GSG HOLDINGS PTY LTD and BOWE
[2023] WASAT 68
•31 JULY 2023
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: STRATA TITLES ACT 1985 (WA)
CITATION: GSG HOLDINGS PTY LTD and BOWE [2023] WASAT 68
MEMBER: MS R PETRUCCI, MEMBER
HEARD: 30 MAY 2023
DELIVERED : 31 JULY 2023
FILE NO/S: CC 914 of 2022
BETWEEN: GSG HOLDINGS PTY LTD
Applicant
AND
COLIN BOWE
First Respondent
ROBIN RANDALL
Second Respondent
ALAN SPALDING
Third Respondent
Catchwords:
Strata titles - Allocation of water usage charges between lot owners where no by-law - Functions of strata company - Levying of contributions by strata company - Unit entitlement - Resolution of scheme dispute - Discretion of Tribunal to make orders
Legislation:
State Administrative Tribunal Act 2004 (WA), s 9
Strata Titles (General) Regulations 2019 (WA)
Strata Titles Act 1985 (WA) (prior to 1 May 2020), s 16, s 36, s 81(10), s 83(1), s 87, s 99
Strata Titles Act 1985 (WA), s 23, s 38, s 91(1)(b), s 100, s 100(1)(a), s 100(1)(b), s 100(1)(c), s 100(1)(d), s 100(4)(a), s 100(6), s 102, s 104(1)(d), s 116(1)(g), s 119(1), s 197(4), s 197, s 197(1)(a)(ii), s 197(1)(a)(vi), s 197(2), s 197(4), s 199, s 199(1), s 200, s 200(1), s 200(2)(m), s 200(7), s 202, s 204(b)(iii), Pt 4, Div 3, Pt 8, Div 1, Pt 13, Sch 1, Sch 2, Sch 5, cl 23
Result:
Application successful
Category: B
Representation:
Counsel:
| Applicant | : | Mr P Monaco |
| First Respondent | : | In Person |
| Second Respondent | : | In Person |
| Third Respondent | : | In Person |
Solicitors:
| Applicant | : | GV Lawyers |
| First Respondent | : | N/A |
| Second Respondent | : | N/A |
| Third Respondent | : | N/A |
Case(s) referred to in decision(s):
Arasi & Anor and The Owners of Beverley Court [2005] WASAT 197
Raymond John Lynch & Others and The Owners of Broome Vacation Village - Strata Plan 19739
Robinson and Stevens [2009] WASAT 207
REASONS FOR DECISION OF THE TRIBUNAL:
Introduction
These proceedings concern the allocation of water usage charges.
On 15 July 2022, GSG Holdings Pty Ltd in its capacity as trustee of the Samoht Management Trust (the applicant) commenced proceedings in the Tribunal under s 197(4) of the Strata Titles Act 1985 (WA) (ST Act). The applicant seeks the resolution of a dispute concerning the charges by The Owners of Broome Vacation Village Strata Plan 19739 (strata company) for water usage in the strata scheme known as the 'Broome Vacation Village' situated at Cable Beach in Broome.
The applicant is the owner of Lot 192 on Strata Plan 19739 (Strata Plan). The Strata Plan was registered on 31 August 1990, and on that date, the strata company, a body corporate, was established under the ST Act. There are 193 lots in this strata scheme. Some lots are occupied permanently, and others are occupied on a seasonal basis. The applicant owned 53 other lots on the Strata Plan at the commencement of these proceedings.[1] Lot 192 is used and operated as a commercially run caravan park.
[1] Hearing Book (HB) at page 75.
Mr Colin Bowe, Mr Robin Randall and Mr Alan Spalding (together, the respondents) each own a lot on the Strata Plan.
In the application to the Tribunal, the strata company was listed as a respondent. However, on 21 February 2023, the Tribunal gave leave to the strata company to withdraw from these proceedings.[2] At the commencement of the final hearing on 30 May 2023, counsel for the applicant informed me that the strata company had sought and obtained legal advice and decided, based on that legal advice, not to participate in these proceedings but would abide by the decision of the Tribunal.[3] The respondents did not dispute this. In line with the Tribunal's main objectives as set out in s 9 of the State Administrative Tribunal Act 2004 (WA) (SAT Act) which includes to act with as little formality and technicality as is practicable and to minimise the costs to the parties, I proceeded to hear and determine the application before the Tribunal on the basis that the parties informed me the strata company would abide by the decision of the Tribunal.
[2] Order 1 of the orders made by the Tribunal on 21 February 2023; HB at page 433).
[3] ts 5-6, 30 May 2023.
Further, at the final hearing, the applicant explained that it was no longer pressing for a declaration to be made by the Tribunal under s 199(1) of the ST Act or for the alternate orders 3 and 4 as set out in its application.[4] Rather, the applicant stated that it was now only seeking the following order from the Tribunal as there is no relevant by-law:[5]
2.An order under [s] 200(1) of the [ST] Act requiring the [strata company] to charge Lot 192 for water consumption based on unit entitlement.
[4] HB at page 74 and ts 5, 30 May 2023.
[5] Ibid.
The applicant asserts there is no basis for the 'arbitrary and different bases' used by the strata company for charging for water usage in the strata scheme.
