GARMAN NOMINEES PTY LTD and SCOPE PROPERTY GROUP PTY LTD
[2024] WASAT 32
•22 APRIL 2024
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA)
STRATA TITLES ACT 1985 (WA)
CITATION: GARMAN NOMINEES PTY LTD and SCOPE PROPERTY GROUP PTY LTD [2024] WASAT 32
MEMBER: MS C BARTON, MEMBER
MS N FINDSON, MEMBER
HEARD: 23 NOVEMBER 2023 (FINAL SUBMISSIONS FILED ON 11 JANUARY 2024)
DELIVERED : 22 APRIL 2024
PUBLISHED : 22 APRIL 2024
FILE NO/S: CC 1716 of 2022
BETWEEN: GARMAN NOMINEES PTY LTD
Applicant
AND
SCOPE PROPERTY GROUP PTY LTD
Respondent
FILE NO/S: CC 440 of 2023
BETWEEN: THE OWNERS OF DAMPIER ARCADE, STRATA PLAN 13207
Applicant
AND
GARMAN NOMINEES PTY LTD
Respondent
Catchwords:
Commercial tenancy - Retail shop lease - Question arising under a lease - Disclosure statement - Assignment of lease - Exception to the giving of a disclosure statement - Notice of default for failure to repair - Whether default notice issued on proper grounds - Strata titles scheme - Scheme dispute - Historical use of common property by lot owner - Whether exclusive use by-law - Whether lease or licence of common property - Removal of structures from common property
Legislation:
Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), s 3(3)(c)(i), s 3(3)(e), s 6, s 6(1), s 6(4), s 6(6), s 6(6)(b), s 15C, s 16, s 16(1), s 16(1)(a), s 16(1)(b), s 16(2), s 25C, s 25D(1), s 26, s 26(1), s 26(1)(a), s 26(1)(b), s 26(1)(c)
Property Law Act 1969 (WA), s 77, s 78
State Administrative Tribunal Act 2004 (WA), s 51(1)
Strata Titles Act 1985 (WA) (prior to 1 May 2020), s 94, Sch 1, Sch 2
Strata Titles Act 1985 (WA), s 3(2), s 10, s 13(7)(b), s 13(9), s 26, s 43(1), s 43(2), s 43(3), s 43(5), s 44(2)(a), s 83, s 91(1)(b), s 91(1)(c), s 93, s 93(1), s 93(2)(c), s 93(3), s 93(3)(a), s 93(3)(b), s 197(1), s 197(1)(a), s 197(1)(vi), s 197(2), s 197(4), s 200, s 200(1), s 200(2), s 200(2)(m), Sch 2, Sch 3, Sch 5, cl 12, cl 14(1), Pt 8, Div 1
Strata Titles Amendment Act 2018 (WA)
Transfer of Land Act 1893 (WA), s 68(1)
Result:
Application dismissed in CC 1716 of 2022
Application allowed in CC 440 of 2023
Category: B
Representation:
CC 1716 of 2022
Counsel:
| Applicant | : | TM Petherick & JL Cahill |
| Respondent | : | P Monaco |
Solicitors:
| Applicant | : | Petherick Cottrell Lawyers |
| Respondent | : | GV Lawyers |
CC 440 of 2023
Counsel:
| Applicant | : | P Monaco |
| Respondent | : | TM Petherick & JL Cahill |
Solicitors:
| Applicant | : | GV Lawyers |
| Respondent | : | Petherick Cottrell Lawyers |
Case(s) referred to in decision(s):
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; (2017) 51 WAR 304
Capolingua v Phylum Pty Ltd (1991) 5 WAR 137
Duffy and Owners of Warrawong Strata Plan 7976 [2010] WASAT 113
Primewest (Mandurah) Pty Ltd v Ryom Pty Ltd as trustee for Golden Asset Pty Ltd [2012] WASC 443
Reds (WA) Pty Ltd and Eileen Joan Edwards as Trustee for the Ron Edwards Family Trust and others [2012] WASAT 85
The Owners of Dolphin Apartments Mandurah Strata Plan 49518 v Poland Superannuation Pty Ltd [2023] WASC 452
The Owners of St John's Court - Rivervale Strata Plan 6052 and Clark [2010] WASAT 126
Wong v Reid [2016] WASC 59
REASONS FOR DECISION OF THE TRIBUNAL:
Introduction
On 21 November 2022, Garman Nominees Pty Ltd (Garman Nominees), made an application to the Tribunal pursuant to s 16(1) of the Commercial Tenancy (Retails Shops) Agreements Act 1985 (WA) (CTRSA Act) referring a question arising under a retail shop lease (CC 1716 of 2022).
The respondent in CC 1716 of 2022 is Scope Property Group Pty Ltd (Scope Property). Scope Property, as lessor, and Garman Nominees, as lessee, are parties to a retail shop lease in respect of Shop 1 and Shop 3, Dampier Shopping Centre, The Esplanade, Dampier (premises). Garman Nominees seeks orders from the Tribunal to address the purported failure of Scope Property to give a disclosure statement in accordance with s 6 of the CTRSA Act and to issue a default notice for certain repair work on proper grounds.
The premises are formally known as Lot 11 and Lot 13 on Strata Plan 13207 (Strata Plan) and part of a strata scheme known as Dampier Arcade (Scheme).
On 3 April 2023, The Owners of Dampier Arcade Strata Plan 13207 (Strata Company) made an application to the Tribunal pursuant to s 197(4) of the Strata Titles Act 1985 (WA) (ST Act) to resolve a scheme dispute (CC 440 of 2023). The respondent in CC 440 of 2023 is Garman Nominees. The Strata Company seeks an order from the Tribunal requiring Garman Nominees to, amongst other things, remove certain structures erected on common property appurtenant and adjoining Lot 11 of the Scheme (Lot 11).
On 16 August 2023, the Tribunal ordered that CC 1716 of 2022 and CC 440 of 2023 are to remain as separate proceedings but be heard and determined together pursuant to s 51(1) of the State Administrative Tribunal Act 2004 (WA) (SAT Act).
For the reasons that follow, we have concluded that the scheme dispute in CC 440 of 2023 should be resolved in favour of the Strata Company because Garman Nominees is using common property of the Scheme in the absence of an exclusive use by-law and without the authority of a lease or licence granted by the Strata Company. In respect of CC 1716 of 2022, we have concluded that Garman Nominees is not entitled to the relief sought because Scope Property was under no statutory obligation to give a disclosure statement. We are also satisfied that Scope Property issued the default notice to Garman Nominees on proper grounds.
Factual background
Certain matters were not in dispute between the parties. We make the findings set out in this paragraph in relation to those matters.
1.The Strata Company is, and was at all material times, a body corporate established for the Scheme pursuant to the ST Act. The Scheme comprises 13 lots and common property and was created by the registration of the Strata Plan on 18 March 2016.[1] There is no management statement registered on the Strata Plan.
[1] Exhibit 2, pages 4 – 5.
