| JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : COMMERCIAL & CIVIL ACT : STRATA TITLES ACT 1985 (WA) CITATION : COUNCIL OF OWNERS - STRATA PLAN 8969 and CLEAVER-WILKINSON [2013] WASAT 196 MEMBER : MR C RAYMOND (SENIOR MEMBER) HEARD : 23 AUGUST AND 6 NOVEMBER 2013 DELIVERED : 2 DECEMBER 2013 FILE NO/S : CC 1895 of 2012 BETWEEN : COUNCIL OF OWNERS - STRATA PLAN 8969 Applicant
AND
IAN CLEAVER-WILKINSON
MICHELE CLEAVER-WILKINSON
Respondents
Catchwords: Strata Titles Act 1985 (WA) Application for removal of solar hot water system fixed to common property Application to strata company for retrospective approval Whether order for removal should be stayed Significance of noncompliance with usual governance requirements Legislation: Strata Titles Act 1985 (WA), s 3(2), s 7, s 7B(2), s 17, s 35, s 42, s 42(8), s 83, s 85, s 95, s 103G
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Result: Application stayed
Summary of Tribunal's decision: The applicant applied under s 83 of the Strata Titles Act 1985 (WA) for an order that the respondents remove a solar hot water system which they had installed on the common property roof of the development without approval.
The respondents applied to the strata company for retrospective approval but that had not been granted. The Tribunal accepted that there was a logical and sensible basis for the applicant not granting approval in that there was insufficient information put before the applicant, and subsequently the strata company in a general meeting, to establish that the roof areas could accommodate solar hot water systems for each owner or that the roof was capable of bearing all loads which would be imposed by the installation of solar hot water systems on each section of roof. The applicant was therefore prima facie entitled to an order for removal.
The Tribunal found that the factual circumstances which existed resulted in the respondents bona fide believing that retrospective approval could be granted and there was a prior history of the applicant dealing with an unauthorised alteration to a lot in this manner. Further, at the annual general meeting at which the application for retrospective approval was first considered, the strata company had agreed to give the matter further consideration provided the respondents had draft by-laws prepared addressing how applications to install solar hot water systems would be dealt with and how responsibility for maintenance and any damage which might be caused by the systems, would be borne. A draft set of by-laws were provided but were considered inadequate by the applicant and that view was later confirmed at an extraordinary general meeting. However, the circumstances in which the extraordinary general meeting was convened were such that members were not in a position to make a truly informed decision.
The Tribunal concluded that while the respondents bore primary responsibility for failing to follow ordinary governance procedures in order to obtain approval prior to the installation, correspondence from the strata manager had not clearly addressed arguments advanced on behalf of the respondents and had contributed to them following the course which they did. There had been no flagrant disregard for good governance procedures. Further, there was considerable evidence provided showing that the Western Australian Government was moving to phase out greenhouse intensive hot water systems. Further, owners had recognised the benefit of replacing the present electrical hot water systems with solar hot water systems, as and when the need might arise,
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by agreeing to a process intended to allow a properly informed decision to be made on whether by-laws should be passed allowing the installation of solar hot water systems in a manner adequately addressing equity issues between owners and any risks associated with the installations. In the circumstances the Tribunal concluded that that process should be properly concluded and that in the meantime the proceedings should be stayed.
The Tribunal made orders requiring the respondents, at their cost, to procure the necessary advice so as to address the capacity of the roof to carry sufficient solar hot water systems for all owners, if required, and to prepare further draft by-laws, or alternative sets of by-laws, with the guidance provided in the Tribunal's reasons for decisions and further input from the applicant. The respondents were further ordered to bear the cost of calling an extraordinary general meeting to consider the proposal. The Tribunal indicated that when the process had been completed the strata company would need to give the proposal proper consideration on a fully informed basis and decide whether the proposed by-laws should be adopted. If a decision was made adverse to the respondents, and that decision could be justified as being based on good sense or logic, the applicant would be entitled to the order sought unless there were discretionary factors suggesting otherwise. The Tribunal observed that the applicant would minimise the risk of adverse discretionary factors by cooperating properly with the respondents and seeing the process through to finality.
