JM Properties Pty Ltd v Strata Corporation No 13975 Inc
[2006] SADC 12
•16 February 2006
District Court of South Australia
(Civil)
JM PROPERTIES PTY LTD v STRATA CORPORATION NO 13975 INC & ORS
Judgment of Her Honour Judge Simpson
16 February 2006
REAL PROPERTY - STRATA AND RELATED TITLES AND OCCUPANCY
Whether claim by plaintiff, as unit holder in strata corporation, of breach of Strata Titles Act 1988, and/or prejudice as a result of wrongful act or default by defendant strata corporation and other unit holders, and/or unreasonable, oppressive or unjust decisions of defendant strata corporation and other unit holders and/or dispute between plaintiff and defendant strata corporation and other unit holders in relation to an aspect of occupation or use of a strata unit made out - whether relief sought by plaintiff altering the articles of strata corporation should be granted - held: claim not made out on the evidence - no basis for any relief established - court not satisfied in any event that articles should be altered.
Strata Titles Act 1988 s 5, s 6, s 7, s 8, s 19, s 20, s 23, s 25, s 27, s 33, s 34, s 41, s41A, referred to.
Jones v Sutherland Shire Council [1979] 2 NSWLR 206; Millar v Houghton Table Tennis & Sports Club Inc (2003) 225 LSJS 241; Popovic & Ors v Tanasijevic & Ors (No 5) (2000) 34 ACSR 1; Thomas v HW Thomas Ltd [1984] 1 NZLR 686 ; Fexuto v Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672; In re Tivoli Freeholds Ltd [1972] VR 445; Scottish Co-op Wholesale Society Ltd v Meyer [1959] AC 324; Wayde v New South Wales Rugby League Ltd (1985) 180 CLR 459; Wilson v Meudon Pty Ltd & Anor [2004] NSWSC 1183 (15/12/03); Peters' American Delicacy Company v Heath et Ors (1938-1939) 61 CLR 457, applied.
CORPORATIONS - MANAGEMENT AND ADMINISTRATION
Whether first meeting of strata corporation validly convened - whether original registered proprietors in strata scheme consented to resolution by strata corporation adopting articles of association - whether secretary of original registered proprietors had authority to act on their behalf at meeting - held: meeting validly convened - presumption of regularity of all internal management procedures of original registered proprietors, and strata corporation, not displaced - plaintiff not entitled to relief sought.
McLean Bros & Rigg Ltd v Grice [1906] 4 CLR 835; Northside Developments Pty Ltd v Registrar-General (1989-1990) 170 CLR 146; Armagas Ltd v Mundogas SA [1986] AC 717 ; Freeman & Lockyer v Buckhurst Park Properties (Magnal) Ltd [1964] 2 QB 480; Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72; Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; In re Duomatic Ltd [1969] 2 Ch 365; Pascoe Ltd (In Liquidation) v Lucas [1998] SASC 660 unreported judgment, 1 May 1998, applied.
Panfida Ltd v Hartogen Energy Ltd and Ors (1988) 51 SASR 404; Salomon v A Salomon & Co Ltd [1871] AC 22; In re Horsley & Weight Ltd [1982] Ch 442; Multinational Gas and Petrochemical Co v Multinational Gas and Petrochemical Services Ltd [1983] Ch 258; Parker & Cooper Limited v Reading [1926] Ch 975; Brick and Pipe Industries v Occidental Life Nominees Pty Ltd (1990) 3 ACSR 649; Thorby v Goldberg (1964) 112 CLR 597, considered.
JM PROPERTIES PTY LTD v STRATA CORPORATION NO 13975 INC & ORS
[2006] SADC 12
This is an action which involves the registered proprietors, or unit holders of property subject to a strata plan, and the strata corporation which is responsible for the administration and maintenance of common property for the benefit of unit holders, the administration of corporation property and enforcement of the articles of the corporation.
The Parties
The plaintiff, JM Properties Pty Ltd (‘JM Properties’), is a body corporate[1] and, in its capacity as trustee of the Balalis Unit Trust and the J & M Balalis Family Trust, is the owner of three units in the Renaissance Arcade in Rundle Mall, Adelaide, South Australia.
[1] T 20-21
The property known as the Renaissance Arcade was developed in the 1980’s by linking a number of existing buildings with some new construction to form a shopping arcade in the centre of the city of Adelaide. The original development involved more properties than those buildings now comprising the Renaissance Arcade, which links Rundle Mall to North Terrace, to the north, and through the Adelaide Central Plaza/David Jones Food Court to the Mansions on Pulteney Street to the east.
The property was converted to strata title in December 1996 with a view to facilitating the sale of its individual components, increasing both investor interest in it and, in particular, the sale value of that part of the property with a frontage to Rundle Mall. [2] Since it was established in 1976, Rundle Mall has been regarded as a premier retail shopping precinct.
[2] Report Mr McArdle P 99
The Renaissance Arcade is subject to a strata plan and divided into nine units and common property, pursuant to the Strata Titles Act 1988. The Strata Titles Act 1988 (‘the Act’) and the Real Property Act 1886 are to be read together and construed as if the two Acts constituted a single Act.[3]
[3] Strata Titles Act 1988 section 4
The plaintiff and the second to seventh defendants are the registered proprietors and unit holders of the nine units as follows:
Unit 1 Second defendant Select Plus Pty Ltd
Unit 2 Third defendant Duke Constructions Pty Ltd
Fourth defendant Duke Properties Pty Ltd
Unit 3 Fifth defendant Demetor SA Pty Ltd
Units 4, 5 and 6 Plaintiff JM Properties Pty Ltd
Units 7 and 8 Sixth defendant Anglican Superannuation Australia Ltd
Unit 9 Seventh defendant Larissa Vakulina
The first defendant, Strata Corporation No 13975 Inc (‘the Strata Corporation’), is a body corporate created under the Act on the deposit of a strata plan.[4] All unit holders are members of the Strata Corporation.[5]
[4] Section 3
[5] Section 18(4)
The Strata Corporation and its members are bound by the Articles of the Strata Corporation. The Articles of the Strata Corporation were adopted by unanimous resolution at the first meeting of the Strata Corporation on 18 December 1996 and lodged with the Registrar-General at the Lands Titles Registration Office on 13 February 1997.
The Articles provide rules generally relating to the obligations of unit holders, as unit holders and in the maintenance, use and occupation of units. In particular, Article 17 provides the basis for the calculation of contributions and levies by unit holders. Article 18 provides for the exercise of a vote at meetings of the Strata Corporation by each unit holder in accordance with the unit entitlement of the unit. The unit entitlement is defined in section 6 of the Act as follows:
(1) The unit entitlement of a unit is a number assigned to the unit that bears in relation to the aggregate unit entitlements of all of the units defined on the relevant strata plan (within a tolerance of 10 per cent) the same proportion that the capital value of the unit bears to the aggregate capital value of all of the units.
(2) The unit entitlement of a unit must be expressed as a whole number.
(3) The aggregate unit entitlements of all units defined on a strata plan must, if the regulations so provide, be a number fixed in the regulations.
The aggregate unit entitlements of all units defined on a strata plan for the purposes of section 6(3) was fixed at 10,000 by Regulation 4 in the Regulations to the Act. Article 19 provides for the recovery of the cost of work that wholly or substantially benefits a particular unit or units from the holders of the unit or units.[6]
[6] And see section 27(6)
JM Properties is the defendant in Action No. 394/2003. The Strata Corporation is the plaintiff in that action, in which the Strata Corporation seeks to recover the contributions/levies said to be owed by JM Properties as at 14 August 2003, in the sum of $70,814.69. The amount which is currently owed by JM Properties to the Strata Corporation by way of contributions/levies, if any amount at all, depends on the resolution of the issues raised by JM Properties in the defence to Action 394/2003. They are the issues which are also to be determined in this action.
It is agreed between the parties that resolution of Action No. 394/2003 depends on and will be determined by the outcome of this action, subject to any further submissions on the amount of any judgment sum which should be entered, in the event the plaintiff fails in this action.
The Application
This is an application brought by the plaintiff seeking the following relief:
1.A declaration that the first general meeting of the Strata Corporation on 18 December 1996, and a resolution passed at the meeting to adopt Articles, together with every subsequent meeting and resolution of the Strata Corporation since 18 December 1996, were in breach of the Act, unconstitutional, invalid, null and void; and
2.A declaration that the Articles of the Strata Corporation have never been lawfully created in accordance with the Act or at common law and are therefore unconstitutional, invalid, null and void;[7]
[7] Statement of Claim, paras 9, 10, 29.3, 29.4, 29.5
OR, in the alternative to the declarations outlined above, the plaintiff is seeking the following declarations and orders, pursuant to section 41A(1) of the Act:
1. A declaration that:
(a) The first to sixth defendants have breached the Act;
(b) The plaintiff has been prejudiced, as occupier of Units 4, 5 and 6, by the wrongful act or default of the first defendant, the management committee of the first defendant, or the second to seventh defendants;
(c) Certain decisions of the first defendant, or the management committee of the first defendant, are unreasonable, oppressive or unjust;
(d)A dispute has arisen between the first defendant and the plaintiff in relation to an aspect of the occupation or use of a strata unit;
(e) A dispute has arisen between the plaintiff and the second to sixth defendants in relation to an aspect of the occupation or use of a strata unit [8].
[8] Statement of Claim, paras 29.6-29.10 inclusive
AND
2.Orders that:
2.1 Article 17 of the Articles of the Strata Corporation be retrospectively altered as and from 19 July 2002, or such other date as the Court sees fit, so that the percentage contributions and levies payable to the Strata Corporation by the registered proprietor of each unit are to be calculated by reference to either the market value of each unit as at 30 June 2004, or the original unit entitlements, or the net lettable area of each unit, or in accordance with such other percentage as the Court sees fit, instead of the percentages set out in Article 17.[9]
2.2 Article 19 be deleted;[10]
AND
3.Consequential orders in relation to any change in the plaintiff’s obligations to the Strata Corporation if the orders sought above are made[11].