2.The Strata Plan provides that all walls are common property and that the boundaries of the lots or parts of the lots which are buildings shown on the Strata Plan are the inner surface of the walls, the upper surface of the floor and the under surface of the ceiling.[2]
[2] Exhibit 1, page 5.
3.The registered proprietor of the premises, being the whole of the land comprised in Certificate of Title Volume 2896 Folio 278 and Certificate of Title Volume 2896 Folio 280, is Scope Property.[3] The premises forms part of the Dampier Arcade shopping centre located at 389 High Street, Dampier (shopping centre).
[3] Exhibit 2, pages 25 – 26.
4.Garman Nominees is the tenant of the premises under the terms of a retail shop lease and operates a supermarket and liquor store from Lot 11.[4]
[4] Applicant's closing submissions dated 19 December 2023, para 5; Closing submissions of Garman Nominees dated 11 January 2024, para 2.
5.Garman Nominees entered into a retail shop lease agreement with Terra Northwest Pty Ltd (Terra Northwest) on 28 February 2009 (original lease).[5] The director of Terra Northwest was Mr Patrick O'Toole (deceased). The lettable area is described in the original lease as 'Shop 1 (Pt Lot 1 219m2) (Pt Lot 1 25m2) (Lot 5 107m2)' and 'Shop 3 (Pt Lot 1 63m2)'.[6] The area described above for Shop 1 is now Lot 11.
6.On or around 1 March 2019, Garman Nominees renewed the original lease with Terra Northwest on the same terms.[7]
7.On 27 July 2020, Garman Nominees entered into a new lease with Terra Northwest which was registered on title (Lease).[8] On 21 August 2020, Scope Property became the registered proprietor of the premises.[9]
8.Garman Nominees has structures located appurtenant and adjoining Lot 11, being refrigeration plant and associated services and equipment (Area D), and refrigeration compressors and condensers on the ground and roof respectively (Area E) (structures).[10] (Annexure A to these reasons is a plan showing the location of Area D and Area E).
9.The refrigeration condensers affixed to the roof of Area E are located above public toilets, including an accessible toilet, that are used by visitors to the shopping centre.[11]
10.Garman Nominees has been using Area D and Area E for approximately 12 years.[12]
11.On or about 27 October 2022, Scope Property issued Garman Nominees with a default notice for failing to repair or replace the ceiling grid and tiles in purported breach of cl 12.1 and cl 12.2 of the Lease (Default Notice).[13]
12.On 21 November 2022, the Small Business Commissioner (Commissioner) issued a certificate to Garman Nominees pursuant to s 25C of the CTRSA Act (s 25C Certificate).[14]
The Tribunal's jurisdiction to determine the application in CC 1716 of 2022
[5] Exhibit 1, pages 374 – 413.
[6] Exhibit 1, page 402.
[7] Exhibit 1, pages 416 – 422.
[8] Exhibit 1, pages 36 – 116.
[9] Exhibit 2, pages 25 – 26.
[10] Exhibit 2, page 29.
[11] ts 48, 23 November 2023.
[12] Witness statement of Gareth Davies filed on 29 June 2023, para 13; Exhibit 2, page 86, para 11.
[13] Exhibit 1, pages 540 – 542.
[14] Exhibit 1, page 4.
Section 16(1) of the CTRSA Act provides that a party to a retail shop lease may refer to the Tribunal any question between the parties which it believes to be a question arising under the lease. Upon receiving an application pursuant to s 16(1) of the CTRSA Act, the Tribunal must determine whether or not the question is a question arising under a retail shop lease and, if it is such a question, hear and determine it.[15]
[15] CTRSA Act, s 16(1)(a) and s 16(1)(b).
The expression 'a question arising under a retail shop lease' includes a reference to a question in relation to any communication between the parties to a retail shop lease prior to their entry into the lease, including a disclosure statement under s 6 of the CTRSA Act, which was material to the terms and conditions of the lease.[16] It also includes a reference to any matter that is in dispute between the landlord and the tenant in connection with the retail shop lease, whether or not that matter is dealt with by the provisions of the lease.[17]
[16] CTRSA Act, s 3(3)(c)(i).
[17] CTRSA Act, s 3(3)(e).
There was no dispute, and we find, that the Lease is a retail shop lease for the purposes of the CTRSA Act. We further find that the issues requiring our determination in CC 1716 of 2022 are both questions arising under a retail shop lease for the purposes of s 16(1) of the CTRSA Act because the first issue relates to the potential absence of a communication (a disclosure statement) which was material to the terms and conditions of the Lease, and the second issue is a matter in connection with the Lease (the Default Notice) that is in dispute between the parties.
Further, the application in CC 1716 of 2022 was accompanied by a 25C Certificate, which is a precondition to the making of an application to the Tribunal.[18]
[18] CTRSA Act, s 25D(1).
For these reasons, we find that the Tribunal has jurisdiction to hear and determine the two questions referred to it pursuant to s 16(1) of the CTRSA Act. We observe that the s 25C Certificate refers to a claim by Garman Nominees in respect of operating expenses. However, it was not a matter put before the Tribunal to be heard and determined.
The Tribunal's jurisdiction to determine the application in CC 440 of 2023
The Tribunal has broad jurisdiction under s 197(1) of the ST Act to resolve 'scheme disputes' between 'scheme participants'.
Pursuant to s 197(4) of the ST Act, an application for the resolution of a scheme dispute can be made to the Tribunal by a party to the dispute. The Tribunal has jurisdiction to resolve a dispute between 'scheme participants' that, amongst other things, relates to any matter arising under the ST Act or the scheme by-laws.[19]
[19] ST Act, s 197(1)(vi).
Schedule 5 to the ST Act addresses the transition of the Strata Titles Act 1985 (WA) that was in force prior to 1 May 2020 (prior ST Act) and relevantly provides that a scheme dispute may involve an event that occurred, or a matter that arose, before that date.[20] Further, the by-laws of a scheme immediately in force before 1 May 2020 continue to have effect notwithstanding the repeal of the prior ST Act.[21] Consequently, as there is no management statement for the Scheme, the Scheme By‑laws are limited to those contained in Sch 1 and Sch 2 to the prior ST Act (Scheme By-laws).
[20] ST Act, Sch 5, cl 14(1). The Strata Titles Amendment Act 2018 (WA), which introduced amendments to the prior ST Act, came into effect on 1 May 2020.
[21] ST Act, Sch 3, cl 12.
The expression 'scheme participants' is defined in s 197(2) of the ST Act to include, relevantly, the strata company for the strata titles scheme and the occupier of a lot in the strata titles scheme.
We find that the respondent in CC 440 of 2023, Garman Nominees, is a lessee of Lot 11 and Lot 13 on the Strata Plan and hence an occupier of a lot in the Scheme and, consequently, a scheme participant for the purposes of s 197(2) of the ST Act. We further find that the applicant in CC 440 of 2023, being the Strata Company of the Scheme, is a scheme participant.
There was no contest that the parties, as scheme participants, are in dispute. The dispute is concerned with whether Garman Nominees, as an occupier of a lot in the Scheme, is lawfully permitted to occupy and use common property of the Scheme, being a matter that we are satisfied arises under the ST Act or the Scheme By-laws.
