HOAR and THE OWNERS OF PRESTIGE POINT APARTMENTS SP 11184
[2024] WASAT 30
•18 APRIL 2024
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: STRATA TITLES ACT 1985 (WA)
CITATION: HOAR and THE OWNERS OF PRESTIGE POINT APARTMENTS SP 11184 [2024] WASAT 30
MEMBER: MS A KING, MEMBER
HEARD: DETERMINED ON THE DOCUMENTS
DELIVERED : 18 APRIL 2024
FILE NO/S: CC 15 of 2024
BETWEEN: GRAHAM PETER HOAR
First Applicant
BRENT BARRETT-LENNARD
Second Applicant
AND
THE OWNERS OF PRESTIGE POINT APARTMENTS SP 11184
Respondent
Catchwords:
Strata Titles Act 1985 (WA) - Amendment of unit entitlements - Whether if allocated at the time of the application, schedule of unit entitlements would require amendments - Whether unit entitlements proportionate to the value of each lot relative to the sum of the value of all the lots in the strata titles scheme - Capital valuation
Legislation:
Land Valuers Licensing Act 1978 (WA)
State Administrative Tribunal 2004 (WA), s 60(2)
Strata Titles (General) Regulations 2019 (WA), reg 54, reg 55, Pt 7
Strata Titles Act 1985 (WA), s 3, s 37, s 37(2), s 37(3), s 37(4), s 38, s 38(3), s 38(5)
Strata Titles Amendment Act 2018 (WA)
Valuation of Land Act 1978 (WA), s 4
Result:
Application is dismissed
Category: B
Representation:
Counsel:
| First Applicant | : | No appearance |
| Second Applicant | : | No appearance |
| Respondent | : | No appearance |
Solicitors:
| First Applicant | : | N/A |
| Second Applicant | : | N/A |
| Respondent | : | N/A |
Case(s) referred to in decision(s):
Blakeney and The Owners of Westcourt West Perth Strata Plan 37494 [2022] WASAT 84
Maludra Pty Ltd and Ors and Owners of Windsor Towers & Ors [2012] WASAT 160
The Owners of Claisebrook Heights Strata Plan 11880 and Thompson [2020] WASAT 125
REASONS FOR DECISION OF THE TRIBUNAL
Introduction
This is a proceeding in which the applicant applied to the Tribunal under s 38(3) of the Strata Titles Act 1985 (WA) (ST Act) for authority to amend the schedule of unit entitlements for a strata scheme, Strata Plan 11184, known as Prestige Point Apartments, 36 Ormsby Terrace, Mandurah, Western Australia (strata scheme). The applicants are Graham Peter Hoar and Brent Barrett-Lennard the owner of Lot 5 and Lot 2 respectively (the applicant) of the strata scheme. The respondents are the owners of the strata scheme (the respondent).
By application dated 9 January 2024, the applicant is seeking the following orders (Proposed Orders):
(1)Pursuant to s 38(5) of the ST Act, the Tribunal authorise the amendment of the schedule of unit entitlements registered in respect of strata plan 11184 for the property known as Prestige Point Apartments, Mandurah, Western Australia be amended by being deleted and replaced by the schedule of unit entitlements set out in the report of Acumentis dated 3 November 2023.
Procedural history
A directions hearing was held on 23 February 2024 and various programming orders were made by the Tribunal. The matter was then adjourned to further directions on 26 March 2024. On that day it was ordered that the matter be determined entirely on the papers pursuant to s 60(2) of the State Administrative Tribunal Act 2004 (WA).
Evidence before the Tribunal
The Tribunal accepted as evidence the following documents:
(1)Application - 9 January 2024;
(2)A Strata Plan for the strata scheme 11178;
(3)Minutes of Annual General Meeting - 5 August 2022;
(4)Minutes of Annual General Meeting - 4 August 2023;
(5)Landgate Schedule of Unit Entitlements - 7 November 2023;
(6)Approved Budget -1 July 2022;
(7)Balance Sheet 30 June 2022 to 31 May 2023;
(8)Income and Expenditure statement - 30 June 2022 to 31 May 2023;
(9)Lost Positions Report - 30 June 2022 to 31 May 2023;
(10)Certificate of Currency - 30 November 2022 to 30 November 2023;
(11)Reserve Fund Plans (amended 25 January 2021);
(12)Emerson Raine Company Proposed Budget - 3 July 2023;
(13)Other Document Graham Hoar - 9 January 2024;
(14)Landgate Schedule of Unit Entitlements - 7 November 2023;
(15)Acumentis report dated 3 November 2023;
(16)Emerson Raine Company Budget printed 21 August 2023;
(17)Notice of Annual General Meeting - 4 August 2023;
(18)Landgate Schedule of Unit Entitlements - 7 July 2021;
(19)Email from Graham Hoar dated 7 March 2024;
(20)Owner List, Owners of Strata Plan 11184 - 6 March 2024;
(21)Declaration of Service Graham Hoar - 5 March 2024;
(22)Declaration of Service dated 3 April 2024; and
(23)Email from Brent Barrett-Lennard - 11 March 2024.