[9] Statement of Claim, paras 29.11.1.1-29.11.1.4 inclusive; 29.11.3
[10] Statement of Claim para 29.11.2
[11] Statement of Claim, paras 29.12-29.20
Section 41A of the Act provides:
(1) An application may be made under this section--
(a)if a strata corporation or a member of a strata corporation claims that a breach of this Act or of the articles of the corporation has occurred; or
(b)if a member of a strata corporation claims to have been prejudiced, as occupier of a strata unit, by the wrongful act or default of the strata corporation, of the management committee of the strata corporation, or of some other member of the strata corporation; or
(c)if a member of a strata corporation claims that a decision of the strata corporation or of the management committee of the strata corporation is unreasonable, oppressive or unjust; or
(d) if a dispute arises--
(i) between a strata corporation and a member of the corporation; or
(ii) between two or more members of a strata corporation,
in relation to any aspect of the occupation or use of a strata unit.
(2) Subject to this section, an application must be made to the Magistrates Court and the Magistrates Court Act 1991 applies, with such modifications as may be necessary for the purpose or as may be prescribed, in relation to the application as if the proceedings were a minor civil action within the meaning of that Act.
(3) A person may, with leave of the District Court, bring an application under this section in the District Court.
(4) The District Court may, on the application of a party to proceedings under this section that have been commenced in the Magistrates Court, order that the proceedings be transferred to the District Court (and such an order will have effect according to its terms).
(5) Proceedings should not be commenced in, or transferred to, the District Court under subsections (3) or (4) unless the District Court considers that it is appropriate for the court to deal with the matter by reason of the complexity or significance of the matter.
(6) A court may, on its own initiative or on an application by a party to the proceedings—
(a)transfer an application under this section to the Supreme Court on the ground that the application raises a matter of general importance; or
(b)state a question of law for the opinion of the Supreme Court.
(7) A court, in hearing and determining an application under this section, should act according to equity, good conscience and the substantial merits of the case, without regard to technicalities and legal forms, and is not bound by the rules of evidence but may inform itself on any matter in such manner as it thinks fit.
(8) A member of a strata corporation duly appointed by the corporation for the purpose may represent the corporation in any proceedings under this section.
(9) A court may, in respect of an application under this section--
(a) attempt to achieve settlement of the proceedings by agreement between the parties;
(b)require a party to provide reports or other information for the purposes of the proceedings;
(c) order that a party take such action as in the opinion of the court necessary to remedy any default, or to resolve any dispute, and is specified in the order;
(d) order that a party refrain from any further action of a kind specified in the order;
(e) by order--
(i) alter the articles of the corporation;
(ii) vary or reverse any decision of the corporation, or of the management committee of the corporation;
(f)give judgment on any monetary claim;
(g)make orders as to costs;
(h)make any incidental or ancillary orders.
(10) A court should not make an order to alter the articles of a corporation unless--
(a) the corporation is a party to the proceedings or the court is satisfied that the corporation has been given a reasonable opportunity to become a party to the proceedings; and
(b) if it appears to the court that the alteration could adversely affect a member of the corporation who is not a party to the proceedings, the court is satisfied that the member has been notified of the possibility that such an order could be made and given a reasonable opportunity to make submissions to the court in relation to the matter; and
(c) in any event, the court is satisfied that the order is essential to achieving a fair and equitable resolution of the matters in dispute.
(11) Where an application is made under this section and the court is satisfied that an interim order is justified by the urgency of the case, the court may make an interim order to safeguard the position of any person pending its final resolution.
(12) An interim order--
(a)has effect for such period as the court may determine and specifies in the order, and may be renewed by the court from time to time; and
(b) may be made or renewed whether or not notice of the application has been given to a respondent; and
(c)unless sooner revoked, ceases to have effect on the determination or resolution of an application under this section.
(13) A person who fails to comply with an order under this section is guilty of an offence.
Penalty: Division 7 fine.
(14) The power to make an order under this section includes the power to vary or revoke an order.
(15) A court may decline to proceed with an application under this section if it considers that it would be more appropriate for proceedings to be taken in another court or tribunal constituted by law.
(16) This section does not limit or derogate from any civil remedy at law or in equity.
(17) Rules of Court may be made dealing with any matter necessary or expedient for the effective and efficient operation of this section.
(18) The rules for a particular court will be made in the same manner as ordinary rules are made for that court.
(19) In this section--
"member" in relation to a strata corporation includes any person who is bound to comply with the articles of the corporation.
On 8 August 2003, the plaintiff was granted leave to bring the application in the District Court pursuant to section 41A(3) of the Act.
I bear in mind that in the determination of that part of the application brought pursuant to section 41A of the Act, the court should act according to equity, good conscience and the substantial merits of the case, without regard to technicalities and legal forms, and is not bound by the rules of evidence but may inform itself on any matter in such manner as it thinks fit.[12]
[12] Section 41A(7)
Witnesses
The plaintiff called Mrs Balalis, a director of the plaintiff company. The evidence given by Mrs Balalis was emotional, discursive and to a significant degree, unresponsive in the answers to many questions. Mrs Balalis demonstrated, in my opinion, a lack of understanding of the issues before the court.
Mrs Balalis had very little first hand knowledge of matters relating to management of the Strata Corporation in particular. It was clear from the evidence she gave that Mrs Balalis had relied on advice and information given to her by others, in particular, by Mr William Bullock, who was the property manager and agent for the plaintiff.[13] Mr Bullock did not give evidence. Mrs Balalis gave evidence of Mr Bullock’s opinions and expressed her own opinions, which were apparently based on what Mr Bullock had told her, on issues which it is ultimately for the court to decide. I found it necessary to approach the evidence given by Mrs Balalis with caution for those reasons. Where her evidence is in conflict with other evidence, I do not accept it.
[13] Statement of Claim, para 11
The plaintiff also called:
·Mr John Baggio and his wife, Mrs Jacqueline Baggio, directors of the three companies which were the original owners of the property subject to the strata scheme
·Mr Richard McNeil who in December 1996 was a partner in the legal firm, Thomsons, now Thomson Playford, and the principal solicitor acting for the State Bank, later the South Australian Asset Management Corporation, the mortgagee in relation to the Renaissance Arcade property
·Mr Stephen White, solicitor with the firm of Thomson Playford
·Mr Richard McCarthy, chartered accountant and Property Officer with the South Australian Asset Management Corporation and
·Mr Peter Edwards, a director of Adelaide Strata Management.
Each of the other witnesses called by the plaintiff answered the questions asked of them in an honest and straightforward manner. I have found that the evidence they were called to give was not always relevant to the issues raised in the action. No criticism of those witnesses or their evidence is made on that account. I accept the evidence of the other witnesses called by the plaintiff, in so far as it was relevant to the decisions called for on the action brought by the plaintiff, and with the qualification attached to the evidence given by Mr Baggio, mentioned below.
Mr Grant Paterson, the secretary of the three companies which were the original registered proprietors of the property in the Renaissance Arcade, was not called to give evidence. He retired as secretary of the companies on 20 December 1996.[14] I draw no adverse inference against any party on account of his not being called to give evidence.
[14] P18-P20 incl
The first defendant called Mr Peter Tierney, retail property manager at Jones Lang LaSalle, the managing agent for the Strata Corporation. He was an impressive witness. He gave evidence in an objective and careful way. I accept his evidence.
The third, fourth and sixth defendants called Mr Simon Lambert, a director in the firm of McGees Property, which in 2001 and 2002 acted as selling agent on behalf of a mortgagee in possession in relation to the sale of Units 4, 5, 6 and 9 in the property, Mr Constantine Angelopoulos, a director of the third and fourth defendants, Duke Group Construction Pty Ltd and Duke Properties Pty Ltd, and Mr Richard Powers, a director of the sixth defendant, Anglican Superannuation Australia Ltd. The fifth defendant called Mr Edward Brew, a director of the fifth defendant, Demetor SA Pty Ltd.
Each of the witnesses called on behalf of the third, fourth, fifth and sixth defendants gave his evidence in an honest and straightforward way. I accept the evidence of the witnesses called on their behalf.
In the event, there was very little dispute about the facts.
Expert Reports
The following reports were tendered by consent:
Mr Fudge, Planning Consultant 8/09/04, 27/9/04, 24/01/05[15]
Mr McArdle, Certified Practising Valuer 21/09/04, 20/01/05[16]
Mr Ellery, Chartered Accountant 29/09/04, 20/01/05[17]
Mr Christodoulou, Property Valuer 14/12/04[18]
Mr Holmes, Chartered Accountant 21/12/04[19]
[15] P95, P96, P97
[16] P99, P100
[17] P101, P102
[18] D38
[19] D39
The second and seventh defendants took no active part in the hearing and agreed to abide the event save as to any orders made as to costs.
The Strata Plan
An application dated 16 September 1996 was made to the Registrar-General for the deposit in the Lands Titles Registration Office of a strata plan by the registered owners of the property, Cassowary Pty Ltd, Caribou Pty Ltd and Duiker Pty Ltd[20], in accordance with the provisions of section 7 of the Act.
[20] P1, P2
Mr Baggio identified his own signature as a director, and the signature of Mr Paterson, the company secretary in each case, appearing in several places on the application for the deposit of the strata plan, attesting to the fixing of the common seal of Caribou Pty Ltd, Cassowary Pty Ltd and Duiker Pty Ltd respectively to that document.
The application was accompanied by a strata plan. Section 5 of the Act provides, inter alia, as follows:
(1) A strata plan is a plan dividing land into--
(a) units (of which there must be at least two); and
(b) common property.
(2) A strata plan must comprise the whole of one or more allotments.
(3) A strata plan--
(a) must define the units to be created by the plan in a manner that allows the boundaries of each unit to be ascertained; and
(b) must assign to each unit a distinguishing number; and
(c) must include a schedule of unit entitlements in relation to the units; and
(d) must delineate the boundaries of the land comprised in the plan; and
(e) must delineate in relation to those boundaries the external lateral boundaries of all buildings on the land; and
(f) must comply with any other requirements stipulated by the Registrar-General.
“Unit" is defined in section 3 of the Act to mean an area shown on a strata plan as a unit.
The strata plan accompanying the application defined the nine units and included a schedule of unit entitlements in relation to the units, in accordance with section 5(3)(c) of the Act.
The Schedule of Unit Entitlements[21] included with the application provided as follows:
[21] P2, P3
UNIT NO. UNIT ENTITLEMENT 1
2
3
4
5
6
7
8
9
1030
1740
1930240
280
1704410
80
120
AGGREGATE 10000
The Schedule was in accordance with the Certificate[22] from a licensed valuer, pursuant to the requirements of section 7(4)(e) of the Act.