Category: B
Representation: Counsel:
Applicant : Mr J Kneebone with Ms E Clark (Acting as Agents)
Respondents : Mr I Cleaver-Wilkinson (In Person and as Agent for the second named respondent) with Mr O Cleaver-Wilkinson (Acting as Agent)
Solicitors:
Applicant : N/A
Respondents : N/A
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Case(s) referred to in decision(s):
Hamilton and Thompson (unreported, DCWA, Library No D990150, 28 May 1999)
Harold & Gladys Verryt and Ann Williams [2005] WASAT 101
The Owners of Mandurah Terrace Apartments Strata Plan 17133 and Russell [2009] WASAT 1
The Owners of Rosneath Farm Survey Strata Plan 35452 and Rowell & Anor [2007] WASAT 95
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REASONS FOR DECISION OF THE TRIBUNAL:
Introduction 1 Mr Ian and Mrs Michele CleaverWilkinson are the owners of a strata title unit Lot 28 on Strata Plan 8969. The strata parcel borders Elizabeth Street in South Perth and comprises three, three level buildings known as Elizabeth Gardens, and common property. Within each building three lots are directly below the same area of roof. Lot 28 is on the uppermost floor. 2 Lot 28 is occupied by the respondent's son, Mr Oscar CleaverWilkinson (Oscar). Oscar, in conjunction with his father, the first-named respondent, and on behalf of the respondents, replaced the electrical hot water system with a solar hot water system installed on the roof of the building immediately above Lot 28. Although an attempt was made to obtain the prior approval of the applicant, no such approval was given. 3 The hot water system was installed on 1 November 2012. On 16 November 2012 the applicant applied to the Tribunal under s 83(1) of the Strata Titles Act 1985 (WA) (ST Act) for an order that the solar hot water system be removed. All references hereafter to sections or parts of legislation are to the ST Act unless otherwise stated. 4 The application brings into play principles of good governance and proper decisionmaking by strata companies. Ordinarily, the Tribunal will not intervene when strata companies make decisions on a sensible and rational basis. 5 In this case the principles are put under tension because of some ambiguity in written communications between the parties prior to the installation and because the respondents contend that they genuinely believed that retrospective approval could be obtained based on their understanding of the legislation and the previous conduct of the applicant. This illustrates that retrospective approval had been given on an earlier occasion. Further, the applicant had considered retrospective approval in this case subject to two major concerns being addressed. 6 The first concern was whether on an equity basis all lot owners would be able to install solar hot water systems if they wished to do so. This raises whether the total roof area, comprising each section of roof, is able to accommodate up to 30 solar hot water systems and would be structurally capable of doing so. (Page 6)
7 The second concern was whether an acceptable set of exclusive use bylaws could devised to regulate the installation of solar hot water systems. 8 On the one hand the respondents have gone to considerable lengths in an attempt to address the applicant's above concerns but, as canvassed below, those concerns have not been fully answered. On the other hand the applicant's concerns are legitimate and if not properly addressed would entitle the applicant to an order for the removal of the system. 9 Both parties have filed extensive submissions. Two owners, Mr P Benson, and Ms C Treasure, have filed letters supporting the application, both on grounds which largely mirror the position of the applicant. Both are offended by the failure of the respondents to follow proper procedures which has caused owners who volunteer their time on council to waste a considerable amount of time on the issue. The submissions filed by the parties are lengthy and do not admit themselves to being easily summarised. They have, however, all been taken into account together with the oral evidence and submissions in the final hearing and the Tribunal will refer to them to the extent necessary to address the topics identified below, which encompass the issues raised and will be determinative of the matter.
Topics for consideration 1) The applicable legal principles. 2) The background and conduct of the parties. 3) The spatial and structural capacity of the roof. 4) The adequacy of the proposed bylaws. 5) The exercise of the discretion to issue an order for removal. 10 Each of the above topics will be discussed in turn.
The applicable legal principles 11 Although the respondents were initially under the impression that the works associated with the installation of the solar hot water system constituted an alteration to their lot, they now accept, and it is the case, that the work properly characterised constitutes an alteration to common property. The boundaries of the lot as delineated on the floor plan and in (Page 7)
accordance with s 3(2) are, in the case of horizontal boundaries, the upper surface of the floor and the under surface of the ceiling. 12 Under s 17 common property is held by the proprietors as tenants in common in shares proportional to the unit entitlements of their respective lots and, as such, each of the tenants has the right to occupy the whole of the common property in common with the others. The strata company is obliged under s 35 to control and manage the common property for the benefit of all the proprietors. Consequently, the strata company is entitled to bring proceedings, as the applicant has done in this case, for an order to remove any fixture placed on the common property for the benefit of only one proprietor, so as in effect to give that proprietor benefits to the exclusion of other proprietors: see The Owners of Rosneath Farm Survey Strata Plan 35452 and Rowell & Anor [2007] WASAT 95, at [11]. 13 As no consent was given for the installation the applicant is, on the face of it, entitled to the order which it seeks. It was, however, agreed at the first directions hearing that if there was any basis upon which the respondents could demonstrate that they were likely to succeed with an application to the Tribunal for an appropriate order allowing the installation to remain, these proceedings would be stayed, to enable that application to be brought. The respondents have advanced a case on a basis which opens up for consideration two possible bases upon which the installation could remain. The first basis enlivens consideration of s 85 which enables the Tribunal to order that the strata company consent to a proposal to effect alterations to common property where it considers the strata company has unreasonably refused to consent to the proposal. The second basis requires consideration of s 95 which enables the Tribunal to make a by-law under s 42(8) with respect to any fixture or fitting to be attached to the common property where it considers that the strata company has unreasonably refused to make the by-law. 14 In The Owners of Mandurah Terrace Apartments Strata Plan 17133 and Russell [2009] WASAT 1 (Russell), the Tribunal had cause to consider in detail the principles to be applied in considering whether or not a strata company had unreasonably refused to do that which it allegedly should have done. The following principles can be identified in that decision. 1) The Tribunal has consistently taken the approach that the management of a strata company is best left to the strata company and that the Tribunal should not too readily impose its own views of what is unreasonable. (Page 8)