The respondents' position is that the application should be dismissed for the following reasons. First, if the allocation of water usage charges to lot owners is reversed to what it was before the decision of Mr R J Kronberger, the (then) Strata Titles Referee, on 25 June 2003 in matter ST/2003000015 Raymond John Lynch & Others and The Owners of Broome Vacation Village - Strata Plan 19739 (the 2003 decision), that is on a unit entitlement basis, that would be very unfair for many owners, such as pensioners, who will struggle to pay considerably more for water usage due to the substantial increase in rental capacity and water usage by Lot 192 which operates the commercial caravan park.[6]
[6] HB at page 414.
Second, the respondents say that the intention of the 2003 decision is that Lot 192's water usage is to be independently measured and recovered by consumption.[7]
[7] HB at pages 343 and 407.
Finally, the respondents urge the Tribunal to order the strata company to pass a by-law to the effect that Lot 192, being a commercial caravan park, be independently metered and be invoiced for water by consumption as it has in excess of 120 rental sites and that all the other lots be invoiced according to unit entitlement.[8]
[8] HB at page 407.
For the reasons which follow, the application is successful. The result is that an order will be made by the Tribunal in the terms sought by the applicant (see above at [6]) which will apply from the date of the order and is to remain in force until the earlier of: (a) a further order is made by the Tribunal; and (b) a resolution is passed by the strata company for a by-law whereby contributions for water usage for Lot 192 are to be levied on a basis that is other than in proportion to the unit entitlement for Lot 192 and that by-law is registered by Landgate.
Relevant procedural history and evidence
Following the usual programming orders by the Tribunal, I heard the matter on 30 May 2023, following which I reserved my decision.
For the convenience of the parties, the Tribunal prepared a Hearing Book comprised of all the documents filed with the Tribunal (pages 1 to 434) (HB), and in accordance with the Tribunal's usual practice in matters of this nature, the final hearing was conducted on the basis that all the documents filed with the Tribunal would be regarded as being in evidence, subject to any proper objection.[9] There was no objection. I have had regard to the HB for the purposes of my determination in these proceedings.
[9] Although forming part of the HB, the parties' contentions and submissions are taken to be submissions, rather than evidence.
Mr Kenneth Oscar Thomas, a director of the applicant, attended the hearing in person. Mr Thomas filed with the Tribunal his witness statement dated 1 May 2023.[10] Ms Brenda French of PRD Real Estate attended the hearing by video conference for the applicant. Ms French filed with the Tribunal her witness statement dated 3 May 2023.[11] Finally, Mr Monaco attended the hearing in person and made submissions for the applicant.
[10] HB at pages 102-103.
[11] HB at pages 100-101.
The respondents, Messrs Bowe, Randall and Spalding attended the hearing together by video conference. Mr Bowe filed with the Tribunal his statement dated 4 December 2022.[12] Mr Randall filed with the Tribunal his statement dated 2 August 2022.[13] Mr Spalding filed with the Tribunal his statutory declaration (undated).[14] Separately, the respondents filed with the Tribunal their joint response to Mr Thomas' witness statement on 8 May 2023.[15]
[12] HB at pages 315-317.
[13] HB at pages 319-320.
[14] HB at pages 335 to 338.
[15] HB at pages 396-398.
In addition, Ms Joan Johnston filed with the Tribunal her statement dated 15 December 2022 in which she supported the respondents.[16] Ms Johnston is a member of the council but did not attend the final hearing as the Tribunal had earlier, on 21 February 2023, given her leave to withdraw from these proceedings.[17]
[16] HB at pages 340-343.
[17] HB at page 433.
Next, I set out the agreed facts followed by the issue to be determined.
Agreed facts
I make the following findings of fact, which are uncontroversial, as set out in the parties' joint agreed facts: [18]
[18] HB at pages 88-90.
1.The application relates to Strata Plan 19739, a strata scheme consisting of 193 lots in a scheme known as Broome Vacation Village situated at 122 Port Drive, Cable Beach.
2.The [a]pplicant is an incorporated body and the owner of Lot 192 within the strata scheme. The [a]pplicant is the trustee for Samoht Management Trust.
3.The [s]econd, [t]hird and [f]ourth [r]espondents are individuals and owners of lots within the strata scheme and are scheme participants.
4.The strata scheme has water supplied by the Water Corporation and there is one meter for the scheme being Account Number 9006942841 for the 193 lots within the strata scheme (the Water Corporation Main Meter).
5.There are a number of submeters within the scheme.
6.Lot 192 has nine (9) separate water submeters (Lot 192 Submeters).
7.Water via the Lot 192 Submeters are used by Lot 192 in the operation of a caravan park and some common property.
8.The balance of the water is used by the remaining 192 lots and some common property.
9.The strata company charges Lot 192 for water consumed based on the reading of the Lot 192 Submeters.
[10].The strata company pays the Water Corporation for water consumed by the strata company as read from the Water Corporation Main Meter and after deducting the water consumed via the Lot 192 Submeters, the balance is invoiced by a special water levy paid for by Lot owners based on unit entitlement, with the EXCLUSION of Lot 192 as they pay for their water by actual consumption recorded by their independent water meters installed solely for that purpose.
[11].There is no by-law on the strata scheme concerning the charging of water consumption for the scheme.