For these reasons, we find that the dispute between the parties, as scheme participants, falls within the meaning of a 'scheme dispute' for the purposes of s 197(1)(a) of the ST Act. Consequently, we find that the Tribunal has jurisdiction to resolve the scheme dispute pursuant to s 197(4) of the ST Act.
Issues for determination
The following issues arise for determination by the Tribunal:
1.Do the structures on Area D and Area E occupy common property of the Scheme and, if so, should they be permitted to remain without an exclusive use by-law or the authority of the Strata Company?
2.Was Scope Property required to give Garman Nominees a disclosure statement pursuant to s 6 of the CTRSA Act and failed to do so? (first question); and
3.Was the Default Notice issued on proper grounds, and if not, should it be withdrawn and Garman Nominees reimbursed for the costs it has incurred in complying with it? (second question).
Tribunal's consideration
Garman Nominees, the occupier of Lot 11, applied to the Tribunal pursuant to s 16(1) of the CTRSA Act referring two questions arising under a retail shop lease, which are set out above. Subsequently, the Strata Company applied to the Tribunal pursuant to s 197(4) of the ST Act for the resolution of a scheme dispute, being a dispute about the failure of Garman Nominees to remove, at its costs, structures erected on common property appurtenant and adjoining Lot 11. The two areas on which those structures are located will be referred to in these reasons as Area D and Area E.
We will first consider the statutory regime relating to the use of common property and whether the structures on Area D and Area E should be permitted to remain in the absence of an exclusive use by-law or without the authority of a lease or licence granted by the Strata Company.
Should the structures on Area D and Area E be permitted to remain?
The Strata Company seeks an order from the Tribunal requiring Garman Nominees to, at its cost, remove the structures from Area D and Area E and to deliver up vacant possession and control of those areas.
Pursuant to s 200(1) of the ST Act, the Tribunal has power to make any order it considers appropriate to resolve a scheme dispute. Without limitation, s 200(2) of the ST Act sets out the types of orders that the Tribunal may make which include an order 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, scheme by-laws or a strata management contract.[22]
The statutory regime relating to the use of common property
[22] ST Act, s 200(2)(m).
Common property is that part of the parcel of land shown on a strata plan that does not form part of a lot in the scheme.[23] Common property is owned by all of the lot owners in undivided shares (as tenants in common) in proportion to the unit entitlement of their respective lots.[24] The owners of lots cannot separately deal with or dispose of their share in the common property.[25] All owners and occupiers of lots in a scheme may use and enjoy common property provided it is in such a manner as not to unreasonably interfere with the use and enjoyment of the common property by other owners and occupiers or of their visitors.[26]
[23] See ST Act, s 10.
[24] ST Act, s 13(7)(b).
[25] ST Act, s 13(9).
[26] See ST Act, s 83; ST Act, Sch 2, by-law 2(a); Prior ST Act, Sch 1, by-law 1(2)(a).
Part 8 Div 1 of the ST Act sets out the functions of a strata company. Pursuant to s 91(1)(b) of the ST Act, a strata company has a statutory duty to control and manage the common property of a strata titles scheme for the benefit of all lot owners. The strata company also has a statutory duty to keep common property in good and serviceable repair and properly maintained (and, if necessary, renew and replace it) pursuant to s 91(1)(c) of the ST Act.
It is possible for the exclusive use and enjoyment of common property to be conferred on an occupier of a lot in a scheme by way of an exclusive use by-law. A by-law may be characterised as an exclusive use by-law because of its express language or by reason of its operation and effect.[27] The expression 'exclusive use by-law' is defined in s 43(1) of the ST Act.
[27] See The Owners of Dolphin Apartments Mandurah Strata Plan 49518 v Poland Superannuation Pty Ltd [2023] WASC 452 at [78].
Section 43(1) of the ST Act provides:
Exclusive use by-laws of a strata titles scheme are scheme by-laws that confer exclusive use and enjoyment of, or special privileges over, the common property in the strata titles scheme or specified common property in the strata titles scheme (the special common property) on the occupiers, for the time being, of a specified lot or lots in the strata titles scheme (the special lots).
Pursuant to s 43(2) of the ST Act, exclusive use by-laws may include the following:
(a)terms and conditions on which the occupiers of special lots may use the special common property;
(b)particulars relating to access to the special common property and the provision and keeping of any key necessary;
(c)particulars of the hours during which the special common property may be used;
(d)provisions relating to the condition, maintenance, repair, renewal or replacement of the special common property.
(e)provisions relating to insurance of the special common property to be maintained by the owners of special lots;
(f)matters relating to the determination of amounts payable to the strata company by the owners of special lots and the imposition and collection of the amounts.
Subject to the terms of an exclusive use by-law, the obligations that would fall on the strata company pursuant to s 91(1)(c) of the ST Act in relation to special common property fall instead on the owners of the special lots.[28] A resolution to make an exclusive use bylaw (being a governance by-law) must be a resolution without dissent.[29] An exclusive use by-law can only be made, amended or repealed if the owner of each lot that is or is proposed to be a special lot has given written consent to the by-law.[30]
[28] ST Act, s 43(3).
[29] ST Act, s 44(2)(a).
[30] ST Act, s 43(5).
Pursuant to s 93(1) of the ST Act, a strata company may enter into a transaction that affects common property in the scheme, including a lease,[31] provided it is authorised by a resolution without dissent or is required for completion of a stage of subdivision to which staged subdivision by-laws apply and otherwise meets the requirements in s 93(3)(b) of the ST Act.[32] A long term lease or licence over common property in a scheme is not effective unless it has been approved in writing by the local government of the district in which the parcel is situated.[33]
[31] ST Act, s 93(2)(c).
[32] ST Act, s 93(3).
[33] ST Act, s 26.
Prior to 1 May 2020, a lot owner could apply to the Tribunal, pursuant to s 94 of the prior ST Act, for an order granting a licence to use specified common property where the strata company of the relevant scheme had refused to grant such a licence.[34] Whilst there is no equivalent provision in the ST Act, the Tribunal has broad powers pursuant to s 200 of the ST Act to make any order it considers appropriate to resolve a scheme dispute or proceeding. However, Garman Nominees has not applied to the Tribunal for an order requiring the Strata Company to grant a licence over Area D and Area E.
Summary of the parties' contentions and evidence
[34] See Duffy and Owners of Warrawong Strata Plan 7976 [2010] WASAT 113 (Duffy).
The Strata Company contends that the structures are on common property and that Garman Nominees does not have an exclusive use by‑law or a lease (or licence) from the Strata Company in respect of Area D or Area E. The Strata Company further contends that the structures on the common property are used for the sole benefit of Garman Nominees. The Strata Company seeks an order pursuant to s 200(2)(m) of the ST Act requiring Garman Nominees to take specified action to remove the structures from common property and to deliver up vacant possession of Area D and Area E.
The Strata Company relied on the evidence of Mr Robert Engelhard who provided a plan showing the location of Area D and Area E and photographs of the plant and equipment located in those areas.[35]
[35] Witness statement of Robert Engelhard dated 15 June 2023; Exhibit 2, pages 64 – 76.