2) The legislature has intended that there be a practicable means of breaking deadlocks between the members of a strata company who are coowners of the common property, who are often in close proximity, and who should desire to live in harmony with each other. 3) The Tribunal has fulfilled that role in circumstances where resolutions proposed to a strata company have failed, that are due to the dissent of a single lot owner, or of a majority of lot owners, by examining the rationale for dissent to ascertain whether there is a sensible basis for dissent. It is possible for persons acting reasonably to come to opposite conclusions on the same set of facts. 5) The standard of reasonableness required by what is known as Wednesbury unreasonableness as adopted in the administrative law governing proper exercise of governmental power is not applicable, so it is not necessary that a decision be regarded as so unreasonable that no sensible lot owner, or number of lot owners, could have come to that conclusion. 6) Some guidance on how a strata company should exercise control and management of common property can be gleaned from the extent to which the ST Act regulates the manner in which a proprietor may effect an alteration to their own lot in a strata scheme; for instance, that a proposal may be refused because it is visible from outside the lot and is not in keeping with the rest of the development. 7) Regard may be had to whether the conduct of the applicant (if not remedied) will undermine the corporate governance of a strata company so as to constitute a sufficient detriment to justify an order for removal of the offending works. 8) In relation to the requirement that an alteration be in keeping with the rest of the development it is for the strata company, acting within its powers, to decide on the degree of uniformity in the external appearance of the development, either in total or in particular respects. (Page 9)
The background and conduct of the parties 15 On 21 August 2012 the respondents wrote to the Council of Owners in the following terms: … We wish to notify the council of owners of the intention to seek advice and quotations for the installation of a solar hot water system for Unit 28. The solar hot water system will replace the existing senescent and insufficient electric hot water system. The intention is to fit the smallest model with dimensions between 1450-1600mm wide and 2530mm long. Without any reasonable objection, we will immediately seek quotes from accredited installers. … 16 The applicant's strata managers replied to the respondents via the email address of Oscar on 24 August 2012, relevantly, as follows: Hot water system - The Strata Company has no objections to the replacement of the hot water system[,] however the exact location of where the unit will be attached to the external wall must be approved by the Strata Company prior to installation. Once you have selected the quote you wish to accept[,] please advise the Strata Company of the details which should include the location, size, make etc. All licensed tradesmen should only quote on products which would comply with the regulations. 17 As is evident, the parties were at cross-purposes from the very commencement of correspondence between each other. Oscar testified that he regarded the response as an approval for the installation and that he proceeded with the arrangements on that basis. Mr Ian CleaverWilkinson also stated that he was relying to a considerable extent on his son who actually dealt with the applicant and that to a large extent he simply endorsed or agreed with his son at particular stages about what needed to be done. He also read the response from the strata company as constituting an approval and, with hindsight, accepts that his general oversight was neglectful. 18 Oscar indicated that in early September he proceeded to strip out the bathroom because there was a verge collection and he could have the debris collected. (Page 10)
19 On 7 September 2012 Oscar emailed a quotation and scope of works for the installation of the solar hot water system to the strata company managers. At that point, the representative of the strata managers, Ms Karla Roche, obviously recognised that she had mistakenly thought that the previous notification related to the replacement of the existing electrical hot water system. In an email response on the same date, Ms Roche advised that a solar hot water system would need to be approved at a general meeting, that solar hot water systems affect all owners and that the strata company was of the understanding that the respondents were replacing the hot water system with a standard hot water system. Further, that the strata company could not 'do this unless every unit at Elizabeth Gardens could install the same unit', and concluded stating expressly that 'you do not have permission to proceed on the quote as was attached to this [the earlier] email'. 20 At this point the position was unequivocal and unambiguous, that the installation would need to be approved at a general meeting of the strata company and that the respondents did not have permission to proceed on the quotation. Unfortunately, subsequent communications confused the situation, as referred to further below. 21 Later, on 7 September 2012, Ms Roche informed Oscar by email that his quotation (and presumably the request to install the solar hot water system) would be placed on the notice and agenda for the annual general meeting of the strata company to be held in December 2012. By email dated 12 September 2012, Oscar replied at some length advising that both the lessee (himself) and the proprietor (respondents) had discussed the situation and had decided that December was too far away. The main reason for this was given that bathroom renovations had been commenced upon receipt of the earlier advice. That is taken to be a reference to the email of 24 August 2012. That email did indicate that there was no objection to the replacement of the hot water system but the reference to approval being required of the position of the unit on an external wall should have alerted the respondents to the likelihood of some misunderstanding of what was being requested. In any event, as the communication indicated that further approval was required, the respondents acted precipitously in commencing the bathroom renovations at this stage. 22 Oscar proceeded to set out in the email of 12 September 2012 three different proposals for dealing with the matter. The first suggestion was for an extraordinary meeting to be called; the second was that there be a retrospective ratification or licence granted; and, thirdly, that there be a (Page 11)
