GREWAL and THE OWNERS OF 16 MILLIGAN STREET PERTH STRATA PLAN 43607

Case •

[2018] WASAT 56

•

28 JUNE 2018

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL

ACT: STRATA TITLES ACT 1985 (WA)

CITATION:   GREWAL and THE OWNERS OF 16 MILLIGAN STREET PERTH STRATA PLAN 43607 [2018] WASAT 56

MEMBER:   DR B DE VILLIERS (MEMBER)

HEARD:   13 JUNE 2018

DELIVERED          :   28 JUNE 2018

FILE NO/S:   CC 1045 of 2017

BETWEEN:   SEHDEV GREWAL

First Applicant

STEPHANIE ANDREA GREWAL

Second Applicant

AND

THE OWNERS OF 16 MILLIGAN STREET PERTH STRATA PLAN 43607

First Respondent

BLUEKNIGHT CORPORATION PTY LTD

Second Respondent

LAMIVOIE ENTERPRISES PTY LTD

Third Respondent


Catchwords:

Strata title - Meaning of 'contributions payable' and 'moneys recoverable' under the Strata Titles Act 1985 (WA) - When is a proprietor disentitled to vote at an annual general meeting - Nature of expenditure allowed to be undertaken by a Strata Company - Authorisation for work on a lot to be undertaken and payment to be made from the account of the Strata Company - Does payment of an invoice from the account of the Strata Company by the strata manager automatically cause moneys to be recoverable 'under the Strata Titles Act 1985 (WA)'

Legislation:

Electricity Corporation Act 2005 (WA), s 4(1)(a), s 4(1)(c)
Strata Titles Act 1985 (WA), s 32(1), s 32(3), s 32(3)(b), s 32(3)(d), s 35(1), s 36, s 36(c), s 36(1)(d), s 38, s 38(1), s 47, s 83, s 83(1), s 83(6), s 97, s 100

Result:

Application successful in part
Orders made

Summary of Tribunal's decision:

This dispute concerns the question of whether the applicants were disentitled to vote at the 2017 Annual General Meeting (2017 AGM) of the Strata Company since they either owed a contribution that was payable to the Strata Company or that they owed moneys to the Strata Company that were recoverable under the Strata Titles Act 1985 (WA) (ST Act). The moneys purportedly owed related to an one-off administrative levy imposed by the Strata Company; common property electricity consumption that had to be paid according to a fixed percentage as part of the levy; electricity consumption by lots that had been paid by the Strata Company but not yet reimbursed; and plumbing and smoke alarm expenses incurred in lots that were paid from the account of the Strata Company but not yet reimbursed.
The Strata Company convened an AGM on 31 May 2017.  At the AGM a dispute arose whether the applicants were entitled to vote.  The second and third respondents contended that the applicants were disentitled to vote because they owed money to the Strata Company.  The applicants denied that they owed money.     It was decided that the AGM would proceed on the basis that each resolution would be voted upon on each of the two premises, namely that the applicants were disenfranchised and that they were entitled to vote.  The dispute was referred to the Tribunal to resolve which of the resolutions had effect.
At the core of the dispute is the question of what is meant when Sch 1 by-law 16(4) speaks about a proprietor being disenfranchised if money is owed and recoverable 'under the Strata Titles Act'? Does it refer to 'any' money that is owed by a proprietor to the Strata Company whatever the cause of the debt may be, or does it only refer to money that is owed by a proprietor to the Strata Company for expenses that the Strata Company would in the normal course of its business incur pursuant to the Strata Titles Act? In this matter part of the dispute related to invoices that were paid by the strata manager from the account of the Strata Company for work that was done to the lots of proprietors and for electricity that was purportedly consumed by lots but paid by the strata manager from the account of the Strata Company.
The Tribunal found as follows:  (a) the by-laws must be interpreted according to the principles of a statutory contract; (b) the meaning of 'moneys recoverable' must be ascertained with reference to work that would in the normal course of events be undertaken by the Strata Company pursuant to its obligations under the ST Act; and when these principles are applied to the issues in dispute that - (c) the administrative levy shortfall did not refer to a recurring levy and needed to be paid only once; the plumbing, smoke alarm and electricity consumption expenses paid by the strata manager from the account of the Strata Company did not fall within the ordinary obligations of the Strata Company and are therefore not 'moneys recoverable' for purposes of by-law 16(4); the common property electricity consumption had to be paid by the relevant proprietors according to the set formula adopted by the AGM on 22 March 2010 if and when payment was due.  The second applicant was therefore not financial at the time of the 2017 AGM since they had failed to pay the account for common property electricity consumption in accordance with by-law 16(4).        

Category:    B

Representation:

Counsel:

First Applicant : Mr C Williams
Second Applicant : Mr C Williams
First Respondent : N/A
Second Respondent : Mr J Park
Third Respondent : Mr J Park

Solicitors:

First Applicant : Solomon Brothers
Second Applicant : Solomon Brothers
First Respondent : N/A
Second Respondent : Park Legal Solutions
Third Respondent : Park Legal Solutions

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

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

Commonwealth v Verwayen (1990) 170 CLR 397

REASONS FOR THE DECISION OF THE TRIBUNAL:

Issues

  1. The parties agree that the issues to be determined by the Tribunal are:

    (a)as at 31 May 2017, were there any:

    (i)contributions payable by the proprietors of any or all of Lots 1, 2, 3, 4, 5, 6, 7 and 14 (Grewal Lots) on Strata Plan 43607 (Strata Plan) to the first respondent (Strata Company) in respect of any of the Grewal Lots; and/or

    (ii)any other moneys recoverable under the Strata Titles Act 1985 (WA) (ST Act) by the Strata Company (first respondent) from the proprietors of any or all of the Grewal Lots;

    (b)if so, what were such contributions and/or other money;

    (c)were the proprietors of any or all of the Grewal Lots disentitled by operation of by-law 14(6) of Sch 1 of the by-laws of the Strata Company (by-law 14(6)) from voting at the Annual General Meeting of the Strata Company held on 31 May 2017 (2017 AGM);

    (d)what resolutions were passed at the 2017 AGM; and

    (e)who was elected to the Council of Owners for the Strata Company at the 2017 AGM?

    Further:

    (a)the second and third respondents contend that the orders sought demonstrate that, because of the effect of s 83(6) of the ST Act, those orders cannot be made, if at all, by application under s 83(1) of the ST Act;

    (b)the second and third respondents contend that any application for such orders needs to be made under, for example, s 97 and s 100 of the ST Act which deal expressly with the 'style' of relief and argument to which the orders relate; and

    (c)the second and third respondents also contend that, if the Tribunal decides that the applicants were able to vote at the 2017 AGM with sufficient unit entitlement to the effect that the budget and levies were not passed (which the second and third respondents deny) the Strata Company owes the second and third respondents any money they paid to the Strata Company in reliance on the 2017 AGM. 

Summary of facts

  1. The following facts, in summary, are agreed by the parties for the purposes of these proceedings:

    Background

    1)The Strata Plan comprises a multi-storey building located at 16 Milligan Street, Perth in the State of Western Australia.