The regulatory framework
In these reasons, any reference to a legislative provision or to 'the Act' is, unless otherwise specified, a reference to the Strata Titles Act 1985 (WA), as amended by the Strata Titles Amendment Act 2018 (WA) (which commenced on 1 May 2020).
Section 38 of the ST Act relevantly provides:
38.Requirements for registration of amendment of schedule of unit entitlements
(1)An amendment of a schedule of unit entitlements may only be registered —
(a)in conjunction with an amendment of the scheme plan to give effect to a subdivision; or
(b)if the amendment is authorised by resolution without dissent of the strata company; or
(c)if the amendment is authorised by order of the Tribunal.
…
(3)The Tribunal may, on the application of an applicant for registration of an amendment of a strata titles scheme involving the amendment of the schedule of unit entitlements, order that an objection to the amendment of a person with a designated interest be disregarded on the grounds that the objection is unreasonable.
…
(5)The Tribunal may, on the application of a strata company or the owner or registered mortgagee of a lot in a strata titles scheme, authorise the amendment of the schedule of unit entitlements for the scheme if satisfied that, if unit entitlements were to be allocated at the time of the application, the schedule of unit entitlements would require amendment for compliance with section 37(2).
(6)If the Tribunal makes an order under this section, the applicant for the order must lodge a copy of the order certified by the Tribunal with the Registrar of Titles for registration of the amendment of the schedule of unit entitlements.
Section 37 of the ST Act relevantly provides:
37.Schedule of unit entitlements
…
(2)When allocated, the proportion that a unit entitlement of a lot bears to the sum of the unit entitlements of all the lots in the strata titles scheme must not be greater than 5% more, or 5% less, than the proportion that the value of the lot bears to the sum of the value of all the lots in the strata titles scheme.
(3)The value of a lot is —
(a)in a strata scheme — the capital value; and
…
(4)Without limitation, the regulations may prescribe matters relating to the determination of the value of a lot[.]
The term 'capital value' is defined in s 3 of the ST Act as having the meaning given in the Valuation of Land Act 1978 (WA) (VL Act), s 4 of that Act provides as follows:
capital value of land means the capital amount which an estate of fee simple in the land might reasonably be expected to realize upon sale — provided that where the capital value of land cannot reasonably be determined on such basis, the capital value of such land shall be the sum of, first, the unimproved value of the land, and, secondly, the estimated replacement cost of improvements to the land after making such allowance for obsolescence, physical depreciation, and such other factors as are appropriate in the circumstances.
Regulation 54 of Pt 7 of the Strata Titles (General) Regulations 2019 (WA) (STRegulations) relevantly provides in determining the capital value of a lot:
54.Determining capital value of a lot
(1)For the purposes of section 37(4), a determination of the capital value of a lot in a strata scheme that is made for the purposes of registering a schedule of unit entitlements, or an amendment of a schedule of unit entitlements, must be made in accordance with this regulation.
(2)A licensed valuer must determine the capital value of a lot as if it had the standard level of internal fit out and finishes for that lot.
(3)The standard level of internal fit out and finishes for a lot is the level of fit out and finishes that the licensed valuer determines to be a reasonable representation of the average expected level of fit out and finishes for lots in the strata scheme of that property type and of commensurate age.
(4)The standard level of internal fit out and finishes for a lot must be determined by the licensed valuer after —
(a)conducting a physical inspection of the parcel of land the subject of the strata scheme; and
(b)conducting an internal inspection of as many lots in the strata scheme as is reasonably practicable to enable the licensed valuer to make a reasonable assessment of the average expected level of fit out and finishes for lots of the same property type and of commensurate age; and
(c)taking into account any relevant information obtained from the strata company or on the strata plan.
(5)A licensed valuer must include in the capital value of a lot any buildings within the lot that have planning approval or approval under any other written law, whether or not shown on the strata plan.
Regulation 55 relevantly provides, in relation to certificates by a licenced valuer, as follows:
55.Certificate by licensed valuer
(1)For the purposes of section 37(6), a certificate by a licensed valuer in relation to a schedule of unit entitlements, or an amendment of a schedule of unit entitlements, must be in an approved form.
(2)The certificate must specify the date on which the licensed valuer issued the certificate.