[22] P32
The application also included, pursuant to section 7(3) of the Act, the written consent of Sandhurst Trustees Pty Ltd, an encumbrancee in relation to encumbrances No. 6806206 and 6806209 over part of the property, together with the consent to the deposit of the strata plan of other persons with a registered estate or interest or right to exclusive use and occupation of the units defined in the strata plan.
The Deposit of the Strata Plan
Section 8 of the Act relevantly provides:
(1) Where--
(a) application is made for the deposit of a strata plan in accordance with this Act; and
(b) the requirements made by or under this Act in relation to the application have been satisfied; and
(c) the plan conforms with the requirements of this Act,
the Registrar-General will, subject to subsection (1a), deposit the plan in the Lands Titles Registration Office and assign a number to it.
…
(2) On the deposit of a strata plan under subsection (1)--
(a) an appropriate note must be entered on any certificate of title for the land to which the plan relates; and
(b) the existing certificates for the land must then be cancelled and new certificates issued for the units and common property created by the plan; and
(c) a strata corporation with the powers and functions conferred or assigned by this Act is created.
(3) The certificates of title for the units will be issued in the name of the registered proprietor of the land to which the plan relates and the certificate for the common property will be issued in the name of the strata corporation.
The strata plan was deposited in the Lands Titles Registration Office by the Registrar-General on 6 December[23] or 9 December[24] 1996. There is no evidence of the precise date of deposit, but nothing turns on that date. I assume, although the evidence is incomplete, that a note that Strata Plan No 13975 had been deposited in the Lands Titles Registration Office was entered on or around 17 December 1996 on each of the following certificates of title to which the strata plan related:
[23] Statement of Claim, para 3
[24] Defences- D1 para 3, D2 para 3, D3,4 & 6, para 3, D5, para 2, D7, para 3
Certificates of Title Register Book
1.Volume 5292 Folio 645 - registered proprietor Caribou Pty Ltd;
2.Volume 5294 Folio 158, Volume 4278 Folio 681, Volume 4278 Folio 682 – registered proprietor Cassowary Pty Ltd;
3.Volume 5186 Folio 5 - registered proprietor Caribou Pty Ltd and Cassowary Pty Ltd
4.Volume 4326 Folio 151 - registered proprietor Duiker Pty Ltd.[25]
The following plan shows the location of the nine units in the Renaissance Arcade:
N
Ground Floor Plan[26][25] P2
[26] P3
Units 1, 2, 3 and 4 are contained in the Richmond Hotel building. The majority of the building is taken up with Unit 3, the Richmond Hotel business, which includes bar, dining and accommodation facilities over a number of floors. A reception area for the hotel is located in part of Unit 1 and there are retail tenancies in Units 1, 2 and 4 on the ground floor. A chiller, supplying chilled water to an air conditioning system serving the hotel and Units 1, 2, 4, 5, 6 and part of 7 and 8, is located on the roof of the hotel.
The Atrium is centrally placed in the property. Part of Unit 4, Unit 5 and part of Unit 7 front onto the Atrium, which includes common areas. The larger part of Unit 7 is located in the Dymocks Standard Books Building. Unit 6, part of Unit 7 and Unit 8 are contained within the building at 23 Austin Street, and Unit 9 in the building at 21 Austin Street.[27]
[27] Report Mr McArdle P99 at pp 11-18
There is no dispute that all of the units are non-residential premises.
The Strata Corporation
The Strata Corporation was created on the deposit of the strata plan on either 6 or 9 December 1996. Once the strata plan was deposited by the Registrar-General in the Lands Titles Registration Office and a number assigned to it, the first defendant, Strata Corporation No 13975 Inc (‘the Strata Corporation’), was created with the powers and functions conferred on or assigned to it by the Act.[28]
[28] Section 8(2)
Section 23 of the Act provides:
(1) A strata corporation must have the following officers:
(a) a presiding officer (to preside at meetings of the corporation); and
(b) a secretary; and
(c)a treasurer.
(1a) Unless all of the units comprised in the strata scheme consist of non-residential premises, the officers of a strata corporation must be unit holders.
(2) Any two or more of the above offices may be held simultaneously by the same person.
(3) Until the first appointments are made to the above offices, they will be held by the original proprietor (or, if the original proprietor is a body corporate, by its nominee or in the absence of a nominee, by its secretary).
(4) Appointments to the above offices must be made by the strata corporation at a general meeting of the corporation.
(5) A strata corporation must not allow any of the above offices to remain vacant for more than six months.
(6) A strata corporation may appoint or engage a person to assist any person appointed under this section as an officer of the corporation.
The Articles of the Strata Corporation
Pursuant to sections 8(2)(c) and 19(1) of the Act, on the deposit of the strata plan in early December 1996, the Articles of the Strata Corporation were those set out in Schedule 3.[29]
[29] Set out in full in Annexure I to the Judgment
Section 19 of the Act provides for the adoption of articles in substitution for the Schedule 3 articles as follows:
(1) Subject to this section, the articles of a strata corporation will be as set out in schedule 3.
(2) A strata corporation may by special resolution—
(a) adopt articles in substitution for those set out in schedule 3; or
(b) revoke or vary articles previously so adopted.
(3) A resolution under subsection (2) has no effect until a copy of the resolution certified in the prescribed manner and accompanied (where appropriate) by the substituted articles, or the variation to the articles, is lodged with the Registrar-General.
(4) The articles of a strata corporation cannot--
(a) prevent or restrict alienation of a unit by a unit holder;
(b) prevent or restrict a unit holder from leasing or granting rights of occupation in respect of a unit;
(c) prevent an occupier of a unit who is blind or deaf from keeping a guide dog at the unit, or restrict the use of a guide dog by such a person.
Contributions of Unit Holders
The powers of the Strata Corporation include a power to raise such funds (including reserve funds for future expenditure of a capital nature) as it thinks necessary.[30] For the purpose of raising funds, the Strata Corporation may, by resolution, levy contributions against all unit holders.[31]
[30] Section 27(1)
[31] Section 27(2)
Section 27(3) of the Act provides that the contributions of the unit holders will be proportional to the unit entitlements of the various units, or will be determined on such other basis as the Strata Corporation decides by unanimous resolution. The Schedule 3 Articles make no provision for the method of calculating the respective levies or contributions of unit holders.
Voting Rights
Section 34 of the Act provides for the voting rights of unit holders at general meetings.
Section 34 provides:
(1)Subject to this section, at a general meeting of a strata corporation, one vote may be exercised in respect of each unit on any matter arising for decision.
(2) If—
(a) all of the units comprised in the strata scheme consist of non-residential premises; and
(b) the strata corporation has, by unanimous resolution, decided to adopt the voting system provided by this subsection,
then a number of votes is exercisable in respect of each unit equivalent to the unit entitlement of the unit.
(3) A vote may be exercised as follows:
(a) it may be exercised (subject to paragraph (b)) by the unit holder or a proxy of the unit holder;
(b) if there are two or more unit holders in respect of the same unit, the following provisions apply:
(i) if only one attends the meeting - the vote is exercisable by that unit holder;
(ii) if two or more attend the meeting - the vote is exercisable by one of them on behalf of all in accordance with an agreement between them or, if there is no such agreement, by the unit holder whose name appears first on the certificate of title for the unit.
(4) A unit holder may exercise an absentee vote on a proposed resolution by giving the secretary written notice of the proposed vote at least six hours before the time of the meeting.
(5) A written ballot may be demanded by a unit holder (or a proxy of a unit holder) attending a meeting.
(6) Such a ballot will be taken amongst the unit holders (or proxies of unit holders) attending the meeting in such manner as the person presiding at the meeting thinks fit.
(7) Except where a unanimous resolution is required, a vote is not exercisable in relation to a unit unless all amounts due and payable to the strata corporation in respect of the unit have been paid.
(8) A decision supported by the majority of votes cast at a duly convened meeting of the corporation will be taken to be a decision of the corporation (unless a special or unanimous resolution is required).
The Original Registered Proprietors of the Property
The three companies, Caribou Pty Ltd, Cassowary Pty Ltd and Duiker Pty Ltd, were the original registered proprietors in relation to the strata scheme, that is, the registered proprietors of an estate in fee simple in the land comprising part of the Renaissance Arcade immediately before the deposit of the strata plan in December 1996.[32]
[32] Section 3 of the Act
The companies were part of the Corfu Jeans Group of companies, owned by the Baggio family, and were apparently subsidiaries of a holding company, Fadden Pty Ltd, reference to which appears on some documents. Mr and Mrs Baggio were directors of the family companies. Mr Baggio said that in December 1996, he had approximately forty family companies of which he was a director. His family companies owned between 25-30 commercial/residential properties in the Central Business District of Adelaide, including properties in Rundle Mall, Pulteney Street, Bank Street and Hindley Street. He estimated the value of those properties to have been in the tens of millions of dollars.
Cassowary Pty Ltd, Caribou Pty Ltd and Duiker Pty Ltd were each incorporated on 25 May 1989 and limited by shares. The directors, secretary and shareholders as at 18 December 1996 were:
Company Directors Appointed Shareholders
Cassowary Pty Ltd[33] Giovanni Baggio 3/7/89 Corfu Jeans Pty Ltd[33] P18
(2 $2.00 shares- fully paid)
Jacqueline Margaret Baggio 1/4/96
Secretary
Grant George Paterson 3/7/89Caribou Pty Ltd[34] Directors Appointed Shareholders
Giovanni Baggio 3/7/89 Corfu Jeans Pty Ltd
(2 $2.00 shares- fully paid)
[34] P20; P31
Jacqueline Margaret Baggio 1/4/96
Secretary
Grant George Paterson 3/7/89
Duiker Pty Ltd[35] Directors Appointed Shareholders
[35] P19
Giovanni Baggio 3/7/89 RMN Corporation (291)
Pty Ltd
(2 $2.00 shares- fully paid)
Jacqueline Margaret Baggio 1/4/96
Secretary
Grant George Paterson 3/7/89The real estate owned by the family companies was subject to mortgages to the State Bank, subsequently the South Australian Asset Management Corporation,[36] and associated financial corporations, between which there were interlocking securities. Mr Baggio and his wife had given personal guarantees supporting the financial arrangements of their family companies.