Issue to be determined
The crux of the application before the Tribunal, is simply, whether the strata company is required to charge lot owners for water supplied by the Water Corporation to the strata scheme based on the respective unit entitlements of the lots as set out on the Strata Plan or whether the strata company may charge Lot 192 for water usage based on the reading of the Lot 192 Submeters and to charge the other owners based on their respective unit entitlements. It is common ground that the latter method is how the strata company is currently charging lot owners for water usage.
The applicant says the strata company must charge the lot owners according to their respective unit entitlements, and in the case of Lot 192, the unit entitlement is 13,268 units out of an aggregate of 100,000 units. The respondents say this is not fair as the applicant uses most of the water supplied by the Water Corporation to the strata scheme and therefore the strata company should continue to charge the applicant based on the reading of the Lot 192 Submeters.
I will determine the application by answering the following issues or questions:
(a)Does the Tribunal have jurisdiction under the ST Act to determine the dispute between the applicant and the respondents concerning how the strata company charges lot owners for water supplied by the Water Corporation to the strata scheme?
(b)Does the strata scheme have a by-law for the charging of water supplied to it by the Water Corporation?
(c)May the strata company charge lot owners for the water supplied to the strata scheme by the Water Corporation other than by unit entitlement?
(d)Should the Tribunal exercise its discretion to make the order sought by the applicant?
Next, I set out the legal framework.
Legal framework
Strata Plan
As already noted, the relevant Strata Plan was registered on 31 August 1990 with 193 lots.
The application proceeded in the Tribunal on the basis that the standard by-laws apply, that is the provisions set out in Sch 1 and Sch 2 of the ST Act apply to the strata scheme with the following changes as notified on the Strata Plan:
(a)Notification of change of by-laws (Sch 2 - By-law 15 - Penalties) by Instrument H592243 dated 7 November 2000;
(b)Notification of change of by-laws (Sch 1 - By-law 17 - Grant of exclusive use of areas of common property) by Instrument J079815 dated 9 November 2004;
(c)Notification of change of by-laws (Sch 1 - By-law 17A - Exclusive use by-laws Chalet Lots 168-191) by Instrument M409881 dated 23 September 2013;
(d)Notification of change of by-laws (Sch 2 - By-law 16 - Rubbish disposal, By-law 17 - Chemical Waste/Sullage, By-law 18 - Undue Noise, By-law 19 - Fences, By-law 20 Ensuites & Verandas, By-law 21 Clotheslines & Hammocks, By-law 22 Open Fires & Generators, by-law 23 - Lawns on a Lot, Bylaw 24 - No Business permitted, By-law 25 - Pool premises) by Instrument N153731 dated 21 October 2015; and
(e)Notification of change of by-laws (Sch 1 - By-law 18 - Serving of Notices) by Instrument N720180 dated 15 September 2017.
Further, the application proceeded in the Tribunal on the basis that there was a reallocation of unit entitlement pursuant to an order of the (then) Land Valuation Tribunal under s 16 of the ST Act by Instrument J386056 dated 5 August 2005. As a result of the reallocation on 5 August 2005, the unit entitlement of Lot 192 went from 4,785 units out of an aggregate of 100,473 units to 13,268 units out of an aggregate of 100,000 unit.[19]
ST Act
Resolution of a scheme dispute
[19] HB at page 8.
Section 197 of the ST Act provides for the resolution of certain 'scheme disputes' including a dispute between scheme participants about the performance of, or the failure to perform a function conferred or imposed on a person by the ST Act or the scheme by-laws or any other matter arising under the ST Act or the scheme by-laws (s 197(1)(a)(ii) and s 197(1)(a)(vi) of the ST Act).
Scheme participants is defined in s 197(2) and relevantly includes:
(d)a member of the strata company for the strata titles scheme[.]
Tribunal proceedings
Part 13 of the ST Act deals with Tribunal proceedings.
In proceedings under the ST Act, the Tribunal may make any order it considers appropriate to resolve the dispute or proceeding (s 200(1) of the ST Act). The types of orders that the Tribunal may make are set out in s 200 of the ST Act and include, for example, an order under s 200(2)(m) of the ST Act requiring a person to take specified action or to refrain from taking specified action to remedy a contravention or prevent further contraventions of the ST Act or scheme by-laws.
The Tribunal may provide that the order is to remain in force for a specified period, until a specified event or until further order (s 200(7) of the ST Act).
Instead of, or in addition to any order that the Tribunal may decide to make to resolve the dispute or proceeding, s 199 of the ST Act provides that the Tribunal may make a declaration concerning a matter in the proceeding. In these proceedings, the applicant is not seeking any declaration.
It is also possible for the Tribunal to make a decision not to make an order or declaration. This is provided for in s 202 of the ST Act.
Finally, s 204(b)(iii) of the ST Act provides that in a proceeding under the ST Act, the Tribunal cannot make an order that the strata company is taken to have passed a resolution fixing or varying contributions unless the Tribunal is satisfied that the contributions fixed by the strata company are inadequate or excessive.
Having set out the agreed facts and the legal framework on which this application is to be determined, I now turn to consider the issues or questions as set out above at [21].
Consideration
Does the Tribunal have jurisdiction?
