Kelly v Birchwood Consolidated Pty Ltd (Receivers and Managers Appointed) (in Liquidation)
[2023] WASCA 76
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: KELLY -v- BIRCHWOOD CONSOLIDATED PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) [2023] WASCA 76
CORAM: QUINLAN CJ
BUSS P
BEECH JA
HEARD: 15 DECEMBER 2022
DELIVERED : 16 MAY 2023
FILE NO: CACV 9 of 2022
BETWEEN: GLEN KELLY
First Appellant
LEE SHARON BAKER
Second Appellant
THE OWNERS OF EQUUS STRATA PLAN 62962
Third Appellant
AND
BIRCHWOOD CONSOLIDATED PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION)
First Respondent
STARPHASE PTY LTD
Second Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram: ALLANSON J
File Number : GDA 1 of 2021
Catchwords:
Appeal – Strata title scheme – Where lot to be converted to common property and transferred out of scheme – Whether by-laws to give effect to that transaction are invalid – Whether by-laws inconsistent with Strata Titles Act 1985 (WA) – Whether by-laws made for matters relating to the management, control, use and enjoyment of the lots and the common property – Jurisdiction of State Administrative Tribunal – Whether dispute with respect to the performance of a duty that may only be performed pursuant to a resolution without dissent
Legislation:
State Administrative Tribunal Act 2004 (WA) s 105
Strata Titles Act 1985 (WA) s 5C, s 10, s 19, s 35, s 44, s 42, s 51, s 83
Strata Titles Amendment Act 2018 (WA)
Result:
Appeal dismissed
Category: A
Representation:
Counsel:
| First Appellant | : | B Dharmananda SC & V N Ghosh |
| Second Appellant | : | B Dharmananda SC & V N Ghosh |
| Third Appellant | : | B Dharmananda SC & V N Ghosh |
| First Respondent | : | D H Solomon |
| Second Respondent | : | No appearance |
Solicitors:
| First Appellant | : | Murcia Pestell Hillard |
| Second Appellant | : | Murcia Pestell Hillard |
| Third Appellant | : | Murcia Pestell Hillard |
| First Respondent | : | Solomon Brothers |
| Second Respondent | : | No appearance |
Cases referred to in decision:
Aldi Foods Pty Ltd v Shop, Distributive & Allied Employees Association [2017] HCA 53; (2017) 262 CLR 593
Bahr v Nicholay (No 2) (1988) 164 CLR 604
Birchwood Consolidated Pty Ltd (Receivers and Managers Appointed) (In Liquidation) and The Owners of Equus Strata Plan 62962 [2020] WASAT 161
Birchwood Consolidated Pty Ltd (Receivers and Managers Appointed) (In Liquidation) v Kelly [2021] WASC 448
Black v Garnock [2007] HCA 31; (2007) 230 CLR 438
Byrne v The Owners of Ceresa River Apartments Strata Plan 55597 [2017] WASCA 104; (2017) 51 WAR 304
Certain Lloyd's Underwriters v Cross [2012] HCA 56; (2012) 248 CLR 378
Chan v Cresdon Pty Ltd [1989] HCA 63; (1989) 168 CLR 242
CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384
Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297
Mackie v Henderson (2011) 42 WAR 194
Miller v The Owners of Marina Village Strata Plan 14517 (WA Supreme Court Library No 920702 dated 22 December 1992)
Minister for Home Affairs v DLZ18 [2020] HCA 43; (2020) 270 CLR 372
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355
R v A2 [2019] HCA 35; (2019) 269 CLR 507
SAS Trustee Corporation v Miles [2018] HCA 55; (2018) 265 CLR 137
Sea Shepherd Australia Limited v Commissioner of Taxation [2013] FCAFC 68; (2013) 212 FCR 252
Taylor v The Owners - Strata Plan No 11564 [2014] HCA 9; (2014) 253 CLR 531
The Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [2001] WASCA 135; (2001) 24 WAR 25
The Owners of Strata Plan No 3397 v Tate [2007] NSWCA 207; (2007) 70 NSWLR 344
Thiess v Collector of Customs [2014] HCA 12; (2014) 250 CLR 664
Westfield Management Ltd v Perpetual Trustee Co Ltd [2007] HCA 45; (2007) 233 CLR 528
XYZ v Commonwealth [2006] HCA 25; (2006) 227 CLR 532
Table of Contents
Introduction and summary
Strata Titles Act
Strata plans
Strata companies
By‑laws
Common property and removal of lots from strata schemes
Jurisdiction and powers of the Tribunal
Factual background
Proceedings in the Tribunal
Proceedings before the primary judge
The significance of by‑laws 64, 65 and 66
Grounds of appeal
Construction of by‑laws
Are by‑laws 64, 65 and 66 inconsistent with the Act (grounds 2 and 4)?
Appellants' contentions
Do by‑laws 64, 65 and 66 seek to avoid (or contract out of) the Act?
Are by‑laws 64, 65 and 66 inconsistent with a temporal requirement in the Act?
Did all 'persons concerned' consent in writing to the transfer?
Are by‑laws 64, 65 and 66 contrary to s 35(1)(b) of the Act?
Do by‑laws 64, 65 and 66 fall within the scope of the by‑law making power (grounds 1 and 3)?
Does s 83(4) of the Act prevent the Tribunal from making orders for the settlement of the dispute (ground 6)?
Principles of statutory construction
Ground 6 – disposition
Notice of contention
Conclusion
JUDGMENT OF THE COURT:
Introduction and summary
This appeal concerns efforts by the first respondent, Birchwood Consolidated Pty Ltd (Birchwood) to give effect to a transaction, or series of transactions, concerning the strata scheme (under the Strata Titles Act 1985 (WA) (Act) in relation to a development known as Equus, a commercial and residential development near the corner of Hay Street and Barrack Street in Perth (Equus).
Equus was developed in around 2011. The scheme for Equus was created by registration of Strata Plan 62962 on 29 August 2011 (Scheme). Birchwood was the developer of Equus and the original owner of all of the land the subject of the Scheme. It remains the owner of Lot 216 on the Strata Plan (Lot 216), a commercial lot on the ground floor of Equus, facing Hay Street.
In general terms, the transaction the subject of these proceedings (transaction) proposed that Lot 216 would be converted into common property and then transferred out of the Scheme to the owner of the adjoining lot (Lot 31).
The exclusion of the land the subject of Lot 216 from the Scheme was notified to purchasers of lots in the Scheme prior to the development of Equus. In that regard:
(a)prior to registration of the Scheme, the exclusion of the land the subject of Lot 216 formed part of special conditions in contracts of sale between Birchwood and purchasers of lots in the proposed Scheme;
(b)following registration of the Scheme, the proposed removal of Lot 216 from the Scheme was the subject of by‑laws in the registered by‑laws of the Scheme (being by‑laws 64, 65 and 66). By‑law 66, in particular provided that the proprietors 'agree to do all things necessary and covenant to take no action to prevent the conversion of Lot 216 into Common Property and its transfer from the Strata Scheme'.
Following the registration of the Scheme, on 2 September 2011, the strata company for the Scheme, the Owners of Equus Strata Plan 62962 (Strata Company) held its first Annual General Meeting. The Strata Company passed resolutions to give effect to the proposed transfer of Lot 216 out of the Scheme. On 7 October 2011, the Strata Company certified that the by‑laws for the Scheme (including by‑law 64) had been amended, so as to reflect the resolutions passed on 2 September 2011.
A number of years later, in 2016, the receiver and manager of Birchwood sought to have the Council of the Strata Company approve sale documents and take reasonable steps to give effect to the transaction. The Council, on behalf of the Strata Company, declined to do so.
Birchwood brought proceedings in the State Administrative Tribunal (Tribunal) seeking orders to give effect to the transaction. It brought the proceedings on the basis that the Strata Company had failed to comply with by‑law 66. The Strata Company opposed the application, on the basis that by‑laws 64, 65 and 66 were inconsistent with the Act and invalid.
In addition, the first and second appellants, Glen Kelly and Lee Sharon Baker, brought separate proceedings in the Tribunal seeking orders that by‑laws 64, 65 and 66 were invalid and that the resolutions passed at the General Meeting on 2 September 2011 were invalid. The first and second appellants are the owners of Lot 70 in the Scheme. They purchased their lot pursuant to a contract with Birchwood dated 21 December 2007. That contract contained the special condition referred to in [40] above, acknowledging that the land the subject of Lot 216 was to be excluded from the development of Equus.
The Tribunal dismissed Birchwood's application and declared that by‑laws 64, 65 and 66 (including amended by‑law 64) were invalid. The Tribunal, however, refused to invalidate the resolutions of the Strata Company passed at the General Meeting on 2 September 2011.[1]
[1] Birchwood Consolidated Pty Ltd (Receivers and Managers Appointed) (In Liquidation) and The Owners of Equus Strata Plan 62962 [2020] WASAT 161 (Tribunal reasons).
Birchwood appealed to the General Division of this Court. The learned primary judge, Allanson J, allowed the appeals and made orders that the Strata Company do all things necessary to give effect to the transaction.[2]
[2] Birchwood Consolidated Pty Ltd (Receivers and Managers Appointed) (In Liquidation) v Kelly [2021] WASC 448 (Primary reasons).
The appellants now appeal to this Court, seeking to restore the orders made by the Tribunal.