[36] T605-606
In 1996, the companies were experiencing financial difficulties. Mr Baggio said that it became apparent that he would have to agree to the sale of assets to avoid the mortgagee exercising its power of sale. The financial difficulties the Baggio group were experiencing made it more important for Mr Baggio to spend his time and effort working in more viable business interests in the suburbs.
The transactions disposing of the Renaissance Arcade property were some of the last in the winding down of the Baggio family interests in accordance with a rationalisation required by the mortgagee. It was part of the settlement, which was reached and carried out, between the larger Baggio Group of companies, Mr and Mrs Baggio and the mortgagee, in an effort designed to save the rest of the Baggio family business.
The firm of solicitors acting for the mortgagee in relation to the settlement which was reached between the mortgagee and the Baggio group of companies was Thomsons, now Thomson Playford. Thomsons were not acting at any time for Mr and Mrs Baggio or any of their companies.
Mr Baggio said that Mr Grant Paterson was the secretary of a number of the Baggio family companies, as well as Caribou Pty Ltd, Cassowary Pty Ltd and Duiker Pty Ltd. Mr Paterson had a background in property development and management. He managed a number of the Baggio family properties.
In 1996, while Mr Baggio was focussing his efforts towards trying to save the rest of the business, Mr Paterson was entrusted with the responsibility for the management of the city properties, and in particular, with the management of the disposal of properties in the course of the rationalisation required by the mortgagee. Mr Paterson was responsible for liaising with the mortgagee and in particular, he was to try to maximise the return to the Baggio companies, and indirectly to Mr and Mrs Baggio, on the disposal of the assets of the companies. Mr Baggio said that he spoke to Mr Patterson on a regular basis about the management by Mr Paterson of the disposal of the Baggio family company assets.
It is clear from his evidence, and Mr Baggio accepted, that it was in the interests of himself, his wife and his family companies that the best possible return be obtained in relation to the sale of the Renaissance Arcade properties.
The History Relating to the Deposit of the Strata Plan
The plaintiff tendered a number of documents in the nature of proposals or advice passing between property consultants, real estate agents, consulting surveyors, and the South Australian Asset Management Corporation, and its solicitors, regarding a sales and marketing strategy for the property in 1995 and 1996[37], and letters of advice from property consultants to the sixth defendant, regarding its possible purchase of property in the Renaissance Arcade to add to its investment portfolio.[38]
[37] P21-P26
[38] P27, P28
The plaintiff also tendered reports from Mr David McArdle, property consultant, dated the 21 September 2004 and 20 January 2005[39], relating to the history of the Renaissance Arcade property and his opinion as to the value of the nine units.
[39] P99, P100
Mr McArdle provided consultancy advice to the South Australian Asset Management Corporation, regarding maximising the value of the Renaissance portfolio, which included the Renaissance Arcade, the Mansions and Mansions Arcade, Potty Bonkers Arcade, now known as 146 Rundle Mall, and the linking bridge over Rundle Mall to the Toys R Us building.
In his report of 21 September 2004, Mr McArdle set out the history of the Renaissance Arcade property. Mr McArdle said in his report that a commercial decision was made to sell individual components of the Renaissance Arcade separately, in order to increase investor interest in the properties and specifically, the sale value for the properties with a frontage to Rundle Mall.
A further decision was made to offer the individual components of the Arcade for sale with strata titles, although it was recognised at the time that the conventional method of determining the allocation of strata levies would be inappropriate when applied to a commercial rather than a residential property. It was recognised that an allocation of common expenses on a capital value ratio did not fairly recognise the unique attributes of each of the proposed strata units.
The decision was made to change the articles of the proposed strata corporation with the objective of overcoming the major concerns, which were:
Commercial investors prefer to be totally in control of their investment and would want to be able to manage, renovate, and subdivide their property with minimal external intervention.
Shopping arcades require a ‘common management approach’ to ensure the overall trading success of the arcade.
The proposed strata units varied significantly in:
·Size
·Nature of operation
·Frontage to Rundle Mall or the Arcade, and
·Relative rental and capital values.
It was recognised that the conventional method of determining the allocation of strata levies was inappropriate as this allocation was normally determined by the ratio of unit entitlements which reflected the ratio of capital values.
An allocation of common expenses on a capital value ratio did not fairly recognise the unique attributes of each of the proposed strata units. Examples of the possible anomalies are as follows:
- Units 1 and 2 are relatively higher in value due to the Rundle Mall frontage and have limited contribution to that value derived from the frontage to the Arcade. An allocation of the Arcade common expenses on a capital value ratio would have resulted in these properties being responsible for an excessive share of the common expense.
- Ground level units have a potentially higher rental value on a per square metre basis when compared with the upper floor areas. An allocation of capital expenses on a capital value ratio would have resulted in a relatively higher share of the repairs and maintenance of these upper levels being the responsibility of the ground level units with these units receiving no direct benefit or use of the upper level structure.
On balance, the allocation of expenses on the basis of a capital value ratio was considered to have a detrimental effect on the total sale price(s) that could be achieved.[40]
[40] P99, page26
In particular, Mr McArdle said, to overcome those issues identified above, a decision was made to change the articles of the proposed strata corporation to incorporate the following:
The owners of strata units with levels other than ground level to have specific responsibility for all costs and expenses involved in cleaning, maintaining and repairing the external walls, windows and roof of those levels with a consequent reduction in the overall level of common expenses.
The ability for the owners of each strata unit to vary the size, number and/or configuration of their respective unit or units.
An obligation on each unit owner to at all times consult and liaise through the strata corporation to coordinate the management, administration, marketing, operation and maintenance of the common property and the respective units owned by them as a single facility.
That any work carried out by the strata corporation that wholly or substantially benefits a particular unit or group of units will be at the cost of the owner(s) of the unit or units.
An allocation of the common expenses in accordance with a specified schedule which differed significantly to an allocation based on unit entitlements.[41]
[41] P99, page 27
The effect, according to Mr McArdle, was to transfer potential operating expenses from the properties with a frontage to Rundle Mall to the properties fronting onto the Arcade, resulting in a significantly higher overall value for the Renaissance Arcade property, compared with a value achieved with a general allocation of common expenses on a unit entitlement basis.
The schedules prepared by Mr McArdle and explanatory notes accompanying them[42] illustrate both the basis for the decision which was made, in particular, to re-allocate a proportion of expenses from units with a Rundle Mall frontage, to units with a frontage onto the Arcade, and its continuing application to his estimates of property values at the time of his report.
[42] P99, pages 28 and 29:
The Schedules ignore the Richmond Hotel and focus on the impact on the Rundle Mall and Arcade frontage properties:
Property Estimated Net Income Capitalisation Rate Estimated Value Rundle Mall Frontage $550,000 7.5% $7,333,333 Arcade Frontage $250,000 13.0% $1,923,077 Total $800,000 $9,256,410 Impact of Reallocation of $100,000 in expenses Property Estimated Net Income Capitalisation Rate Estimated Value Rundle Mall Frontage $650,000 7.5% $8,666,667 Arcade Frontage $150,000 13.0% $1,153,846 Total $800,000 $9,820,513 Difference in Total Value $564,103 The schedule identifies an overall enhancement in value of approximately $564,000.
Further analysis of the figures provides an insight into the scale of the impact on the various owners in the event that the expenses were reallocated in accordance with the unit entitlements which would result in –
- A net reduction in value of all the properties of $564,000.
- An increase in value of the Arcade frontage properties of $769,000.
- A decrease in value of the Rundle Mall properties of $1,333,000.
The current rental level for these properties has changed significantly however the impact of the re-allocated expenses is identical. This is illustrated in the second schedule.
Property Estimated Net Income Capitalisation Rate Estimated Value Rundle Mall Frontage $540,000 7.5% $7,200,000 Arcade Frontage $110,000 13.0% $846,154 Total $650,000 $8,046,154 Impact of Reallocation of $100,000 in expenses Property Estimated Net Income Capitalisation Rate Estimated Value Rundle Mall Frontage $640,000 7.5% $8,533,333 Arcade Frontage $10,000 13.0% $76,923 Total $650,000 $8,610,256 Difference in Total Value $564,103
It was recognised that the proposal to change the basis on which contributions were levied against unit holders resulted in some of the units being responsible for a higher level of property outgoings compared with other comparable properties. However, it was also recognised that:
-Potential investors would acquire the strata units with higher outgoings at a commensurately lower purchase price reflecting the lower net income.
- The investor would therefore achieve the same rental yield.
-The investment performance of the asset was expected to be maintained because of the expectation that rental income and outgoings escalation would generally be at the same rate.[43]
[43] P99, page 29
The documents tendered by the plaintiff show that at least from around mid-1995 to mid-1996, the South Australian Asset Management Corporation received advice from various consultants, including Mr McArdle, about possible marketing alternatives in respect of a number of properties owned by the Baggio companies, including but not limited to the proposed strata title units which were part of the Renaissance Arcade property.[44]
[44] P21, P22-P29 incl
By March 1996, Colliers Jardine and Jones Lang Wootton had been appointed as Joint Marketing Agents for the sale of the properties by tender.
The Investment Report[45] prepared by Jones Lang Wootton, stated that:
The Vendor’s solicitors, Thomsons, 101 Pirie Street, Adelaide, are in the process of strata titling approximately one half of the Renaissance Complex. In total, nine (9) strata units will be created and eight (8) existing Torrens titles will be offered for sale.
The seven (7) separate parcels shall comprise the following titles:-
Contracts relating to the sale of the proposed Strata units shall be subject to the deposit of the Strata Plan within 6 months of the date of the contracts.
The Strata Plan was Appendix D to the Investment Report.
[45] P26, Appendix A
At least two of the strata units were sold on the basis of the proposed strata plan, and, in particular, in contemplation of the Strata Corporation, to be created on deposit of the Strata Plan, adopting new Articles in substitution for the Schedule 3 Articles.
Cassowary Pty Ltd and Caribou Pty Ltd entered into a contract on 15 July 1996 with the sixth defendant for the sale and purchase of units to be created under the strata scheme. In particular, the contract was subject to the deposit of the strata plan and to a special condition that Articles were to be adopted at the first meeting of the Strata Corporation in substitution for the Schedule 3 Articles.