The jurisdiction of the Tribunal was not challenged. In any event, in short, I am satisfied that the Tribunal has jurisdiction under s 197(4) of the ST Act to determine the dispute between the parties concerning the basis used by the strata company to charge the lot owners for the water supplied to the strata scheme by the Water Corporation. This is the scheme dispute. Further, I am satisfied this scheme dispute is a dispute between scheme participants as that term is defined in s 197(2) of the ST Act, as both the applicant and the respondents are lot owners in the strata scheme and therefore members of the strata company.
I am also satisfied that the Tribunal may make any order it considers appropriate to resolve the scheme dispute.[20]
Does the strata scheme have a by-law for the charging of water supplied by the Water Corporation?
[20] ST Act, s 200.
Scheme by-laws are the rules that the strata company, owners and others must comply with. Provisions concerning scheme by-laws are provided for in Div 3 of Pt 4 of the ST Act. This includes that the strata company has broad powers to make, amend and repeal by-laws provided that the by-laws are not inconsistent with the ST Act, the Strata Titles (General) Regulations 2019 (WA) or other written law. Further, the strata company may resolve, through the proper process, by-laws concerning contributions, levies or moneys payable by an owner to the strata company. These types of by-laws are referred to as 'governance by-laws'.
In this case, the standard by-laws apply with the various changes as set out above at [24].
It is common ground that none of the by-laws concern the contributions, levies or money payable by an owner to the strata company in respect of water usage expressly or in relation to utility charges more generally.
In conclusion, I find there is no by-law for this strata scheme which deals with the contributions, levies or money payable by an owner to the strata company in respect of water usage.
Can the strata company charge lot owners for the water supplied to the strata scheme by the Water Corporation as it is doing so currently?
It is useful to start by considering Div 1 of Pt 8 of the ST Act which sets out the functions of the strata company.
Relevant to these proceedings is the general duty of the strata company to control and manage the common property for the benefit of all the owners (s 91(1)(b) of the ST Act) and the requirement for the strata company to establish a fund (an administrative fund) for the control and management of the common property, for the payment of any premiums of insurance and the discharge of any other obligations of the strata company (s 100(1)(a) of the ST Act).
As the Strata Plan was registered on 31 August 1990, that is before the amendments to the ST Act on 1 May 2020, the following provisions in cl 23 of Sch 5 to the ST Act apply:
23.Financial management
(1)An administrative fund of a strata company established under section 36 as in force immediately before commencement day is taken to be an administrative fund established under section 100.
…
(3)Contributions or other arrangements determined under section 36 as in force immediately before commencement day for any period that continues on or after commencement day for any period that continues on or after commencement day are taken to be contributions or arrangements determined under section 100[.]
The effect of the above provision is that the administration fund established by the strata company under the former s 36 is taken to be an administrative fund under s 100 of the ST Act and that contributions or other arrangements in place under the former s 36 are taken to be contributions or arrangements determined under s 100 of the ST Act.
Once the strata company has established an administrative fund, it must determine the amounts to be raised for payment by the owners into the administrative fund (s 100(1)(b) of the ST Act). It is therefore important that the strata company identifies its costs and expenses, properly budgets for them and levies contributions appropriately for them. Expenses that might require management may include fees payable for suppliers of services and amenities to the strata company such as gardening costs and handyman costs, insurance for the strata scheme's insurable assets and water usage where the strata scheme has only one meter connected to the Water Corporation mains.
How a strata company is to levy contributions is set out in s 100(1)(c) of the ST Act. That provision provides that the strata company must levy contributions on the owners as follows:
(a)in proportion to the unit entitlements of their respective lots; or
(b)in accordance with any by-law(s) of the strata scheme that provide for a different basis for levying contribution.
Therefore, in my view, subject to there being a relevant contract in place between the strata company and owner of Lot 192, which I discuss later in these reasons (see below at [53]), the strata company must levy contributions either in proportion to the unit entitlement as set out on the Strata Plan for the respective lots or as set out in a by-law which provides a different basis for levying contribution. It is common ground that there is no by-law for this strata scheme that provides for a different basis for levying contribution for water usage charges. The result is, in my view, the strata company cannot use a different method such as in proportion to unit entitlement for all owners apart from the owner of Lot 192 on a quarterly basis and for the owner of Lot 192 on reading the Lot 192 Submeters on a monthly basis for water usage charges.
It is through contributions levied to an owner by the strata company under s 100 of the ST Act that such contributions become due and payable to the strata company in accordance with the terms of the decision to raise the contribution (s 100(4)(a) of the ST Act). That is, the lot owner is liable in respect of any contribution levied by the strata company under s 100 of the ST Act along with any interest on the contribution (joint and severally with any person who is liable to pay that contribution and interest) (s 100(6) of the ST Act). Under s 100(1)(d) of the ST Act, the strata company can recover from the owner (by action in a Court if necessary) any sum of money expended by the strata company for repairs or work done by it or at its direction or order made, under a written law in respect of the lot.
For the benefit of the strata company and the owners, s 104(1)(d) of the ST Act requires the strata company to keep the following in a manner that facilities access to the information, in particular, for use by the member of the council and officers of the strata company:
…
(ii)the current balance of the administrative fund and, if applicable, the reserve fund of the strata company;
(iii)the current budget (showing estimated income and expenditure) of the strata company;
(iv)the terms of the most recent resolution determining contributions, the period for which they are determined, the basis on which the contributions are apportioned amongst members of the strata company and the date on which they fall due[.]