meeting within the period prescribed by s 7B(2) of 35 days to consider the respondents' application. A fairly detailed motivation was set out in respect of the second and third proposals. Unfortunately, the motivation was based on a misconception that what was being proposed involved an alteration to the respondents' lot, rather than an alteration to common property. From a practical point of view the aspect that was pressed in this email advice was that the hot water system was working only intermittently and the bathroom was in a 'deconstructed' state. 23 The strata manager responded by an email on 14 September 2012. The content was as follows: Dear Oscar The Council of Owners have [sic] advised that while in principal [sic] they have no objection to the top floor units being able to install a solar hws, there are some significant concerns. The Council represents all owners and they have an obligation to have this added to the agenda for the AGM and to put to everyone as per the standard procedure for requests such as this. They do not feel that the request warrants an EGM due to the expense and being so close to the AGM. Some of the issues involved here are: • Structural information regarding the roof, ie. Is the roof supportive of this kind of structure and if it is supportive with one structure, is it supportive if everybody wanted the same? • As the roof is common property, who is going to be responsible for the repair and maintenance of the roof that the structure is situated upon. There have been multiple issues with the roof leaking in the past. • A By-law would probably have to be put in place to make the section of roof that you wish to utilise for your exclusive use, therefore, all repairs and maintenance would be your responsibility. This all represents considerable additional costs, which all owners should not be responsible for. Investigations into the above would have to be at your cost. 24 This above response, unwittingly, contributed to the confusion to which I have referred. Strata managers should have a proficient knowledge of the ST Act. The concept of strata title, identification of lot boundaries and what constitutes common property are matters not easily understood by laypersons. Given the detailed email from Oscar of (Page 12)
12 September 2013, setting out the three courses which he considered possible, it is, with the benefit of hindsight, unfortunate that the response from the strata manager did little more than to explain why it was not appropriate to call an 'EGM' and to outline issues which would have to be considered when the matter was dealt with at the annual general meeting. In the course of that explanation, there was no more than a short statement that the roof is common property. There was no explanation of why the second and third courses proposed by Oscar were misconceived, and while that may have seemed obvious to a strata manager, Oscar was adamant throughout the hearing before the Tribunal that he remained of the view that a retrospective approval could be given under s 103G which he had referred to in his above email. 25 While to those better informed in the workings of the strata titles legislation, it may have appeared that the respondents were proceeding with a high disregard for the proper governance of the strata company that was, I find, not the case. In the email of 12 September 2012, Oscar had motivated that a decision needed to be made by the strata company within 35 days under s 7B(2) and that if the strata company did not do so the system would be installed. Again, reflecting a misunderstanding of rights and obligations in relation to common property, Oscar asserted that the installation would not constitute exclusive possession as it could be removed if objected to, or if the space was required for common use. 26 On 1 November 2012 contractors attended early in the morning at the parcel to proceed with the installation of the unit. A councillor of the strata company, Ms Simone Neil, informed one of the contractors that the installation had not been approved and that he could not proceed with its installation. The contractor indicated that he would speak to Oscar and would ultimately do whatever Oscar instructed. Ms Neil recorded that conversation and a subsequent discussion with Oscar in an email which was sent almost immediately to the strata manager, Ms Roche. Ms Neil attended the hearing and testified as to the accuracy of the email and was cross-examined about it and the operation of the council generally. Ms Neil's evidence is that shortly after she had spoken to the contractor, Oscar came to her door. He informed her that he was proceeding with the installation, that he had paid $800 for an engineer's report to say that the roof structure was sound and had waited over 70 days for a response. He indicated that he would 'fight it in SAT after the fact if need be'. Ms Neil explained that there were maintenance issues relating to the roof, that it would be necessary to change the bylaws and that there would be costs involved in doing so, as well as there being equity concerns if something only benefited some owners. (Page 13)