As will become apparent, the proceedings before the Tribunal and this Court were beset by a number of substantive and procedural anomalies. Those anomalies served to unduly complicate the matter and to obscure what ought to have been the real issues in the case.
First, the grounds of appeal focussed entirely on the validity of the relevant by‑laws (by‑laws 64, 65 and 66, as amended). The appellants cannot be criticised for that focus. It was a product of the manner in which Birchwood initially sought orders in the Tribunal. Nevertheless, there is a real question as to whether reliance upon the by‑laws as the mechanism for giving effect to the transaction was at all necessary, given that the resolutions passed at the General Meeting on 2 September 2011 were in all likelihood sufficient to justify the orders sought by Birchwood. The Tribunal declined to invalidate those resolutions and no appeal was brought from the Tribunal's orders in that regard.
Secondly, the lack of proper focus on effect of the resolutions meant that, in the course of the hearing of the appeal, the appellants raised new issues as to the interest, if any, that the first and second appellants had in the making of those resolutions. On the face of it, Mr Kelly and Ms Baker, who purchased their lot with notification that the land the subject of Lot 216 was to be excluded from the development of Equus, had no interest at all in the fate of Lot 216. There was no evidence of any such interest before the Tribunal. On appeal, the first and second appellants' interest was described as being 'to ensure compliance with the Act'.
For its part, Birchwood devoted much of its attention on the appeal, not to upholding the finding of the learned primary judge that by‑laws 64 to 66 were valid, and should be given effect, but to a notice of contention that sought to develop an abstruse argument about the effect of management statements under the Act and the role of the Registrar of Titles in registering such statements. That approach added an unnecessary layer of complexity to Birchwood's case, in its tendency to distract focus from whether error was demonstrated in the judge's reasoning to his conclusion. On our analysis, the notice of contention ultimately does not contribute to the proper resolution of the appeal because we see no error in the judge's reasoning.
The appeal should be dismissed because, for the reasons that follow, in our view the learned primary judge was correct to conclude that by‑laws 64 to 66 were valid and that the Tribunal had the power to make the orders that his Honour made in substitution of the orders initially made by the Tribunal.
We commence by identifying the relevant statutory provisions.
Strata Titles Act
As its long title suggests, the Act[3] facilitates the horizontal and vertical subdivision of land into separate lots, or lots and common property, by registration of a strata plan or strata-survey plan.[4]
Strata plans
[3] All references to the Act in these reasons are references to the Act in force as at 1 July 2019. The Act was extensively amended by the Strata Titles Amendment Act 2018 (WA) (amending Act), the provisions of which came into operation on 1 May 2020. The transitional provisions of the amending Act require proceedings in the Tribunal that were commenced before commencement of the amending Act, to be dealt with as if that Act had not been enacted (see amending Act, sch 5, cl 30).
[4] Act, s 4(1).
Sections 5 and 5B of the Act set out the requirements of a strata plan lodged for registration. If a strata plan lodged for registration complies with the Act, the Registrar shall register it in the prescribed manner.[5]
[5] Act, s 5B(4).
Section 5C of the Act provides for a management statement setting out by‑laws to be lodged with a strata plan. Relevantly, s 5C provides:
(1)When a strata/survey-strata plan is lodged for registration a management statement –
(a)that is in the prescribed form; and
(b)that complies with subsection (3),
may be lodged for registration with it.
(2)A management statement is a document setting out –
(a) by‑laws of the strata company that are to have effect under sections 42, 42A and 42B; and
(b)amendments and repeals referred to in section 42(2),
and may include by‑laws in relation to any matter specified in Schedule 2A.
(3)A management statement shall be signed by –
(a)the person who is registered as proprietor of the fee simple of the parcel; and
(b)each person who has a registered interest in, or is a caveator in respect of, the parcel.
…
(5)Upon registration of a management statement, the by‑laws set out in the statement, and any amendments and repeals, have effect for the purposes of section 42.
(6)By‑laws set out in a management statement may be amended in accordance with section 42 or as otherwise provided by this Act.
The provisions relating to by‑laws are set out in more detail below.
Strata companies
Upon the registration of a strata plan, the proprietors from time to time constitute a strata company. The strata company is a body corporate, which is regulated in accordance with the Act and the by‑laws in force in respect of the strata company.[6]
[6] Act, s 32(3).
Section 35 of the Act provides, inter alia, that the strata company shall:[7]
(a)enforce the by‑laws; and
(b)control and manage the common property for the benefit of all the proprietors;
[7] Act, s 35(1).
Subject to the provisions of the Act, the functions of a strata company shall be performed by a council of the strata company. Section 44 of the Act provides:
44.Functions of councils
(1)The functions of a strata company shall, subject to this Act and to any restriction imposed or direction given at a general meeting, be performed by the council of the strata company.
(2) The council of a strata company shall be constituted and shall perform its functions in accordance with and in the manner provided by the by‑laws of the strata company.
By‑laws
As noted above, the Act includes various provisions in relation to by‑laws governing strata schemes and strata companies, including the creation of by‑laws by the registration of a management statement under s 5C(5) of the Act.
The general power for a strata company to make by‑laws is found in s 42 of the Act, which is itself referred to in s 5C. Section 42 relevantly provides:
(1)A strata company may make by‑laws, not inconsistent with this Act, for –
(a)its corporate affairs; and
(b)any matter specified in Schedule 2A; and
(c)other matters relating to the management, control, use and enjoyment of the lots and any common property.
(2)The provisions set out in Schedules 1 and 2 shall be deemed to be by‑laws of the strata company and may be amended, repealed or added to by the strata company –
(a)by resolution without dissent (or unanimous resolution, in the case of a two-lot scheme), in the case of Schedule 1 by‑laws; or
(b)in accordance with any order of a court or the State Administrative Tribunal or any written law; or
(c)in any other case, by special resolution.
(2a)Each by‑law that is additional to the by‑laws in Schedules 1 and 2 or any amendment to a Schedule 1 or Schedule 2 by‑law shall be classified in the by‑laws as -
(a)a Schedule 1 by‑law; or
(b)a Schedule 2 by‑law.
Schedule 1 and Schedule 2 of the Act provide for by‑laws on a range of topics. In that regard:
(a)Schedule 1 by‑laws regulate the governance of the strata company and the council and also provide for the general duties of proprietors and occupiers in relation to lots and common property; and
(b)Schedule 2 by‑laws provide for additional matters concerning the conduct of proprietors, occupiers or residents of lots.
The relative significance of the matters dealt with in Schedule 1 by‑laws and Schedule 2 by‑laws, respectively, is reflected in the different statutory requirements for their amendment or repeal provided for in s 42(2) of the Act.
As s 42(1) of the Act makes clear, the topics upon which by‑laws may be made are not confined to those dealt with in Schedule 1 and Schedule 2 of the Act. Schedule 2A of the Act, in particular, provides for a variety of matters falling within the by‑law making power. Those matters include:
1.The amendment or repeal of a by‑law contained in Schedule 1.
2.The amendment or repeal of a by‑law contained in Schedule 2.
3.Any additional by‑law that may be made under section 42.
4.The control or preservation of the essence or theme of the development under the scheme.
…
7.The control, management, use and maintenance of any part of the common property, including any special facilities provided on the common property.
8.Provisions relating to any proposed re-subdivision in a scheme being provisions that -
(a)comply with the requirements of section 8A(b) and (c) and any other prescribed requirements; and
(b)state the proposed unit entitlement of each lot and the proposed aggregate unit entitlement of the scheme following the completion of all proposed re‑subdivisions in the scheme.
It will be apparent that there is a degree of overlap (or circularity) between s 5C, s 42 and Schedule 2A of the Act. Section 5C(2), for example, provides that a management statement may include both by‑laws that are to have effect under s 42 and by‑laws in relation to matters specified in Schedule 2A. The latter reference might be thought to be superfluous, given that the matters specified in Schedule 2A are themselves referred to in s 42. Similarly, Schedule 2A both refers to, and is referred to in, the scope of the by‑law making power in s 42.
Section 42 of the Act also makes particular provision in relation to the effect of amendments to by‑laws. In particular s 42(4) provides:
(4)No amendment or repeal of a by‑law or additional by‑law has effect until –
(a)the strata company has, not later than 3 months after the passing of the resolution for the amendment, repeal or additional by‑law, lodged a notice of the amendment, repeal or additional by‑law in the prescribed form with the Registrar of Titles, including in the case of a by‑law made under subsection (8) a description of the area affected; and
(b)the Registrar of Titles has made a reference to the amendment, repeal or additional by‑law on the appropriate registered strata/survey-strata plan.
By‑laws made under the Act, in addition to the effects given to them by the Act, also operate as if they had contractual force. Section 42(6) of the Act provides:
(6)Without limiting the operation of any other provision of this Act, the by‑laws for the time being in force bind the strata company and the proprietors and any mortgagee in possession (whether by himself or any other person) or occupier or other resident of a lot to the same extent as if the by‑laws had been signed and sealed by the strata company and each proprietor and each such mortgagee, occupier or other resident respectively and as if they contained mutual covenants to observe and perform all the provisions of the by‑laws.
Common property and removal of lots from strata schemes
Any portion of the land comprised in a strata plan as from time to time is not comprised in a lot shown on the plan (or is a lot or lots shown on a survey‑strata plan as common property) is defined in the Act as 'common property'.[8] Common property is held by the proprietors as tenants in common in equal shares proportional to the unit entitlements of their respective lots.[9]
[8] Act, s 3(1), definition of common property. Common property also includes any leasehold interest acquired by a strata company under s 18 of the Act.