In the current proceedings, Mr Thomas gave evidence that he asked for documentation to confirm the basis for how water usage is charged for the strata scheme, but it was never provided to him.[21]
[21] HB at page 103.
The respondents' position is that:[22]
The uniqueness of Broome Vacation Village is such that there is a commercial operation which covers lot 192 and it is not unreasonable, regardless of by-laws or any other interpretation that may be put forward that an individual who is on selling their services to clients should not pay for water that they've consumed. To suggest otherwise is totally unreasonable[.]
[22] ts 46, 30 May 2023.
While it is appropriate that in performing its functions, the strata company has the objective of implementing processes and achieving outcomes that are not, having regard to the use and enjoyment of lots and common property, unfairly prejudicial to, or discriminatory against a person or oppressive or unreasonable (s 119(1) of the ST Act), it is also necessary that the strata company in performing its functions does comply with the requirements of the ST Act including s 100(1)(c) in respect of levying contributions. For reasons already explained, in my view, the strata company failed to comply with the requirements of s 100(1)(c) of the ST Act.
I now turn to consider s 116(1)(g) of the ST Act.
Under s 116(1)(g) of the ST Act, the strata company in performing its functions, may make a contract with a lot owner or occupier of a lot for the provision of amenities or services by it to the lot or to the lot owner or occupier. This is subject to the normal expenditure provisions of the ST Act (refer to s 102 of the ST Act). In this case, there is no contract as contemplated in s 116(1)(g) of the ST Act. Rather, the strata company receives from the Water Corporation as evidence by the 'water use and service charge account' (bill) that is addressed to PRD Real Estate (the strata manager) for 'the common - residential at 122 Port Dr Cable Beach Lot 1'.[23] There is only one account, that is account 9006942841, and the property owner is stated on the bill as 'Broome Vacation Village' and expressly refers to strata lots 1 to 193.
[23] HB at page 375.
For the bill issued on 15 June 2022[24] the following 'meter read details' are set out on the bill:
[24] HB at pages 375-377.
Meter Number
Last read date
Meter read
This read date
Meter read
Water use (kL)
KK1400156
25 May 2022
339,148
14 June 2022
339,757
609
KK1400156
13 May 2022
338,569
25 May 2022
339,148
579
KK1400156
6 May 2022
337,898
13 May 2022
338,569
671
KK1400156
8 April 2022
335,213
6 May 2022
337,898
2,685
WKK0510106
25 May 2022
2,427
14 June 2022
2,427
0
WKK0510106
13 May 2022
2,426
25 May 2022
2,427
1
WKK0510106
6 May 2022
2,425
13 May 2022
2,426
1
WKK0510106
8 April 2022
2,425
6 May 2022
2,425
0
From the above table it is clear that there are two meters, that is KK1400156 and WKK0510106. Further, it is clear that meter KK1400156 has the highest water usage reading and the meter WKK0510106 has an insignificant water usage reading. This pattern of water usage for the two meters is reflected in the bills for the period 20 October 2021 through to 15 June 2022.[25]
[25] HB at pages 360-383.
The total water usage for the above bill was 4,546 kilolitres with a total amount payable of $17,495.32 (which included a fire service connection charge of $47.77).[26] Of the total $17,495.32 charged to it, the strata company charged Lot 192 $7,338.26 for 1,912 kilolitres, or approximately 42% of the total 4,546 kilolitres used, as follows:[27]
[26] HB at page 376.
[27] HB at page 377.
Location
Meter
Start
End
Units used
08/04/2022
08/06/2022
North Ablution/Site 19
1
11523
11743
220
Residence
2
712
775
63
Reticulation
3
15153
15581
428
Chalets
4
10673
10941
268
South Ground/Pool Shed
5
24870
25263
393
South Ablution
6
1603
1761
158
Site 33
7
1213
1276
63
Site 30
8
4449
4613
164
Site 202
9
1852
2007
155
1912
Ms French, in her capacity and an employee of the strata manager for the strata company, gave evidence that the strata company receives an invoice each month from the Water Corporation in the name of the strata company which is paid by the strata company.[28] Further, Ms French explained that the method used by the strata company for charging for water usage differs between Lot 192 and the remaining lots (Lots 1 to 191 and Lot 193). In regards to Lot 192, Ms French explained that the strata manager issues an invoice each month to the owner of Lot 192 (the applicant) from the readings taken by the manager of the caravan park of the Lot 192 Submeters. That is, Lot 192 is billed per the Water Corporation tariff rates. In contrast, Ms French explained that for the other lots:[29][30]
(a)an annual budget is prepared based on a predicted water usage for all lots apart from Lot 192 and then those lots are charged based on their respective unit entitlements by way of a special levy each quarter; and
(b)there is no adjustment at the end of the financial year for any excess received in relation to the special levy, which is retained by the strata company, but an adjustment is made in the budget for next year.
[28] HB at page 101.
[29] HB at page 101.