    2)On 4 May 2006 an extraordinary general meeting (EGM) of the Strata Company was held at which a resolution was passed for the amendment of the Strata Plan's by-laws by the introduction of Sch 1 by­law 22A. 

    3)A meeting of the Council of Owners of the Strata Company was held on 10 June 2008 at which resolutions were passed concerning the proposed adoption of a budget and allocation of electricity expenses. 

    4)An annual general meeting of the Strata Company was held on 22 October 2011 at which resolutions were passed for the adoption of a review of electricity expenses and the adoption of an estimate of expenditure and levying of contributions on proprietors. 

    5)An annual general meeting of the Strata Company was held on 22 October 2011 at which resolutions were passed for the adoption of a budget and the levying of contributions on proprietors. 

    6)On 10 December 2015, at an annual general meeting of the Strata Company, resolutions were passed with included resolutions 7.3.1 to 7.3.7 being:

    7.3.1It was resolved to adopt an estimate of expenditure totalling $421,864 plus GST for the period 1 October 2015 to 30 September 2016 as tabled or as subsequently agreed at the meeting;

    7.3.2It was resolved that the amount required as determined by the adopted estimate of expenditure to be [achieved] by raising periodic contributions of $330,000 plus GST as a proportion of each lot owner's respective unit entitlement for payment into an administrative fund;

    7.3.3It was resolved that such contributions become due and payable quarterly in advance commencing 1st October, 1st January, 1st April and, 1st July.  NOTE:  An adjustment credit for the quarter commencing 1 October will be issued with Levies due 1st January if required;

    73.4It was resolved that a further contribution be made at 1st October 2016 equal to that due as at 1st July 2016 and adjusted at the time the next Annual General Meeting is conducted where a final budget is established and the quarterly contributions agreed to for the next Financial Year;

    7.3.5Resolved to adopt contributions to a reserve fund totalling $10,000 plus GST for the period 1st October 2015 to 30th September 2016 such agreed sum to be raised as a proportion of each owner's respective unit entitlement;

    7.3.6Resolved that such contributions become due and payable quarterly in advance commencing on 1st October 2015, 1st January 2016, 1st April 2016 and 1st July 2016; and

    7.3.7That a further contribution be made at 1st October 2016 equal to that due as at 1st July 2016 and adjusted at the time the next annual general meeting is conducted and a final budget is established for that financial year and the quarterly contributions agreed at that annual general meeting.

    7)On 5 May 2016, at an EGM of the Strata Company, resolutions were passed which included resolutions 4.2 to 4.4 being:

    4.2It was resolved to amend the administrative budget to include $100,000 for lobby refurbishment;

    4.3It was resolved to amend administrative budget to include $4,500 for project management; and

    4.4It was resolved to amend the administrative fund budget income to $411,500 plus GST and raise a one off short-fall administrative levy of $81,500 plus GST due and payable on 1 July 2016 in accordance with unit entitlements.

    Electricity Accounts

    1)Between August 2009 to October 2016:

    a)each of Lot 3 and Lot 14 had their own separate electricity meters; and

    b)separate accounts were periodically issued for each of Lot 3 and Lot 14 (together, Electricity Accounts) by, prior to 1 January 2014, the Electricity Retail Corporation established pursuant to s 4(1)(c) of the Electricity Corporations Act 2005 (WA) and, from 1 January 2014, by the Electricity Generation and Retail Corporation established pursuant to s 4(1)(a) of the Electricity Corporations Act 2005 (Synergy).

    2)The Electricity Accounts were addressed to either 'Mulligan Pty Ltd' or 'Mulligan Pty Ltd ­ SP 43607' at care of Blackburne Property Group of PO Box 422, West Perth WA 6872 or 'Owners of 16 Milligan Street Perth SP43607' at care of Bellcourt of PO Box 7099, Shenton Park WA 6008.

    3)Blackburne Property Group was engaged as a Strata Manager by the Strata Company prior to its engagement of Bellcourt.

    4)The Strata Company paid the amount of each of the Electricity Accounts except for 2 Electricity Accounts which related to the usage of Lot 14 only between the periods of 24 February 2016 to 27 April 2016 and 28 April 2016 to June 2016.

    5)No accounts issued by Synergy for the usage of electricity in either Lot 3 or Lot 14 have been paid by the Strata Company subsequent to October 2016.

    6)Bellcourt, has demanded that the first applicant, as proprietor of Lot 3 and Lot 14, reimburse the Strata Company for the amount of the Electricity Accounts paid by the Strata Company as detailed below.

    7)The amounts of Electricity Accounts paid by the Strata Company, being amounts which Bellcourt has demanded that the first applicant, as proprietor of Lot 3 and Lot 14, reimburse the Strata Company for paying, and the periods of time to which those Electricity Accounts relate, are recorded in statements sent by Bellcourt to the first applicant.

    8)As of 31 May 2017, the first applicant, the proprietor of Lot 3 and Lot 14, had not:

    (a)paid any of the Electricity Accounts;

    (b)reimbursed the Strata Company in whole or in part for its payment of the Electricity Accounts.

    Plumbing Expenses

    1)The Strata Company:

    (a)paid $539.33 to Perth Environmental Plumbing (Perth Enviro Plumbing) in payment of Perth Enviro Plumbing's invoice numbered 226260 for attending to a pipe leak in or about May 2016;

    (b)paid $4,175.60 to Perina Plumbing & Gas (Perina Plumbing) in payment of Perina Plumbing invoice numbered 81824 in respect of repairs to a leaking pipe in or about December 2016;

    (c)paid $178.20 to Perina Plumbing minutes in payment of Perina Plumbing invoice numbered 82202 in respect of repairs to leaking pipes in or about January 2017; and

    (d)paid $297.35 to Perina Plumbing in payment of Perina Plumbing invoice numbered 82780 in respect of a leak in the basement of the Strata Plan in or about March 2017,

    (Lot 2 Plumbing Expenses)

    1)The Strata Company paid $209 to Perina Plumbing in payment of Perina Plumbing invoice numbered 82198 in respect of a leak on the ground floor of the Strata Plan in or about March 2017 (Lot 3 Plumbing Expense).

    2)Bellcourt has demanded that:

    (a)the second applicant, as the proprietor of Lot 2, reimburse the Strata Company for the amounts of each of the Lot 2 Plumbing Expenses; and

    (b)the first applicant, as the proprietor of Lot 3, reimburse the Strata Company for the amount of the Lot 3 Plumbing Expense.

    3)The second applicant paid to the Strata Company:

    (a)an amount of $593.33 on 10 March 2017;

    (b)an amount of $4,175.60 on 10 March 2017 and

    (c)an amount of $178.20 on 27 January 2017.

    4)As of 31 May 2017, the second applicant, as the proprietor of Lot 2, and the first applicant, as the proprietor of Lot 3, had not otherwise:

    (a)paid any of the Lot 2 Plumbing Expenses or the Lot 3 Plumbing Expense or any amounts corresponding thereto; or

    (b)reimbursed the Strata Company in whole or in part for its payment of the Lot 2 Plumbing Expenses or the Lot 3 Plumbing Expense.

    5)The Strata Company has not passed a special resolution fixing a sum of money per Lot for the purposes of section 47(1) of the STA.