[9] Act, s 17(1).
In addition to the common property that may be formed at the time of the registration of a strata plan or strata‑survey plan, s 18 of the Act provides, in general, that a strata company may, pursuant to a resolution without dissent, accept a transfer or lease of land, for the purpose of creating additional common property.
The Act also makes provision both for the conversion of lots into common property and for the disposal of common property by transfer.
As to the conversion of a lot into common property, s 10 of the Act relevantly provides:
10.Conversion of lots into common property
(1)One or more lots may be converted into common property by the registration of a transfer executed by the proprietor or proprietors of that lot or those lots and by the strata company.
(2)A transfer under subsection (1) shall not be registered unless –
(a)it is accompanied by a certificate given by the local government consenting to the conversion into common property effected by the transfer; and
(b)it is accompanied by a certificate under seal of the strata company certifying that the strata company has by resolution without dissent (or unanimous resolution, in the case of a two‑lot scheme) consented to the conversion effected by the transfer; and
(c)every mortgage, charge, current lease, caveat or other interest recorded in the Register in relation to the lot or each lot to which the transfer relates has, in so far as it affects any such lot, been discharged or surrendered or withdrawn or otherwise disposed of, as the case may be.
(3)Upon the registration of a transfer under this section, the land comprised in the transfer becomes common property and is subject to the provisions of this Act relating to common property.
Section 19 of the Act in turn makes provision for the transfer of common property. Section 19 relevantly provides:
19.Transfer or lease of common property
(2)Subject to subsection (10), a strata company may, pursuant to a resolution without dissent (or unanimous resolution, in the case of a two-lot scheme) and where satisfied that all persons concerned have consented in writing to the transfer or lease, execute a transfer or lease of common property, other than common property the subject of a lease accepted or acquired by the strata company under section 18(1).
…
(5)Upon execution of a transfer or lease or sub‑lease in accordance with subsection (2) or (3) –
(a)the transfer or lease or sub‑lease is valid and effective without execution by any person having any estate or interest in the common property; and
(b)the receipt of the strata company –
(i)is a sufficient discharge for; and
(ii)exonerates the person taking under the transfer or lease or sub‑lease from responsibility for the application of,
the moneys expressed to have been received by it and is likewise a sufficient discharge and exoneration for all moneys payable to the strata company under the transfer or lease or sub‑lease.
(6)Every transfer or lease or sub‑lease executed under subsection (2) or (3) shall be endorsed with or accompanied by a certificate under the seal of the strata company that the resolution referred to in the relevant subsection was duly passed and that all necessary consents were given.
(7)In favour of –
(a)a purchaser or lessee of the common property; and
(b)the Registrar of Titles,
a certificate under subsection (6) is conclusive evidence of the facts stated in it.
(8)The Registrar of Titles shall –
(a)in the case of a transfer of common property under this section, register the transfer by creating and registering in the transferee's name a certificate of title for the land transferred, and no notification of the transfer shall be otherwise made in the Register.
Subsection 19(10) of the Act requires a transfer of common property to be approved by the Western Australian Planning Commission and the relevant local government.
Relevant to s 10 and s 19 of the Act, a 'resolution without dissent' is defined in s 3AC of the Act. Relevantly such a resolution is one against which no vote is cast by a person entitled to exercise the powers of voting on the resolution conferred under the Act. Persons 'entitled to vote', relevantly, include registered proprietors in lots in the scheme.[10]
[10] Act, sch 1, by-law 14.
Section 19 of the Act also uses the expression 'person concerned'. A 'person concerned' is defined in s 3 of the Act to mean:
(a)a person appearing by the Register to have an estate or interest in the common property; and
(b)a person having an estate or interest (other than a charge for a tax, rate or other statutory liability) that has been notified to the strata company.
Jurisdiction and powers of the Tribunal
Part VI of the Act provides for resolution of disputes. In that context, the Act confers a number of powers on the Tribunal, including, by s 83, a general power to make orders for the settlement of disputes. Section 83(1) of the Act provides:
The State Administrative Tribunal may, pursuant to an application of a strata company, an administrator, a proprietor, a person having an estate or interest in a lot or an occupier or other resident of a lot, in respect of a scheme, make an order for the settlement of a dispute, or the rectification of a complaint, with respect to the exercise or performance of, or the failure to exercise or perform, a power, authority, duty or function conferred or imposed by this Act or the by‑laws in connection with that scheme on any person entitled to make an application under this subsection or on the council or the chairman, secretary or treasurer of the strata company.
This general power of the Tribunal is subject to s 83(4) of the Act, which provides:
Nothing in subsection (1) empowers the State Administrative Tribunal to make an order under that subsection for the settlement of a dispute, or the rectification of a complaint, with respect to the exercise or performance of, or the failure to exercise or perform, a power, authority, duty or function conferred or imposed on the strata company by this Act where that power, authority, duty or function may, in accordance with any provision of this Act, only be exercised or performed pursuant to a unanimous resolution, resolution without dissent or a special resolution.
The Act makes separate provision, in s 51, for a person to apply to the District Court where a unanimous resolution or resolution without dissent is required but not obtained before an act may be done. Section 51(1) of the Act provides:
In any case where under this Act a unanimous resolution or a resolution without dissent is necessary before any act may be done and that resolution is not obtained but the resolution is supported to the extent necessary for a special resolution, a person included in the majority in favour of the resolution may apply to the District Court to have the resolution as so supported declared sufficient to authorise the particular act proposed and if the District Court so orders, the resolution shall be deemed to have been passed as a unanimous resolution or a resolution without dissent, as the case may be.
By s 93 of the Act the Tribunal has specific powers to make orders relating to by‑laws, including:[11]
(a)a declaration that a by‑law or an amendment or repeal of a by‑law is invalid;
(b)the repeal of a by‑law;
(c)the repeal of an amendment to a by‑law…
[11] Act, s 93(2).
The Tribunal may make such an order in relation to a by‑law if it is satisfied that the by‑law:[12]
(a)was made without power; or
(b)was not made in accordance with this Act or the regulations or any other requirement that ought to have been observed; or
(c)should not have been made having regard to the interests of all proprietors in the use and enjoyment of their lots or the common property.
[12] Act, s 93(3).
We turn to the factual and procedural background.
Factual background
Many of the facts before the Tribunal and the learned primary judge were agreed or uncontentious. The parties filed an Agreed Statement of Issues and Facts in the Tribunal and tendered, without objection, a large body of documentary evidence, including a number of witness statements. A number of witnesses were also called and cross-examined.
What follows reflects the unchallenged findings of the Tribunal, supplemented where necessary from the agreed facts and uncontentious evidence adduced at the hearing.
Birchwood was the original owner and developer of the Equus development, situated at 580 Hay Street, Perth (Land). The development comprises a 26 level mixed development tower, including 30 retail shops, 48 commercial suites and 138 residential apartments.[13] The Land was formerly Lot 32 on Plan 12711 being part of the land contained in certificate of title Volume 1657 Folio 653.[14]
[13] Agreed Facts [2] ‑ [3] (GAB 470).
[14] GAB 2.
From in or about 2007, Birchwood sold units in the Equus development to purchasers 'off the plan'.[15]
[15] Agreed Facts [7] (GAB 471).
On 21 December 2007, Birchwood entered into a contract (Contract) with the first and second appellants for the sale of Lot 70 (Lot 70), one of the proposed residential apartments. Settlement of the Contract was to occur in accordance with the definition of 'Settlement Date' in special condition 2.1, being 'the date which is 14 days after the issue by the Registrar of the Certificate of Title for the Land'.[16]
[16] Agreed Facts [8] (GAB 471).
The Contract included a number of attachments, including Special Conditions (Attachment B) and a proposed strata plan (Attachment E).
Special Condition 6 of the Contract provided:[17]
[17] Tribunal reasons [13]; GAB 237 ‑ 238.
6.Management Statement and Proxy
6.1The Buyer authorises the Seller to amend the Management Statement if such amendment is required to complete the Development, to allow for the registration of the Strata Plan, or to comply with any requirement of any Authority.
6.2The Buyer irrevocably:
(a)appoints the Seller to be the proxy of the Buyer, in the name of and for and on behalf of the Buyer to do each of the following:
(i)attend and vote at the first Annual General Meeting of the Strata Company even to the exclusion of the Buyer, if present at the meeting, for the purposes of dealing with any matter arising at such meeting dealt with by this Contract, including but not limited to any matters enabling the Seller to proceed with or complete the Development;
(ii)to do all such things and execute all such documents as may be necessary to give effect to any resolution passed at such meeting or any matter required by this Contract;
(iii)to propose and vote for any By‑law or the repeal, substitution or variation of any By‑laws including the Non-Standard By‑laws;
(b)agrees to ratify and confirm as necessary all that the Buyer does pursuant to this clause; and
(c)will sign the proxy form attached as Attachment R or as to give effect to this clause and for the proxy to provide as necessary to the Strata Company at any meeting.
6.3The Buyer unconditionally:
(a)approves the By‑laws;
(b)consents, if required, to the Strata Company adopting By‑laws; and
(c)approves the resolutions set out in Attachment P that are to be proposed and passed at the first annual general meeting of the Strata Company.