It is the position of Garman Nominees that the structures were in situ and affixed in their current location when it acquired the supermarket business and entered into the original lease.[36] Garman Nominees relied on the evidence of Mr Gareth Davies, a director of Garman Nominees, who said that he inspected the premises before purchasing the supermarket business in 2009. In his written evidence, Mr Davies stated that during that inspection he noticed a cool room, freezer and plant equipment located on Area D and Area E. At the final hearing, Mr Davies' understanding of the extent of the lettable area was further elicited in the following exchange between him and counsel for Garman Nominees:[37]
… So what was your understanding of the leased area at the time?--- The shop was there. The coolroom and the freezer and everything out the back was running the shop. All the plant and equipment out the back was running the inside coolrooms and freezers at the time. We bought it as a going concern as it stood.
So who owns that equipment once you purchased it?--- Well, Patrick sold it to us. We bought the plant and equipment and the goodwill of the business.
Was it your understanding that the plant and equipment that you referred to – the freezer and the like – was that on common area or part of the leased area when you purchased?--- I thought it was all in the lease[.]
[36] Closing submissions of Garman Nominees dated 11 January 2024, para 4.
[37] ts 15, 23 November 2023.
However, Mr Davies acknowledged that the original lease was silent on Area D and Area E.[38] Mr Davies was first made aware of the fact that Garman Nominees was using common property after receiving an email from Mr Shaun Quinlan of Scope Property on 11 June 2021.[39] Mr Davies said that no disclosure statement was provided to him in 2009 or when the Lease was renewed in 2020 which may have alerted him to the issue.[40] Because he has been using Area D and Area E exclusively for the past 12 years, Mr Davies considers those areas to be part of his leasehold interest.[41] He said that the areas are essential to his business and if he is not permitted to use the common property, he would need to close the supermarket.[42]
Disposition – use of Area D and Area E
[38] Witness statement of Gareth Davies filed on 29 June 2023, para 7 and para 8; Exhibit 2, page 85.
[39] Witness statement of Gareth Davies filed on 29 June 2023, para 10.
[40] Witness statement of Gareth Davies filed on 29 June 2023, para 8 and para 12; Exhibit 2, page 86.
[41] Witness statement of Gareth Davies filed on 29 June 2023, para 11 and para 13; Exhibit 2, page 86.
[42] Witness statement of Gareth Davies filed on 29 June 2023, para 16 and para 17; Exhibit 2, page 86.
The Strata Company seeks an order from the Tribunal requiring Garman Nominees to remove the structures from Area D and Area E.
In The Owners of St John's Court – Rivervale Strata Plan 6052 and Clark,[43] (St John's Court) the Tribunal granted an application under the prior ST Act for the removal of an air-conditioning unit installed on common property. In the following passage, the Tribunal summarised the principles relating to the use of common property:[44]
… [W]hile an individual lot owner, as a tenant in common, is entitled to the use and enjoyment of any part of the common property, it is subject to the control and management of the common property by the strata company. That right of use does not enable the lot owner to exclude any other tenant in common from making use of the common property, unless by way of a resolution without dissent … a by-law is passed granting exclusive use and enjoyment, or special privileges in respect of the common property or any part of[.]
[43] The Owners of St John's Court - Rivervale Strata Plan 6052 and Clark [2010] WASAT 126.
[44] St John's Court at [23].
The Tribunal has ordered the removal of a hot water system which was installed on common property by a lot owner without the express authority of the strata company. In reaching its decision, the Tribunal observed:[45]
The installation of any object by means of affixing it to a common property wall connotes a (perhaps minor) structural alteration to the common property. To the extent that it results in the use of part of the common property for purposes peculiar to the proprietor for whom it is being installed, it also entails use by that proprietor of common property to the exclusion of the other proprietors[.]
[45] Duffy at [15]. See also Wong v Reid [2016] WASC 59.
Based on the lot boundaries shown on the Strata Plan, and the plan in Annexure A showing the location of Area D and Area E, we find that the structures are located on common property of the Scheme.
It was not in dispute, and we find, that the structures were affixed to Area D and Area E before Garman Nominees acquired its leasehold interest in Lot 11 in 2009. We further find, based on the evidence before us, that the structures on Area D and Area E are used exclusively for purposes particular to Garman Nominees in respect of its supermarket business. Whilst we accept that the structures were affixed to Area D and Area E when Garman Nominees entered into the original lease in 2009, we find that there is no Scheme by-law which confers exclusive use of Area D or Area E on the owner or occupier of the premises. As already stated, the Scheme By-laws are limited to those in Sch 1 and Sch 2 to the prior ST Act,[46] none of which are in the nature of an exclusive use by-law. Notably, by-law 1(2)(a) of the Scheme By-laws provides that an owner or occupier of a lot must not unreasonably interfere with the use and enjoyment of common property by other owners and occupiers.
[46] Clause 12 of Sch 3 to the ST Act provides that the former by-laws of the Scheme continue to have effect notwithstanding the repeal of the prior ST Act. By-laws are properly characterised as a statutory contract as opposed to subsidiary legislation: Byrne v The Owners of Ceresa River Apartments Strata Plan 55597 [2016] WASC 153 at [61]. See also Byrne v The Owners of Ceresa River Apartments Strata Plan 55597 [2017] WASCA 104; (2017) 51 WAR 304 at [34].
It follows, and we find, that the retention of the structures on Area D and Area E prevents the use and enjoyment of common property by other owners and occupiers of the Scheme.
There was also no evidence before us to support a finding that the Strata Company has granted a lease (or licence) of Area D or Area E in favour of Garman Nominees pursuant to s 93(2)(c) of the ST Act; a transaction that must be authorised by a resolution without dissent.[47]
[47] See ST Act, s 93(3)(a).
Accordingly, for these reasons, we will order that Garman Nominees is to remove the structures from Area D and Area E by 31 May 2024 and make good all affected and adjacent surfaces, and any damage caused by the carrying out of the work to remove the structures. We will further order that Garman Nominees vacate and deliver up to the Strata Company vacant possession and control of Area D and Area E within the same time frame.
We will next consider whether Scope Property, as the registered proprietor of Lot 11, was required to provide Garman Nominees with a disclosure statement prior to entering into the Lease.
Was Scope Property required to provide a disclosure statement?
Garman Nominees has applied to the Tribunal pursuant to s 16(1) of the CTRSA Act referring a question arising under a retail shop lease, specifically, whether Scope Property failed to provide a disclosure statement to Garman Nominees prior to entering into the Lease. If the question is answered in the affirmative, Garman Nominees seeks an order from the Tribunal that Scope Property must pay compensation to Garman Nominees for the pecuniary loss it has suffered as a result of the omission.[48]
[48] Exhibit 1, page 142.
