DITCHFIELD and BOTHMA
[2005] WASAT 133
•14 JUNE 2005
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
STREAM: COMMERCIAL & CIVIL
ACT: STRATA TITLES ACT 1985 (WA)
CITATION: DITCHFIELD and BOTHMA [2005] WASAT 133
MEMBER: DR B DE VILLIERS (MEMBER)
HEARD: ON PAPERS
DELIVERED : 14 JUNE 2005
FILE NO/S: CC 2359 of 2005
BETWEEN: MICHAEL DITCHFIELD
Applicant
AND
LEON BOTHMA
Respondent
Catchwords:
Strata titles - Refusal of consent to change of use, merchandise
Legislation:
State Administrative Tribunal Act 2004 (WA)
Strata Titles Act 1985 (WA)
Result:
Application succeeds.
Category: B
Representation:
Counsel:
Applicant: Self-represented
Respondent: Self-represented
Solicitors:
Applicant: Self-represented
Respondent: Self-represented
Case(s) referred to in decision(s):
Nil
Case(s) also cited:
Nil
DR B DE VILLIERS (MEMBER):
REASONS FOR DECISION
Issue
The applicant seeks an order under s 83(1) of the Strata Titles Act 1985 (WA) that the respondent has unreasonably refused to consent to the change of use of the applicant's premises to a men's barber shop and that such consent is deemed to be given.
The applicant, who is operating a television and video repair shop from the said premises, wants to change the use to enable a Mr Daniel Monks to operate a men's barber from the premises. However in order for the change of use to occur the consent of the respondent is required as he operates a unisex salon in the same complex. The applicant contends that the respondent has been unreasonable in withholding his consent.
The respondent contends that he recently acquired the unisex salon on the basis that no other hairdresser is operating from the shopping centre and that the Sch 1 by-law 1(2)(d) works in his favour due to the fact that the merchandise he trades in would comprise at least 70 per cent of the proposed men's barber. The respondent therefore contends that his refusal to consent to the change of use is reasonable and should be upheld.
Applicant and respondent
The applicant is the proprietor of shop 19 (strata title lot 24), Padbury Shopping Centre, Warburton Ave, Padbury 6025.
The respondent is the proprietor of shop 17 (strata lot 22) of the same shopping centre.
Submissions were received from the applicant and respondent. Neither the strata company nor the property manager made submissions.
Order sought
The applicant varied the original order he sought when the application was filed. Pursuant to an order by Senior Member Raymond at a directions hearing on 2 June 2005, the order sought was amended to read as follows:
"That the respondent has unreasonably refused to consent to the change of use of the applicant's premises to a men's barber shop and such consent is deemed to be given."
Application lodged with State Administrative Tribunal
The application was lodged with the State Administrative Tribunal ("SAT") on 19 April 2005.
The SAT was established on 1 January 2005 pursuant to s 7 of the State Administrative Tribunal Act2004 (WA) ("SAT Act").
The application for relief was lodged pursuant to s 77 of the Strata Titles Act 1985. The applicant did not certify as required by s 77B that the strata company had no by-laws to regulate the resolution of a dispute. However the applicant provided the Tribunal with a copy of the amended by-laws of the strata company and I could not find any provision therein that deals with alternative dispute resolution. Due to the commercial urgency of the application and the substantial merits thereof I am therefore willing to proceed with the application. This follows from the main objectives of the Tribunal to "act as speedily and with as little formality and technicality as is practicable … ": s 9(b) SAT Act. In exercising its jurisdiction SAT deals with a matter in accordance with the SAT Act and the enabling Act, which in this case is the Strata Titles Act 1985.
The application is determined on the papers under s 60(2) SAT Act pursuant to an order made by Senior Member Raymond on 2 June 2005.
The President of SAT nominated me under s 11(1) of the SAT Act to constitute the Tribunal for purposes of determining this matter.
I have now considered the submissions and make the following determination.
Parcel
The parcel comprises a shopping centre called Padbury Shopping Centre referred to in the certificate of title as The Owners of Padbury Shopping Centre on Strata Plan 18773 located at Warburton Avenue, Padbury, 6025. The current strata plan was registered on 3 July 1992. It comprises 25 lots. The complex is described as a single storey brick and tile shopping complex.