    Administrative Shortfall Levy from 1 October 2016 to 31 December 2016

    1)Bellcourt has demanded that the applicants pay to the Strata Company amounts described as 'Administration Levy Shortfall from 01-10-16 to 31-12-16'  ('Administrative Shortfall Levy').

    2)The first applicant made payment of the amounts equal to those so demanded to the Strata Company for:

    (a)Lot 6 on 23 May 2017;

    (b)Lot 7 on 1 May 2017; and

    (c)Lot 14 on 28 April 2017.

    3)The second applicant made a payment of an amount equal to that so demanded to the Strata Company for Lot 1 on 19 May 2017.

    4)The first applicant has not paid the Administrative Shortfall Levy as demanded to the Strata Company for Lot 3.

    5)The second applicant has not paid the Administrative Shortfall Levy as demanded to the Strata Company for: 

    (a)Lot 4; and

    (b)Lot 5.

    Burke Air Accounts

    1)On 29 March 2017, Aishling Waldron, in her capacity as agent of the first applicant, agreed by email for the Strata Company to incur costs of $2,246.20 to Burke Air Pty Ltd (Burke Air) for works related to the City of Perth's compliance requirements for Lot 3 and Lot 14 (Burke Air Costs).

    2)Bellcourt issued a Work/Purchase Order to Burke Air dated 29 March 2017 with a total price of $2,042. 

    3)On 31 May 2017 at 2:12pm, the Strata Company received into its bank account a payment of $1,413.52 from the first applicant.

    4)By email chain between Aishling Waldron in her capacity as agent of the first applicant and Ms Kim Van Elden of Bellcourt on 22 and 23 May 2017, Aishling Waldron directed that a payment of $832.68 be applied in part payment of the Burke Air Costs. 

    Common Property Electricity Charges

    1)Bellcourt has demanded that the second applicant pay to the Strata Company amounts described as '65% Electricity Fund', which amounts are recorded in tax invoices sent by Bellcourt to the second applicant.

    2)Bellcourt has demanded that the second applicant pay to the Strata Company amounts described as including '35% Electricity'.

Orders sought

  1. It is determined that the following purported contributions purportedly levied on the applicants by the first respondent are not contributions validly levied under s 36 of the ST Act and are not other moneys recoverable under the ST Act by the first respondent:

    •Administration Levy Shortfall from 1-10-16 to 31­12­16;

    •65% Electricity Fund from 1-1-17 to 31-3-17;

    •Administration Levy & 35% Electricity from 1-1-17 to 31-3-17;

    •Administration Levy Shortfall from 1-1-17 to 31-3-17;

    •Reserve Fund Levy from 1-1-17 to 31-3-17;

    •Administration Levy from 1-4-17 to 30-6-17;

    •65% Electricity Fund from 1-4-17 to 30-6-17; and

    •Reserve Fund Levy from 1-4-17 to 30-6-17.

  2. It is determined that the following charges, costs and fees purportedly charged to the applicants by the first respondent are not contributions validly levied under s 36 of the ST Act and are not other moneys recoverable under the ST Act by the first respondent:

    •Electricity Usage charges Lot 3;

    •Electricity Usage charges Lot 14;

    •Postage of utility accs Lot 3 & Lot 14;

    •Providing Additional Invoices & Statements Lot 3 & Lot 14; and

    •Staff costs Reconciliation of utility accounts Lot 3 & Lot 4.

  3. It is determined that the following charges, costs and fees purportedly charged to the applicants by the first respondent are not contributions validly levied under s 36 of the ST Act and are not other moneys recoverable under the ST Act by the first respondent:

    •Perina Plumbing inv-82198 leak on ground floor $209.00 Lot 3;

    •Perth Enviro Plumbing inv-22626 attend pipe leak $539.33 Lot 2;

    •Perina Plumbing inv-81824 repairs to leaking pipes $4,175.60 Lot 2;

    •Perina Plumbing inv-82780 carpark track repairs $297.55 Lot 2;

    •Perina Plumbing inv-82202 leak in basement $178.20 Lot 2;

    •Burke Air Inv 820934 compliance works 20-4-17 $1,413.85 Lot 3; and

    •Site attendance 27/7/16 & breach notice $198 Lot 3.

  4. It is determined that the following charges, costs and fees pertaining to the amounts referred to in proposed orders 1 to 3 above purportedly charged to the applicants by the first respondent are not contributions validly levied under s 36 of the ST Act and are not other moneys recoverable under the ST Act by the first respondent:

    •Arrears Letter;

    •Interest charge;

    •Admin costs Letter of Demand; and

    •Letter of Demand.

  1. It is determined that the applicants, as proprietors of Strata Lots 1 to 7 and 14, were not disentitled by operation of Sch 1 by-law 14(6) from voting at the 2017 AGM of the first respondent held on 31 May 2017 (2017 AGM). 

  2. It is determined that the resolutions passed and failed at the 2017 AGM are as set out in the minutes thereof and noted as having been passed or failed 'should all Grewal Lots be financial'.

  3. The first respondent shall:

    •Appoint Perth Management Services to be Strata Company Manager effective 1/7/17 for 3 years; and

    •Terminate Strata Management Agreement with Bellcourt Strata Management effective 30/6/17.

Preliminary issue

  1. The second and third respondents contend that the application should be dismissed because the relief sought cannot be granted pursuant to s 83(1) of the ST Act.

  2. Section 83 relevantly provides as follows:

    General powers of SAT to make orders

    (1)The State Administrative Tribunal may, pursuant to an application of a strata company, an administrator, a proprietor, a person having an estate or interest in a lot or an occupier or other resident of a lot, in respect of a scheme, make an order for the settlement of a dispute, or the rectification of a complaint, with respect to the exercise or performance of, or the 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 or on the council or the chairman, secretary or treasurer of the strata company.

    …

    (6)Nothing in this Part affects the generality of subsection (1), but an order in respect of any matter referred to in any other section of this Part shall not be made under this section.

  3. The second and third respondents say, in effect, there are other more appropriate sections of the ST Act under which relief can be sought, for example s 97 and s 100 of the ST Act. The second and third respondents say that since the applicants are challenging the outcome of a vote taken at the 2017 AGM, it is the resolution of that meeting that should be challenged according to the most relevant section of the ST Act. Section 83(6) of the ST Act provides that although s 83(1) of the ST Act has general application, an application that can be brought under a more appropriate section may not be pursued under s 83(1) of the ST Act. The second and third respondents also contend that the 2017 AGM proceeded on the basis that the applicants were disenfranchised since moneys were payable to the Strata Company.

  4. The applicants take issue for two reasons with the propositions by the second and third respondents. Firstly the applicants say that the minutes of the 2017 AGM make it clear that the meeting proceeded on two bases, namely that the applicants were unfinancial and in the alternative that they were financial. There was no precedence given to one option over the other. In fact, the minutes of the AGM record that the dispute shall be referred to the Tribunal to determine which of the resolutions were to take effect. Secondly, the applicants say the nature of the dispute clearly falls within the scope of s 83(1) of the ST Act since the questions the subject of this proceeding are a 'dispute' for purposes of s 83(1) of the ST Act and the exercise of a vote falls within the description of the 'exercise of a power' pursuant to s 83(1) of the ST Act.