Pursuant to s 16(2) of the CTRSA Act, the question arising under the Lease may be determined by the Tribunal in such manner as it thinks fit, subject to each party being given an opportunity to make a written submission. Without limiting any power to make an order that is conferred by the SAT Act, but subject to the CTRSA Act, s 26(1) of the CTRSA Act sets out the types of orders that the Tribunal may make. These include an order requiring a party to pay money to a person specified in the order or to do, or refrain from doing anything specified in the order.[49] The Tribunal also has power to make an order dismissing any matter before it.[50]
The statutory regime relating to the giving of a disclosure statement
[49] CTRSA Act, s 26(1)(a) and (b).
[50] CTRSA Act, s 26(1)(c).
Subject to certain statutory exceptions, the giving of a disclosure statement is mandatory.[51] The purpose of a disclosure statement is to ensure that a prospective tenant understands the essential elements of a lease.[52]
[51] See Capolingua v Phylum Pty Ltd (1991) 5 WAR 137 at [15].
[52] Reds (WA) Pty Ltd and Eileen Joan Edwards as Trustee for the Ron Edwards Family Trust and others [2012] WASAT 85 at [23].
Section 6(1) of the CTRSA Act provides that where a retail shop lease is entered into and the tenant has not, at least 7 days before the entering into of the lease, been given a disclosure statement in accordance with s 6(4) of the CTRSA Act, or the disclosure statement is incomplete or contains false or misleading information, the tenant may, in addition to exercising any other right, do either or both of the following:
(a)within 6 months after the lease was entered into give to the landlord written notice of termination of the lease, unless subsection (3) prevents termination;
(b)apply in writing to the Tribunal for an order that the landlord pay compensation to the tenant in respect of pecuniary loss suffered by the tenant as a result of —
(i)the omission of the landlord to give a disclosure statement in accordance with subsection (4); or
(ii)the giving of an incomplete disclosure statement by the landlord; or
(iii)the giving of false or misleading information by the landlord in the disclosure statement.
Subsection 6(4) of the CTRSA Act provides that a disclosure statement must, firstly, be in the prescribed form duly completed and signed by or on behalf of the landlord and the tenant and, secondly, contain a statement notifying the tenant that he or she should seek independent legal advice.
Pursuant to s 6(6) of the CTRSA Act, a disclosure statement is not required to be given to a tenant on the renewal of a retail shop lease under an option or on the assignment of a retail shop lease.
Summary of the parties' contentions and evidence
Garman Nominees contends that, contrary to s 6(1) of the CTRSA Act, it was not given a disclosure statement prior to entry into the Lease which led it into error with respect to the boundaries of the lettable area. As a consequence, Garman Nominees says it has suffered and will continue to suffer pecuniary loss in the nature of licensing fees for occupying common property of the Scheme, in addition to the cost of removing and relocating structures from common property. Garman Nominees seeks an order pursuant to s 6(1)(b)(i) of the CTRSA Act requiring Scope Property to pay it compensation for anticipated pecuniary loss suffered as a result of the omission.[53]
[53] Exhibit 1, page 142.
In contrast, Scope Property contends that Garman Nominees entered into the Lease with Terra Northwest on 27 July 2020, there having been prior leases between Garman Nominees and Terra Northwest in 2009 and 2019 respectively. Scope Property says that it did not become the lessor of the premises until after the Lease commenced, when it was assigned to Scope Property by Terra Northwest on the sale of the premises on or around 20 August 2020. Relying on s 6(6)(b) of the CTRSA Act, Scope Property says that there is no legal requirement for it, as assignee, to provide a disclosure statement to Garman Nominees and, consequently, it says that the matter should be dismissed by the Tribunal.[54]
[54] Respondent's closing submissions filed on 19 December 2023, para 6 and para 7.
In the alternative, Scope Property contends that, for the purposes of seeking an order for compensation pursuant to s 6(1)(b)(i) of the CTRSA Act, Garman Nominees has failed to produce evidence to demonstrate the extent of any pecuniary loss suffered 'as a result of' the omission to give a disclosure statement in accordance with s 6(4) of the CTRSA Act.[55] Scope Property says that provision of a disclosure statement would not have made any difference to the decision by Garman Nominees to enter into the Lease in 2020 because it was made on an informed basis. The matters relied on by Scope Property to support this contention include, but are not limited to, the following:[56]
(a)Mr Davies, a director of Garman Nominees, said that he had been in possession of Area D and Area E since 2009;
(b)Mr Davies is an experienced businessman, having conducted previous business with the director of Terra Northwest, and operated a supermarket and liquor store since 2009;
(c)A plan of the lettable area is clearly depicted in the original lease[57] and the Lease.[58]
(d)The Lease arose from negotiations instigated by Garman Nominees and while it was legally represented;
(e)Garman Nominees does not say that had it been confirmed that structures required to operate the business were outside the lettable area, it would not have signed the Lease; and
(f)Prior to the Lease being executed, Garman Nominees and Terra Northwest commissioned an independent rental assessment. The valuer clearly identified that an undercover storage area with cool room and freezer at the rear of the shop was not part of the lettable area.[59]
[55] Respondent's closing submissions filed on 19 December 2023, para 12.
[56] Respondent's closing submissions filed on 19 December 2023, para 14.
[57] Exhibit 1, page 405.
[58] Exhibit 1, page 116.
[59] Exhibit 1, page 508 – 510.
Scope Property relied on the evidence of Mr Quinlan. It is Mr Quinlan's evidence that Scope Property began negotiations with Terra Northwest in March 2019 with a view to purchasing the premises, together with several other lots in the Scheme, before ultimately purchasing the premises in August 2020. Mr Quinlan rejected any assertion that Scope Property was behind the negotiation of the Lease or that it was aware at that time that Garman Nominees and Terra Northwest were acting under a mistake as to the boundaries of the lettable area. Mr Quinlan stated that Scope Property did not have the premises under contract at that point, so 'we had no contractual right or leverage'.[60]
[60] ts 56, 23 November 2023.
Mr Quinlan stated that the use of common property by Garman Nominees came to light after the Strata Company, under new management, raised the issue on 11 June 2021.[61] He said that the Strata Company received legal advice that there were 'outbuildings' located on common property.[62] So that the supermarket's operations were not adversely affected, Mr Quinlan said that the Strata Company had indicated, and remained willing, to offer Garman Nominees a licence to use Area D at market rates and to provide an alternative location for the plant and equipment located on Area E.[63]
[61] Witness statement of Shaun Quinlan dated 27 July 2023; Exhibit 1, page 370; para 24.
[62] ts 59, 23 November 2023.
[63] Witness statement of Shaun Quinlan dated 27 July 2023; Exhibit 1, page 370, para 22 – 23.
Garman Nominees relied on the evidence of Mr Davies who stated that on 11 June 2021 he became aware that a cool room, freezer and plant equipment required to operate his supermarket business were located on common property of the Scheme.[64] He stated that no disclosure statement was provided to him in 2009 or when the Lease was renewed in 2020 which may have alerted to him to the issue.[65]
[64] Witness statement of Gareth Davies filed on 29 June 2023, para 10.
[65] Witness statement of Gareth Davies filed on 29 June 2023, para 11 and para 13; Exhibit 2, page 86.