In addition, Ms French gave evidence that a resolution was passed, which she assumed was passed at a general meeting of the strata company, setting out the above methodology for charging for water usage. Ms French explained that this methodology has been in place since 2014 (and not since the 2003 decision). Ms French confirmed that there are no minutes where the strata company resolved to impose the special levy each quarter, rather it is called a 'special levy' for the convenience of identifying the water consumed by the remaining areas apart from the Lot 192 Submeters.[31]
[31] ts 29, 30 May 2023.
In addition to the Lot 192 Submeters, as reflected in the above table (see above at [57]), there are another six water submeters[32] in the strata complex for the remaining lots which the strata company uses to assess for excess water usage or leaks and one submeter to record swimming pool water.[33] The strata company has not charged lot owners connected to these six water submeters for water usage as measured by these submeters.
[32] HB at page 98.
[33] HB at page 411.
If the strata company charged the owner of Lot 192 for water consumption for the above bill (see above at [57]), based on its unit entitlement of 13,268 units out of a total 100,000 units, the charge would have been $2,321.27.[34] That is a difference of $5,016,99 for this bill. It is this difference which the respondents submit would severely disadvantage the owners besides the applicant, many of whom are pensioners.
[34] HB at page 375.
This is not the first time the basis of charging for water usage in the strata scheme has arisen. This issue was raised in 2003 when it was referred to the (then) Strata Titles Referee (see above at [8]). The applicants were the (then) owners of Lot 107 (Donald Kenneth Simms and Annette Helen Simms), Lot 118 (Winifred Anne Lynch) and Lot 142 (Raymond John Lynch). In 2003, the applicants sought the following orders under s 83(1), s 87 and s 99 of the ST Act (as it was prior to the amendments on 1 May 2020):
1.That the Strata Company manage and regulate the water meter and or meters, valves, water pipes fittings and fixtures on Strata Plan 19739 so that each lot proprietor has access to:
a)up to 150 kilolitres of water per annum in respect of such lot and be charged for such consumption at the rate prescribed by the Water Corporation (on a basis that such lot were separately rated) whether such volume be consumed or not.
b)water in excess of 150 kilolitres per annum provided that such volume is metered and such proprietor is charged for such excess at the rate prescribed by the Water Corporation as if such lot were separately rated for consumption.
2.That the Strata Company acquire and install five (or such other number as may be necessary) meters to measure the water consumption on lot 192 and other meters on any other lot that it may consider desirable to monitor and also for the purpose of ascertaining substantial leakage or wastage on any section of the Strata Plan.
3.That the Strata Company discharge its obligations under s 36(1) of the Strata Titles Act 1985 in respect of water consumption by charging each lot proprietor for the water consumed or deemed to be consumed as described under these Orders and any additional consumption charged for by the Water Corporation be charged by the Strata Company in proportion to Unit Entitlement.
4.That the Strata Company refrain from watering any land that is not contained within the Strata Plan without the approval of a special resolution of a general meeting of members.
The Strata Titles Referee noted that he had received responses from the owners of 29 lots in support of the application but none in opposition. The owner of Lot 192 did not make any submissions and in considering the matter stated at [28] to [33]:
28In the circumstances set out by the Applicants and those supporting the application, it appears to me that proper management of the strata scheme would include, as a minimum, the separate metering of water consumption between Lot 192 and the other lots.
29However, I consider that it would be difficult to make the order proposed in item 1(b) of the Orders sought unless and until every lot is separately metered. There would obviously be a considerable cost involved in making those installation and, perhaps, in carrying out readings from time to time.
30The Applicants have not specified why they have sought five (or more) meters on Lot 192 other than to ascertain leakages or wastage. However, I note from the Applicants' submissions that the Strata Company at its 2002 Annual General Meeting appeared to refer to five meters in all, including one for Lot 192 and four others, each in "four discrete areas".
31With so many lots involved, the division of the lots (other than Lot 192) into four areas of reasonably-apportioned groups of lots each with a separate meter, plus a separate meter for Lot 192, appears to be a practical compromise.
32To the extent that water supply charges imposed by the Water Corporation may include a minimum 'free' or lower-cost initial component of water usage component, I consider that all lot proprietors whose water consumption is measured through a particular meter should be credited with the same proportion thereof their respective unit entitlements bear to the aggregate of all unit entitlements of the lots serviced by that meter.
33As to the fourth of the Orders sought, if the proprietor or occupier of Lot 192 wishes to utilise the common property water supply to water road verges beyond the boundaries of the parcel, that should be separately metered as part of Lot 192's consumption.
In conclusion, the Strata Titles Referee made the following orders at [36]:
36My orders are that
The Owners of Broome Vacation Village - Strata Plan 19739 must by 31 July 2003 or as soon thereafter as may be permitted by the Water Corporation of Western Australia, take all steps and expend all sums necessary to install:
(a)an approved water consumption meter to measure the water consumption on Lot 192 on Strata Plan 19739 ("the Strata Plan") and on any land external to the boundaries of the parcel comprised in the Strata Plan and which is watered by or on behalf of any proprietor, occupier or resident of the said Lot 192 from any water source or facilities within the said parcel;
and
(b)four additional water meters to be distributed amongst the remaining lots on the Strata Plan in such locations as may be recommended or approved by the said Water Corporation to create four approximately-equal groups of lots for the purposes of measuring the water consumption for those said groups.