Special Condition 33 dealt with the area that was to become Lot 216. Special Condition 33 provided:[18]
[18] GAB 249 ‑ 250.
33.Inclusion of Lot 176
The Buyer acknowledges that:
(a)the Development is not intended to be constructed over all of the land more particularly described as Lot 32 on Plan 12 711 being the land contained in certificate of title Volume 1657 Folio 653 and incorporating the proposed Strata Plan because the portion of the land currently leased by ANZ bank, being about 143 square metres in area at the south western corner of Lot 32 on Plan 12711, having approximately a 9.5 metres frontage on Hay Street and abutting Lot 31 on Plan Diagram 55867 to the west which is now occupied by a McDonalds Restaurant is intended to be excluded from the Development and to have a separate and unrelated title initially owned by the Seller (Excised Portion);
(b)if the Seller because of any refusal by any Authority, or for other reasons, cannot obtain a separate title for the Excised Portion then it will include the Excised Portion into the Development and the Strata Scheme as Lot 176 with the commensurate rights appurtenant to that Lot and in the common property;
(c)the Unit Entitlement of the Lots in the Strata Scheme will be subject to change if the Excised Portion becomes a Lot in accordance with clause 33(b); and
(d)nothing in this clause or its effect will give the Buyer a right to object to the registration of the Strata Plan, avoid the Contract or to seek damages from the Seller. [Initials]
It was an agreed fact that Lot 176, referred to in Special Condition 33 is what later became Lot 216.[19]
[19] Agreed Facts [14] (GAB 473).
Consistent with the exclusion of Lot 216 from the Equus development, the proposed strata plan attached to the Contract did not depict that area on the plans. For example, the ground floor level did not depict the separate proposed commercial lots and did not include the land comprising Lot 216 within the boundary of the proposed development.[20]
[20] GAB 263.
In 2011, Birchwood caused a strata plan for the Equus development and a Management Statement to be lodged with Landgate for registration.
On 29 August 2011, Strata Plan 62962 (Strata Plan) and a Management Statement lodged in accordance with s 5C of the Act (Management Statement) were registered by the Registrar of Titles.[21]
[21] Agreed Facts [10] (GAB 471); Tribunal reasons [9].
The Strata Plan, unlike the proposed strata plan attached to the Contract, did depict the area being Lot 216:[22]
[22] GAB 90.
Lot 216 can be seen depicted in the upper left portion of the plan. That area was not included in the proposed strata plan attached to the Contract.[23]
[23] GAB 263.
The Management Statement set out the by‑laws that were to have effect upon registration of the statement. The Schedule 1 by‑laws included by‑laws 64, 65 and 66, which provided:
64. Removal of Lot 216 From Strata Scheme
Under the Strata Titles Act 1985 (WA) (Act) Lot 216 of the Strata Scheme (otherwise known as the 'ANZ site') will be converted into Common Property for the purpose of it then being immediately transferred out of the Strata Scheme and amalgamated with the adjoining land lot (now lot 31) as anticipated in Clause 33 of the Special Conditions of the standard contract for sale of Lots within the Strata Scheme.
65. Initial General Meeting
The Proprietors acknowledge that the Original Proprietor will pass at the initial General Meeting of the Strata Company the required resolutions without dissent allowing Lot 216 to be converted into Common Property and transferred out of the Strata Scheme in accordance with the above By‑law 64.
66. Agreement to Convert and Transfer
The Proprietors agree to do all things necessary and covenant to take no action to prevent the conversion of Lot 216 into Common Property and its transfer from the Strata Scheme as allowed by above By‑laws 64 and 65.
At the time that the Management Statement was lodged there appeared to have been a number of registered interests relating to leases and security interests over Lot 216, including KSZH Pty Ltd, Bosi Security Services Pty Ltd, Australia and New Zealand Bank Group Ltd, and McDonald's Australia Ltd (the persons having registered interests).[24] Each of the persons having registered interests signed or endorsed the Management Statement.[25]
[24] See Record of Certificate of Title (GAB 42).
[25] GAB 29 – 35.
On 1 September 2011, Birchwood as the original and sole proprietor of all lots in the Scheme gave notice of the convening of the First Annual General Meeting (First AGM) of the Strata Company to be held on 2 September 2011.[26]
[26] Tribunal reasons [11].
The agenda for the First AGM included a number of proposed resolutions, including the following resolutions proposed in agenda items 5, 6 and 8:[27]
[27] Tribunal reasons [14]; GAB 44 ‑ 45.
5.The Strata Company resolve by a majority resolution to authorise the Council of Owners of the Strata Company to affix the common seal and execute any documents required to effect the Strata Company's resolutions as set out in this Agenda.
6.The Strata Company resolve by resolution without dissent that:
(a)Lot 216 of the Strata Scheme (otherwise known as the 'ANZ site') will be converted into Common Property for the purpose of it being then immediately transferred out of the Strata Scheme and amalgamated with the adjoining land lot (now lot 31) as anticipated in Clause 33 of the Special Conditions of the standard contract for sale of Lots within the Strata Scheme;
(b)The Common Property formerly known as Lot 216 of the Strata Scheme be transferred to the registered proprietor of the adjoining land lot (now Lot 32) as anticipated in Clause 33 of the Special Conditions of the standard contract for sale of Lots within the Strata Scheme.
…
8.The Strata Company resolve by a resolution without dissent that Schedule 1 By‑law 16 be amended to be: 'Whilst Lot 216 is included in the Strata Scheme, or that area of land is common property during the process of removing it from the Strata Scheme and amalgamating it with the adjoining lot 31, so far as is permissible by law, these By‑laws must be read and construed subject to the existing leases to the ANZ Bank and of 25.45 m2 of Lot 216 to McDonald's Australia Limited, as those leases are extended or renewed from time to time.'
The Minutes of the First AGM record that, on 2 September 2011:[28]
1.Confirmed quorum and meeting properly constituted by agreed short notice.
2.The Strata Company resolved unanimously and, as appropriately, without dissent, passing each of the resolutions the subject of the meeting in accordance with the Agenda of meeting dated 1st September 2011.
[28] Tribunal reasons [97]; GAB 46.
It was not in dispute that Birchwood was the only party who voted at the First AGM. Indeed, in the proceedings before the Tribunal, Birchwood contended that as sole proprietor of all the lots in the Scheme it was the only party entitled to vote.[29]
[29] Tribunal reasons [98].
On or about 7 October 2011, the Strata Company lodged, in the form prescribed for the purposes of s 42(4)(a) of the Act,[30] a notification of change of by‑laws with the Registrar of Titles. That notification, which was under the Common Seal of the Strata Company certified, inter alia, that the by‑laws were amended as follows:[31]
Schedule 1 By‑law 64 be amended to be:
(a)Lot 216 of the Strata Scheme (otherwise known as the 'ANZ site') will be converted into Common Property for the purpose of it being then immediately transferred out of the Strata Scheme and amalgamated with the adjoining land lot (now lot 31) as anticipated in Clause 33 of the Special Conditions of the standard contract for sale of Lots within the Strata Scheme;
(b)The Common Property formerly known as Lot 216 of the Strata Scheme be transferred to the registered proprietor of the adjoining land lot (now Lot 32) as anticipated in Clause 33 of the Special Conditions of the standard contract for sale of Lots within the Strata Scheme.
[30] Strata Titles General Regulations 1996 (WA), Form 21 (see [31] above).
[31] GAB 48.
On 10 October 2011, Landgate registered amended by‑law 64.[32] That is, a reference to the amendment was made on the registered strata plan in accordance with s 42(4)(b) of the Act.[33]
[32] Tribunal reasons [15].
[33] Tribunal Exhibit 13, 457.
On 6 April 2016, the Strata Company was provided with a suite of documents to give effect to the transaction the subject of the resolutions and by‑laws 64 to 66 through its legal advisers.[34]
[34] Tribunal reasons [16].
On 12 August 2016, Birchwood sent an email to the Strata Company's strata manager, Richardson Strata Management Services, requesting that the Strata Company include on its agenda for the next Strata Council meeting a resolution to the effect that:[35]
The Strata Council approves the Sale Documents and agrees to take all reasonable steps to give effect to the transaction that was unanimously approved without dissent on 2 September 2011 at the first annual general meeting of the Equus Strata.
[35] Tribunal reasons [17].
At the Strata Council meeting held on 5 September 2018, the resolution was not put to a vote.[36]
[36] Tribunal reasons [18].
Neither the resolution, nor any similar resolution which would constitute compliance with by‑law 66 has been put or passed.[37]
[37] Tribunal reasons [19].
Proceedings in the Tribunal
In 2016 and 2017 three separate proceedings were commenced in the Tribunal:
(a)Birchwood applied to the Tribunal for orders under s 83 of the Act to give effect to the transaction by which Lot 216 be converted to common property and transferred out of the Scheme to the owner of the adjoining land (CC 1728 of 2016). The respondent to CC 1728 of 2016 was the Strata Company;
(b)the first and second appellants, together with the second respondent, applied to the Tribunal for a declaration pursuant to s 93 of the Act that the original by‑laws 64 to 66, and as amended at the First AGM, are invalid (CC 1056 of 2017); and
(c)the first and second appellants, together with the second respondent, applied to the Tribunal for a declaration pursuant to s 97(1)(a) of the Act that resolutions passed at the First AGM, including the resolutions in terms of items 6 and 8 of the agenda, are invalid (CC 1057 of 2017).