  5. The Tribunal agrees with the applicants. The minutes of the 2017 AGM are unequivocal that a dispute was declared at the commencement of the meeting and that a decision was unanimously made to proceed on the basis of two options, namely on the assumptions that the applicants were financial and unfinancial. No preference was expressed for either of the options. The Tribunal therefore rejects the version of events proposed by the second and third respondents namely that the meeting had a preference for the applicants not being financial. See for example item 2.7 of the minutes in which it is clearly stated that the meeting confirmed unanimously that 'each motion be determined on an unfinancial and financial basis' of the applicants. Also refer to item 2.10 of the minutes where this methodology is confirmed. The proposition offered by the second and third respondents is therefore void of any merit. Section 83(1) of the ST Act is specifically designed to be of application in a dispute of this nature. There are several demands for payments that are subject to challenge and this in turn impacted on the status of the applicants as being 'financial' or 'unfinancial' at the commencement of the 2017 AGM. It is only when those questions are resolved, that a decision can be made as to which of the resolutions were properly adopted. Neither s 97 nor s 100 of the ST Act bears relevance to the current proceeding since there is no specific resolution being challenged.

  6. The application for the matter to be dismissed is without merit and must in itself be dismissed.

Principles of construction of by-laws

  1. It is accepted that the principles applicable to the construction of by­laws of a strata scheme are consistent to those of a statutory contract.  In the matter of Byrne v The Owners of Ceresa River Apartments Strata Plan 55597 [2017] WASCA 104 at [72] - [79] her Honour Prichard J set out those principles summarised as follows:

    •The Management Statement and by-laws are to be construed objectively, by reference to what a reasonable person would understand the language of the instrument to mean;

    •The Management Statement and by-laws are to be construed in the context of the registered Strata Plan;

    •The Management Statement and by-laws are to be construed in the relevant statutory context, being, first and foremost, the ST Act;

    •As the Management Statement and by-laws are on the Torrens Register, unamended, rules of evidence assisting the construction of contracts inter parties do not apply to its construction; and

    •Insofar as there are constructional choices properly open, a construction should be preferred which is consistent with the ST Act.

  2. These are the principles that will guide the Tribunal to determine the issues the subject of this proceeding.

Construction of Sch 1 by-law 14(6)

  1. Schedule 1 by-law 14(6) of provides as follows:

    Except in cases where by or under the [Strata Titles] Act a unanimous resolution or a resolution without dissent is required, no proprietor is entitled to vote at any general meeting unless all contributions payable in respect of his lot have been duly paid and any other moneys recoverable under the Act by the strata company from him at the date of the notice given to proprietors of the meeting have been duly paid before the commencement of the meeting.

  2. This wording is similar to those of the standard by-laws that form part of the ST Act (Sch 1 by-law 14(6) of the ST Act).

  3. The question before the Tribunal is whether the words 'moneys recoverable under the [Strata Titles] Act' refer to any moneys that are owed by a proprietor to the Strata Company for whatever reason, or whether the by-law has a more restricted meaning by relating only to specific expenditures that in ordinary circumstances would be required to be made by the Strata Company in the discharge of its functions, duties and obligations.

  4. The Tribunal shall address this issue and then apply the finding to the specific items of conflict.

  5. The applicants contend that the words 'moneys recoverable under the [ST] Act' do not invite a broad debt-recovery power whereby any moneys owed to the Strata Company for whatever reason would render a proprietor unfinancial.  The applicants propose that the words 'moneys recoverable' refer specifically to expenditure the Strata Company incurred as the result of it discharging its functions pursuant to the ST Act.  If such moneys that the Strata Company had incurred on behalf of a proprietor pursuant to the ST Act are not paid at the commencement of an AGM, a proprietor is unfinancial.  Any other debt or money that a proprietor may owe to the Strata Company for whatever other reason may be pursued in a court of appropriate jurisdiction, but the debt does not render a proprietor unfinancial for purposes of voting at a general meeting.

  6. The second and third respondents contend that the words 'moneys recoverable under the [Strata Titles] Act' should be given a broad meaning to refer to any expense that was incurred by the Strata Company on behalf of a proprietor, including expenditure that had been incurred in regard to the lot of a proprietor. The second and third respondents say their proposed interpretation is consistent with the general powers and functions of a strata company; it reflects the practice in this particular strata scheme where requests were made to the strata manager to arrange for certain services in lots on behalf of a proprietor; and where the provisions of s 83(1) of the ST Act are very wide and general with the clear intent to accommodate all disputes in a strata scheme by way of a single, integrated jurisdiction via the Tribunal.

  7. The Tribunal agrees with the construction of by-law 14(6) proposed by the applicants.

  8. A strata company is incorporated for a strata scheme (s 32(1) of the ST Act).  The Strata Company is a legal entity that is capable of suing and being sued (s 32(3) of the ST Act), but it is important to note that the Strata Company is 'regulated' in accordance with the ST Act (s 32(3)(b)) and it may do all things that bodies corporate generally do 'that are necessary for or incidental to the purposes for which a strata company is constituted' (s 32(3)(d)).  The purpose of the Strata Company is therefore constrained by the ST Act and any by-laws enacted pursuant to the ST Act.

  9. There are two prominent examples of duties conferred onto a strata company by the ST Act in regard to its power to incur expenditure.  Firstly the Strata Company shall enforce by-laws; control and manage common property; and keep in good repair common property and personal property vested in the Strata Company (s 35(1) of the ST Act).  Secondly the Strata Company may in certain circumstances carry out work on a lot of a proprietor (s 38(1) of the ST Act).  In order to fund the forgoing activities the Strata Company shall raise levies (s 36 of the ST Act) and shall recover from a proprietor 'any sum of money expended by the Strata Company for repairs or work done by it or at its direction in complying with any notice or order of a competent public authority or local government in respect of that portion of the building comprising the lot of the proprietor' (s 36(1)(d) of the ST Act).

  10. The scope of activities that may be lawfully undertaken by a strata company is therefore restricted by the ST Act and the by-laws of the Strata Company.

  11. The words 'moneys recoverable under the [Strata Title] Act' must be interpreted as a power that derives from the ST Act and that should be interpreted within the context of the ST Act.  The plain reading of by­law 14(6) justifies and supports this interpretation of the Tribunal.  A proprietor would only be caught by the provisions of by-law 14(6) if the proprietor fails to pay to the Strata Company for expenditure that arises from a power, function or duty of the Strata Company under the ST Act.  Any other moneys that may be owed to the Strata Company by a proprietor as a result of an expenditure incurred by the Strata Company or the strata manager on behalf of the Strata Company outside the provisions of the ST Act, do not render a proprietor unfinancial for purposes of voting at an AGM.  

  12. The Tribunal shall now apply these general principles to the specific disputes before it.

Application of by-law 14(6) to plumbing expenses

  1. The strata manager, Mr Scott Bellerby, authorised the payment of invoices from the account of the service company to Perth Enviro Plumbing and Perina Plumbing for plumbing work done to Lots 2 and 3.  The Strata Company sought to be reimbursed by the applicants in their capacity as proprietors of the Lots 2 and 3.  The proprietors of the two lots had not yet at the time of commencement of the 2017 AGM reimbursed the Strata Company for the plumbing costs and therefore a question arose whether they were financial when the 2017 AGM commenced or whether they were caught up by by-law 14(6) as owing to the Strata Company moneys that are recoverable under the ST Act.