Under cross examination, Mr Davies was taken to the original lease, a renewal of the original lease in 2019, and the Lease, all of which were made between Garman Nominees and Terra Northwest. Mr Davies acknowledged that a plan depicting the area that Garman Nominees could occupy as tenant was included in the original lease.[66] Mr Davies explained that the Lease resulted from the settlement of a dispute with Terra Northwest before the Small Business Tribunal, which concerned the repayment of variable outgoings. He stated that Garman Nominees was legally represented before the Small Business Tribunal and in respect of the Lease negotiations. He also acknowledged that the plan of the area that Garman Nominees could occupy, attached to the Lease, was the same as the plan included in the original lease.[67]
[66] ts 40, 23 November 2023.
[67] ts 41, 23 November 2023.
Mr Davies was questioned by counsel for Scope Property about a rental assessment dated 1 March 2019 undertaken by National Property Valuers on instructions from both himself (on behalf of Garman Nominees) and Mr O'Toole of Terra Northwest. Mr Davies acknowledged that the appointed assessor had considered the dimensions of the lettable area and had explained that 'the undercover section around the cool rooms at the rear of shop is not shown or included in dimensions'.[68] Further, the assessor had noted: '… the retail shop space has the advantage of a lockable storage area with coolroom and freezer room. That is not included in the strata plan'. However, as to the information set out in the rental assessment, Mr Davies conceded that his main concern was the rental figure, and that 'he could not say if he did or didn't read it'.[69]
[68] ts 43, 23 November 2023.
[69] ts 44, 23 November 2023.
Mr Davies was also questioned by counsel for Scope Property about alternative options put forward by the Strata Company to enable Garman Nominees to continue to operate its business. By way of response, Mr Davies said that there had been 'a couple of meetings', during which 'they put forward ridiculous prices'.[70]
Disposition – disclosure statement
[70] ts 44, 23 November 2023.
Subject to certain exceptions, a landlord must provide a disclosure statement to a prospective tenant pursuant to s 6(1) of the CTRSA Act. One such exception is in 6(6)(b) of the CTRSA Act which provides that a disclosure statement is not required to be given on the assignment of a retail shop lease.
The term 'assignment' is not defined in the CTRSA Act and, consequently, it carries its ordinary meaning which is relevantly defined in the Macquarie Dictionary Online as:
4.Law
a.the transference of a right, interest, or title, or the instrument of transfer[.]
There was no dispute, and we find, that the Lease was entered into between Terra Northwest and Garman Nominees on 27 July 2020. We further find that Scope Property became the registered proprietor of the premises on 21 August 2020 with notice of the Lease which was registered on title. Consequently, Scope Property has the benefit of the covenants under the Lease as a result of the conveyance.[71] Because the reversionary interest was transferred to Scope Property when it became the registered proprietor of the premises, we find that the Lease was assigned to Scope Property on 21 August 2020.
[71] See Property Law Act 1969 (WA), s 77 and s 78. In contrast, an unregistered lease for a term exceeding 5 years is extinguished by the transfer of the freehold interest: see Transfer of Land Act 1893 (WA), s 68(1); Primewest (Mandurah) Pty Ltd v Ryom Pty Ltd as trustee for Golden Asset Pty Ltd [2012] WASC 443.
For these reasons, we are satisfied that the circumstances of this case meet the statutory exception in s 6(6)(b) of the CTRSA Act and, consequently, we find that Scope Property was not required to provide Garman Nominees with a disclosure statement pursuant to s 6(1) of the CTRSA Act.
Accordingly, the Tribunal answers the first question in the negative, that is:
Scope Property was not under a statutory obligation to give Garman Nominees a disclosure statement pursuant to s 6(1) of the CTRSA Act.
Counsel for Garman Nominees suggested in oral submissions that Scope Property was involved in the drafting of the Lease and, therefore, was aware, before it acquired the premises, that structures required to operate the supermarket business were located on common property.[72] We do not consider that this assertion is supported by the evidence before us. We accept the uncontested evidence of Mr Quinlan on this issue, and we find, that Scope Property became aware of the use of the common property by Garman Nominees after it had acquired the premises and, therefore, did not know that the structures were located on common property at the time the Lease was executed.
[72] ts 5 – 6, 23 November 2023.
Because both parties were mistaken about the location of the structures, Garman Nominees says that it is open to the Tribunal to amend the Lease to incorporate in the lettable area, the structures on Area D and Area E.[73] Whilst the Tribunal has power pursuant to s 26 of the CTRSA Act to order the parties to enter into an agreement varying a retail shop lease, the structures are located on common property of the Scheme and consequently, an interest in Area D and Area E could not be granted to Garman Nominees without the authority of the Strata Company.
[73] Closing submissions of Garman Nominees, dated 11 January 2024, para 27.
In light of our findings, it is unnecessary for us to consider whether Garman Nominees has suffered pecuniary loss as a result of not being given a disclosure statement by Terra Northwest prior to entering into the Lease. Nevertheless, we observe that Terra Northwest was not a party to these proceedings and that there was limited evidence before us to quantify the pecuniary loss (if any) suffered by Garman Nominees. We further observe, based on evidence adduced at the final hearing, that there may be an opportunity for Garman Nominees to continue to operate its supermarket business by negotiating an exclusive use by‑law, licence or a lease with the Strata Company in relation to the use of the Area D and by relocating, at its expense, the structures located on Area E.[74]
[74] Exhibit 1, page 520 and page 523.
In closing submissions, counsel for Garman Nominees asserted that Scope Property has acted unconscionably with respect to the excessive fee it had requested from Garman Nominees to licence Area D and Area E.[75] Garman Nominees did not make an application to the Tribunal pursuant to s 15C of the CTRSA Act and, consequently, the issue of whether Scope Property had engaged in unconscionable conduct was not formally raised in these proceedings; nor was Scope Property given an opportunity to lead any evidence in respect of the issue. In any event, we observe that it is a matter for the Strata Company, and not Scope Property, to determine an appropriate licence fee for the use of common property of the Scheme.
[75] Closing submissions of Garman Nominees, dated 11 January 2024, para 22.
We will next consider the second question for determination pursuant to s 16(1) of the CTRSA Act, that is, whether Scope Property had proper grounds to issue the Default Notice and, if not, should it be withdrawn and Garman Nominees reimbursed by Scope Property for the costs it incurred in complying with it.
Was the Default Notice issued on proper grounds?
On or about 27 October 2022, Scope Property issued Garman Nominees with a Default Notice for failing to repair or replace the ceiling grid and tiles in purported breach of cl 12.1 and cl 12.2 of the Lease, and for failing to provide an annual air conditioning service report pursuant to cl 13.4 of the Lease.
Pursuant to cl 30.1 of the Lease, an event of default occurs if the lessee is in breach of any of the Lessee's Covenants for 14 days after notice has been given to the lessee. By email dated 11 October 2022, Scope Property gave notice to Garman Nominees stipulating each breach and requiring the lessee to remedy each breach within 14 days. However, Garman Nominees did not remedy the breach as required by the notice, and Scope Property issued the Default Notice.