It will be necessary for us to return to aspects of the proceedings before the Tribunal in more detail later. At this point it is sufficient to observe that the Tribunal concluded that by‑laws 64 to 66 were invalid because they were made without power, for the purposes of s 93(3)(a) of the Act and were inconsistent with the provisions of the Act.[38] For that reason the Tribunal dismissed Birchwood's application in CC 1728 of 2016 to enforce the transaction and made orders in CC 1056 of 2017 declaring that the original by‑laws 64 to 66 and as amended at the First AGM were invalid. It was from these decisions that Birchwood appealed to the General Division of the Court.
[38] Tribunal reasons [111].
The Tribunal, however, dismissed the application in CC 1057 of 2017, and expressly refused to invalidate resolutions 6 and 8 of the First AGM. There was no appeal from that decision.
Proceedings before the primary judge
Birchwood appealed from the Tribunal's decision to dismiss its application in CC 1728 of 2016 and the Tribunal's declaration, in CC 1056 of 2017, that the original by‑laws 64 to 66, and as amended at the First AGM, were invalid. The appeal was heard by Allanson J, who allowed the appeal.
The learned primary judge made the following consequential orders:
3.Order 1 made by [the Tribunal] on 22 December 2020 in CC1056 of 2017 be, and hereby is, set aside and, in its place, orders are made that the application be dismissed.
4.Order 1 made by [the Tribunal] on 22 December 2020 in CC1728 of 2016 be, and hereby is, set aside and, in its place, orders are made in that application pursuant to Schedule 1 By‑laws 64, 65 and 66 of Equus Strata Plan 62962 (Strata Plan) and s 83(1) of the Strata Titles Act 1985 (WA) (STA) that:
(a)[the Strata Company] execute all necessary documents and do all acts and things necessary to:
(i)first, transfer lot 216 (Lot 216) of the strata scheme (Strata Scheme) under the Strata Plan from the appellant to the fourth respondent for consideration expressed as 'To give effect to Schedule 1 By‑law 64 of the Strata Plan' to effect the conversion of Lot 216 to common property pursuant to s 10 of the STA (Removed Common Property);
(ii)second, transfer the Removed Common Property from the fourth respondent to the applicant for consideration expressed as 'To give effect to Schedule 1 By‑law 64 of the Strata Plan' and out of the Strata Scheme pursuant to s 19(2) of the STA following approval in writing by the Western Australian Planning Commission and the City of Perth pursuant to s 19(10) of the STA; and
(iii)third, amalgamate the Removed Common Property with the adjoining land, being lot 31 on deposited plan 55867.
In relation to the validity of the by‑laws, the learned primary judge concluded that the by‑laws fell within the powers in s 42(1)(c) of the Act and were not otherwise inconsistent with the Act.
As to s 42(1)(c) of the Act, his Honour said:[39]
[39] Primary reasons [67] ‑ [71].
[67]Section 42(1)(c) empowers a strata company to make by‑laws for other matters relating to the management, control, use and enjoyment of the lots and the common property. Terms such as 'relating to', or 'relates to', or with respect to' have been described as having indefinite content. 'The sufficiency of the connection or association will be a matter for judgment which will depend, among other things, upon the subject matter of the enquiry, the legislative history, and the facts of the case'.
[68]There are several decisions which discuss the nature of the bylaws of a strata company, describing them (by analogy to membership of the company) as a statutory contract 'constituted by the bundle of rights and liabilities created by the constituent documents'. That description must allow for the requirement that the validity of a by‑law depends upon its consistency with the Act.
[69]In the context of the Strata Titles Act, regard must be had to s 42(6) by:
Without limiting the operation of any other provision of this Act, the by‑laws for the time being in force bind the strata company and the proprietors and any mortgagee in possession (whether by himself or any other person) or occupier or other resident of a lot to the same extent as if the by‑laws had been signed and sealed by the strata company and each proprietor and each such mortgagee, occupier or other resident respectively and as if they contained mutual covenants to observe and perform all the provisions of the by‑laws.
[70]The 'mutual covenants' in the challenged by‑laws must, accordingly, have a sufficient connection to the management, control, use and enjoyment of the lots in the common property to meet the description 'relating to' those matters. First, the by‑laws relate to the conversion of a lot to common property for the purpose of its transfer. The statutory process pursuant to s 10 requires execution by the proprietor and by the strata company. Second, by s 19, common property may be transferred by the strata company, pursuant to a resolution without dissent, and where the strata company is satisfied that all persons concerned have consented in writing to the transfer. Each of those steps is directly connected to the property in the scheme. By‑laws which regulate the bundle of rights and liabilities of the strata company and the proprietors in relation to the conversion and transfer of a lot, in my judgment, have a sufficient connection to the matters specified in s 42(1). That is, they are properly characterised as relating to the management, control, use and enjoyment of the lots and the common property.
[71]Further, it is not necessary, as the Tribunal said, that a by‑law relate solely to lots and any common property within the scheme. Nor is it necessary that the by‑law be for the benefit of all owners: a by‑law that relates to common property does not lose that character because it is for the benefit of one proprietor.
As to the allegation of inconsistency, the learned primary judge said:[40]
[75]Properly construed, however, by‑law 64, read with the other bylaws, did not avoid the processes prescribed by the Act.
[76]Consistently with s 10, the by‑laws provided for the original proprietor to pass the required resolution without dissent at the initial General Meeting of the Strata Company. The subsequent execution of the transfer by the Strata Company is consistent with a resolution it has already passed in accordance with s 10.
[77]The by‑laws also provided for the resolution required by s 19 to execute the transfer disposing of that part of the common property. The present proprietors simply acknowledged that the original proprietor would do what, consistently with the Act, it was entitled to do.
[78]It cannot, in my opinion, be said that the result of the by‑laws was that the original proprietor contracted out of the requirements of the Act.
[79]The agreement by the proprietors, pursuant to by‑law 66, to do all things necessary to give effect to resolutions that have passed without dissent, is not inconsistent with pt II.
[80]The Tribunal also found that the transfer of common property out of the Scheme, as contemplated by the transaction, was not for the benefit of all proprietors of the Scheme. Birchwood submitted, in my opinion correctly, that at the time that the management statement including the challenged by laws was lodged for registration, Birchwood (as the original proprietor) was to become the sole proprietor of all lots in the strata scheme on registration and therefore the sole owner of all common property. Assuming that s 35(1)(b) would operate so as to invalidate a by law, the by law when made was not inconsistent with the Act, as it was then for the benefit of all proprietors. That conclusion appears to be consistent with the Tribunal's finding (at [92]) that it was not satisfied that by laws 64 to 66 were invalid having regard to the interests of all proprietors in the use and enjoyment of their lots or the common property.
[81]In summary, I am satisfied that the Tribunal erred in its construction of s 42 in finding that the challenged by‑laws were not for matters relating to the management, control, use and enjoyment of the lots and the common property. I am also satisfied that the Tribunal erred in finding that the by‑laws were inconsistent with s 10, s 19 and s 35.
[40] Primary reasons [75] ‑ [79].
Finally, his Honour deal with the operation of s 83(4) of the Act (see [42] above). In that context, his Honour said:[41]
[83]The Tribunal dismissed the challenge to the resolutions that were passed at the initial General Meeting of the strata company. The minutes of that General Meeting record that Birchwood resolved unanimously and without dissent to pass each of the Resolutions on the agenda, including,
i.Lot 216 of the Strata Scheme (otherwise known as the 'ANZ site') will be converted into Common Property for the purpose of it being then immediately transferred out of the Strata Scheme and amalgamated with the adjoining land lot (now lot 31) as anticipated in Clause 33 of the Special Conditions of the standard contract for sale of Lots within the Strata Scheme.
ii.The Common Property formerly known as Lot 216 of the Strata Scheme be transferred to the registered proprietor of the adjoining land lot (now lot 32)33 as anticipated in Clause 33 of the Special Conditions of the standard contract for sale of Lots within the Strata Scheme.
[84]Section 83(4) does not prevent the Tribunal making an order with respect to the exercise of the strata company of its functions necessary to give effect to the transaction because the required resolutions of the strata company have already been passed without dissent.
[41] Primary reasons [83] ‑ [84].
Before turning to the grounds of appeal it is necessary to address a matter that provides important context to those grounds.
The significance of by‑laws 64, 65 and 66
As will be apparent from the issues before the Tribunal and the learned primary judge, much of the focus of the parties' respective positions has been on the validity of by‑laws 64, 65 and 66. That focus has affected the approach taken by the parties throughout the history of the proceedings, including in this Court. For the reasons that follow, there is good reason to suppose that that focus was either misdirected or unnecessary.
As we have said, much of the focus of the parties' submissions, before the Tribunal and the learned primary judge, was on the validity of by‑laws 64, 65 and 66, as amended. While the first and second appellants also challenged the validity of the resolutions at the First AGM the Tribunal rejected that challenge, and there was no appeal from that decision. Nevertheless, the parties have apparently proceeded upon the basis that, unless by‑laws 64, 65 and 66 were valid, the Strata Company was not obliged to give effect to, and Birchwood could not enforce, the transaction.