  2. The applicants contended that they were financial and that by­law 14(6) does not apply for two principal reasons:  firstly that Mr Bellerby did not act with the necessary authority of the proprietors of Lots 2 and 3 when he arranged for work to be done in regard to their lots; and secondly, that even if Mr Bellerby had been duly authorised, this is an expenditure that falls outside of the ambit of the Strata Company's functions pursuant to the ST Act.  The invoice should not have been paid by Mr Bellerby, and even if the invoice had been paid from the account of the Strata Company, the recovery of the moneys is for another court of competent jurisdiction.

  3. The second and third respondents contend that by-law 14(6) does apply, principally for the following three reasons:  firstly that Mr Bellerby acted reasonably by accepting instructions from what appeared to be the agent, Mr Henry Van Es, of the proprietors of Lots 2 and 3; secondly, that the plumbing works were undertaken pursuant to a notice issued by the City of Perth; and thirdly that the payment made by the Strata Company falls within the scope of 'moneys recoverable' pursuant to functions that can be performed by the Strata Company pursuant to the ST Act.

  4. The Tribunal agrees with the second proposition of the applicants, but it rejects the first proposition put forward by the applicants.  The outcome is, however, that the Tribunal finds that the plumbing expenses are not moneys recoverable pursuant to the ST Act or by-law 14(6) and that the applicants were therefore financial regardless of invoices issued by the Strata Company to be reimbursed for the cost of plumbing expenses not having been paid at the commencement of the 2017 AGM.

  5. The reasons for this finding are:

  6. The Tribunal accepts that Mr Bellerby acted reasonably when he accepted the instructions of Mr Van Es to arrange the plumbing works to Lots 2 and 3.  The proposition by the applicants that Mr Van Es did not act on behalf of the proprietors of Lots 2 and 3 is rejected.  The proprietors of Lots 2 and 3 did not give evidence but merely relied on submissions by Mr C Williams, council for applicants, from the party table; the evidence of Mr Bellerby was credible and it is accepted that he had recommended the services of Mr Van Es to the proprietors of Lots 2 and 3 by email dated 20 July 2016; that by conduct and oral exchange it appeared that the proprietors of Lots 2 and 3 had decided to utilise the services of Mr Van Es; that Mr Bellerby had dealings with Ms Van Elden who communicated in regard to the plumbing works; and several emails between Mr Bellerby and Mr Van Es were copied to Mr Roni Mo, the property manager of the proprietors of Lots 2 and 3.  The Tribunal therefore finds as fact that Mr Van Es acted on behalf of the proprietors of Lots 2 and 3 and that he gave instructions to Mr Bellerby for the plumbing works to be undertaken.

  7. The Tribunal does not accept, however, that the scope of the plumbing works fell within the ambit of s 36; s 38 or s 47 or any other relevant obligation of the Strata Company pursuant to the ST Act.

  8. A summarised narrative of events is that the need for plumbing work arose from renovations that had been undertaken to Lots 2 and 3 by the proprietors of those lots.  The City of Perth informed the proprietors of Lots 2 and 3 and Mr Bellerby that certain plumbing work had to be done before the lots could be used for the intended purpose.  The proprietors of Lots 2 and 3 through their agent Mr Van Es requested the assistance of Mr Bellerby to arrange for the plumbing work to be done to their lots.  Mr Bellerby gave evidence that as strata manager he prefers to deal with tradespersons with credibility and expertise, and that convenience and economies of scale caused him to request the services of Perth Enviro Plumbing and Perina Plumbing who had also been doing plumbing work on common property of the strata scheme.  He paid the invoices rendered by these service providers from the Strata Company's account and sought reimbursement on behalf of the Strata Company from the proprietors of Lots 2 and 3.  There was no specific authorisation from the Strata Company or Council of Owners for him to expend monies in regard to the plumbing works in Lots 2 and 3 in this manner and no allowance in the annual budget for the expenditure.  The expenditure also did not arise from the emergency powers of the Strata Company since the work was done at the request of the proprietors of the respective lots whereas emergency powers generally relate to instances where a proprietor fails or refuses to undertake works.

  9. The Tribunal accepts that Mr Bellerby acted in good faith, but he nevertheless acted without the authority of the Strata Company. The Strata Company, and therefore in effect the strata manager, can only expend from its account moneys pursuant to the ST Act. The rationale of economy of scale and convenience cannot be used to justify expenditure from the account of the Strata Company that is not otherwise authorised. The account of the Strata Company cannot be used as a de facto credit provider for proprietors of the scheme whereby invoices are paid that do not arise from the obligations of the Strata Company under the ST Act. Mr Bellerby ought not to have paid from the strata account an invoice for work done to Lots 2 or 3 unless the works were pursuant to s 36; s 38; s 47 or another relevant provision of the ST Act. None of those sections apply to this dispute. Mr Bellerby, in effect, provided a service in kind to the applicants, but the Strata Company was not obligated by way of a notice of the City of Perth to conduct the service in the respective lots on behalf of the proprietors.

  10. The Sch 2 by-law 13 is also not applicable to this dispute.  By­law 13(c) requires that written notice be given to a proprietor to undertake certain work and it is only if that notice is not heeded that the Strata Company may intervene.  This does not apply in the current dispute. There was no written notice given to the relevant proprietors and no refusal of them to undertake the necessary works.  The facts before the Tribunal indicate a cooperative relationship whereby the strata manager was requested to facilitate works as a typical agent would do; he then paid for the works from the Strata Company funds; and finally he invoiced the relevant proprietors for the work done. 

  11. The same applies to the possible application of Sch 1 by-laws 18 and 19; and Sch 2 by-laws 7, 10 and 12.  These by-laws set out the general responsibilities of the Strata Company and proprietors and the duties and obligations of the Strata Company.  None of these by-laws relate, however, to the current dispute where a proprietor requested the strata manager to coordinate a service and then ostensibly failed to reimburse the Strata Company.  

  12. The appropriate action for Mr Bellerby would have been to cause the plumbing contractors to directly invoice the proprietors of Lots 2 and 3 for the work done to the respective lots.

  13. The unpaid invoices for plumbing works issued by Mr Bellerby on behalf of the Strata Company to the proprietors of Lots 2 and 3 for reimbursement of unauthorised payments from the account of the Strata Company are not caught by by-law 14(6).  The applicants, in their capacity as the proprietors of Lots 2 and 3, were therefore not unfinancial to vote at the 2017 AGM for reason of unpaid plumbing invoices issued by the Strata Company.

Application of by-law 14(6) to smoke detectors

  1. This dispute relates to work that was done to Lots 3 and 14 by Burke Air in regard to smoke detectors in those lots.  The works were required to equip the lots for the intended use.  It is agreed that the proprietors of Lots 3 and 14 requested, via their agent, for Mr Bellerby to arrange for work to be undertaken by Burke Air to the smoke detectors in their lots in order to comply with requirements of the City of Perth.