In reply to the applicant's submissions,[35] the respondents refute that the Strata Titles Referee's orders required water consumption meters to be installed that were approved Water Corporation meters. Rather, the respondents submit that the order of the Strata Titles Referee only required an approved water consumption meter to be installed to measure the water consumption of Lot 192 and not for an independent supply meter directly connected to the Water Corporation.[36]
[35] HB at pages 91-95.
[36] HB at page 406.
Further, the respondents disagree that the strata company failed to enforce the orders made by the Strata Titles Referee and instead opted to install water submeters for water supplied off the existing main Water Corporation meter.[37] The respondents say it was not possible to provide a single independent water supply meter direct from the Water Corporation due to the arterial network supply servicing Lot 192 and that because of this, it was agreed by the strata company including Mr Thomas to connect the Lot 192 Submeters to record water consumption by Lot 192 in lieu of a single meter.[38] This was on the basis that it would be more economical and easier to install and use multiple independent meters to record water consumption by Lot 192 rather than a single metered service directly connected to the incoming Water Corporation water supply mains connection.[39]
[37] HB at page 92.
[38] HB at pages 406 and 411.
[39] HB at page 414.
I do not accept the respondents' position for the following reason. In my view, the Strata Titles Referee came to a practical compromise for the proper management of the strata scheme by requiring the separate metering of water consumption between Lot 192 and the other lots. That is, the Strata Titles Referee required 'one approved water consumption meter' for Lot 192 and four 'additional water meters' apportioned across equal groups of lots for the purposes of measuring water consumption for those groups. It appears that because of financial constraints and the way the plumbing is networked in the strata complex it was not possible to have one meter to cover all the ablution areas of Lot 192,[40] the requirement to have 'one approved water consumption meter' for Lot 192 was not done because it is common ground that the Lot 192 Submeters were installed as well as six other meters and that the strata company receives one account from the Water Corporation for the entire strata scheme.
[40] ts 46, 30 May 2023.
Mr Thomas' evidence is that the applicant was in the process of acquiring Lot 192 at the time the matter was before the Strata Titles Referee and that neither the applicant nor the previous owner of Lot 192 made submissions to the Strata Titles Referee.[41] Mr Thomas stated when he enquired, he was informed that water consumption for Lot 192 was regulated as a result of an order of the Strata Titles Referee dated 25 June 2003 and on face value, he accepted it.[42]
[41] ts 25, 30 May 2023.
[42] HB at page 103 and ts 16, 30 May 2023.
In the end nothing turns on the orders made by the Strata Titles Referee. This is because those orders ceased to have any force or effect upon the expiration of the period of two years from the making of the orders as provided in s 81(10) of the ST Act (as it applied prior to 1 May 2020). That is, the orders per the 2003 decision ceased to have any force or effect after 25 June 2005.
Mr Thomas says that in September 2013 he raised the issue of the basis for the strata company apportioning water consumption charges between owners. The then chairman of the council, Mr Neil Digney, received advice from Mr Angus Murray on 24 September 2012.[43] In Mr Murray's email he stated in part:[44]
Mr Thomas' claim is that the current method of determining water cost apportionment between the Owners is unfair and that it should be apportioned according to Unit Entitlement. He claims that there is no ruling from the State Administrative Tribunal determining any other method and therefore the unit entitlement method must stand[.]
[43] HB at pages 399-400.
[44] Ibid.
Subsequently by email dated 23 November 2013 a then member of the council, Mr Barry Ralston, wrote to Mr Digney, with a copy to others including Mr Thomas where Mr Ralston stated in part:[45]
I have also ascertained that following the decision [of the Strata Title Referee in 2003], all of the parties (including the owners of Lot 192) considered that it would be cheaper to install internal meters measuring the separate water usage of Lot 192 without providing direct connections from the Water Corporation to the various sections of Lot 192. The then owner of Lot 192 agreed to this as his cost would have been substantial given his unit entitlement at the time. The parties therefore decided to install the internal meters and adopt the present method of measuring water usage which identifies a result of Lot 192 paying for use and not on an unit entitlement basis.
[45] HB at page 404.
The issue of water consumption charges was discussed at the meeting of the council on 25 February 2014. Mr Digney, Mr Ralston, Mr Thomas and others are listed in the minutes as attending that meeting.[46] The minutes of that meeting provided in part:[47]
Water Usage Lot 192
ND tabled a map of the Park showing the position of the new meters.
…
The installation of the meters will enable easy and concise calculation of the water usage by Lot 192 and comply with legal requirements[.]
[46] HB at page 401.
[47] HB at page 402.
The respondents submit that due to the original developmental plumbing design and shared water supply services, it was not possible to separately meter or invoice the lot owners, apart from Lot 192, for the water consumed. Further, and in any event, the respondents say the minutes of meetings and the budget records reflect the current billing arrangement whereby the water usage for Lot 192 is measured by the Lot 192 Submeters and is directly billed to the owner of Lot 192 on a monthly basis by the strata company which was agreed to by Mr Thomas back in 2014.[48]
[48] HB at pages 402, 404 and 407.