27 To the extent that Oscar endeavoured to suggest that Ms Neil gave him permission to proceed with the installation, I reject his evidence as improbable and I accept the evidence of Ms Neil wherever there is conflict between them, with one qualification discussed later below. The way in which Oscar endeavoured to establish that there was an understanding that he could proceed is inconsistent with any proper construction of the above communications with the strata company. It is inconsistent with Ms Neil intervening at all, and it would be inconsistent with the stance that the strata company had adopted through the council of which she was a member. Most significantly, it is inconsistent with a contemporaneous record made by Ms Neil and which was sent by email at 7.34 am that day to the strata manager. 28 At best, Oscar might have been left under the impression that Ms Neil was not strenuously opposed to the concept of the installation and that she thought that using a solar hot water system would be good in theory 'but only if the concerns raised were properly addressed'. 29 The qualification referred to above relates to whether there was any discussion about the possibility of removal of the installation. Oscar contended that he had discussed the possibility of removal if the roof was unable to support the system. I find it probable that there was a reference to this. It is clear that Ms Neil contemplated that if the strata company wished to do so, it could apply for an order requiring the respondents to remove the installation, and reference was made in her note that the concerns needed to be resolved before installation 'to avoid more expense and possible removal'. There was therefore some discussion about the possibility of the system having to be removed. 30 The evidence establishes that not only had the respondents by then obtained an engineering report but that they had also gone to some trouble to find a suitable person to draft a set of exclusive use by-laws which they hoped to be able to put before the strata company. All of that is consistent with every effort being made to address the concerns raised by the strata company. It is also significant that the possibility of having to remove the system, as reflected in the email of 12 September 2012 and as I have found was mentioned in the discussion with Ms Neil, provides a basis for the finding which I made above that the respondents had not acted with a high-handed disregard for proper governance of the strata company. They acted on a mistaken understanding of what they were entitled to do and of their rights and obligations in relation to the roof. They were however obviously convinced that they could meet any reasonable concerns of (Page 14)
members of the strata company so that, if need be, they would fight the matter out in the Tribunal. 31 The respondents thereafter produced an engineering report which was considered at the annual general meeting on 8 December 2012. The report was not considered as acceptable because it reflected that the engineer had not examined the roof but had based his opinion on a set of drawings. The minutes of the annual general meeting reflect that an engineering report might be needed for each unit block to establish whether all 30 units could safely install a solar hot water system to the roof, and that the respondents would need to engage a strata titles consultant to prepare exclusive use by-laws and to advise on the procedure to be followed. It was agreed that the proceedings before the Tribunal would be stayed pending the provision by the respondents of draft exclusive use bylaws by 1 February 2013, together with a full application seeking approval, and an extraordinary general meeting would then be convened. 32 The respondents provided a draft set of exclusive use by-laws but the applicant (the council of owners) decided that they were unsatisfactory and that therefore an extraordinary general meeting would not be called and the proceedings in the Tribunal would continue. 33 In the meantime, the proceedings in the Tribunal had been adjourned consistent with the arrangements made by the parties at the annual general meeting on 8 December 2012. It was reported to the Tribunal at a directions hearing on 8 April 2013 that the applicant had decided to persist with the application and, accordingly, directions were issued programming the matter to a final hearing on 16 August 2013. 34 At some point during the preparation of the matter for hearing the applicant received advice that it should convene an extraordinary general meeting to consider the draft by-laws provided by the respondents. That extraordinary general meeting was held on 9 July 2013. Mr Ian CleaverWilkinson stated during the hearing that he was taken aback by this sudden change of direction by the applicant. He stated that he had received a letter from the strata managers (a copy of which was filed with the Tribunal on 11 June 2013) advising that the extraordinary general meeting had been called to give all owners the opportunity to voice opinions in regard to the respondents' retrospective application for the solar hot water system to be installed. He was concerned that there would not be a bona fide consideration of the proposal and immediately prior to the meeting, which he attended, he raised his concern with (Page 15)
Mr Kneebone of the strata managers, who was in fact later elected to chair the meeting. 35 Mr Ian Cleaver-Wilkinson stated that he was informed by Mr Kneebone that the meeting was called on advice from a strata consultant in order to protect the position of the strata company. As a result, it is evident that the respondents did not participate as fully in this meeting as they might otherwise have done. They did not move the motion to consider the by-laws which was moved by Ms Neil to enable the matter to be considered. While it is apparent that Mr Ian CleaverWilkinson took some part in the debate which followed, he stressed that it was evident to him that the result was a formality. It is to be noted from the minutes of the meeting that no votes were cast in favour of the proposal, not even by the respondents. Mr Ian CleaverWilkinson, as a coowner, required a proxy to vote and there is no indication that he held a proxy. 36 I accept that the calling of the extraordinary general meeting in the midst of preparations of the matter for a final hearing in the circumstances which prevailed resulted in the respondents regarding the meeting as a farce and that this view was genuinely held by them. If that was not the case, one would have expected the Mr Ian CleaverWilkinson would have held a proxy enabling him to vote but it is clear that while he attended the meeting he had no intention of voting. By contrast, he held a proxy for the annual general meeting of 8 December 2012 which demonstrates that he was aware of the need to do so in order to vote. 37 While the respondents' concern about the bona fides of the extraordinary general meeting are understandable given the history of the matter, and particularly the initial refusal to call an extraordinary general meeting, the respondents were nevertheless wrong not to take the full opportunity to put their case to the strata company in general meeting; that is the purpose and benefit of such meetings. 38 The above factual circumstances and the conduct of the parties will be discussed when considering the exercise of the discretion to issue an order for removal of the solar hot water system.