(3)The date of issue of the certificate must be no more than 2 years before the application to register the schedule, or amendment, is made to the Registrar of Titles.
(4)In addition, if the certificate includes a determination that a stage of subdivision is or is not a significant variation under Part 6, the certificate must comply with any requirements for the certificate specified in that Part.
Issues for determination
The principal issue to be determined by the Tribunal is:
(1)whether, if unit entitlements for the Scheme were to be allocated today, the schedule of strata unit entitlements currently on the strata plan (Current Schedule)[1] would require amendment by reference to the requirements of s 37(2) of the ST Act.
(2)that in turn requires consideration by the Tribunal of whether there is sufficient evidence by reference to the ST Regulations[2] to determine:
(a)whether, within a 5% tolerance, the unit entitlements in the Current Schedule are proportionate to the capital value of each of the lots relative to the whole of the Scheme, and if not then;
(b)whether, within a 5% tolerance, the unit entitlements in the Proposed Schedule are proportionate to the capital value of each of the lots relative to the whole of the Scheme.
[1] Strata Plan 11184.
[2] ST Regulation, reg 54.
History of the Scheme and the application
The original form of the Scheme was created by the registration of Strata Plan 11184 on 17 December 1982 which described the Scheme as:[3]
A building shown on a parcel of land portion of Cockburn Sound location 16 & being Lot 2 on diagram 61988.
[3] Annexure A of the Strata Plan 11184.
At the time of registration, the aggregate of the unit entitlements was 13, as comprised of 13 lots having one unit entitlement each.[4]
[4] Minutes of AGM dated 4 August 2023.
On 4 August 2023[5] the owners proposed, moved by Graham Hoar, that the unit entitlements be changed to the valuation method which is calculated by a licensed valuer. A licensed valuer was to be employed.[6]
[5] Minutes of AGM dated 4 August 2023.
[6] Ibid.
The aggregate of unit entitlements[7] was to be 1000, with the following entitlements:
[7] Landgate Schedule of Unit Entitlements approved form dated 7 November 2023.
(a)Lot 1 = allocated 62 unit entitlements;
(b)Lot 2 = allocated 64 unit entitlements;
(c)Lot 3 = allocated 62 unit entitlements;
(d)Lot 4 = allocated 65 unit entitlements;
(e)Lot 5 = allocated 68 unit entitlements;
(f)Lot 6 = allocated 65 unit entitlements;
(g)Lot 7 = allocated 67 unit entitlements;
(h)Lot 8 = allocated 70 unit entitlements;
(i)Lot 9 = allocated 67 unit entitlements;
(j)Lot 10 = allocated 100 unit entitlements;
(k)Lot 11 = allocated 100 unit entitlements;
(l)Lot 12 = allocated 105 unit entitlements; and
(m)Lot 13 = allocated 105 unit entitlements.
Orders sought
The applicant is seeking orders, consistent with the report of Acumentis and as set out in the Landgate approved form (Certificate of Licensed Valuer)[8] that the allocated unit entitlements of each of the units of the strata scheme be amended as above.
[8] Ibid.
The valuation evidence
The Report filed in support of the application was prepared by Acumentis (Decision Certainty) of Valuations Pty Ltd t/as Acumentis Mandurah.
The report is dated 3 November 2023 and is unsigned.
The report describes having accepted instructions to inspect the relevant property and having assessed unit entitlements for Strata Plan 11184.
The report sets of some of the relevant provisions of the Act and then provides an opinion that 'we have assessed the following unit entitlements':
Unit No
Unit Entitlement
1 62 2 64 3 62 4 65 5 68 6 65 7 67 8 70 9 67 10 100 11 100 12 105 13 105
It is unclear from the document who the author is however the certificate of Licensed valuer is named as Scott Damien Robinson who describes himself as licensed under the Land Valuers Licensing Act1978 (WA).
No further evidence to support the opinion as described above was provided to the Tribunal.
The applicant lodged minutes of the annual general meeting on 5 August 2022.
The above minutes confirms that Graham Hoar be appointed as the strata company representative.
Consideration and findings of the Tribunal
The Tribunal has considered the Valuation report[9] which is dated 3 November 2023.
[9] Acumentis report.
The Tribunal notes the author of the report failed to acknowledge in his report that he has read the Tribunal's information sheet entitled 'Guide to giving expert evidence' and agrees to be bound by the expert's duties stated in that document.
The Tribunal is not satisfied that, in preparing the report, the expert has fulfilled the prescribed requirements relating to determining the value of a lot (s 37(4) of the ST Act; reg 54 of the ST Regulations) for the reasons set out below.
