JEFFEES and THE OWNERS OF MATILDA BAY APARTMENTS - STRATA PLAN 37177
[2006] WASAT 377
•22 DECEMBER 2006
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
STREAM: COMMERCIAL & CIVIL
ACT: STRATA TITLES ACT 1985 (WA)
CITATION: JEFFEES and THE OWNERS OF MATILDA BAY APARTMENTS - STRATA PLAN 37177 [2006] WASAT 377
MEMBER: MR M SPILLANE (MEMBER)
MR D LIGGINS (SENIOR SESSIONAL MEMBER)
HEARD: 12 SEPTEMBER 2005 AND 14 NOVEMBER 2005, BALANCE DETERMINED ON THE PAPERS
DELIVERED : 22 DECEMBER 2006
FILE NO/S: ST 130 of 2004
BETWEEN: DENNIS JAMES JEFFEES
Applicant
AND
THE OWNERS OF MATILDA BAY APARTMENTS - STRATA PLAN 37177
Respondent
Catchwords:
Strata titles - Unit entitlement - Order for variation of unit entitlement
Legislation:
State Administrative Tribunal Act 2004 (WA), s 167
Strata Titles Act 1985 (WA), s 16(2)(a), s 103H, s 103H(3), s 103H(3)(a), s 103H(3)(b)
Result:
Application successful
Category: B
Representation:
Counsel:
Applicant: Mr M Grasso
Respondent: Ms D Seed (Acting as Agent)
Solicitors:
Applicant: Millsteed Grasso
Respondent: Dee Seed Real Estate (Real Estate Agency)
Case(s) referred to in decision(s):
Nil
Case(s) also cited:
Nil
REASONS FOR DECISION OF THE TRIBUNAL:
Summary of Tribunal's decision
This was an application to vary the unit entitlement registered in respect of the strata scheme for Strata Plan 37177 located at 10 Kings Park Avenue, Crawley, Western Australia.
Following agreement by the parties' expert valuers that the unit entitlement should be amended, the Tribunal needed to satisfy itself pursuant to s 103H(3) of the Strata Titles Act 1985 (WA) that the proportion the unit entitlement of any lot in the scheme bears to the aggregate unit entitlement of all lots in the scheme, is not consistent with the proportion that the value of that lot bears to the aggregate value of all lots in the scheme and that such lack of consistency is sufficiently great as to be unfair or anomalous.
Having considered submissions received and the Joint Statement of Experts, the Tribunal was satisfied that the application passed the relevant test and ordered that the registered schedule of unit entitlements be amended.
Application
This matter was first lodged with the Strata Titles Referee, as he then was, on 30 November 2004. The application was lodged by a proprietor of a lot in the scheme for an order for the variation of unit entitlements under s 103H of the Strata Titles Act 1985 (WA) in respect of Strata Plan 37177 being premises located at 10 Kings Park Avenue, Crawley, Western Australia.
In the application, the applicant sought orders amending the schedule of unit entitlements registered in the scheme from the existing unit entitlements set out in the table below to the proposed unit entitlements, also set out.
Lot Number
Existing Unit Entitlement
Proposed Unit Entitlement
1
60
56
2
63
62
3
67
73
4
72
75
5
78
79
6
80
85
7
84
87
8
92
87
9
93
89
10
94
91
11
107
95
12
110
121
Aggregate
1000
1000
Although the application was originally made to the Strata Titles Referee, the State Administrative Tribunal commenced operations on 1 January 2005 and, by virtue of s 167 of the State Administrative Tribunal Act 2004 (WA), this matter was transferred to the Tribunal for determination.
Following a number of directions hearings, the matter came on for final hearing on 12 September 2005 and was adjourned part heard and reconvened on 14 November 2005.
On 14 November 2005 the matter was again adjourned to allow the parties' experts further time to consider the position and confer.
Following several further directions hearings, the Tribunal issued specific directions as to the conferral of experts, and on 13 July 2006 a Joint Statement of Experts dated 6 July 2006 which agreed the proposed unit entitlement was tendered to the Tribunal.
Section 103H(3) of the Strata Titles Act 1985 states:
"(3)On the making of an application under subsection (1), the State Administrative Tribunal may make an order under this section if satisfied that ‑
(a)the proportion that the unit entitlement of any lot in the scheme bears to the aggregate unit entitlement of all lots in the scheme is not consistent with the proportion that the value of that lot bears to the aggregate value of all lots in the scheme; and
(b)that the lack of consistency is sufficiently great as to be unfair or anomalous."
In light of the provisions of s 103H(3) of the Strata Titles Act 1985 and the fact that the parties had filed an agreed Joint Statement of Experts, the Tribunal made the following orders on 20 July2006:
"1.All parties have until 31 August 2006 to make submission in respect of what finding the Tribunal should make in respect of section 103H(3)(a) and (b) of the Strata Titles Act 1985 (outlined above) in light of the valuers agreeing the Proposed Unit Entitlement in the joint statement dated 6 July 2006."
The only submissions received by the Tribunal in compliance with that order were submissions on behalf of the Seventh Interested Party, Ms Jan Patricia Kent, which submissions were received on 17 August 2006.