The spatial and structural capacity of the roof to accommodate solar hot water systems 39 In a report dated 5 December 2012 the engineering firm Marra & Associates motivated their opinion that installing the solar water tank frame exactly above a wall would result in half of the load being carried by the wall and half being carried by the purlins on each side of (Page 16)
the wall. Further, that calculations showed that spreading the load above two purlins resulted in the roof being capable of carrying the solar water system loading. The report reflects that the advice is based upon a '''received drawing'' titled ''typical section and details'' by Montague Grant Architect'. There is nothing to indicate whether the drawings were the 'approved for construction' drawings or 'as constructed' drawings. It was specifically recorded that it was necessary to base the advice on the drawings because the roof structure was not accessible. 40 As already recorded, the strata company in general meeting did not regard the report as satisfactory because it was only based on the drawings and the roof structure had not been inspected. In addition, the minutes of the general meeting show that the members of the strata company were concerned about establishing that the roofs of all buildings would be sufficient to bear the weight of 30 solar hot water systems so that any owner who wished to do so could install a unit. 41 The respondents obtained a further engineering report from Marra & Associates dated 19 August 2013. In order to carry out an inspection of the roof area, the respondents had a small portion of the ceiling removed. 42 This report makes no mention of the water tank being installed immediately above a wall. It reflects that the water tank has been installed centrally above the roof area, approximately 1.8 metres from the external side wall. Nevertheless, the opinion is expressed that calculations show that the load imposed by the water tank is within the limits for the design for permanent and imposed loading on the purlins. This report has never been considered by the strata company in general meeting but at the hearing no real issue was taken with the report. It was, however, submitted on behalf of the applicant that the report did not establish whether the roof above the respondents' lot would be capable of bearing another two similar systems, nor did the report establish whether the other areas of roof would be capable of bearing up to 27 solar hot water systems. 43 A number of photographs depicting the roof and the positioning of the hot water system have been filed. They tend to suggest that there is sufficient room for another two solar hot water systems on the roof above the respondents' lot. 44 The above factors will be taken into account when considering the exercise of a discretion whether or not to issue an order for removal. (Page 17)
The adequacy of the proposed bylaws 45 There is nothing particularly remarkable about the draft bylaws which, on their face, appear to address adequately the matters usually dealt with in an exclusive use by-law permitting the attachment of fittings to common property, save for a rather obscure reference to the proprietor complying with the requirements of s 42 and s 7. It is not clear what provision of s 42 might be applicable, nor is it readily apparent why the installation of a solar hot water system on the roof, which is common property, might constitute the erection of, alteration to or extension of a structure on a lot, but perhaps there is some aspect of the installation which might make it necessary to comply with this particular provision. If so, that has not been identified in these proceedings, and it appears any connection of piping or attachment of fittings should be characterised as being merely incidental to the proposed alterations to the common property. 46 The applicant's concern with the by-laws is that they do not address issues raised about exposure to claims arising from damage caused by the installation of such systems as a result of the properties below being physically damaged or due to leakage. Further, the applicant submits that the by-laws do not address, and leave uncertain, who would pay for inspections of the roof, whether the lot owners who had installed hot water systems would be required to address maintenance issues immediately and pay for tradesmen to carry out the repairs, and what would happen if they did not. In the event of damage being caused by the hot water systems, who would be responsible for meeting the claims and what would happen if there were two or three systems on the same section of roof. In that event, which proprietor would be responsible? What would happen if there was a dispute about payment? 47 These are all valid concerns, and in the absence of any other evidence, are understood to be the basis upon which the respondent council, and subsequently the strata company in general meeting, regarded the by-laws as being unsatisfactory. I consider that the decision that the by-laws were not satisfactory is founded on a logical and sensible basis. These are matters which need to be addressed. 48 No relatively standard set of by-laws could be expected to address these matters, so that unless the draftsperson is given accurate instructions about the issues and the desired outcome which the by-laws must achieve, it would be difficult for anyone to draft a suitable set of bylaws. (Page 18)
The exercise of the discretion to issue an order for removal of the solar hot water system 49 As I have found, the respondent strata council, and the strata company in general meeting, had sensible and logical grounds upon which to conclude that the proposed by-laws were not acceptable. On that basis alone the applicant is entitled to an order of the removal of the system, unless on discretionary grounds it is considered inappropriate to make the order. It is not necessary to make findings in favour of the applicant with regard to its further grounds advanced in support of a removal order, that the solar hot water system is not in keeping with the rest of the development and that to allow the system to remain would create governance issues. I will nevertheless address those issues, because they are relevant if I am wrong in my conclusion that there is a logical and sensible basis for rejecting the by-laws, as alterative bases upon which to support the order sought and they are in any event relevant, to the exercise of the discretion. 50 I will address firstly the issue of governance. 51 There can be little doubt that impact on the good governance of a strata company can be a basis upon which to support an order for the removal of the installation of a fixture to common property or a lot without obtaining the proper consent. In Hamilton and Thompson (unreported, DCWA, Library No D990150, 28 May 1999) (Hamilton), the Chief Judge of the District Court allowed an appeal against the decision of the strata titles referee who declined to make an order for removal. In allowing the appeal, the court considered that the respondent's carrying out of the installation in flagrant and knowing breach of the Act and by-laws undermined corporate governance to an extent that warranted a removal order. In Russell, referred to above, the Tribunal also relied on interference with corporate governance in circumstances where the respondent had gone through the motions of obtaining consent but had paid little heed to the limited consent given and was held to be the architect of his own misfortune. 52 This case is distinguishable. As stated above, Oscar had communicated at some length about the three different procedures which he considered could be followed in order to deal with the matter. He had obviously made a considerable attempt to familiarise himself with the ST Act, but the views which he expressed were wrong. The response from the strata manager would have been fully understood by a lawyer or someone within the strata industry conversant with the legislation but it (Page 19)