  2. The submissions by the parties are in essence the same as those above in regard to the works undertaken and costs incurred in regard to plumbing expenses.  The one difference is that the proprietors of Lots 3 and 14 do not challenge the assertion that they requested via their agent for Mr Bellerby to arrange for work to the lots to be done to the smoke detectors in their lots.  Mr Bellerby complied with the request; arranged for work to be undertaken by Burke Air; paid the invoice from the account of the Strata Company; and claimed, on behalf of the Strata Company, reimbursement from the proprietors of Lots 3 and 14.  The Strata Company had not been reimbursed by the time of the commencement of the 2017 AGM.

  3. The Tribunal reaches the same conclusion as in regard to the work that was done in regard to the plumbing expenses.

  4. The Tribunal accepts that Mr Bellerby acted in good faith when he requested Burke Air to do work on the Lots 3 and 14 at the request of the proprietors of those lots, but he nevertheless acted without the authority of the Strata Company and without an approved budget allocation when he paid the invoices for the work done from the account of the Strata Company since the work was not budgeted, the work related to lots, and the work was not done to common property. There was no general or emergency obligation that required the Strata Company to undertake the work to the lots on behalf of the proprietors.  A cooperative relationship existed between the proprietors and Mr Bellerby and he assisted the proprietors to bring their lots to the standard required by the City of Perth.  For all practical purposes it seems as if he acted as their agent to coordinate a service and in doing so the lines between his duties as a strata manager and as agent for individual proprietors became blurred.

  5. The Strata Company, and therefore in effect the strata manager, can only expend from the Strata Company's account moneys pursuant to the ST Act.  The account of the strata company cannot be used as a de facto credit provider for proprietors of the scheme whereby invoices are paid from common funds that are not provided for in the budget or that do not arise from the emergency obligations of the Strata Company. 

  6. Mr Bellerby ought not to have paid from the strata account an invoice for work done to Lots 3 or 14 unless the works were pursuant to s 36; s 38; s 47 or another relevant provision of the ST Act. None of those sections apply to this dispute. The appropriate action for Mr Bellerby would have been to cause Burke Air to directly invoice the proprietors of Lots 2 and 3 for the work done to the respective lots.

  7. The invoices issued by Mr Bellerby on behalf of the Strata Company to the proprietors of Lots 3 and 14 for reimbursement of unauthorised payments from the account of the Strata Company for purposes of Burke Air's work on smoke detectors in those lots, are therefore not caught by by-law 14(6).  The proprietors of Lots 3 and 14 were not unfinancial to vote at the 2017 AGM for reason that they may have owed money to the Strata Company in regard to work done by Burke Air.

Application of by-law 14(6) to electricity charges

  1. This dispute relates to usage of electricity by Lots 3 and 14 which was paid by Mr Bellerby as strata manager from the account of the Strata Company on behalf of the proprietors of those lots, but not reimbursed to the Strata Company at the time of the commencement of the 2017 AGM.

  2. The applicants say that Mr Bellerby had no authority to pay the invoices from the account of the Strata Company.  The applicants contend that a debt may have arisen to the Strata Company, but the debt cannot be classified as 'moneys recoverable under the [Strata Titles] Act' since these were not invoices the Strata Company was required to pay.  The applicant says that there is no moneys payable by the proprietors of Lots 3 and 14 to the Strata Company, and even if there were, any such entitlement do not fall within the scope of moneys owed pursuant to by­law 14(6).

  3. The second and third respondents say that the electricity invoices for Lots 3 and 14 were sent to the Strata Company although addressed to relevant proprietors.  The Strata Company paid these invoices as an 'indulgence' and by doing so the debt that arose is consistent with the provisions of by-law 14(6) namely being 'moneys recoverable under the [Strata Titles] Act'.

  4. The Tribunal agrees with the contentions of the applicants namely that if indeed the applicants were obligated to reimburse the Strata Company for payment made from the account of the Strata Company by the strata manager on their behalf for the use of electricity, any such moneys owed do not fall within the scope of 'moneys recoverable under the [Strata Titles] Act' pursuant to by­law 14(6) or any other part of the ST Act.

  5. The Tribunal reaches this conclusion for the following reasons:

  6. First, Mr Bellerby, did not have specific authorisation to pay these invoices from the account of the Strata Company.  The expenditure was not enclosed in the budget and it was not arising from emergency expenditure that a strata company may undertake.  It is accepted that the invoices were sent to the care of the strata managing company for the proprietors of Lots 3 and 14, but the appropriate action would have been to forward the invoices to the relevant owners.  It is accepted that Mr Bellerby caused the invoices to be paid in good faith from the account of the Strata Company, but in doing so, the cost incurred did not bring the payments within the scope of the ST Act as an obligation of the Strata Company.

  7. Second, these invoices were clearly marked for payment of the proprietors of Lots 3 and 14. The mere fact that the invoices were sent to the address of the strata manager does not require payment by the Strata Company. By-law 14(6) does not refer, as is suggested by Mr J Park, the council for second and third respondents, to 'any' debt that a proprietor may owe to the Strata Company, but rather to moneys payable 'under the Strata Titles Act'. The Strata Company may therefore be entitled to be reimbursed for the payment it incurred on behalf of the applicants but the payment did not arise under the ST Act or by-law 14(6), and therefore did not render the proprietors unfinancial at the 2017 AGM.

  8. Third, as explained above, all costs incurred by the Strata Company must be associated with a power, duty or function of the Strata Company.  The Strata Company is limited in its scope of operations by the provisions of the ST Act and applicable by-laws.  The account of the Strata Company cannot and should not be used for the payment of invoices that are not budgeted or otherwise not related to the powers, functions and duties of the Strata Company.  The electricity use by Lots 3 and 14 was done by separate meters; the invoices were issued in the name of the relevant proprietor; and the invoice was sent to the relevant proprietors in the care of the strata managing company.  The Strata Company had no obligation to pay the invoices and the strata manager ought not to have paid the invoices. 

  9. Fourth, Sch 1 by-law 22 and 22A have no bearing on these electricity accounts and are therefore not relevant to this element of the dispute.

  10. Fifthly, the Tribunal rejects the contention by the second and third respondents that the applicants are estopped from denying knowledge of the required payment for reason that they had paid some of the charges.  The judgment of Commonwealth v Verwayen (1990) 170 CLR 397 does not apply to this part of the dispute for two reasons: firstly, the question before the Tribunal is not whether as a general proposition the applicants are liable to reimburse the Strata Company. The question is specifically whether the failure to reimburse the Strata Company renders the applicants unfinancial pursuant to by­law 14(6). The Tribunal has already answered this question in the negative. Secondly, the fact that the applicants paid an invoice for usage of electricity submitted to them by the strata manager, does not by itself stop them from contending that the invoice/s did not arise from an authorised action by the strata manager pursuant to the ST Act.

  11. The moneys purportedly owed by the proprietors of Lots 3 and 14 for the electricity use that had been paid by Mr Bellerby from the account of the Strata Company are not caught by by-law 14(6).  The proprietors of Lots 3 and 14 were therefore not unfinancial to vote at the 2017 AGM for reason of the moneys it may have owed to the Strata Company for the use of electricity.