Consideration
In the Joint Statement of Experts dated 6 July 2006, Valuers RG Hall, KS Johnson and M Dempsey agreed the following table which outlined in the second column the agreed Proposed Unit Entitlement as of June 2006:
1
62
1.225
56
60
2
65
1.280
62
63
3
69
1.360
73
67
4
73
1.44
75
72
5
77
1.520
79
78
6
84
1.660
85
80
7
87
1.715
87
84
8
89
1.755
87
92
9
91
1.795
89
93
10
93
1.835
91
94
11
98
1.935
95
107
12
112
2.210
121
110
1000
19.730
1000
1000
LOT #
PROPOSED UE
CV
R.G.H
ACTUAL
Jun-06
Jun-06
Apr-04
DEMPSEY
ORIGINAL
Section 103H(3)(a) of the Strata Titles Act 1985 allows the Tribunal to make an order if it is satisfied that the proportion that the unit entitlement of any lot in the scheme bears to the aggregate unit entitlement of all lots in the scheme is not consistent with the proportion that the value of that lot bears to the aggregate value of all lots in the scheme.
In respect of this issue, the Seventh Interested Party submitted:
(i)that the agreed joint report shows that the proportion that the present unit entitlement of Lot 11, being the Seventh Interested Party's lot, bears to the present aggregate unit entitlement of all lots in the scheme is not consistent with the proportion that the present value of that lot bears to the present aggregate value of all lots in the scheme; and
(ii)that the first limb of s 103H(3) is not concerned with questions of degree; it looks only to whether there is an inconsistency (that is, inequality or discrepancy) to any extent between the proportions of unit entitlement and value and, in the present case, the first limb is satisfied.
However, s 103H(3)(b) adds a second component, or, as the Seventh Interested Party describes it as, a second limb, which must be satisfied and that is that the lack of consistency referred to in s 103H(3)(a) is sufficiently great as to be unfair or anomalous.
It is submitted that the second limb is concerned with a question of degree, namely whether the lack of consistency is sufficiently great. It will be sufficiently great if it is either unfair or if it is anomalous, and in that respect the Seventh Interested Party states:
(i)the two words represent a distinct concept. Unfair means "not equitable or unjust" and anomalous means "irregular or abnormal", see Shorter Oxford Dictionary (Fifth Edition);
(ii)in the present case, the inconsistency in relation to the Seventh Interested Party's lot is both unfair and anomalous as the present unit entitlement is 9 units or about 9% more than the unit entitlement agreed by the experts based on the value of their lot and other lots in the scheme;
(iii)that number of units is significant by itself but presently the Seventh Interested Party's unit entitlement also bears a higher proportion of the total unit entitlement than it would if all unit entitlements were to be adjusted as agreed by the experts and that the adjustment of unit entitlements for all units as agreed by the experts would result in:
(a)a lowering of the amount of the Seventh Interested Party's annual levies;
(b)a more equitable distribution of the burden of the levies across all lot owners; and
(c)the value of each unit being justly reflected in the unit allocation;
(iv)the lack of consistency between the current proportion of the Seventh Interested Party's unit entitlements and the current proportionate value of their lot is unfair because, under the current regime, the Seventh Interested Party will be required to pay significantly greater body corporate levies over the ensuing years than they would have to pay if their unit entitlement and the unit entitlement of the other lot holders were to be adjusted. Without adjustment, the re‑sale value of their lot will or is likely to be adversely affected and that too, it is submitted, is unfair; and
(v)the lack of consistency is anomalous, as the grounds in support of the initial application indicated that the original unit entitlement allocation was undertaken on a somewhat arbitrary basis between the two original owner/developers to reflect a percentage of their ownership interest in the scheme rather than the value of each individual lot. Such an allocation produced anomalous results, including notably, a significantly higher allocation to the Seventh Interested Party's lot than would ever have been justified by its value and proportionate value of the other lots in the scheme.
It is therefore submitted that both limbs of s 103H(3) are satisfied.
Having considered the agreed Joint Statement of Experts dated 6 July 2006, the submissions on behalf of the Seventh Interested Party, and the fact that the proposed amended unit entitlements will vary the Seventh Interested Party's unit entitlement in excess of 5% which is the amount required by s 16(2)(a) of the Strata Titles Act 1985 in an agreed re‑allocation, the Tribunal is satisfied that in the present case the proportion of the unit entitlement that Lot 11 bears to the aggregate unit entitlement of all lots in the scheme is not consistent with the proportion that the value of that lot bears to the aggregate value of all lots in the scheme and that that lack of consistency is sufficiently great as to be unfair or anomalous.
In the circumstances, as the Tribunal is satisfied in terms of s 103H(3)(a) and s 103H(3)(b) that the unit entitlement of Lot 11 should be amended it follows that the unit entitlement of the other lots must also be amended to allow such re‑allocation.
Furthermore, both the applicant's and respondent's experts agree what the proposed unit entitlement should be, and at the directions hearing on 13 July 2006 the parties confirmed that consent orders could be made in line with the agreed Joint Statement of Experts.
In all the circumstances the schedule of unit entitlements should be amended in the manner agreed in the Joint Statement of Experts dated 6 July 2006.
Orders
The schedule of unit entitlement registered in respect of Strata Plan 37177 for premises located at 10 Kings Park Avenue, Crawley, Western Australia be amended as follows:
Lot Number
Existing Unit Entitlement
New Unit Entitlement
1
60
62
2
63
65
3
67
69
4
72
73
5
78
77
6
80
84
7
84
87
8
92
89
9
93
91
10
94
93
11
107
98
12
110
112
1000
1000
I certify that this and the preceding [23] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MR M SPILLANE, MEMBER
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