On 15 July 1996, the sixth defendant, then described as Australian Clergy Provident Fund Limited, as purchaser, entered into a contract with Cassowary Pty Ltd and Caribou Pty Ltd, as vendors, for the sale and purchase of part of the land in the Renaissance Arcade, that is, Unit 7 and Unit 8, to be created in accordance with the Strata Plan attached to and forming part of the contract[46].
[46] D37
The contract was apparently executed by Mr Paterson for and on behalf of Cassowary Pty Ltd and Caribou Pty Ltd. There is no question raised in the action questioning the validity of the contract or the manner or form of its execution. A Statement under Section 7 of the Land and Business (Sale and Conveyancing) Act 1994, apparently signed by Mr Paterson on behalf of the vendors and annexing the Strata Plan and the proposed Strata Articles, was received by the purchaser on 12 July 1996[47].
[47] D36
The contract was subject, as a condition precedent, to the deposit of a Strata Plan substantially in the form of the Strata Plan provided with the contract, which appears in all material respects consistent with the Strata Plan deposited in December 1996.
A special condition of the contract provided as follows:
5.1The Purchaser expressly acknowledges and agrees that at the first meeting of the Strata Corporation to be incorporated in respect of the Strata Plan (hereinafter called the “Strata Corporation”) to be held prior to the date of settlement hereunder it is intended to pass certain resolutions relating to the amendment of the Articles of the Strata Corporation being those resolutions annexed hereto as part of Appendix 4. The Purchaser further acknowledges that it has read and understood those resolutions and agrees to be bound thereto.
5.2For the purpose of enabling the Strata Corporation to pass those resolutions referred to in Special Condition 5.1 the Purchaser hereby irrevocably appoints the Vendor as its proxy to vote at any meeting of the Strata Corporation at which the Purchaser is entitled to vote in respect of the resolutions referred to in Special Condition 5.1 and the Purchaser further agrees to sign any such form or notice which may be required in order to grant such proxy.
Appendix 4 set out the proposed special resolution to be passed at the first meeting of the proposed Strata Corporation:
That the Articles of Strata Corporation No. [INSERT] Incorporated which by virtue of the deposit of Strata Plan No. [INSERT] are the Articles contained in Schedule 3 of the Strata Titles Act 1988 be deleted and the Articles annexed hereto as Appendix 1 shall be adopted as the Articles of Strata Corporation No. [INSERT] in lieu therof.
The Articles annexed as Appendix 1 are the Articles which were adopted at the first meeting of the Strata Corporation and which have since been the Articles of the Strata Corporation.
On 18 December 1996, the first general meeting of the members of the Strata Corporation was held. All unit holders are members of a strata corporation.[48] There is no dispute that on deposit of the strata plan, Caribou Pty Ltd, Cassowary Pty Ltd and Duiker Pty Ltd, as the registered proprietors of an estate in fee simple in respect of the nine units, were the only unit holders/members of the Strata Corporation.
[48] Section 18(4)
Section 33 of the Act relevantly provides:
(1) A strata corporation may hold a meeting of its members (a "general meeting") at any time.
(2) Such a meeting may be convened by--
(a) the secretary; or
(b) if the corporation has a management committee--any two members of the committee; or
(c) the unit holders of one-fifth or more of the total number of units; or
(d) in the case of the first such meeting--the original registered proprietor.
(3) A meeting is convened by giving written notice of the day, time and place of the meeting to all unit holders at least 14 days before the date of the meeting.
(3a) A person or group of persons proposing to convene a meeting of the members of a strata corporation should take reasonable steps to ensure that the proposed day, time and place are reasonably convenient to a majority of members of the corporation.
(4) The corporation must hold at least one such meeting (the "annual general meeting") in every calendar year and no more than 15 months after the last such meeting.
(5) Subject to subsection (6), no business may be transacted at a general meeting of the corporation unless a quorum, consisting of persons entitled to exercise the voting power in respect of not less than one-half of the units, is present at the time when the meeting proceeds to business.
The evidence is, and it is not disputed, that Mr Grant Paterson was responsible for convening the first meeting of the Strata Corporation.
Between July 1989 and December 1996, Mr Paterson was the secretary in each case of the original registered proprietor, Cassowary Pty Ltd, Caribou Pty Ltd and Duiker Pty Ltd.
Mr Paterson also held, from the time of the deposit of the strata plan, the offices of presiding officer, secretary and treasurer of the Strata Corporation pursuant to section 23(3) of the Act, without the necessity of specific nomination by the original registered proprietor.
The minutes[49] of the Strata Corporation for the meeting held on 18 December 1996 record that:
1. Mr Paterson was present in his capacity as secretary of each of the members of the Strata Corporation, the original proprietors, Caribou Pty Ltd, Cassowary Pty Ltd and Duiker Pty Ltd;
2. It was resolved that Mr Paterson be elected presiding officer, treasurer, secretary and chairman of the Strata Corporation;
3. It was noted that a quorum was present;
4. Resolutions were carried regarding the rights of the registered proprietor and occupier of Unit 3, the Richmond Hotel, in relation to the attachment to common property of a balcony and pedestrian walkway, and the registered proprietor of Unit 5, in relation to an exclusive licence to occupy part of the common property;
5. It was resolved by unanimous resolution that the Articles of the Strata Corporation, which by virtue of the deposit of the strata plan were the Articles contained in Schedule 3 to the Act, be deleted and the Articles annexed to the minutes be adopted in lieu thereof.
[49] P16
The minutes of the meeting were signed by Mr Paterson, as presiding officer, as a true and correct record of the meeting.
The terms of the Articles[50] annexed to the minutes generally followed the Schedule 3 Articles[51] but excluded those articles which applied to residential rather than commercial premises.
[50] Set out in full in Annexure II to the Judgment
[51] Schedule 3 Articles 1-5, 7, 9. 11 and 12
In addition, Article 18 adopted a voting system provided for by the Act, that is:
In accordance with the Strata Titles Act 1988, Section 34(2)(b), each unit holder will exercise a vote at meetings of the strata corporation in respect of each unit equivalent to the unit entitlement of the unit.
Article 17 determined that rather than being proportional to the unit entitlements of the various units[52], the basis for contributions to be levied against unit holders would be as follows:
[52] Section 27(3)(a) and 27(3)(b)
The registered proprietor of each unit is to be liable to pay to the strata corporation all contributions and levies for common repairs, cleaning, maintenance, insurance, replacements, management, administration, marketing and other common costs and expenses incurred by the Strata Corporation in respect of the property comprising the strata plan in the following percentages:
Unit 1 6.0%
Unit 2 7.5%
Unit 3 20.5%
Unit 4 23.0%
Unit 5 9.5%
Unit 6 9.0%
Unit 7/8 11.0%
Unit 9 13.5%
100.0%
The Articles also made provision, amongst other things, for:
·the registered proprietors of Units 3, 5, 6, 7, 8 and 9 to bear certain costs and expenses in respect of the cleaning, repair, maintenance and replacement of some parts of their property[53]
·the issue of keys to doors providing access to common property[54]
·unit holders to have sufficient flexibility to vary the size, number and/or configuration of their units, with consequent amendment to the strata plan[55]
·where the strata corporation carries out work that wholly or substantially benefits a particular unit or group of units, the corporation is to recover the cost of that work as a debt from the unit holder or unit holders of the unit or units[56]
and
·the unit owners at all times to consult and liaise through the strata corporation to coordinate the management, administration, marketing, operation and maintenance of the common property and the respective units owned by them as a single facility.[57]
[53] Articles 10-14 incl
[54] Article 15
[55] Article 16
[56] Article 19
[57] Article 20
The Articles adopted at the first meeting of the Strata Corporation and the minutes of the meeting were prepared by Mr McNeil, a partner at the firm of solicitors, Thomsons. Mr McNeil was acting on behalf of the mortgagee, South Australian Asset Management Corporation to put into effect the settlement reached with the Baggio interests, a settlement which involved the disposal of the property owned by a number of Baggio family companies, including the three companies directly involved as vendors of property subject to the strata scheme, and which was designed to maximise the value of the property.
The Articles reflect the original proposal for the most financially beneficial disposal of the nine units making up the property, in accordance with the advice given to the South Australian Asset Management Corporation by Mr McArdle. The resolutions, including the resolution to adopt the Articles, coincide with what appears to have been the common understanding of the mortgagee, the three companies as the prospective vendors of the property, in the context of the equivalent of a forced sale[58], and the sixth defendant as purchaser of Units 7 and 8. The Articles that were adopted at the first meeting of the Strata Corporation were identical to those annexed as an appendix to the special conditions attached to the contract of sale, referred to above, between Cassowary Pty Ltd and Caribou Pty Ltd and the sixth defendant.
[58] T329-330
On 18 December 1996, the same day as the first meeting of the Strata Corporation, Mr Baggio, executed a document as director of Caribou Pty Ltd and Cassowary Pty Ltd, with Mr Paterson, as secretary of those companies, attesting to the fixing of the Common Seal on a Memorandum of Transfer of Encumbrance[59], that is, the transfer of Encumbrance No. 7803020[60] from Caribou Pty Ltd and Cassowary Pty Ltd, as encumbrancee, to the Strata Corporation. The consideration is expressed to be:
The desire to transfer the Encumbrancee’s estate and interest to the Transferee consequential to the deposit of Strata Plan No. 13975 and for no monetary consideration whatsoever.
[59] SC1
[60] P13
The Memorandum of Transfer of Encumbrance was prepared under the supervision of Mr McNeil and lodged for registration by the registered conveyancer at Thomson Playford, Mr Frank Stemper.
Mr McNeil prepared the documents associated with the conversion of the Renaissance Arcade property to strata title on the instructions of the South Australian Asset Management Corporation, with the input of Mr Paterson. According to Mr Baggio, Mr Paterson was entrusted with managing the disposal of properties owned by the Baggio family in the course of the rationalisation required by the mortgagee, at the same time endeavouring to maximise the return to the Baggio family companies. Mr McNeil understood that Mr Paterson was the responsible officer and the secretary of the three companies which owned the property and that Mr Paterson had full authority to act on behalf of them. It seems that Mr Baggio participated directly where necessary, executing documents by attesting as director to the fixing of the common seal of the three companies to implement the strata title proposal.
The resolution to adopt Articles in substitution for the Schedule 3 Articles had no effect until a copy of the resolution, certified in the prescribed manner and accompanied by the substituted articles, was lodged with the Registrar-General.