Application of by-law 14(6) to electricity expenses for fixed charges

  1. The issue in dispute is whether the fixed electricity charges accrued by the second applicant referred to in the submissions as the 'Common Property Electricity Charges', were due to be paid as a levy by the time the 2017 AGM commenced and hence, since not paid, if by-law 14(6) rendered the proprietors unfinancial at the 2017 AGM.

  2. It is agreed that these charges originate from consumption of electricity in regard to common property and that the Strata Company lawfully paid the invoice.  It is also agreed that Sch 1 by­­law 22A which was adopted on 4 May 2006, provided a basis for the apportionment of costs arising from electricity use on common property on a basis other than by unit entitlement.  It is also agreed that by resolution of the AGM that took place on 10 June 2008 it was decided to apportion 35% of electricity costs to the proprietors of Lots 1, 2, 3 and 14; and 65% of electricity costs would be apportioned to Lots 4 to 13.  The said allocation has been applied for each financial year since the 2008 meeting as part of the annual budgeting process of the strata scheme.

  3. By-law 22A reads as follows:

    Clause 22A ­ Air­Conditioning power costs

    (a)Lots 1, 2, 3, 4 and 14 are not liable for any Strata Company's air­conditioning power costs associated with Lots 4 to 13 inclusive as Lots 1, 2, 3 and 14 each have their own meters or sub-meters, pay their own power costs, and they are each the proprietor of their own air­conditioning plant and equipment and responsible for their own repairs and maintenance.  Each of Lots 1, 2, 3, and 14 will pay their own air-conditioning power costs individually and separately directly to the service provider.

    (b)In relation to Lots 4 to 13 inclusive the following applies:

    (i)Air-conditioning power costs during normal business hours:  The Strata Company will determine the net, air­conditioning power consumption used during normal business hours … according to each lot's unit entitlements.  The charge will form part of the strata levies payable by each of those lots.

    (ii)Air-conditioning power costs outside normal business hours: The Strata Company will determine the air­conditioning power consumption used outside of normal business hours by Lots 4 to 13 inclusive and will invoice each of those lots according to each of those lots individual consumption outside of normal business hours.

    (iii)'Normal business hours' means Monday to Friday 7.00am to 6.00pm excluding public holidays.

  4. The issue that divides the parties is whether the set percentage of common property electricity use can only be levied as part of the general quarterly levy that is raised after approval of the annual budget by the AGM, or whether the electricity use can be invoiced to the owners of lots in the absence of an approved budget or quarterly levy for a financial year.  It is agreed that other than the resolutions of the 2015 AGM and the 2016 EGM, there had not been any fund for administrative expenses, any reserve fund, or a budget approved prior to the 2017 AGM.

  5. Mr Bellerby, as strata manager acting on behalf of the Strata Company invoiced the set fixed percentage of common property electricity charges to all the proprietors and says that the relevant amount had to be paid prior to the commencement of the 2017 AGM since it constituted part of the levy payable by the respective lots.  The second applicant does not deny that she owed charges for electricity, but she says that this was a 'free-standing' obligation - not a levy that was imposed on the relevant lots since it was an expense of the Strata Company; the expense had not been included in the budget for the financial year; the expense had not been approved by a general meeting; and therefore the expense could not be raised or categorised as a 'levy'.  The second applicant says there was no obligation on the proprietors to pay the invoices issued by the Strata Company unless there had been a resolution of a general meeting to authorise the administrative budget and levy for each lot, inclusive of the fixed percentage for electricity use.

  6. The second and third respondents say that the apportionment of the fixed percentage of payment for electricity use by the applicants originates from Sch 1 by-law 22A and subsequent meetings where the apportionment had been approved by an annual general meeting and since then implemented on an annual basis.  The second and third respondents say that the electricity levy can be raised independently from any other levies and, if not paid at the commencement of the 2017 AGM, rendered the owing proprietor unfinancial and therefore ineligible to vote.

  7. The Tribunal concurs with the contentions of the second and third respondents for the following reasons:

  8. Firstly, by-law 22A sets the basis for the apportionment of electricity cost to be different from lot entitlement.  Although by-law 22A does not establish the basis whereupon common property electricity consumption is apportioned, the general meeting of 10 June 2008 determined by ordinary resolution the percentage whereby electricity consumption would be apportioned to the respective lots.  This apportionment has been followed by the Strata Company since the resolution had been adopted.

  9. Secondly, the use in by-law 22A of the phrase 'part of the strata levies' does not necessarily refer to the practice of quarterly levies that are imposed following the adoption of the annual budget.  The Tribunal accepts that for the sake of convenience the annual budget would in the normal course of events include an estimated amount for electricity use and then apportion the fixed percentage of electricity use to the respective proprietors as part of their levy.  This practice, however, does not mean it is the only way in which the levy for electricity consumption can be allocated to the respective lots.  In the current scheme where there had been no approved annual budget, the actual cost arising from electricity use could be invoiced from all the proprietors as a 'levy' since those are costs the Strata Company had to incur pursuant to the ST Act.  The Strata Company could, after all, not refrain from making payments to an electricity provider for electricity use on common property merely because of an ongoing internal conflict between proprietors or due to a failure of proprietors to adopt an annual budget.

  10. Thirdly, although it is accepted that as part of a properly functioning strata scheme, a general meeting would annually approve a budget for the next financial year and apportion levies in accordance with unit entitlements or any relevant by-law such as by-law 22A, it does not mean that if a budget had not been approved for whatever reason, that the Strata Company cannot use the actual rather than the estimated costs for purposes of levying a contribution in regard to a lawful expense for common property electricity use.  Mr Bellerby, acted properly and in compliance with by-law 22A and the resolution of 10 June 2008 when he paid the electricity account on behalf of the Strata Company and then passed on the cost as a levy according to the fixed percentage to the respective proprietors on behalf of the Strata Company.

  11. Fourthly, the notion proposed by the second applicant that a 'levy' cannot have the character of a one-off payment is rejected. The ST Act does not offer any definition of the term 'levy'. Section 36(c) of the ST Act empowers a strata company with broad power to raise amounts by 'levying contributions' in proportion of unit entitlement or as determined by a special by-law. There is no suggestion that levies must be recurring; must be of an annual nature; or cannot be one-off. It is indeed a wide term which is meant to refer to moneys payable by a proprietor to the Strata Company to enable it to discharge its obligations. Refer for example to the 'one­off administrative levy' that was approved by the EGM of the Strata Company on 5 May 2016. By­law 22A and subsequent resolution set the basis for a levy to be imposed in accordance with the fixed percentage to enable the Strata Company to pay its common property electricity account or to recoup money that has been paid towards the electricity account.

  12. The Tribunal therefore rejects the proposition of the second applicant that there had been no obligation on any of Lots 4 to 13 to pay 65% (or any other amount) of the Strata Company's electricity consumption expenditure ­ and no obligation on any of Lots 1, 2, 3 and 14 to pay 35% (or any other amount) of the Strata Company's electricity expenditure ­ subsequent to the levied contributions that fell due for payment on 1 October 2016.