Indeed, this focus is apparent from the terms of the application brought by Birchwood in CC 1728 of 2016. Both the orders sought in that application, and the grounds upon which it was made, were expressly based on the failure of the Strata Company to give effect to by‑laws 64 to 65.
The Amended Application in CC 1728 of 2016, for example, sought the following order:[42]
By reason of the respondent's failure to give effect to by‑laws 64, 65 and 66 of the Schedule 1 by‑laws for Strata Plan No 62962 ('the Strata Plan') as required by the duties imposed on the respondent by s.42(6) and s.35(1)(a) of the Strata Titles Act 1985 ('the Act'), an order pursuant to section 83(1) of the Act that the respondents must, as a matter of urgency and as soon as practicable, execute all necessary documents and do all things necessary to give effect to the conversion of Lot 216 of the strata scheme ('Strata Scheme') under the Strata Plan ('Lot 216') into common property and transfer out of the Strata Scheme in accordance with 64, 65 and 66 of the Schedule 1 by‑laws for the Strata Plan.
[42] Amended SAT Application CC 1728 of 2016 dated 18 December 2017 [1]. Save that it sought orders for declarations the Application filed by Birchwood on 25 October 2016 sought an order that was in substance to the same effect as this proposed order.
The grounds in the Amended Application in CC 7128 of 2016 were as follows: [43]
(a) The proprietors of each of the lots within the Strata Plan (Proprietors) constitute the strata company 'The Owners of Strata Plan 62962' (Strata Company) (section 32(1) of the Strata Titles Act 1985 (WA)). (b) The Strata Company and the Proprietors are bound by, and have a duty to act in accordance with, the by‑laws for Strata Plan 62962 (By‑laws) (section 42(6) of the Act). Further, the Strata Company has a duty to enforce the By‑laws (section 35(1)(a) of the Act. (c) By‑law 64 of the Schedule 1 By‑laws requires Lot 216 to be converted into Common Property for the purpose of it then being immediately transferred out of the Strata Scheme and amalgamated with the adjoining land lot. (d) By‑law 65 of the Schedule 1 By‑laws contains an acknowledgement by the Proprietors that the applicant will pass at the initial General Meeting of the Strata Scheme held under s 49(1) of the Act ('initial General Meeting') the required resolutions without dissent allowing Lot 216 to be converted into Common Property and transferred out of the Strata Scheme in accordance with Schedule 1 by‑law 64. (e) On 29 August 2011, the Strata Plan and a Management Statement lodged with the Strata Plan under and in accordance with s 5C of the Act ('the Management Statement') were registered by the Registrar of Titles pursuant to rr 16 ‑ 18 of the Strata Titles General Regulations 1996. Upon registration of the Strata Plan and the Management Statement, the Schedule 1 By‑laws contained in the Management Statement came into effect by operation of s 5C(5) of the Act. (f) On 1 September 2011, the applicant gave notice of the convening of the initial General Meeting to be held on 2 September 2011. (g) On 2 September 2011, at the initial General Meeting of the Strata Company, the resolutions contemplated in by‑law 65 of the Schedule 1 By‑laws were passed. (g) By‑law 66 of the Schedule 1 By‑laws requires the Proprietors to do all things necessary and covenant to take no action to prevent the conversion of Lot 216 into Common Property and its transfer from the Strata Scheme, in accordance with by‑laws 64 and 65 of the Schedule 1 By‑laws. (h) Despite requests from the applicant, the respondents have failed to comply with by‑law 66 of the Schedule 1 By‑laws. On 6 April 2016 the respondents, through their legal advisers, were provided with a suite of documents to give effect to the conversion of Lot 216 into Common Property and the transfer out of the Strata Scheme (Transaction). On 5 September 2016 the Strata Council, on behalf of the respondent, failed to approve a resolution requiring the respondent to give effect to the Transaction. (i) The respondent's failure to comply and act in accordance with Schedule 1 By‑laws 64, 65 and 66 of the By‑laws has given rise to a dispute under s 83(1) of the Act between the applicant and the respondents.
[43] Amended SAT Application CC 1728 of 2016 dated 18 December 2017. The grounds in the Amended Application are in substance the same as in the Application filed on 25 October 2016, save for the addition of paragraph 2(e), 2(f) and the first 2(g).
As can be seen, the dispute for the purpose of s 83(1) of the Act was said to arise from the Strata Company's failure to act in accordance with by‑laws 64, 65 and 66.
While Birchwood brought, and maintained, the proceedings by reference to the Strata Company's failure to comply with by‑laws 64, 65 and 66, there is a real question as to whether by‑laws 64, 65 and 66 were necessary in order to effect the transaction. That is because, on the face of it, resolutions 5, 6 and 8 of the resolutions passed at the First AGM were themselves sufficient to authorise the transaction and to require the council of the Strata Company to do all things necessary to give effect to those resolutions.
In particular, while all the parties treated the resolutions as having given rise to amendments to the by‑laws, which amendments were formally notified to the Registrar of Titles, the resolutions were nevertheless expressed in terms which also satisfied the requirements of s 10 and s 19 of the Act, for the conversion of a lot to common property and the transfer of that common property out of the Scheme. That is, the resolutions themselves reflected the approvals required by the Act to give effect to the transaction, regardless of whether they also validly amended the by‑laws.
For example, in relation to the conversion of a lot to common property the relevant requirement of s 10 of the Act, as it relates to the Strata Company, is that a transfer to convert a lot into common property 'is accompanied by a certificate under seal of the strata company certifying that the strata company has by resolution without dissent … consented to the conversion effected by the transfer'.[44] In that regard:
(a)resolution 6(a) is clearly a resolution without dissent that Lot 216 be converted into common property (see [64] above);
(b)resolution 5 authorises the council of the Strata Company to affix the common seal and execute documents required to give effect to that resolution.
[44] Act, s 10(2)(b) (see [36] above).
Similarly, in relation to the transfer of the common property, s 19 of the Act provides that 'a strata company may, pursuant to a resolution without dissent … and where satisfied that all persons concerned have consented in writing to the transfer … execute a transfer of common property'. In that regard:
(a)resolution 6(b) is clearly a resolution without dissent that the common property formerly Lot 216 be transferred to the registered proprietor of the adjoining land (see [64] above);
(b)resolution 5 authorises the council of the Strata Company to affix the common seal and execute documents required to give effect to that resolution.
As noted at [62] above, at the time the resolution authorising the transfer was passed, all the persons having registered interests in Lot 216 had signed or endorsed the Management Statement proposing the transaction. Insofar as those persons having registered interests were 'persons concerned' in the transaction within the first limb of the definition of 'person concerned' in s 3 of the Act, there was no suggestion that their endorsement of the transaction in the Management Statement was not 'consent in writing' for the purpose of s 19(2) of the Act. Indeed their interests were specifically protected by the amendment to the Schedule 1 by‑law 16 effected by resolution 8 passed at the First AGM.
It is to be recalled that in CC 1057 of 2017 the first and second appellants sought a declaration that the resolutions passed at the First AGM were invalid. That application failed and, there having been no appeal in that matter, the resolutions remain valid and effective according to their terms.
Indeed, given that those resolutions were carried, on the face of it, the Strata Company was then under an obligation to give effect to them. The council of the Strata Company, similarly, had, and has, a duty under s 44(1) of the Act to give effect to the direction given at the general meeting.[45] Indeed, the failure of the council of the Strata Company to give effect to the resolutions of the general meeting of the Strata Company would prima facie give rise to a dispute within the jurisdiction of the Tribunal in s 83 of the Act.
[45] See Interpretation Act 1984 (WA), s 56(2).
As we have set out above, however, despite the apparent sufficiency of the resolutions to carry the transaction into effect, Birchwood clearly ran its case below on the basis that it was the by‑laws that formed the basis for the relief it sought. That is the basis upon which the case was put and that must remain the focus of the appeal to this Court.
Nevertheless, the fact that resolutions without dissent were passed in accordance with s 10 and s 19 of the Act remains relevant to the assessment of the merits of the appeal, particularly in relation to the appellants' contention that by‑laws 64, 65 and 66 are inconsistent with other provisions of the Act. In that context, the appellants relied upon the requirement, apparently not litigated below, that 'all persons concerned have consented in writing to the transfer' in the context of its contention that the by‑laws were inconsistent with s 19 of the Act. We will address that issue in the context of the grounds of appeal, to which we now turn.
Grounds of appeal
There are five grounds of appeal, which are as follows:
1.The Learned Hearing Judge erred in law in finding the Schedule 1 bylaws 64 ‑ 66 of the management statement L711880 and amended by bylaw 64(a) and (b) notified by L755034 on Strata Plan 62962 (the 'Bylaws 64 to 66'), in providing for the conversion of Lot 216 therein to common property and for the common property constituted by the area of former Lot 216 to immediately thereafter be transferred out of the Scheme and amalgamated in the title of adjoining independently owned land, related to the management, control, use and enjoyment of the Lots within the Scheme and its common property so as to be within the bylaw making power granted by s 42(1)(c) of the Strata Titles Act 1985 (WA) (the 'Act') ([65] to [70] and [81]).
2.The Learned Hearing Judge erred in law in finding Bylaws 64 to 66 were not, as proscribed for the exercise of the bylaw making power in s 42(1), inconsistent with ss 10, 18, 19 and 35 of the Act ([75] to [81]).