did not sufficiently address the arguments advanced by Oscar in a way which would have been clear to a layperson. While the respondents cannot be excused in law for proceeding as they did, I am satisfied that they proceeded in the belief that there was nothing unusual in seeking retrospective approval, although they were putting themselves in a position whereby they might have to remove the system if approval was not given and they failed in subsequent proceedings before the Tribunal. I find that it was made clear to Oscar by Ms Neil, on the day on which the installation was commenced, that he did not have approval to carry out the installation but that he bona fide believed that he could do so, that it was possible to obtain retrospective approval, and that if refused the respondents had such a compelling case that the matter would be fought out in the Tribunal. Thus, while the respondents' conduct is blameworthy, it cannot be said that they were entirely the architects of their own misfortune. That distinguishes the matter from the situation in Russell. 53 The facts and circumstances are also entirely different to those in Hamilton. In that case, approval had been sought through proper process on a number of occasions and consistently rejected and the respondent simply went ahead and carried out the installation. Further, the proposal was inconsistent with detailed by-laws controlling alteration to lots designed to maintain a high degree of uniformity. In this case, the respondents were continuing with their preparation to obtain approval at the meeting on 8 December 2012. They had already obtained an engineer's report and were attempting to identify an appropriate person to prepare draft by-laws, all of which is consistent with their belief that there should be no difficulty in obtaining retrospective approval. 54 In addition, the material filed in these proceedings shows that the strata company had given retrospective approval on a previous occasion when a lot owner installed wooden French doors in lieu of aluminium sliding doors. The conduct of the strata company in general meeting on 8 December 2012 was entirely consistent with the strata company giving due consideration to whether retrospective approval should be granted. While the two owners who filed submissions with the Tribunal were angered by what they saw as the respondents' failure to follow proper procedures, they could not have been aware of the full circumstances as outlined in these reasons. 55 In the circumstances, I do not consider that the concern about governance is one which is sufficient to support an order for removal. The history of how the strata company dealt with the installation of the wooden French doors, and with this issue at the annual general meeting on 8 December 2012, demonstrates that members as a whole were prepared (Page 20)
to deal with the situation on its merits, although at least some owners were displeased with the process followed by the respondents. This conclusion will be weighed in the exercise of the discretion whether to order removal. 56 The issue of the installation not being in keeping can be dealt with quite shortly. Firstly, the installation cannot be seen from the roadway or when one is within any close proximity to the building. It is only partially visible from the very rear of the carpark at the rear of the parcel. There is no indication that the aesthetics of the installation was raised at the annual general meeting on 8 December 2012. There is no obligation to record in the minutes all that was discussed, but if it was an issue which needed to be addressed, one would have expected it to be minuted as such. The gist of the resolution recorded in the minutes was that the matter would be reconsidered if an appropriate set of draft by-laws were provided, although it was noted that an engineering report might be needed for each section of roof to establish whether all 30 units could install a solar hot water system. 57 The Tribunal has consistently held that the extent to which an alteration must be in keeping with the rest of the development is a matter to be determined by the strata company: see Russell above and the reference to Harold & Gladys Verryt and Ann Williams [2005] WASAT 101. 58 I conclude that the strata company in general meeting was not concerned about the aesthetics of the installation and therefore regarded it as being in keeping with the development. This conclusion will also be weighed in the exercise of the discretion whether or not to order removal. 59 There are other factors relevant to the exercise of the discretion. 60 The respondents have filed a great deal of documentation demonstrating the commitment of the Government of Western Australia to the phasing out of greenhouse intensive hot water systems and the consequent bias towards low emission hot water systems (solar, heat pump and high efficiency gas). The object of phasing out greenhouse intensive hot water systems is to reduce greenhouse gas emissions, reduce the cost of emissions abatement and to help households adjust to increased utility prices: see the publication issued by the Department of Finance of the Government of Western Australia appearing on the Finance Department website Appendix 10 to the respondents' submission filed on 7 May 2013. (Page 21)
61 It is clear that the lot owners in general meeting have recognised the benefit of solar hot water systems because otherwise they would have refused retrospective approval on 8 December 2012 without wishing to explore the possibility of by-laws being drafted to address their concerns relating to the capacity of the roof and the equity of all owners being entitled to the same benefit. Ms Neil stated that she was in favour of solar hot water systems in principle, but subject to the concerns expressed. One of the owners who lodged a submission supporting the applicant made plain that she was not opposed to the installation of solar hot water systems, she thought they were beneficial, but that the process of considering installation needed to be properly undertaken. 62 While the cost of the system installed by the respondents is not disclosed in the material provided, it is obviously not an insignificant cost. In addition, the respondents have incurred a cost of $800 for the first engineering report. The cost of the second report has not been established. The respondents have also incurred the cost of preparing draft by-laws. That cost has also not been established. It is unfortunate therefore that the parties should then not see the process through in order that a properly informed decision may be made about whether solar hot water systems might feasibly be installed on all roofs and on terms properly enshrined in appropriate by-laws. It would be manifestly unfair to order the removal of the respondents' hot water system if in a few years' time the applicant, in any event, moves towards favouring the installation of solar hot water systems. That is particularly so where at the moment, because of the respondents' precipitous conduct, the owners are able to shift the financial burden of carrying out the exercise to determine the feasibility of such installations on to the respondents. 63 When one has regard to the by-laws, and particularly if there is sensible input on the part of the applicant, one would expect that a draft set of bylaws could be prepared and put to owners in general meeting in a form which would allow a sensible and logical decision to be made. I will endeavour to give some illustration in broad terms of how the concerns expressed by the owners could be addressed. It would be futile however to proceed with any further attempt to redraft the by-laws unless appropriate advice is likely to be forthcoming, or is provided, that there is sufficient space on each separate section of roof to accommodate solar hot water systems for the three units immediately below the particular section of roof. Subject to that being established, the by-laws could be amended to incorporate provisions addressing the concerns raised. In doing so I assume, there being no basis in the material before me to suggest otherwise, that if its roof above the respondents' lot is capable of (Page 22)