The Certificate is in evidence.[61] The Certificate is in the form prescribed by the Ninth Schedule to the Act and was prepared by Thomson Playford, on Mr McNeil’s authority. It was signed by Mr Paterson, as company secretary and the person appointed by the original registered proprietor of the units comprised in Strata Corporation No 13975 Inc, to perform the functions of presiding officer at the first meeting. The Certificate states:
I GRANT GEORGE PATERSON of 1st Floor 27 Gresham Street Adelaide 5000 being the Company Secretary of and a person appointed by Caribou Pty Ltd ACN 008 216 804, Cassowary Pty Ltd ACN 008 216 813 and Duiker Pty Ltd ACN 008 216 751 being bodies corporate and together the original proprietor of the units comprised in the Strata Corporation 13975 Incorporated to perform the functions of presiding officer of the Strata Corporation No. 13975 Incorporated, certify that the attached resolution is a true and correct copy of a special resolution amending the articles of the corporation passed at a duly convened meeting of the corporation on the 18th day of December 1996.
[61] D42
The Certificate and the Articles adopted at the meeting were lodged with Mr McNeil’s authority at the Lands Titles Registration Office on 13 February 1997.
The Plaintiff’s Case
The plaintiff seeks a declaration that the first general meeting of the Strata Corporation on 18 December 1996, and a resolution passed at the meeting to adopt Articles, together with every subsequent meeting and resolution of the Strata Corporation since 18 December 1996, were in breach of the Act, unconstitutional, invalid, null and void. [62]
[62] Statement of Claim, para 9
The plaintiff’s case is that the meeting of the Strata Corporation on 18 December 1996 was not properly convened in accordance with the requirements of the Act and that Mr Paterson had no proper authority to convene or attend the meeting of 18 December 1996, or to exercise the voting rights of the unit holders at the meeting. It is on that basis that the plaintiff seeks a declaration that the first general meeting of the Strata Corporation on 18 December 1996, and a resolution passed at the meeting to adopt Articles, were in breach of the Act, unconstitutional, invalid, null and void.
It is the plaintiff’s case that:
1. As at 18 December 1996, Cassowary Pty Ltd, Caribou Pty Ltd and Duiker Pty Ltd were the unit holders of Units 1-9 inclusive;
2. As at 18 December 1996, Cassowary Pty Ltd, Caribou Pty Ltd and Duiker Pty Ltd were the members of the Strata Corporation;
3. Mr and Mrs Baggio were the two directors appointed by each of the three companies;
4. The Articles of Association of Cassowary Pty Ltd, Caribou Pty Ltd and Duiker Pty Ltd in each case provided that there be not less than two or more than five directors unless otherwise decided by the company in general meeting;
5. At no time was a decision made in general meeting by the company in each case that the number of directors be other than not less than two or more than five;
6. The Articles of Association of Cassowary Pty Ltd, Caribou Pty Ltd and Duiker Pty Ltd in each case provided that the quorum necessary for the transaction of the business of the directors was to be fixed by the directors and unless so fixed was to be two;
7. The directors had not otherwise fixed the number of directors constituting a quorum for the transaction of the business of the directors, and therefore the quorum was two;
8. At no time did Mr and Mrs Baggio, or any of the three companies:
8.1appoint Mr Paterson as proxy for Cassowary Pty Ltd, Caribou Pty Ltd and Duiker Pty Ltd for the purpose of convening or holding the meeting of the Strata Corporation on 18 December 1996, or for the resolution passed at the meeting, or for any other purpose;
8.2direct, instruct or authorise Mr Paterson to convene the meeting of the Strata Corporation on 18 December 1996;
8.3authorise the resolution, passed at the meeting;
8.4direct, instruct or authorise the convening or holding of any meeting of the Strata Corporation for the purpose of changing the original Articles of the Strata Corporation;
8.5authorise any change of the original Articles of the Strata Corporation;
9. No written notice was given to the members of the Strata Corporation in accordance with the provisions of section 33(3) of the Act;
10. No reasonable steps were taken by the person convening the meeting on 18 December 1996 to ensure that the day, time and place were convenient to a majority of members of the Strata Corporation, as provided in section 33(3a) of the Act;
11. No quorum, consisting of persons entitled to exercise the voting power in respect of not less than one-half of the units, was present, contrary to the provisions of section 33(5) of the Act;
12. It is now accepted by the plaintiff that Mr Paterson was the Company Secretary of each of the unit holders as at 18 December 1996;
13. Mr Paterson was not authorised by each unit holder at the time of the meeting on 18 December 1996 to convene the meeting;
14. Mr Paterson was not authorised by each unit holder to exercise a vote at the meeting on behalf of each unit holder to pass the resolution;
15. Mr Paterson was not an officer of the Strata Corporation at the time of the meeting within the meaning of section 19(3) of the Act and the Regulations;
16. The resolution did not comply with the requirements of section 19(2) and section 3(1) of the Act in relation to 14 days’ written notice to each unit holder of the terms of the resolution and to being supported by a number of votes equal to or exceeding two-thirds of the total number of votes that could be exercised assuming all unit holders attended and exercised their right to vote;
17. Each unit holder exercised more than one vote in respect of each unit, contrary to section 34 of the Act;
18. Each unit holder did not exercise its vote in accordance with its unit entitlement under section 6 of the Act;
19. As a consequence, the Strata Corporation did not comply with section 27(2) and 27(3) of the Act, which provide for the levy of contributions against unit holders proportional to unit entitlements, unless otherwise determined by the Strata Corporation by unanimous resolution;
20. As a consequence of the meeting of 18 December 1996 and the resolution passed at it being invalid, null and void, the Strata Corporation did not comply with the requirements of section 27(2) (providing that the Strata Corporation for the purpose of raising funds may, by resolution, levy contributions against all unit holders) and section 19(3) of the Act in relation to the lodging of a certified copy of the resolution passed at the meeting with the Registrar-General.
The result of the resolution adopting Articles in substitution for the Schedule 3 Articles being declared invalid, or null and void is, on the plaintiff’s case, that by operation of section 19(1) of the Act, the Articles of the Strata Corporation are now and have always been, those set out in Schedule 3, and that pursuant to section 34(1), at each general meeting of the Strata Corporation one vote may be and should always have been exercised in respect of each unit on any matter arising for decision.
The plaintiff’s case is that as a consequence of the meeting of 18 December 1996 and the resolution passed at the meeting being unconstitutional, invalid, null and void, all subsequent meetings and resolutions of the Strata Corporation, in particular, all resolutions regarding the imposition and payment of contributions and levies by unit holders and/or approval of budgets, were unconstitutional, invalid, null and void.
The plaintiff has to prove the facts which are necessary to enable the declarations to be obtained. (Jones v Sutherland Shire Council [1979] 2 NSWLR 206 at 212) In my opinion, there is no basis on which the plaintiff may avoid the onus of proving its case, and in particular, the absence of formal evidence in relation to the internal management of Cassowary Pty Ltd, Caribou Pty Ltd and Duiker Pty Ltd does not in my view require the defendants to establish the regularity of company procedures associated with the decisions of the original registered proprietors of the Renaissance Arcade property.
Procedural Requirements
Convening the meeting
The first meeting of a strata corporation may be convened by the original registered proprietor. Cassowary Pty Ltd, Caribou Pty Ltd and Duiker Pty Ltd were the original registered proprietors in this case. [63] Companies may only act through the agency of a natural person. Leaving aside the question of any specific authority conferred on him by the original registered proprietor, there is no reason to infer that Mr Paterson, as the secretary of the companies in each case, did not have the capacity to convene the first meeting of the Strata Corporation on their behalf.
[63] Section 3
As from the time of deposit of the strata plan, pursuant to section 23(3) of the Act, Mr Paterson was presiding officer, secretary and treasurer of the Strata Corporation. As the secretary of the Strata Corporation, Mr Paterson was able to convene the first meeting of the Strata Corporation in any event.
Notice of time, date and place of meeting
A general meeting of a strata corporation is convened by giving 14 days’ written notice of the day, time and place of the meeting to all unit holders, taking reasonable steps to ensure the proposed day, time and place are reasonably convenient to a majority of members.[64]
[64] Sections 33(3) & 33(3a)
There is no evidence of 14 days’ written notice being given to the members of the Strata Corporation of the first meeting of 18 December 1996. It seems that since the Strata Corporation was created on the deposit of the strata plan on 6 or 9 December 1996, there was not an interval of 14 days between its creation and the date of the first meeting.
The minutes of the meeting however indicate that Mr Paterson was present in his capacity as the secretary of all of the unit holders/members of the Strata Corporation, Cassowary Pty Ltd, Caribou Pty Ltd and Duiker Pty Ltd.
I infer, from the fact of his attendance on their behalf, that reasonable steps were taken by Mr Paterson to ensure that the time, date and place were convenient to himself as the representative of each of the members of the Strata Corporation.
A quorum, consisting of persons entitled to exercise the voting power in respect of not less than half the units, was required.[65] A quorum was present, constituted by Mr Paterson representing all the unit holders/members of the Strata Corporation.
[65] Section 33(5)
Notice of the terms of resolution
A special resolution was required to adopt Articles in substitution for the Schedule 3 Articles. A special resolution required at least 14 days’ written notice, setting out the terms of the resolution, to be given to the unit holders.[66]
[66] Section 19(2)(a) and section 3
I infer that Mr Paterson, who convened and attended the meeting, and through him, the members of the Strata Corporation, Cassowary Pty Ltd, Caribou Pty Ltd and Duiker Pty Ltd, of which Mr Paterson was duly appointed as secretary in each case, must have had appropriate notice of the terms of the resolutions to be considered at the meeting.
In addition, Cassowary Pty Ltd and Caribou Pty Ltd in fact had notice, by virtue of the contract for the sale and purchase of Units 7 and 8 executed on their behalf by Mr Paterson on 15 July 1996, that the Strata Corporation would at its first meeting adopt the articles which were in fact adopted. Mr Paterson had notice of the terms of the resolution relating to the adopting of articles at least from July 1996. Mr Paterson was also secretary of Duiker Pty Ltd, which also therefore had notice of the terms of the resolution to adopt the articles.
Mr Paterson had the capacity as secretary of Cassowary Pty Ltd, Caribou Pty Ltd and Duiker Pty Ltd to convene and attend the meeting of the Strata Corporation on 18 December 1996 on behalf of each company. No appointment by the directors of Mr Paterson as proxy was required.