The Default Notice provides that Garman Nominees was in default under the terms of the Lease in that it had failed in respect of the building located on Lot 11 (building):
(a)to repair the ceiling grid pursuant to cl 12.1 and cl 12.2 of the Lease;
(b)to replace the ceiling tiles pursuant to cl 12.1 and cl 12.2 of the Lease; and
(c)to provide the lessor with an annual air conditioning service report pursuant to cl 13.4 of the Lease.
The Default Notice required Garman Nominees to remedy each breach and pay to the landlord $500 plus GST in payment of the legal costs incurred by the Lessor in connection with the preparation of the Default Notice by 5pm on 3 November 2022.
Summary of the parties' contentions and evidence
Garman Nominees contends that it did not breach the terms of the Lease.[76] It says that that the roof of the building is old, non-compliant with building and cyclone-proof standards and regularly leaks, causing damage and safety concerns, including (among other things) water damage to the ceiling panels and water entering the electrical system. It further says that the roof, and consequently the ceiling grid, was damaged during a burglary on 20 July 2022.[77]
[76] ts 6, 23 November 2023.
[77] Exhibit 1, page 142.
On the basis that the damage to the ceiling grid and tiles was sustained from the failure of Scope Property to repair and maintain the roof of the building, Garman Nominees contends that it is not responsible for the cost of carrying out the work required by the Default Notice.[78] Garman Nominees says that the failure to address the roof, which is of a structural nature, amounts to a breach of the terms of the Lease by Scope Property, in particular, cl 12.1(d) and cl 4 of the Lease, the latter entitling Garman Nominees to 'quiet enjoyment' of the premises.[79]
[78] ts 6, 23 November 2023.
[79] Exhibit 1, page 142.
Garman Nominees seeks an order from the Tribunal that the Default Notice should be withdrawn by Scope Property and any amount paid by Garman Nominees in respect of complying with it should be refunded.[80]
[80] Exhibit 1, page 142.
In support of its position, Garman Nominees relied on the evidence of Mr Davies, including a 'Contact Information Schedule' that sets out that roof leaks are an issue with the tenancy;[81] a report dated 23 March 2020 prepared by Wes Gregory Consulting;[82] a building condition report (in relation to the roof sheeting) prepared by Mr Kieran O'Connor on 24 May 2023;[83] photographs; as well as a bundle of email correspondence between Mr Davies and Mr Quinlan in relation to the replacement of ceiling tiles.[84]
[81] Exhibit 1 page 138.
[82] Building Assessment Report prepared by Wes Gregory Consulting on 23 March 2020; Exhibit 1, pages 118 – 137.
[83] Exhibit 2, pages 77 to 84.
[84] Exhibit 1, pages 207 – 210.
It is the evidence of Mr Davies that the generally poor condition of the roof, which he says has been an ongoing issue since 2009, results in frequent water leaks and water damage to the ceiling tiles.[85] Mr Davies said that in the past Mr O'Toole of Terra Northwest had fixed the roof and replaced any damaged ceiling tiles.[86] Mr Davies also said that about six or eight ceiling tiles were damaged during a burglary on 20 July 2022.[87]
[85] ts 27, November 2023.
[86] ts 27, November 2023.
[87] Witness statement of Gareth Davies filed on 29 June 2023; Exhibit 1, pages 146, para 21; ts 31, November 2023.
Mr Davies told the Tribunal that he has raised the issue of the poor condition of the roof with Scope Property on several occasions, including before the Default Notice was issued.[88] He said that in mid2022, on his own accord, he had replaced 38 damaged ceiling panels using leftover panels stored at the premises.[89]
[88] Witness statement of Gareth Davies filed on 29 June 2023; Exhibit 1, pages 146 – 147, paras 24 – 27.
[89] ts 27-28, 23 November 2023.
Garman Nominees relied on a building condition report prepared by Mr O'Connor in May 2023. Mr O'Connor, who is a qualified engineer, is of the opinion that the sheeting to the roof structure of the building requires immediate attention or significant renovation to ensure the roof meets the minimum requirements of the Building Code of Australia.[90] Mr O'Connor's report sets out his assessment about the state and condition of the roof sheeting as follows:[91]
1.Most of the roof sheets missing fixings and insufficiently secured
2.Some sheets are completely loose and in need of urgent attention
3.Fascia to the building is severely rotten and is in need of replacing
4.Water damage is clearly visible from inside the building internal ceiling sheets heavily stained and marked.
[90] Exhibit 1, page 84.
[91] Exhibit 2, page 79.
Scope Property contends that the Default Notice is based on the terms of the Lease, and it is for Garman Nominees to show that it was issued without cause. It contends that following the issue of the Notice, the repairs to the ceiling were carried out by Garman Nominees resolving the first two items in the Default Notice. It further contends that in circumstances where there has been compliance with two of the three items in the Default Notice, and no evidence tendered in these proceedings in respect of the third item, the Tribunal should dismiss the application.[92]
[92] Respondent's closing submissions dated 19 December 2023, para 25.
In support of its position, Scope Property relied on the evidence of Mr Quinlan. In Mr Quinlan's opinion, the roof is appropriately maintained by the Strata Company. He stated:[93]
The roof structure is strata property. On every occasion when the Applicant has raised an issue with the roof with the Respondent (in its capacity as Lessor), the Respondent has passed that request onto the Strata Company and on each occasion work orders were raised and the roof leaks were fixed. Roof Leaks and the repairing of them is a standard repairs and maintenance item in commercial leases and in this case is not structural in nature. Under the terms of the Lease the responsibility rests with the Applicant to repair and maintain their ceiling tiles, ceiling grid and lighting.
The required repairs raised by the applicant in their building condition report dated 24 May 2023 have had work orders issued by the Strata Manager for those repairs to be completed and/or they have already been repaired…
The damage to the ceiling grid was a result of a break in. The burglar's entered the Premises through the common area ceiling space. A potential access point, within the common area, was subsequently identified but not confirmed.
The respondent notified the Strata Manager of the issue and possible common area access point. The strata manager then upgraded security.
[93] Witness statement of Shaun Quinlan dated 27 July 2023; Exhibit 1, page 371, para 35.
At the final hearing, Mr Quinlan gave evidence that the water damage to the ceiling tiles could have been caused by either the leaking roof or condensation from the air-conditioners. In the following exchange with counsel for Garman Nominees, Mr Quinlan said that it was the responsibility of the Strata Company to carry out repairs to the roof of the premises:[94]
… But, we're talking substantial water damage, aren't we?--- No. No. Standard – stock-standard for a commercial premises …
And prior to issuing this notice, there was communication between yourself and Mr Davies?--- Correct, yes.
Yes. He was telling you that the roof has been leaking badly for years and that you need to address that?--- Sorry. At every point in time that a concern was raised with myself as – as the landlord, that was then communicated to the strata company, and then repairs were instigated and completed. So on each and every occasion that there has been an issue with the roof or leaks, it has been repaired. Where it represents a problem is that when the ceiling tiles aren't replaced with new ceiling tiles, you can't identify old leaks from new leaks. So it makes it even more difficult to repair roof leaks, which are standard repairs and maintenance items, when ceiling tiles aren't replaced.