3.The Learned Hearing Judge erred in law in finding it is not necessary for a bylaw to be valid that it must relate solely to lots within the scheme or be for the benefit of all owners and not just one owner within the subject scheme ([71]).
4.The Learned Hearing Judge erred in law in finding, on the assumption s 35(1)(b) would (otherwise) operate to invalidate Bylaws 64 to 66, those Bylaws when made were not inconsistent with the Act, as it was for the benefit of all proprietors, Birchwood being the sole registered proprietor at that time ([80]).
5.[Not pursued]
6.The Learned Hearing Judge erred in law in finding s 83(4) of the Act did not prevent the Tribunal from making orders under s 83(1) to settle the dispute in relation to the Third Respondent's failure to give effect to Bylaws 64 to 66 because resolutions as required by ss 10, 18 and 19 of the Act had been passed without dissent ([84]).
As will be apparent there is considerable overlap in the grounds of appeal, particularly grounds 1 to 4. Indeed, the appellants' submissions as to the validity of the by‑laws did not distinguish between grounds 1 to 4. There are three broad issues, however, that arise from the grounds as a whole:
(a)whether by‑laws 64, 65 and 66 (originally or as amended) are inconsistent with other provisions of the Act, and in particular ss 10, 18, 19 and 35 of the Act (grounds 2 and 4);
(b)whether by‑laws 64, 65 and 66 (originally or as amended) fall within the scope of the by‑law making power in s 42(1) of the Act. This is essentially a matter of whether the by‑laws are properly characterised as within the specified subject matters in the Act (grounds 1 and 3); and
(c)whether s 83(4) of the Act prevented the Tribunal from making orders for the settlement of the dispute in relation to the Strata Company's failure to give effect to by‑laws 64, 65 and 66 (ground 6).
It is convenient to deal with the issues (and the grounds of appeal) in this order. In particular, as will become apparent, whether by‑laws 64, 65 and 66 are inconsistent with the Act depends in part upon the proper construction of the by‑laws and what may be described as their intended operation. The proper construction of the by‑laws is, in turn, relevant to their characterisation for the purposes of the by‑law making power in s 42 of the Act.
Before turning to those issues, it is useful to identify some general legal principles as to the construction of the by‑laws.
Construction of by‑laws
The proper approach to the construction of by‑laws under the Act was the subject of this Court's decision in Byrne v The Owners of Ceresa River Apartments Strata Plan 55597.[46]
[46] Byrne v The Owners of Ceresa River Apartments Strata Plan 55597 [2017] WASCA 104; (2017) 51 WAR 304 (Byrne).
Byrne concerned an appeal from Pritchard J (as her Honour then was) in which her Honour concluded, following the New South Wales Court of Appeal in The Owners of Strata Plan No 3397 v Tate,[47] that the ordinary principles of contractual construction should guide the construction of by‑laws under the Act, namely that the rights and liabilities of parties are determined objectively, by reference to the contract's text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.[48] To these principles, Pritchard J added four qualifications:
(a)to the extent that their terms permit, by‑laws should be construed so that they are not inconsistent with the Act (bearing in mind that a strata company has no power to make a by‑law which is inconsistent with the Act);[49]
(b)in interpreting a term of a contract which is ambiguous, it is possible in some circumstances to refer to objective extrinsic material to ascertain the meaning of the term. However, in the context of by‑laws, caution should be exercised in going beyond the language of by‑laws and their statutory context to ascertain their meaning, and a tight rein should be kept on having recourse to surrounding circumstances;[50]
(c)the statutory context of the by‑laws of a strata company should be taken into account by the Court in construing by‑laws;[51] and
(d)in the case of by‑laws, there is no basis for saying that they should be interpreted as a business document, with the intention that they be given business efficacy. That does not mean that by‑laws may not have a commercial purpose, and be interpreted accordingly, but due regard must be paid to the statutory context in so doing.[52]
[47] The Owners of Strata Plan No 3397 v Tate [2007] NSWCA 207; (2007) 70 NSWLR 344 (Tate).
[48] Byrne [75] (Pritchard J).
[49] Byrne [76] (Pritchard J).
[50] Byrne [77] (Pritchard J).
[51] Byrne [78] (Pritchard J).
[52] Byrne [79] (Pritchard J).
This Court in Byrne, while disposing of the appeal from Pritchard J in accordance with the principles identified in Tate, observed that, in point of principle a different approach may be required in the case of by‑laws in a management statement that has not been amended since registration. In that context the Court said that the correct approach to construction might be along the following lines:[53]
(a)the Management Statement is to be construed objectively, by reference to what a reasonable person would understand the language of the instrument to mean;
(b)it is to be construed in the context of the registered strata plan;
(c)it is to be construed in the relevant statutory context, being, first and foremost, the Strata Titles Act;
(d)as the Management Statement is on the Torrens Register, unamended, rules of evidence assisting the construction of contracts inter partes, of a nature explained by Codelfa Constructions Pty Ltd v State Rail Authority (NSW), do not apply to its construction: Westfield Management Ltd v Perpetual Trustee Co Ltd;
(e)insofar as there are constructional choices properly open, a construction should be preferred which is consistent with the Strata Titles Act: s 42(1) of the Strata Titles Act.
[53] Byrne [139] (Murphy & Mitchell JJA & Beech J) (references omitted).
As will be apparent the principal difference between the approach identified by Pritchard J and this Court in Byrne, concerned the extent to which, in the case of a management statement, the court may have regard to extrinsic evidence as to surrounding circumstances. In the case of a management statement on the publicly accessible register, consistent with the approach of the High Court in Westfield Management Ltd v Perpetual Trustee Co Ltd, a third party who inspects the register cannot be expected to look further for extrinsic materials which might establish facts or circumstances existing at the time of the registered dealing.[54]
[54] Westfield Management Ltd v Perpetual Trustee Co Ltd [2007] HCA 45; (2007) 233 CLR 528 (Westfield) [39] (Gleeson CJ, Gummow, Kirby, Hayne & Heydon JJ).
In the present case, the original by‑laws 64, 65 and 66 were contained in the Management Statement, although by‑law 64 was amended at the First AGM. The by‑laws nevertheless referred to the special conditions in the Contract, and to that extent directed the reader to external material.[55]
[55] As to which see Westfield [44] (Gleeson CJ, Gummow, Kirby, Hayne & Heydon JJ).
Are by‑laws 64, 65 and 66 inconsistent with the Act (grounds 2 and 4)?
A significant plank of the appellants' challenge to the validity of by‑laws 64, 65 and 66, reflected in grounds 2 and 4 of the appeal, is that, contrary to the chapeau of s 42(1) of the Act, the by‑laws are inconsistent with the Act, and in particular with the legislative requirements for the conversion of a lot to common property (in s 10) and for the transfer of common property out of the Scheme (in s 19).
Those grounds challenge the learned primary judge's conclusions at Primary reasons [75] to [81] (see [80] above).
Appellants' contentions
The appellants' submissions in this Court as to inconsistency were somewhat ambulatory and traversed a number of themes or contentions.
The first, and most straightforward, contention was that the by‑laws were inconsistent with the Act because they sought to avoid (or contract out of) the process prescribed by s 10 and s 19.[56] This was a conclusion that had been reached by the Tribunal at first instance and appears to proceed upon the premise that a strata company cannot seek to achieve, by the use of by‑laws, a result otherwise than by following the prescribed requirements of the Act.[57]
[56] See Appellants' amended submissions [35.3], [47], [49] (WAB 36 - 43).
[57] Tribunal reasons [69].
The second contention added a temporal variant to the first contention. That temporal variant was that by‑laws 64, 65 and 66, by purporting to permit, and require, the conversion and transfer of Lot 216 on the basis of the resolutions passed on 2 September 2011, were inconsistent with the Act because, the appellants submitted, the requirement that there be a resolution without dissent to the conversion (in s 10), must be determined as at the time of the relevant transfer (rather than at the time of the resolution).
The appellants, for example submitted:[58]
48A. Furthermore, in summary, s 42(1) provides that a strata company may make by‑laws 'not inconsistent with the Act.' By‑laws 64-66 are inconsistent with the Act. Section 10(1) permits a lot to be converted into common property by registration of a transfer executed by the proprietor and the strata company. Section 10(2)(b) provides that a transfer shall not be registered unless it is accompanied by a certificate under the strata company's seal that the 'strata company has by resolution without dissent' consented to the conversion effected by the transfer.
48B. Section 32(1) relevantly provides that the proprietors from time to time shall constitute a strata company; i.e. the strata company is the proprietors from time to time. The transfer of lot 216 cannot be registered because no proper and compliant certificate of the 'strata company' or its proprietors by 'resolution without dissent' can be provided as at the time the transfer is sought. When registration will be sought, the strata company will have more than one proprietor, not the original proprietor. The resolution of the original proprietor is insufficient. Just as the issue of discharge of mortgages and other interests (required by s 10(2)(b)) is determined as at the time that registration is sought, the issue of a proper 'resolution without dissent' must be determined as at that time.
[58] See Appellants' amended submissions [48A], [48B] (WAB 41). These submissions, relying upon a temporal requirement to the 'resolution without dissent', do not appear to have been put to the Tribunal or the primary judge. They were included in the Appellants' Amended Submissions as a consequence of amendments made to the Appellants' Case filed on 24 November 2022.