As there is no contract between the strata company and the owner of Lot 192 as contemplated by s 116(1)(g) of the ST Act or a by-law for the water usage to be charged to Lot 192, the difficulty with the approach taken by the strata company in that the charging of Lot 192 by way of reading the Lot 192 Submeters is that it does not comply with the ST Act, in particular s 100 of the ST Act. That section authorises a strata company in regulating and managing its financial affairs to put together a budget which covers the expenses associated with managing the strata scheme and to have that budget paid for by levying contributions on the owners in proportion to their unit entitlement, or if there is a by-law that provides for a different basis of levying those contributions then in accordance with that by-law.
In conclusion, in this case, the strata company has simply sought to recover from the owner of Lot 192 water usage based on monthly readings of the Lot 192 Submeters which is not supported by a by-law, a contract between the strata company and the owner of Lot 192 as contemplated by s 116(1)(g) of the ST Act and is not based on unit entitlement.
Of the 193 lots (of which the applicant owns a number of lots) the Tribunal received submissions from four owners opposing the order sought by the applicant. This followed the Tribunal making orders on 9 August 2022 requiring the strata company (when it was still a respondent in these proceedings) to provide to the owners (Notified Person) a copy of the application and supporting documents filed with the Tribunal along with a copy of the orders made by the Tribunal. The order also provided that any Notified Person wishing to participate as a party in the proceeding had to file with the Tribunal by 15 August 2022 a written notice that they wished to be joined as an applicant or as a respondent. Messrs Bowe, Randall and Spalding gave written notice and were joined as respondents to these proceedings by the Tribunal by order made on 13 September 2022. Similarly, Ms Johnston gave written notice and was joined as a respondent to these proceeding by the Tribunal by order made on 13 September 2022 but at her request was given leave to withdraw from the proceedings by the Tribunal by order made on 21 February 2023.
Finally, while the respondents assert it would not be fair and it would be discriminatory if the applicant was charged water usage by way of its unit entitlement, and that there is no possibility of the strata company passing a by-law as the applicant holds a majority balance of voting rights,[49] nothing was put to the Tribunal that the strata company has endeavoured without success to pass such a by-law. If such a bylaw is not passed, it may be open for a scheme participant (as that term is defined in s 197(2) of the ST Act) to make an application to the Tribunal under s 197(4) for the resolution of a scheme dispute whereby an order is sought that the strata company is taken to have passed a resolution fixing or varying contributions in respect of water usage charges. The requirements of s 204(b)(iii) of the ST Act would need to be satisfied before the Tribunal would consider making an order under that provision. Alternatively, if the capital value of lots in the strata scheme are not correctly reflected in recorded unit entitlements for each lot on the Strata Plan, s 38 of the ST Act sets out the requirements for registration of an amendment of a schedule of unit entitlements.
[49] HB at page 359.
The final issue or question that requires determination is whether I should exercise the Tribunal's discretion to make the order sought by the applicant under s 200(1) of the ST Act (see above at [6]).
Should the Tribunal exercise its discretion to make the order sought by the applicant?
The ST Act does not provide any guidance to the Tribunal on determining whether it should exercise its discretion to make an order under s 200(1) of the ST Act to resolve the dispute or proceeding. It is necessary, in my view, following Robinson and Stevens [2009] WASAT 207 at [23], that the Tribunal must apply its mind to the facts before it to determine if it should exercise its discretion to make an order. Further, it is necessary in my view, following Arasi & Anor and The Owners of Beverley Court [2005] WASAT 197 at [28] that the Tribunal in deciding whether to exercise its discretion to make an order must act in accordance with:
(a)the provision of the ST Act;
(b)the principles of reasonableness and fairness;
(c)the interests of the parties;
(d)equity; and
(e)due consideration of all the information before the Tribunal.
Reflecting back on the order sought by the applicant (see above at [6]), while I acknowledge the respondents' concern is that Lot 192 is a large commercial business with many customers using a great deal of water,[50] bearing in mind the requirements of the ST Act and in particular s 100 which sets out how a strata company must levy contributions, it is appropriate in my view having given due consideration to all the information before the Tribunal, to exercise the Tribunal's discretion to make the order sought by the applicant. The order will come into effect from the date of the order and is to remain in force until the earlier of a further order made by the Tribunal and a resolution is passed by the strata company for a scheme by-law whereby contributions for water usage by Lot 192 are to be levied on a basis that is other than in proportion to the unit entitlement for Lot 192 and that by-law is registered by Landgate.
[50] HB at page 316.
Orders
The Tribunal orders:
1.Pursuant to s 200(1) of the Strata Titles Act 1985 (WA) The Owners of Broome Vacation Village Strata Plan 19739 shall levy contributions to the applicant for water usage for Lot 192 in proportion to the unit entitlement of Lot 192 as reflected on Strata Plan 19739.
2.Pursuant to s 200(4) and s 200(7) of the Strata Titles Act 1985 (WA), order 1 above applies from the date of this order and is to remain in force until the earlier of:
(a)a further order made by the Tribunal; and
(b)a resolution is passed by The Owners of Broome Vacation Village Strata Plan 19739 for a scheme by-law whereby contributions for water usage by Lot 192 are to be levied on a basis that is other than in proportion to unit entitlement and that by-law is registered by Landgate.
I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
MS R PETRUCCI, MEMBER
31 JULY 2023
[30] ts 27, 30 May 2023.
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