Voting
A special resolution to adopt Articles in substitution for the Schedule 3 Articles required the resolution to be supported by a number of votes equal to, or exceeding, two thirds of the total votes which could have been exercised at a general meeting of the corporation assuming that all the unit holders attended and exercised their right to vote.[67]
[67] Section 19(2)(a) and section 3
A resolution to adopt the alternative voting system for which the Act provides, and a resolution to determine the basis on which contributions are levied against unit holders, must each be a unanimous resolution.[68]
[68] Section 34(2)(b), section 27(3)(b) respectively
In accordance with the provisions of section 34(1), one vote in respect of each unit may be exercised at a general meeting of a strata corporation, unless and until a decision is made to adopt the voting system whereby a number of votes is exercisable in respect of each unit equivalent to the unit entitlement of the unit.
No unit holder was therefore entitled, at the first meeting, to exercise its vote in accordance with its unit entitlement. One vote in respect of each unit could be exercised.
Leaving aside the question of any specific authority from the companies, there is no reason to infer that the duly appointed secretary of Cassowary Pty Ltd, Caribou Pty Ltd and Duiker Pty Ltd did not have the capacity to exercise the voting rights on behalf of each company as unit holders and members of the Strata Corporation at the meeting. No appointment of Mr Paterson as a proxy was required.
There is no evidence and no reason to infer that each unit holder exercised more than one vote in respect of each unit. All resolutions, including the resolution to adopt Articles in substitution for Schedule 3 Articles, were carried unanimously.
Authority
It was conceded by the plaintiff that at all relevant times, Mr Paterson was the secretary of the three companies, appointed by the directors in accordance with the Articles of Association.[69]
[69] P18, P19, P20 Article 97
A person dealing with the Strata Corporation in good faith is entitled to presume that the minutes of the meeting, signed by Mr Paterson as the presiding officer, are an accurate record, and therefore:
·that a quorum was present
and
·the vote exercised by each unit holder/member of the Strata Corporation on the resolutions passed at the first meeting, at which the members were all represented by the duly appointed secretary of the company in each case, had been duly authorised.
The minutes of the meeting, and the Certificate lodged at the Lands Titles Registration Office with the Articles, are prima facie evidence that all that took place at the meeting, including the resolution to adopt the Articles in substitution for Schedule 3 Articles, was done lawfully.
The resolutions of a corporation must be recorded in writing, because they are the agreement between several persons. They are an agreement between members of a company, or of a sufficiently numerous committee of them, which binds the company. It follows that a resolution, when made, being in the nature of an agreement, may be proved in the same way as any other agreement. The best evidence of an agreement is the signed memorandum of it. So I take it that in the case of a meeting – I am dealing now with the common law apart form the Statute- the best evidence of an agreement come to by a body of persons assembled together would be a record of it signed by them or by their authorized agent, and I apprehend, in a case of this sort, the chairman of the meeting is the authorized agent of all of them, just as an auctioneer is the authorized agent of the bidder to sign the contract on his behalf.
(McLean Bros & Rigg Ltd v Grice [1906] 4 CLR 835 at 847, 848-849)
The presumption on the evidence, prima facie, is that the meeting of the Strata Corporation of 18 December 1996 was duly convened and held, and that the resolutions, agreed to by all of the unit holders/members, were properly passed.
Any person dealing in good faith with the Strata Corporation, or with Cassowary Pty Ltd, Caribou Pty Ltd or Duiker Pty Ltd, would be entitled to presume that the acts of the Strata Corporation, and of Cassowary Pty Ltd, Caribou Pty Ltd or Duiker Pty Ltd, at the meeting, apparently within the corporations’ constitution and powers in each case, have been duly performed and would not be bound to inquire whether acts of internal management of any corporation have been regular. The presumption of regularity in relation to the internal administration of a company, or the indoor management rule, is a presumption of fact.
Where the indoor management rule applies, it covers each of the links between the constitution of the company and the particular act (or omission) done (or omitted) by a purported officer or agent of the company in the transaction. It covers the due making of appointments of the original directors, of subsequent directors, of other officers and of agents; it covers the conferring of authority on officers and agents; and it covers the satisfaction of conditions governing the exercise of authority. (Northside Developments Pty Ltd v Registrar-General (1989-1990) 170 CLR 146 at 154, 171, 176-178, 198-199, 206-207, 212-213)
The presumption of regularity is usually applied as a basis for estoppel in circumstances where for some reason the company denies the regularity of a particular transaction to which the company was a party. In this case, no question of estoppel arises on account of any of Cassowary Pty Ltd, Caribou Pty Ltd or Duiker Pty Ltd denying the authority of the secretary, Mr Paterson, to act on their behalf.
The Application for the Deposit of a Strata Plan dated 16 September 1996, executed by fixing the Common Seal of Cassowary Pty Ltd, Caribou Pty Ltd and Duiker Pty Ltd, the Memorandum of Transfer of Encumbrance dated 18 December 1996, executed by fixing the Common Seal of Cassowary Pty Ltd and Caribou Pty Ltd, the deposit of the strata plan on behalf of the three companies, together with the subsequent sale of the nine units in the strata plan, which I infer must have required the fixing of the company seal of each company, all assume, consistently with the available evidence, the active participation and consent of Cassowary Pty Ltd, Caribou Pty Ltd and Duiker Pty Ltd, together the original registered proprietor of the property, by their directors and/or shareholders in accordance with the Memorandum and Articles of Association in each case. (Northside Developments Pty Ltd v Registrar-General (1989-1990 170 CLR 146 at 160)
Even if the plaintiff had established on the evidence some wrongful act or default, or some decision of the Strata Corporation that should be characterised as unreasonable, oppressive or unjust, which it has not, no basis for intervention by altering the Articles has been made out. Such a remedy bears no relation to the matters of which the plaintiff complains. It severely disadvantages other unit holders. There could be no possible justification for its retrospective operation. I am not satisfied that an order to alter the Articles in any way proposed by the plaintiff is essential to achieving a fair and equitable resolution of any dispute between the plaintiff, the Strata Corporation and its other members.
The plaintiff has not established that it is entitled to the declarations it seeks in its application pursuant to section 41A of the Act, or the orders sought. In addition, in any event, the plaintiff has not satisfied me that it would be appropriate to grant the relief it seeks.
The application under section 41A of the Act should be dismissed.
Outstanding Applications
There remain outstanding matters in relation to applications made after the close of evidence in the trial.
On 15 June 2005, an application was made by the Strata Corporation for an interim order pursuant to section 41A(11) of the Act that the plaintiff pay to the Strata Corporation the sum of $63,225.30 in respect of outstanding contributions. At the time, the plaintiff accepted that it was in arrears in that sum. An order was made that the plaintiff pay to the Strata Corporation the sum of $31,612.65 within 14 days and the further sum of $31,612.65 within six weeks, that is, on 3 August 2005.
The plaintiff did not make the second payment of $31,612.65.
On 15 August 2005, an injunction was granted, on the application of the first, third, fourth and sixth defendants, restraining the plaintiff, Mr and Mrs Balalis and the Balalis family company, Cos Catering Pty Ltd, from disposing of real property until further order. The injunction was varied on 25 November 2005 to amend the name of Cos Catering Pty Ltd to Cos Holdings Pty Ltd.
On 8 September 2005, the plaintiff filed two applications. The first was an application to reduce strata fees payable by the plaintiff in respect of the period 31 July 2002 to date, or in the alternative, for an assessment by the court of the proper level of strata fees to be paid by the plaintiff to the Strata Corporation from 31 July 2002 to date, or an account and inquiry as to the proper level of strata fees to be paid by the plaintiff to the Strata Corporation from 31 July 2002 to date.
The second application of 8 September 2005 was to vary the injunction granted on 15 August 2005. The applications were heard on 12 September and adjourned finally to 15 November 2005, when on the non-appearance of the plaintiff, the applications were further adjourned to 21 November 2005.
On 18 November 2005, the Strata Corporation filed an application for the court to make garnishee orders against the tenants of the plaintiff in the Renaissance Arcade in respect of the sum of $31,612.65, which the plaintiff has failed to pay pursuant to the order made on 22 June 2005. The Strata Corporation also applied for an order that the plaintiff pay a further sum of $66,588.03 by way of outstanding levies due and payable to the Strata Corporation.
On 21 November 2005, the plaintiff sought an adjournment to file further affidavit material in relation to its application for a reduction or re-assessment of strata contributions, or for an assessment or account and inquiry as to the amount of strata contributions it owed. All matters were adjourned to 6 December 2005.
On 6 December 2005, on its own application, the plaintiff’s applications were adjourned to a date to be fixed to allow the counsel for the plaintiff some further time.
The applications of the Strata Corporation were heard on 6 December 2005, over objection by the plaintiff, which wished to defer the hearing until it was ready to proceed on its own applications. The affidavit of Mr Tierney sworn on 5 December 2005 in support of the application, provides evidence of further strata contributions owed by the plaintiff in respect of the period 1 July 2005 to 5 December 2005 in the sum $79,905.63. I reserved my decision to a date to be fixed.
The application brought by the plaintiff pursuant to section 41A has now been determined.
Pursuant to section 41A(12), an interim order, unless sooner revoked, ceases to have effect on the determination or resolution of an application under section 41A. In those circumstances, it is not appropriate to make further interim orders. I make no findings and no orders on either of the applications of the Strata Corporation of 18 November 2005.
The order made on 22 June 2005 for the plaintiff to pay to the Strata Corporation the sum of $31,612.65, an order with which the plaintiff has not complied, ceases to have effect.
The Strata Corporation is, however, entitled to a judgment against the plaintiff in Action No 394/2003. The quantum of the judgment is a matter on which I will hear the parties further. The plaintiff will have its opportunity to put before the court the matters raised by its application of 8 September 2005, that is, its application for an assessment or account and inquiry into the amount of strata contributions it currently owes to the Strata Corporation.
I will hear the parties as to orders to be made. I will also hear the parties further on the orders made on 15 August 2005 granting an injunction.
Annexure I
Schedule 3 Articles of Strata Corporation
1. (1) A unit holder must--
(a) maintain the unit in good repair;
(b) carry out any work ordered by a council or other public authority in respect of the unit.
(2) The occupier of a unit must keep it in a clean and tidy condition.
