inconsistent with other written law. 

  12. In conclusion, the ordinary and natural meaning of the words of by­law 17, when considered in the context of the ST Act, is that the strata company may make governance by-laws requiring owners to contribute (or pay moneys) to the strata company for the discharge of other obligations of the strata company, such as for recovery of outstanding levies provided that the amounts so determined are raised in proportion to the unit entitlements of their respective lots (unless a scheme by-law provides for a different basis). This construction of by-law 17 is, in my view, consistent with s 44 of the ST Act along with s 100(1)(a), (b) and (c) of the ST Act (and the equivalent provisions in the ST Act).

  13. For completeness, I note that it does not appear that Mr Clay is challenging the validity of by-law 17 on the basis that it is unfairly prejudicial to, or unfairly discriminatory against one or more owner or is oppressive or unreasonable (per s 46(j) of the ST Act) or seeking a declaration and/or orders under s 200 of the ST Act concerning by­law 17.

  14. As the current proceeding is now concluded with these reasons for decision, the undertaking given by the strata company regarding recovery of any outstanding levies owed by Mr Clay is now removed (see above at [21] to [24]).  This means the strata company may now proceed with the recovery of any outstanding levies owed by Mr Clay subject to the proper construction of by-law 17 as set out above.  An order in these terms is reasonable in all of the circumstances of this case.

Costs

  1. Mr Clay seeks costs in the current proceeding. 

  2. A party may make an application for costs in accordance which rule 42A of the State Administrative Tribunal Rules 2004 (WA) which provides:

    Subject to these rules, an application to the Tribunal for costs under this Division can be made within 21 days of the orders to which the application relates being made by the Tribunal.

  3. Subject to Div 5 of Pt 4 of the SAT Act, which deals with costs of the parties and others, it is now open for a party to make an application to the Tribunal for costs in the current proceeding.

Other issue

  1. Mr Clay says he has made numerous attempts to bring the council and the owners to the table to find ways to address the issues and to proactively find a resolution without having to make applications to the Tribunal.  Further, Mr Clay says he understands the reticence or reluctance that many owners feel that stop them coming out and supporting him given the 'hostility and abuse that those on the council direct against [him] and those who do come out and speak in support [of him]'.[29]

    [29] Witness statement of Mr Clay filed on 10 July 2024 at paragraphs 76 to 77.

  2. Many members of the strata company take a very different view.  This different view is reflected in Ms Metzger's statement as follows:[30]

    90.I am painfully aware that the last 10 years of litigation initiated by or involving Mr Clay has caused headaches for so many owners and council members who have spent countless hours defending applications and dealing with Mr Clay's unwarranted level of interference and dysfunction, not to mention the monetary loss that owners have faced over those years.

    91.I am surprised that Mr Clay is so emboldened by the SAT jurisdiction that he does not attempt to resolve matters with council members and instead uses the SAT to press his point of view.  One owner should not be entitled to cause such grief and financial harm to other owners to satisfy an obsessive need for control.  I believe that the Tribunal's intervention is needed to prevent Mr Clay from bringing further vexatious and frivolous proceedings which are of little or no importance to the majority of owners of Carinya Court.

    [30] Witness statement of Ms Metzger filed on 17 July 2024 at paragraphs 90 to 91 (HB at page 1458).

  3. Further, the witness statements of Mr Pearce, Ms Della-Vedova and Ms Metzger state there is a recurring history of Mr Clay commencing applications in the Tribunal and being unwilling to accept the decisions of the majority of the members of the strata company or other members which do not align with his views.

  4. In my respectful view, all that needs to be said in regards to this other issue, is by reference to The Tempest (see above at [1]), that is, that it is now time for Mr Clay and the strata company to accept that the past has happened, to learn from it, and to move on in the interests of all of the members of the strata company.

Conclusion

  1. The Tribunal's objectives requires that it achieve the resolution of matters according to the substantial merits of the case with as little formality and technicality as is practicable (s 9 of the SAT Act).

  2. Reflecting back on the orders sought by Mr Clay to resolve a scheme dispute or the current proceeding (see above at [17] to [18]), and the findings reached, for all of the reasons set out above, in my view, Mr Clay's application is unsuccessful.  I make the following declarations and orders.

Orders

The Tribunal declares:

Pursuant to s 199(3) of the Strata Titles Act 1985 (WA):

(a)the election of the council on 13 November 2023 is valid;

(b)the notice dated on or about 25 November 2023 for the annual general meeting held on 14 December 2023 is valid;

(c)the annual general meeting held on 14 December 2023 is valid; and

(d)all of the resolutions passed at the annual general meeting held on 14 December 2023 are valid.

The Tribunal orders:

1.Pursuant to s 200(2) of the Strata Titles Act 1985 (WA):

(a)the council elected on 13 November 2023 is valid;

(b)the notice dated on or about 25 November 2023 for the annual general meeting held on 14 December 2023 is valid;

(c)the annual general meeting held on 14 December 2023 is valid; and

(d)all of the resolutions passed at the annual general meeting held on 14 December 2023 are valid.

2.Pursuant to s 200(2) of the Strata Titles Act 1985 (WA) the applicant, as a lot owner and not a member of council, must immediately refrain from:

(a)performing or seeking to perform the functions and duties of the council pursuant to s 135(1) of the Strata Titles Act 1985 (WA) and Sch 1 by-law 4(1) of the scheme by-laws; and

(b)issuing proposed resolutions (by way of email or otherwise) outside of a general meeting.

3.Pursuant to s 100(4), s 100(5) and s 100(6) of the Strata Titles Act 1985 (WA), the respondent may seek recovery of any outstanding levies from the applicant. For avoidance of doubt, the proper construction of Sch 1 by-law 17 provides that the cost of recovering outstanding levies, is to be raised by the respondent on the owners in proportion to the unit entitlement of the owners' respective lots and not on a different basis.

I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.

MS R PETRUCCI, MEMBER

11 FEBRUARY 2025


Actions
Download as PDF Download as Word Document
Cases Cited

19

Statutory Material Cited

7

PEARCE and CLAY [2021] WASAT 142
EFFICIENT BUILDING TEAM PTY LTD and PERTH RECRUITMENT SERVICES PTY LTD [2024] WASAT 25
Minister for Immigration and Citizenship v Li [2013] HCA 18