So do you accept that it' ultimately the landlord's responsibility to replace the sheets of roofing iron when they need to be replaced?--- It's the strata – in this instance, it's the strata company's obligation to repair the roof and repair any roof leaks as they occur.
Disposition – Default Notice
[94] ts 74, 23 November 2023.
Garman Nominees was served with a Default Notice for failing to repair or replace the ceiling grid and tiles of the building in purported breach of cl 12.1 and cl 12.2 of the Lease, and also for failing to provide an annual air conditioning service report pursuant to cl 13.4 of the Lease.
Garman Nominees seeks reimbursement for the costs of complying with the Default Notice in respect of the ceiling grid and tiles, including the legal costs incurred by Scope Property in issuing the Default Notice. The cost of providing the annual air conditioning service report was not a matter pressed by Garman Nominees at the final hearing.
Relevantly, cl 12.1(a) of the Lease provides that the lessee must maintain the premises in safe, good order, repair and condition, fair wear and tear excepted. Clause 12.1(d) of the Lease provides that the lessee is not obliged to carry out work of a structural nature unless it is made necessary by either damage to the premises caused or contributed to by the lessee where the payment of insurance money is refused by the insurer on the ground of an act or omission by the lessee, or the lessee's use of the premises. Pursuant to cl 12.2 of the Lease, the lessee must promptly at its own expense repair to the satisfaction of the lessor any damage to the premises for which the lessee is liable.
Based on the terms of the Lease, we are satisfied that Garman Nominees is responsible for the repair and maintenance of the ceiling grid and tiles. There was no dispute, and we find, that the ceiling grid and tiles required replacement and, ultimately, Garman Nominees undertook the work to replace them at its cost.
Pursuant to cl 30.1 of the Lease, the lessor is entitled to issue a notice of default to the lessee where an event of default occurs, which includes a breach of any of the Lessee's Covenants for 14 days after notice has been given to the lessee.[95] The expression 'Lessee's Covenants' is defined in cl 1 of the Lease to mean 'covenants, agreements and obligations contained or implied in [the Lease] or imposed by law or equity to be observed and performed by a person other than the Lessor'.
[95] Lease, cl 30.1(b).
There was no dispute, and we find, that the obligation on Garman Nominees to maintain the premises in cl 12.1 of the Lease and repair any damage to the premises at the lessee's cost in cl 12.2 of the Lease, are 'Lessee's Covenants' for the purposes of the Lease.
Consequently, we find that the Default Notice was issued to Garman Nominees in accordance with cl 30.1 of the Lease because Garman Nominees continued in breach of the Lessee's Covenants in cl 12.1(1) and cl 12.2 of the Lease after 14 days' notice of the breach was given by Scope Property.
The Default Notice also refers to cl 10.2 of the Lease, which provides that the lessee must pay to the lessor all Legal Fees (as defined in clause 10.1 of the Lease)[96] which the lessor is liable to pay in connection with any breach of the Lessee's Covenants. It follows, and we find, that Garman Nominees is also responsible for paying all Legal Fees which Scope Property has incurred in connection with a breach of the Lessee's Covenants.
[96] The expression 'Legal Fees' is defined in the Lease as 'all amounts which are payable or have been paid by the Lessor to the Lessor's lawyer calculated on whichever of the following bases costs are determined between the Lessor and the Lessor's lawyer: (a) as stated in a written agreement between the Lessor and the Lessor's lawyer; or the maximum permitted scale for the work involved'.
The Strata Plan provides that the boundaries of the lots or parts of the lots which are buildings shown on the Strata Plan are the inner surface of the walls, the upper surface of the floor and the under surface of the ceiling.[97] It follows, and we find, that the roof of the building forms part of the common property of the Scheme. We do not accept the contention by Garman Nominees that work requiring repairs to roof sheeting is of a structural nature and, therefore, is the responsibility of Scope Property pursuant to the terms of the Lease. Whilst the evidence before us supports a finding that the roof sheeting requires maintenance, we accept the evidence of Mr Quinlan, and we find, that the Strata Company is routinely called upon to organise repairs to roof as part of its statutory duty to properly maintain the common property of the Scheme pursuant to s 91(1)(c) of the ST Act.
[97] Exhibit 1, page 5.
For these reasons, the second question is answered as follows:
Scope Property issued the Default Notice on proper grounds.
Accordingly, we will decline to make an order in favour of Garman Nominees for reimbursement of the costs that it incurred in complying with the Default Notice, including Legal Fees that Scope Property incurred in issuing the Default Notice.
Conclusion
The structures located on Area D and Area E occupy common property of the Scheme. However, the Strata Company has not granted a lease (or licence) of those areas in favour of Garman Nominees, and there is no exclusive use by-law in place. Accordingly, we will make an order in CC 440 of 2023 requiring Garman Nominees to remove the structures from Area D and Area E.
In relation to CC 1716 of 2022, we answer the two questions referred to the Tribunal pursuant to s 16 of the CTRSA Act as follows:
(a)Scope Property was under no statutory obligation to give Garman Nominees a disclosure statement pursuant to s 6 of the CTRSA Act; and
(b)Scope Property issued the Default Notice on proper grounds.
Accordingly, we will make an order dismissing the application in CC 1716 of 2022.
Orders
CC 1716 of 2022
The Tribunal orders:
1.The application is dismissed.
2.The respondent has 21 days from the date of this order to file with the Tribunal and give to the applicant written submissions in support of its application for costs including any supporting documentation.
3.The applicant has 14 days from the date of receipt of the material in support of the respondent's costs application to file with the Tribunal and give to the respondent written submissions and any supporting documentation in reply.
4.Subject to any further order an application for costs will be determined entirely on the documents pursuant to s 60(2) of the State Administrative Tribunal Act 2004 (WA).
CC 440 of 2023
The Tribunal orders:
1.The application is allowed.
2.By 5.00 pm on 31 May 2024 pursuant to s 200(2)(m) of the Strata Titles Act 1985 (WA) the respondent must at its cost remove the structures, namely refrigeration plant and associated services and equipment, refrigeration compressors and condensers (structures) from Area D and Area E shown on Annexure A (being the common property appurtenant and adjoining Lot 11 on Strata Plan 13207) and make good all affected and adjacent surfaces and any damage caused by the carrying out of the work.
3.By 5.00 pm on 31 May 2024 pursuant to s 200(2)(m) of the Strata Titles Act 1985 (WA) the respondent must deliver up to the applicant vacant possession and control of Area D and Area E shown on Annexure A.
4.The applicant has 21 days from the date of this order to file with the Tribunal and give to the respondent written submissions in support of its application for costs including any supporting documentation.
5.The respondent has 14 days from the date of receipt of the material in support of the applicant's costs application to file with the Tribunal and give to the applicant written submissions and any supporting documentation in reply.
6.Subject to any further order an application for costs will be determined entirely on the documents pursuant to s 60(2) of the State Administrative Tribunal Act 2004 (WA).
I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
MS C BARTON, MEMBER
22 APRIL 2024
ANNEXURE A
2
8
7