The applicant operates a TV and video repair shop from his premises. The respondent operates a unisex salon from his premises. The respondent recently acquired the premises from Mr Allgood to whom reference is made in earlier correspondence.
Strata plan and Strata Titles Act
The Strata Plan was registered pursuant to the Strata Titles Act1985.
In these reasons, unless otherwise specified, all references to sections and Schedules are, respectively, references to sections of and Schedules to the Strata Titles Act 1985.
Section 83(1) reads as follows:
"The State Administrative Tribunal may … make an order for the settlement of a dispute, or the rectification of a complaint, with respect to the exercise or performance of, or failure to exercise or perform, a power, authority, duty or function conferred or imposed by this Act or the by‑laws in connection with that scheme on any person entitled to make an application under this subsection … "
By‑laws
A notification of change to the by‑laws of the strata company was registered on 28 November 1991 (number E755922). Schedule 1 by‑law 1(2)(d) of the amended by‑laws relates to this application. The remainder of the changes to the by‑laws are not of direct relevance to the application.
Schedule 1 by-law 1(2)(d) reads as follows:
"A proprietor, or other occupier of a lot shall –
(d)not without the written consent of the strata company use the lot or permit it to be used for any purpose other than that for which it was used as at the date of registration of the strata plan provided that, if the proposed use is the same or similar to the use of another lot in the Strata Scheme then in addition to the written consent of the proprietor of that other lot must be obtained. For the purposes of this by‑law 1(2)(d) the use of a lot means the business which comprises at least 70 per cent of the business carried on in the lot, having regard to the type of merchandise traded in;"
Applicant's submission
The following paragraphs provide a summary of the main elements of the submission by the applicant:
(a)The property manager wrote to Mr. Mark Allgood, the then proprietor of shop 17 (lot 22) on 24 March 2005 to seek his consent for the change of use of the applicant's premises to a men's barber. Mr Allgood indicated that although his shop was up for sale, he would in the meantime withhold consent for the requested change of use.
(a)The unisex salon operated by the respondent generates at least half of its business from female customers and therefore the consent of the respondent is not required for changing the use to a men's barber. The men's barber will be exclusively for cutting men's hair and trimming of beards and will therefore not be the same or similar to 70 per cent business carried out by the unisex salon of the respondent.
(b)In a letter dated 7 April 2005, Linda Lampard who is the commercial property manager of Ockerby Real Estate, wrote to the legal representative of Mr Allgood to request that he provide:
"financial evidence to our office within seven (7) days of the above date, substantiating that 70 per cent of the business' takings acquired in respect of his freehold property relate solely to men's hairdressing."
(c)It is not uncommon for shopping centres to have a unisex salon and a men's barber since they cater for different markets. It is therefore important to consider the gender of the two businesses in order to differentiate between their core business and the merchandise they offer to the public. Mr Monks, the proposed lessee of the applicant's premises, intends to focus solely on men's hair which is "most certainly less that 70 per cent" of the business of the respondent.
(d)The respondent has not yet provided financial evidence or information as requested by the property manager to substantiate his claim that 70 per cent of his business would overlap with operating a men's barber.
(e)In a recent example in the same shopping centre an application by Jesters Pies to operate a business was opposed by Brumby's on the basis that the selling of pies would impact on the Brumby's market. However due to the fact that the selling of pies is only a proportion of Brumby's business (less than 70 per cent), Jesters were allowed to operate.
(f)The application should therefore succeed and an order made to the effect that the respondent is deemed to have consented to the change of use.
Respondent's submission
The following paragraphs provide a summary of the main elements of the submission by the respondent:
(a)The respondent recently purchased the business and freehold from Mr Allgood and paid a premium for the "exclusive nature it offered in the shopping complex".
(b)The unisex salon serves men and women and if the respondent were allowed to operate the men's salon it would "seriously devalue" the exiting unisex goodwill and turnover.
(c)The business of the unisex salon is "99 per cent hair cutting and styling" and any suggestion to split it into genders is "preposterous".
(d)The application should therefore be dismissed as his refusal to consent to the change of use is reasonable and within the ambit of the said by‑law.
Consideration
The Strata Titles Act 1985 contains two key provisions of relevance to this application – s 83(1) and amended Sch 1 by‑law 1(2)(d). The provisions are quoted above.