  13. The Common Property Electricity Charges were payable by the second applicant and since those charges were not paid as part of the levy, the second applicant was not financial and therefore disentitled to vote at the 2017 AGM pursuant to by-law 14(6).

Application of by-law 14(6) to the Administrative Shortfall

  1. This dispute concerns the invoices issued by Mr Bellerby, to proprietors for what was described as an 'Administrative Shortfall from 01-10-16 to 31-12-16'.  The applicants had not paid these invoices in full by the time the 2017 AGM had commenced.  The issue is whether these invoices and non-payment thereof, fall within the scope of by­law 14(6)?

  2. The background, in short, to the 'administrative shortfall' is as follows:  On 10 December 2015 the AGM approved a budget for the upcoming financial year and resolved that although the financial year ended in July 2016, proprietors shall pay on 1 October 2016 a levy equal to the levy that was payable on 1 July 2016.  The levy payable on 1 October 2016 was intended to allow for time for the next AGM to be convened without causing a cash flow problem to the strata scheme.  (see paragraph 7.3.4 of the minutes which is consistent with practices previously adopted by the Strata Company).  During the 2016 financial year an EGM was called to discuss urgent expenses to the lobby of the strata scheme.  The EGM took place on 5 May 2016.  At the EGM approval was given to raising a 'one-off administrative levy of $81,500 plus GST due and payable on 1 July 2016 in accordance with unit entitlement'.  The strata manager, Mr Bellerby, sent invoices to proprietors after 1 July 2016 for a quarter of the same amount of the administrative shortfall to be paid on 1 October 2016 for the quarter 1 October 2016 to 31 December 2016.  Mr Bellerby explained that he had assumed that the special levy raised by the EGM was intended to be of a recurring nature, therefore to be levied at the commencement of the next quarter which was 1 Oct 2016.

  3. The applicants say that the resolution must be read in its plain and ordinary meaning, namely that there would only be a one-off administrative levy payable on 1 July 2016 in addition to the ordinary levy that had been approved by the 2015 AGM.  The special administrative levy ought not to have been added to the ordinary levy that was payable on 1 October 2016.  The second and third respondents say that the applicants failed to pay the levy as invoiced for the period 1 October 2016 to 31 December 2016 and were therefore unfinancial at the 2017 AGM.

  1. The Tribunal agrees for the following reasons with the contentions of the applicants:

  2. The resolutions of the 2015 AGM and 2016 EGM must be read according to the plain language in which they were written.  The 2015 AGM approved a budget for the 2016 financial year ending on 31 July 2016.  As a transitional arrangement the 2015 AGM resolved that a levy should be paid by each lot on 1 October 2016 of the same amount as the levy imposed on 1 July 2016. 

  3. The 2016 EGM approved a 'one­off' administrative levy that was payable on 1 July 2016, with no indication that the levy should be applied to or carried over to the next financial year.  The words could hardly be clearer:  'It was resolved to amend the administrative fund budget income to $411,500 plus GST and raise a one off short­fall administrative levy of $81,500 plus GST due and payable on 1st July 2016 in accordance with unit entitlement' (minutes of 2016 EGM item 4.4).

  4. The understanding of Mr Bellerby is not material to resolve the dispute.  The text of the two resolutions is clear and leaves no room for uncertainty.  Mr Bellerby's understanding of the resolutions is not only immaterial, it is also plainly wrong if proper account is taken of the wording of the resolutions. 

  5. There is no ground to reasonably conclude that the effect of the 2016 EGM was to amend the payment that had been set by the 2015 AGM for 1 October 2016.  There is no suggestion in the minutes of the 2016 EGM that the 'one-off' payment should be repeated or that it in effect increased the levy that was payable on 1 October 2016.

  6. The effect of the two resolutions was as follows:  firstly, according to the 2015 AGM each proprietor had to pay a levy on 1 October 2016 that was of similar value to the levy that was paid on 1 July 2016.  It is not contested that the applicants paid the levy on 1 October 2016.  Secondly, according to the 2016 EGM each proprietor had to pay a one­off administrative levy on 1 July 2016.  It is not contested that the applicants paid the one-off administrative levy.  There was no authority for an additional levy to be imposed on 1 October 2016 pursuant to the 2016 EGM.  The applicants were therefore not unfinancial by refusing to pay what was clearly an unauthorised 'levy' for the period 1 October 2016 to 31 December 2016.

  7. The applicants were not unfinancial when at the commencement of the 2017 AGM they had not paid the unauthorised 'levy' for the period 1 October 2016 to 31 December 2016.

Other issues

  1. The Tribunal notes that following the 2017 AGM there had been ongoing attempts to resolve the disputes and as part of that process certain payments were made to the second and third respondents. (see the witness statement dated 30 April 2018 of Mr David Arthur Paganin, who was not called to give evidence).  Those negotiations and payment/s are not relevant and do not assist to determine the questions before the Tribunal.

  2. The second and third respondents also drew attention of the Tribunal to potential consequences of the Tribunal's findings in regard to decisions that have been made by the strata council since the 2017 AGM as well as the risk that the Strata Company may be unable to meet its financial obligations.  Those concerns are not relevant to the issues before the Tribunal.  The Tribunal will, however, allow the parties time to consider the decision of the Tribunal and to make attempts to resolve outstanding issues.

Conclusion

  1. The Tribunal finds in conclusion as follows:

    1)The preliminary application for this proceeding to be dismissed should be dismissed.

    2)The applicants in their capacity as proprietors of Lots 2 and 3 were not unfinancial at the commencement of the 2017 AGM for reason of unpaid plumbing invoices issued by the Strata Company;

    3)The applicants in their capacity as proprietors of Lots 3 and 14 were not unfinancial at the commencement of the 2017 AGM for unpaid smoke alarm invoices issued by the Strata Company;

    4)The applicants in their capacity as proprietors of Lots 3 and 14 were not unfinancial at the commencement of the 2017 AGM for invoices issued for electricity consumption.

    5)The applicants in their capacity as proprietors of Lots 3, 4 and 5 were not unfinancial at the commencement of the 2017 AGM for failing to pay an 'administrative levy' for 1 October 2016 to 31 December 2016.

    6)The second applicant was unfinancial at the commencement of the 2017 AGM for failing to pay the invoice for Common Property Electricity Charges.

  2. In light of these findings and orders to follow, the Tribunal will adjourn the proceeding to a further directions hearing to give the parties time to attempt to resolve any outstanding issues through negotiation.

Orders

The Tribunal makes the following orders:

1.The preliminary issue raised by the second and third respondent for the proceeding to be dismissed, is in itself dismissed.

2.The application is successful in part.

3.The second applicant was unfinancial at the commencement of the 2017 Annual General Meeting for failing to pay the invoices for Common Property Electricity Charges.

4.The applicants were otherwise financial at the commencement of the 2017 Annual General Meeting.

5.The matter is set down for a directions hearing to take place at 3 pm on 26 July 2018 to enable the parties an opportunity to consider the decision of the Tribunal and to attempt to resolve any outstanding issues by way of negotiation.

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

DR B DEVILLIERS, MEMBER

29 JUNE 2018

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Byrne v The Owners of Ceresa River Apartments Strata Plan 55597 [2017] WASCA 104
Commonwealth v Verwayen [1990] HCA 39