In the matter of the The Owners of Claisebrook Heights and Thompson,[10] the Tribunal, in granting the application to amend unit entitlements, examined the valuation evidence and noted amongst other matters that the report:
(a)gave the date of inspection and valuations as at the relevant date;
(b)the report was noted as being directed to assessing the 'current market value of the individual strata lots' in the Scheme for the purpose of reassessing unit entitlements;
(c)described the complex, size and shape;
(d)noted the varying standards of lots with individual owners having carried out renovations and modifications throughout the years; and
(e)states (at para 5.5) that the valuation analysis is based on a direct comparison approach and outlines the market evidence (in the form of comparable sales in the area) relied upon for that purpose.
[10] The Owners of Claisebrook Heights Strata Plan 11880 and Thompson [2020] WASAT 125 at [29].
The report does not state the date of the assessment, only the date the report was prepared. It also fails to state the date on which the units were inspected and on what, if any, information the expert relied upon to reach the conclusions.
It makes no reference to assessing the Capital Value of each lot for the purposes of determining the Reallocation of Unit Entitlements based on the existing strata plan by having first established individual capital values of the lots.
In the matter of Maludra Pty Ltd and Ors and Owners of Windsor Towers[11] it was held that the definition of 'capital value' in the VL Act, and therefore the value referred to in the ST Act, is the market value, which must take into account all the circumstances which might affect that value. Those circumstances will include improvements to the land and, in the case of the lots in the strata scheme, the level of fit out of those lots.[12]
[11] Maludra Pty Ltd and Ors and Owners of Windsor Towers & Ors [2012] WASAT 160 at [107].
[12] Ibid.
The need to conduct a physical inspection of the scheme property including inspections as was reasonably practical including a crosssection of lots was considered in the matter of Blakeney and The Owners of Westcourt West.[13]
[13] Blakeney and The Owners of Westcourt West Perth Strata Plan 37494 [2022] WASAT 84 at [33].
The Tribunal finds that the report makes no comparisons to recent sales of commercial strata title premises in Mandurah, Western Australia or other comparable premises in the surrounding suburbs and in particular makes no reference to considerations of any need to adjust for size or configuration, location within the development, any variations in access considerations, level of fit out or other circumstances which might affect the value of the lots for the purposes of assessing the capital values to arrive at the unit entitlements.
There is no reference to any basis of value, methodology or assumptions made by the expert.
The Tribunal lacked any information as to the expert's experience in undertaking valuations for the purposes of assessing unit entitlements.
The report is one page in length and is lacking in supporting information or detail for the basis of the opinions expressed. The report was not supported by other evidence or further documentary evidence.
The Tribunal finds that the evidence fails to satisfy s 37 of the ST Act. In simple terms it is not supported by any evidence of how the assessment relates to capital value (by reference to the ST Regulations) for the Tribunal to determine:
(a)whether, within a 5% tolerance, the unit entitlements in the Current Schedule are proportionate to the capital value of each of the lots relative to the whole of the Scheme; and if not then
(b)whether, within a 5% tolerance, the unit entitlements in the Proposed Schedule are proportionate to the capital value of each of the lots relative to the whole of the Scheme.
The applicant further seeks to rely on the Landgate form signed by Mr Scott Robinson as further evidence in support of the application. The Tribunal finds that the completed Landgate form does not amount to valuation evidence.
Finally, the Tribunal is not satisfied that the report provides a pathway of reasoning for the opinion expressed. It states merely that 'we have assessed the following unit entitlements'. It fails to identify who the 'we' refers to or identify their experience and qualifications in respect to the assessment undertaken.
The Tribunal finds that the report failed to provide a valuation report detailing bases of value, methodology, evidence to support each lots capital value and the basis/calculations of the assessment of the UE which meets the definitional requirements of capital value in accordance with s 37(3) of the ST Act being the capital value which an estate in fee simple in the land might reasonably be expected to realise upon sale.
The Tribunal finds that the report does not meet the criteria set out in s 38(5) and s 37(2) of the ST Act with reference to reg 54 of the ST Regulations[14] accordingly the Tribunal finds that it does not support the orders sought.
Should the Tribunal exercise its discretion, under s 38(5) of the ST Act, to either amend or refuse the amendment of the schedule of unit entitlement?
[14] ST Regulations, reg 54.
The question of how the Tribunal might exercise its discretion under s 38(5) of the ST Act, is such that it can only be exercised in circumstances where the criteria in s 37(2) of the ST Act have been satisfied.
In summary for the reasons set out above the Tribunal is not satisfied that it should make the orders sought and accordingly the application must be dismissed.
Orders
The Tribunal orders:
1.The application is dismissed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
MS A King, MEMBER
18 APRIL 2024
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