The first question to address relates to the authority of the Tribunal to make an order of the nature requested by the applicant. Section 83(1) has three elements that must be met namely firstly the applicant must have locus standi to bring the application. The applicant meets this requirement as he is the proprietor of shop 19. Secondly the dispute must relate to exercise or performance or failure to exercise or perform a power or authority conferred by the Act or by‑law. The refusal by the respondent to consent to the change of use falls within the requirements of the Act and particularly within the meaning of Schedule 1 by‑law 1(2)(d). Thirdly the person against whom the order is sought must be entitled to bring an application under this section. The respondent is the proprietor of shop 17, which brings him under the ambit of the by‑law. An application under s 83(1) can therefore be brought against the respondent for his alleged unreasonable refusal to give consent to the change of use of the applicant's premises. It is therefore within the powers of the Tribunal to make an order as is sought by the applicant.
The second question deals with the requirements of Sch 1 by‑law (2)(d) ("the by-law") and in particular if the respondent's refusal to consent to the change of use of the applicant's premises is unreasonable.
It appears that the condition imposed by the by‑law is aimed at preventing a situation where two or more shop owners in the shopping centre carry on a business that overlap 70 per cent or more in regard to the merchandise it trades in. The by‑law does not envisage a complete monopoly by one trader where any form of competition or overlap of business activity can be vetoed. On the contrary, a very high degree of overlap (competition) in merchandise on offer by two or more shops can coexist under the by‑law provided that that latter shop does not exceed the level of 70 per cent of merchandise on offer by the original trader.
Although the by‑law is intended to protect the interests of the respondent as the current operator of the unisex salon, the respondent is obliged to demonstrate that the 70 per cent benchmark would indeed be exceeded if the change of use were to be allowed. The mere contention by the respondent that the merchandise on offer by his unisex business overlaps more than 70 per cent with the merchandise that would be on offer by a men's barber does not suffice to meet the requirements of the by‑law. He must provide some form of evidence to substantiate his objection.
I note that the Commercial Property Manager, Linda Lampard, requested the previous owner Mr Allgood to provide financial evidence to substantiate his allegation that 70 per cent of his "business takings" relate solely to men's hairdressing. Neither Mr Allgood nor the respondent provided the breakdown of how the merchandise traded in by the unisex salon would overlap with a men's barber. The respondent merely argued that his business comprises of "99 per cent hair cutting and styling". He contends that the Tribunal should not take into account the gender of clients when determining if consent has been withheld unreasonably.
The by-law does not offer clarity as to what is meant by the expression "merchandise". The Macquarie Concise Dictionary defines "merchandise" as goods, commodities, especially manufactured goods, the stock of a store. (Moore A, (ed.) Macquarie University Library, 2004.) I note that the by‑law does not include the word "services" but only refers to "merchandise". At issue is therefore whether the "merchandise" that is sold or traded in by the respondent comprises at least 70 per cent of the business that would be carried out by the men's barber. The type of merchandise rather than the gender of clients is the determining factor.
A "unisex" salon offers merchandise aimed at both genders while a men's barber offers merchandise mainly or even exclusively to male clientele. It is not for the applicant or die Tribunal to establish what the type of merchandise is that the respondent offers or what percentage may overlap with the proposed new men's barber. It is incumbent on the respondent to show that the merchandise he trades in is so similar that it will comprise at least 70 per cent of the merchandise on offer by the proposed men's barber. There may be some overlap of the merchandise traded in by the unisex and men's barber, but in the absence of evidence the respondent has failed to substantiate that the overlap exceeds 70 per cent as required by the by‑law.
I therefore regard the refusal by the respondent to give consent for the change of use as unreasonable.
Finding
I am satisfied that the applicant has demonstrated that the refusal by the respondent to consent to the change of use to enable the operation of a men's barber on the premises of the applicant, is unreasonable.
The application must therefore succeed under s 83(1) of the Strata Titles Act 1985 on grounds that the respondent has unreasonably refused to consent to the change of use of the applicant's premises to a men's barber shop.
Order
Pursuant to section 83(1) of the Strata Titles Act 1985 it is deemed that the respondent has consented to the change of use of the applicant's premises to a men's barber‑shop.
I certify that this and the preceding 9 pages comprise the reasons for decision of the Tribunal.
______________________________
B De Villiers, Member
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