accommodating and supporting two additional solar hot water systems similar to that installed by the respondents, that each separate section of roof can reasonably be expected also to do so. 64 While by-laws could address future installations in a manner requiring structural capacity of the roof concerned to be established, a matter for consideration may be the equity that some owners might not be able to install solar hot water systems unless the strata company bears the cost of any additional support required to the roof. Alternatively, such owners might be able to install some other form of energy efficient heating such as high efficiency gas heating. These are matters for consideration by the strata company. I now turn to give some indication how the by-laws might be amended to address current concerns. 65 Firstly, the applicant applying to carry out an installation could be required to detail the dimensions of the proposed solar hot water system, and to provide a plan showing its proposed location and the position at which other systems of at least the same size could be installed, as well as showing the location of any existing system. Any application for an approval could be required to have a report or certificate from an engineer certifying that the section of roof is capable of supporting three solar hot water systems of at least the same dimensions. The need for such a report or certificate would obviously not arise in respect of applications to install additional solar hot water systems of the same dimensions/weight on the same section of roof, limited to three systems per roof section, where approval has already been given for at least one system to be installed. The by-laws could reflect that the strata company consents to the making of such inspection openings as may be required in the ceiling of the lot immediately below the roof section concerned. It may be necessary to consider the right of the owner of the lot immediately below the roof and whether or not that lot owner should have any obligation to grant access for that purpose. If the owner is not to be obliged, the practical effect would be that other owners within each section would not be able to install solar hot water systems until the owner of the uppermost lot has done so. 66 By-laws could require the applicant lot owner to indemnify the strata company and other lot owners in respect of any loss or damage. Concerns about potential disputes about who of three possible owners might be responsible for loss or damage could be covered by by-laws making all owners on each section of roof who have installed solar hot water system jointly and severally liable to the strata company and other lot owners, with a right to seek repayment from such owner or owners who may be found responsible for the event giving rise to loss or damage. Provision (Page 23)
could be made that if any maintenance or other remedial work is not carried out by the responsible proprietor, or proprietors if an event has occurred for which they are jointly and severally liable, within a stated period, or if urgent work is required, that the strata company shall be entitled to undertake the work and recover the cost as a debt owed by the proprietor or proprietors. 67 These are given as examples simply to indicate that the concerns raised are capable of being addressed. Having adopted the path which it did on 8 December 2012, the respondents and the strata company should see the process through in good faith. It would be helpful if a representative of the applicant, or the strata managers on instructions from the applicant, were able to give some input to the draftsman. 68 In my view, taking all factors into account, subject to appropriate conditions to ensure that the respondents advance the process at their cost, this proceeding should be stayed. 69 The respondents through their precipitous actions have forced the applicant, and members of the strata company, into having to consider how solar hot water systems could be available as an option for all owners at a time which is not of their choosing. The respondents should therefore in fairness bear the costs involved. 70 When the process has been completed the strata company will need to give proper consideration on a fully informed basis to the proposal for retrospective approval and whether the proposed by-laws should be adopted. If a decision is then made adverse to the respondents, and that decision can be justified as being based on good sense or logic, the applicant will be entitled to the order sought, unless there are discretionary factors suggesting otherwise. The applicant will minimise the risk of adverse discretionary factors by cooperating properly with the respondents in seeing the process through to finality. 71 The submissions filed on behalf of the applicant and the submissions filed by the two owners supporting the applicant reflect the frustration in the strata company being drawn into a time consuming process, and having to incur costs in relation to, particularly in circumstances in which all members of the respondent council are volunteers. This is understandable and I am empathetic but these reasons for decision should demonstrate that it is not a one-sided story. The respondents bear primary responsibility for the situation which has developed and that is why they must incur the cost of putting a proper proposal forward. The members of the strata company are also to be commended for not rejecting the (Page 24)
application out of hand at the meeting on 8 December 2012 and in recognising that a proper investigation of whether solar hot water systems could be installed for the benefit of all proprietors could resolve the situation. But having commenced that course, it is not fair to stop halfway. The extraordinary general meeting in July 2013 did not cure this situation because a good faith consideration required better communication and input from the applicant to ensure that draft bylaws could be prepared so as to reflect a genuine attempt to address the concerns of members of the strata company. 72 In between the first day of the hearing on 23 August 2013 and the resumption of the hearing on 6 November 2013, the Tribunal offered mediation to the parties. The applicant declined to participate in a mediation. That was unfortunate because it may well have put the matter on a better course with a prospect of a successful outcome. The parties will again be given liberty to apply for mediation if that would assist in finalising the proposal to be put to the strata company or if it might assist in resolving the matter completely. 73 Although the proceeding will be stayed while the contemplated course is being followed, in accordance with the Tribunal's usual practice, the matter will be listed for a directions hearing, or periodic directions hearings, to the extent necessary to ensure that the matter proceeds as expeditiously as possible. 74 If difficulties are experienced by either party in progressing the matter, a directions hearing should be requested. It would not be appropriate to let the matter lie and then raise the issue at a much later already listed directions hearing.
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Order 75 For the above reasons the Tribunal will cause an order to issue in the following terms. (Page 26)
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