2. A person bound by these articles—
(a) must not obstruct the lawful use of the common property by any person; and
(b) must not use the common property in a manner that unreasonably interferes with the use and enjoyment of the common property by the other members of the strata community, their customers, clients or visitors; and
(c) must not make, or allow his or her customers, clients or visitors to make, undue noise in or about any unit or the common property; and
(d)must not interfere, or allow his or her customers, clients or visitors to interfere, with others in the enjoyment of their rights in relation to units or common property.
3. A person bound by these articles must not use the unit, or permit the unit to be used, for any unlawful purpose.
4. Subject to the Strata Titles Act 1988, a person bound by these articles must not, without the strata corporation's consent, keep any animal in, or in the vicinity of, a unit.
5. A person bound by these articles--
(a) must not park a motor vehicle in a parking space allocated for others or on a part of the common property on which parking is not authorised by the strata corporation; and
(b) must take reasonable steps to ensure that his or her customers, clients or visitors do not park in parking spaces allocated for others or on parts of the common property on which parking is not authorised by the strata corporation.
6. A person bound by these articles must not, without the consent of the strata corporation—
(a) damage or interfere with any lawn, garden, tree, shrub, plant or flower on the common property; or
(b) use any portion of the common property for his or her own purposes as a garden.
7. A person bound by these articles must not--
(a) bring objects or materials onto the site of a kind that are likely to cause justified offence to the other members of the strata community; or
(b) allow refuse to accumulate so as to cause justified offence to others.
8. A person bound by these articles must not, without the consent of the strata corporation, display any sign, advertisement, placard, banner or any other conspicuous material of a similar nature--
(a) on part of his or her unit so as to be visible from outside the building; or
(b) on any part of the common property.
9. The occupier of a unit may, without the consent of the strata corporation, paint, cover or in any other way decorate the inside of any building forming part of the unit and may, provided that unreasonable damage is not caused to any common property, fix locks, catches, screens, hooks and other similar items to that building.
10. The occupier of a unit used for residential purposes must not, without the consent of the strata corporation, use or store on the unit or on the common property any explosive or other dangerous substance.
11. A person bound by these articles--
(a) must maintain within the unit, or on a part of the common property set apart for the purpose by the strata corporation, a receptacle for garbage adequately covered; and
(b) must comply with all council by-laws relating to the disposal of garbage.
12. A unit holder must immediately notify the strata corporation of--
(a) any change in the ownership of the unit, or any change in the address of an owner;
(b) any change in the occupancy of the unit.
Annexure II
Articles of Strata Corporation No 13975 Inc Adopted 18 December 19961. 1.1 A unit holder must--
(a)maintain the unit in good repair;
(b)carry out any work ordered by a council or other public authority in respect of the unit.
1.2 The occupier of a unit must keep it in a clean and tidy condition.
2. A person bound by these articles--
2.1must not obstruct the lawful use of the common property by any person;
2.2 must not use the common property in a manner that unreasonably interferes with the use customers, clients or visitors;
2.3must not make, or allow his or her customers, clients or visitors to make, undue noise in or about any unit or the common property; and
2.4must not interfere, or allow his or her customers, clients or visitors to interfere, with others in the enjoyment of their rights in relation to units or common property.
3. A person bound by these articles must not use the unit, or permit the unit to be used, for any unlawful purpose.
4. Subject to the Strata Titles Act 1988, a person bound by these articles must not, without the strata corporation's consent, keep any animal in, or in the vicinity of, a unit.
5. A person bound by these articles--
5.1must not park a motor vehicle in a parking space allocated for others or on a part of the common property on which parking is not authorised by the strata corporation; and
5.2must take reasonable steps to ensure that his or her customers, clients or visitors do not park in parking spaces allocated for others or on parts of the common property on which parking is not authorised by the strata corporation.
6. A person bound by these articles must not—
6.1bring objects or materials onto the site of a kind that are likely to cause justified offence to the other members of the strata community; or
6.2 allow refuse to accumulate so as to cause justified offence to others.
7. The occupier of a unit may, without the consent of the strata corporation, paint, cover or in any other way decorate the inside of any building forming part of the unit and may, provided that unreasonable damage is not caused to any common property, fix locks, catches, screens, hooks and other similar items to that building.
8. A person bound by these articles--
8.1must maintain within the unit, or on a part of the common property set apart for the purpose by the strata corporation, a receptacle for garbage adequately covered; and
8.2must comply with all council by-laws relating to the disposal of garbage.
9. A unit holder must immediately notify the strata corporation of--
9.1any change in the ownership of the unit, or any change in the address of an owner;
9.2any change in the occupancy of the unit.
10.The registered proprietor of Unit 3 shall bear all costs and expenses in respect of the cleaning repair maintenance and replacement (including the undertaking of all structural repairs maintenance and replacements) of the roof and all external walls and windows situated below and above ground floor level and which comprise portion of the building of which Unit 3 forms part together with all costs of cleaning repairing and replacing all external and internal glass comprising part of the stair unit subsidiaries of Unit 3 situated at ground floor level.
11.The registered proprietor of Unit 5 shall bear all costs and expenses in respect of the cleaning repair maintenance and replacement (including the undertaking of all structural repairs maintenance and replacements) of the roof and all external walls and windows which comprise portion of the building of which Unit 5 forms part.
12.The registered proprietor of Unit 6 shall bear all costs and expenses in respect of the cleaning repair maintenance and replacement (including the undertaking of all structural repairs maintenance and replacements) of the roof and all external walls and windows which comprise portion of the building of which Unit 6 forms part.
13.The registered proprietor of Units 7 and 8 shall bear all costs and expenses in respect of the cleaning repair maintenance and replacement (including the undertaking of all structural repairs maintenance and replacements) of the roof and all external walls and windows which comprise portion of the building of which Units 7 and 8 form part.
14.The registered proprietor of Unit 9 shall bear all costs and expenses in respect of the cleaning repair maintenance and replacement (including the undertaking of all structural repairs maintenance and replacements) of the roof and all external walls and windows of which comprise the building of which Unit 9 forms part.
15.The strata corporation shall issue to those persons nominated by the registered proprietors of the units being either tenants or officers of any registered proprietor company and/or any person authorised by the registered proprietor keys to all doors between areas of or providing access to common property (including toilets) provided that the corporation shall be entitled to maintain a register of persons to whom such keys are issued and to hold those persons responsible for the safe return thereof. All tenants of any registered proprietor shall be obliged to lock any doors opened by them during such hours as the opening of those doors are not required as part of their normal trade requirements.
16.16.1 The unit holders agree that in order to assist in maintaining the capital value of their respective units it is desirable to ensure that all unit holders have sufficient flexibility to enable each of them if desired to vary the size number and/or configuration of their respective unit or units.
16.2 In order to facilitate and assist any unit holder in procuring an amendment to the strata plan the following procedures shall apply in respect of any proposal by any unit holder or unit holders to vary the number size or configuration of their respective unit or units:
(a)the relevant unit holder shall by notice in writing advise the strata corporation of its desire to amend the number size and/or configuration of its unit or units and shall submit to the strata corporation contemporaneously with such notice and indicative strata plan detailing the proposed amendment to the strata plan together with an indicative amended schedule of unit entitlements;
(b)upon receipt of the notice and plan referred to in Article 16.2(a) the strata corporation shall convene a meeting of the strata corporation in accordance with the provisions of the Strata Titles Act, 1988 for the purpose of considering the proposal to vary the strata plan;
(c)the unit holders shall vote in favour of any resolution to amend the strata plan in accordance with the notice submitted pursuant to Article 16.2(a) provided that nothing contained in this Article shall oblige any unit holder to vote in favour of any resolution empowering the strata corporation to make application to amend the strata plan if such amendment effects any alteration whatsoever either to the size and/or configuration of any unit other than the units within the ownership of the unit holder wishing to amend the strata plan;
(d)subject to the unanimous passing of the resolution to amend the strata plan the unit holders shall sign all such application and other documents as shall be required in order to enable the strata corporation to make application pursuant to Section 12 of the Strata Titles Act to amend the strata plan in accordance with such resolution and shall procure (where necessary) the consent to such application by any person with an encumbrance registered in relation to the respective units; and
(e)the unit holder who initiates the amendment to the strata plan shall bear all costs and expenses of and incidental to the amendment of the strata plan including all survey fees, all Lands Titles Office registration fees, all council application fees, and all fees payable to a licensed valuer in respect of any amended schedule of unit entitlement required to be prepared in respect of such amendment.
17.The registered proprietor of each unit shall be liable to pay to the strata corporation all contributions and levies for common repairs, cleaning, maintenance, insurance, replacements, management, administration, marketing and other common costs and expenses incurred by the Strata Corporation in respect of the property comprising the strata plan in the following percentages:
Unit 1 6.0%
Unit 2 7.5%
Unit 3 20.5%
Unit 4 23.0%
Unit 5 9.5%
Unit 6 9.0%
Unit 7/8 11.0%
Unit 9 13.5%
100.0%
18.In accordance with Strata Titles Act 1988, Section 34(2)(b), each unit holder will exercise a vote at meetings of the strata corporation in respect of each unit equivalent to the unit entitlement of the unit.
19.If the strata corporation carries out work that wholly or substantially benefits a particular unit or group of units the corporation shall recover the cost of that work as a debt from the unit holder or unit holders of the unit or units.
20.The unit owners shall at all times consult and liaise through the strata corporation to coordinate the management, administration, marketing, operation and maintenance of the common property and the respective units owned by them as a single facility.
22.22.1 The unit owners and persons authorised by them are authorised to carry out prescribed work in relation to a unit within the meaning of Section 29 of the Strata Titles Act 1998 subject always to the obtaining of all necessary statutory approvals required to undertake such works.
22.2 Without limiting the generality of Article 22.1 the lessee of units 7 and pursuant to Memorandum of Lease No. 5039830 shall be entitled to undertake certain prescribed works in and about Units 7 and 8 being those works more particularly described in a certain Extension of Lease dated the 22nd day of March 1996 and made between Caribou Pty Ltd and Cassowary Pty Ltd as lessor and MacMast Pty Ltd as lessee
NB There is some minor variation regarding the registered proprietor for a particular unit as at 18.12.96 and in the dates on which transfers were completed across various documents tendered. Nothing turns on those matters.
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