The gravamen of the appellants' case, in this regard, was that while Birchwood may have been the only proprietor of the lots and entitled to vote at the First AGM, after that time, and at the time of the proposed registration of the transfer of Lot 216 (under s 10), there were additional proprietors (including the appellants) such that there could not be said to be a resolution without dissent. While little attention was given to it in their submissions, the appellants also appeared, implicitly at least, to make the same submission in relation to the requirement in s 19(2) of the Act that there be a resolution without dissent for the transfer of common property.[59]
[59] Appeal ts 38 ‑ 39.
The third contention as to inconsistency relied upon by the appellants concerned the requirement in s 19(2) of the Act that a strata company may transfer common property '… where satisfied that all persons concerned have consented in writing to the transfer'. The appellants' reliance on this provision was not clear from its written submissions. In those submissions, the appellants appeared to contend that, as in the case of the contention we have just referred to, it was necessary for all 'persons concerned' to consent in writing at the time of the transfer.[60] That submission is therefore addressed in the context of the second (temporal) contention.
[60] See Appellants' amended submissions [48F] (WAB 42).
At the hearing of the appeal, however, the appellants made clear that their contention in relation to the consent of 'all persons concerned' was that the only person who consented to the transfer was Birchwood (the original sole proprietor) and that there were other 'persons concerned' who had not given their consent, namely the prospective proprietors under uncompleted contracts of sale, such as the first and second appellants.[61] As counsel put the appellants' position, 'so soon as there was a contract to purchase, there is an interest in land sufficient for them to be persons concerned'.[62]
[61] Appeal ts 38 ‑ 44.
[62] Appeal ts 41.
Finally, in relation to the allegation of inconsistency, the appellants contended that by‑laws 64, 65 and 66 were inconsistent with s 35(1)(b) of the Act, which requires the strata company to 'control and manage the common property for the benefit of all the proprietors' (appellants' emphasis).
In its written submissions the appellants submitted that, contrary to s 35(1)(b), by‑laws 64, 65 and 66 'assisting a single lot owner or third party to be the beneficiary of a transfer of common property which is not for the benefit of all proprietors and in fact will result in those proprietors having to pay the costs associated with that outcome'.[63] At the hearing of the appeal, the submission was put differently, namely that pursuant to by‑laws 64, 65 and 66, 'Birchwood did not benefit as a proprietor under the strata scheme. Birchwood benefited as the seller of Lot 216 to a third party'.[64]
[63] See Appellants' amended submissions [46] (WAB 40).
[64] Appeal ts 58.
We will deal with each of these contentions in turn.
Do by‑laws 64, 65 and 66 seek to avoid (or contract out of) the Act?
The answer to the first question, as to whether by‑laws 64, 65 and 66 sought to avoid, or contract out of, the requirements of the Act significantly turns, as the primary judge recognised, on the proper construction of the by‑laws and in particular whether those by‑laws purport to provide an alternative mechanism to give effect to the transaction to the mechanisms prescribed by the Act. In that regard, it may be accepted that if by‑laws 64, 65 and 66 had purported to create an alternative mechanism for giving effect to the transaction – thereby seeking to avoid the requirements of the Act – those by‑laws would likely be invalid.
For the following reasons, however, in our view, the by‑laws do no such thing. Indeed, to the contrary, on their proper construction, by‑laws 64, 65 and 66, are wholly consistent with, and are intended to reflect, the processes required by the Act.
In their original form (i.e. as they appeared in the Management Statement) by‑laws 64, 65 and 66 expressly contemplated that the requirements of the Act would be complied with, to convert and transfer Lot 216. By‑law 64, which identified the nature of and purpose of the transaction as both permitted by the Act and anticipated by the Contract, is not inconsistent with the statutory process for conversion to, and transfer of, common property. It provided for the conversion to occur '[u]nder the [Act].' Similarly, by‑law 65 expressly recognises the need for compliance with the requirements of the Act and, in particular, the need for 'the required resolutions' allowing the transaction to occur. Rather than being inconsistent with the requirements for resolutions without dissent, by‑law 65 respected those requirements, in contemplating that those requirements would be satisfied in converting Lot 216 by the passing of 'the required resolutions'.
By‑law 66 is, in context, also not inconsistent with the requirements of the Act. Properly construed by‑law 66 does not relieve, or purport to relieve, the Strata Company (or Birchwood as the original proprietor) from complying with the requirements of the Act. It simply provides, in the form of a covenant, that the subsequent proprietors would also act in accordance with, and not seek to obstruct, the process contemplated by the Act and the other by‑laws. As an aside, in one sense, it might have been thought that such a covenant would not be necessary given that the Strata Company could be expected, through its council, to give effect to resolutions passed by the Strata Company in accordance, and in compliance, with the Act. As matters have turned out, such an expectation may well have been misplaced. We will return to this later.
The 'proprietors', as has already been addressed, means the registered proprietors, as at the relevant time. As already noted, at the time the by‑laws were made, and at the time of the resolutions giving effect to the by‑laws, Birchwood was the registered proprietor of all of the lots in the Scheme and therefore the sole owner of all common property. The learned primary judge was therefore correct to conclude that the by‑laws, and the resolutions were for the benefit of all of the proprietors.
There is another reason for rejecting this contention as to inconsistency. The learned primary judge proceeded upon the assumption that 's 35(1)(b) would [or could] operate so as to invalidate a by‑law'.[81] There is good reason to doubt that assumption, at least in relation to the by‑laws in the present case. As we have already concluded, on their proper construction, by‑laws 64, 65 and 66 are wholly consistent with, and are intended to reflect, the processes required by the Act for the conversion and transfer of common property. The Act expressly contemplates that a strata company may, pursuant to a resolution without dissent, dispose of common property. It could hardly be suggested that by exercising the power to dispose of common property in the circumstances provided for in s 19 of the Act, a strata company thereby acts contrary to its obligations with respect to the common property under s 35(1)(b). In those circumstances a by‑law which does no more than recognise and support those powers could not be said to be contrary to those obligations either. Indeed, insofar as by‑laws are concerned, s 42(8) of the Act expressly provides that by‑laws may confer on a proprietor 'exclusive use and enjoyment of, or special privileges in respect of the common property or any part of it'. Consistent with the provisions of the Act in relation to common property generally, such a by‑law may be made pursuant to a resolution without dissent.
[81] Primary reasons [80].
For these reasons, each of the appellants' contentions that by laws 64, 65 and 66 are inconsistent with the Act must be rejected.
Grounds 2 and 4 fail.
Do by‑laws 64, 65 and 66 fall within the scope of the by‑law making power (grounds 1 and 3)?
Grounds 1 and 3 challenge the learned primary judge's conclusion that by‑laws 64, 65 and 66 are properly characterised as relating to the management, control, use and enjoyment of the lots and the common property, so as to fall within the subject matter in s 42(1)(c) of the Act.
The appellants submitted that the learned primary judge 'did not explain how or why [the by‑laws] relate to any one of 'management', 'control', 'use' and 'enjoyment' of the lots and the common property'. Their submissions continued that 'bearing in mind, s 35(1)(b), which requires the strata company to control and manage the common property 'for the benefit of all the proprietors', 'it cannot properly be said that the by‑laws relate to any (or all) of these matters'.[82]
[82] See Appellants' amended submissions [48E] (WAB 42).
There is a certain inconsistency in the appellants' submissions in that regard. Whereas, in the context of ground 4, the appellants maintained that the by‑laws were inconsistent with the Strata Company's obligation to 'control and manage the common property', in the context of ground 1, they maintain that the by‑laws do not even 'relate to' those matters.
Be that as it may, in our view, the learned primary judge was correct to conclude that by‑laws 64, 65 and 66 are bylaws 'relating to' the 'management, control, use and enjoyment of the lots and the common property'.
The phrase 'relating to' is, as the High Court has often observed, one of wide import.[83] The phrase can refer to a direct or indirect connection between two subject matters, and one subject matter can 'relate to' another subject matter even though the first subject matter also relates to other things.[84] The degree of connection required between two subject matters joined by the words 'relating to' is ordinarily to be determined by reference to the text, context, legislative purpose and history of the provision and the facts of the case.[85]
[83] Minister for Home Affairs v DLZ18 [2020] HCA 43; (2020) 270 CLR 372(Minister for Home Affairs v DLZ18) [43] (Kiefel CJ, Bell, Gageler, Keane & Gordon JJ).
[84] Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 (Project Blue Sky) [87] (McHugh, Gummow, Kirby and Hayne JJ); Minister for Home Affairs v DLZ18 [43] (Kiefel CJ, Bell, Gageler, Keane & Gordon JJ).
[85] Minister for Home Affairs v DLZ18 [43] (Kiefel CJ, Bell, Gageler, Keane & Gordon JJ).
As this Court observed in Byrne,[86] the words 'management, control, use and enjoyment' of a lot, in s 42(1)(c), are, singularly and collectively, words of considerable breadth. The Court in Byrne,[87] also cited with approval the observations of Edelman J in Mackie v Henderson[88] that the range of possible by‑laws can be extremely broad and that by‑laws can interfere with the property rights and personal rights of the owners of a lot.
[86] Byrne [116] (Murphy & Mitchell JJA & Beech J).
[87] Byrne [117] (Murphy & Mitchell JJA & Beech J).
[88] Mackie v Henderson (2011) 42 WAR 194 [22] (Edelman).
Byrne concerned by‑laws relating to the lots in a Scheme, hence the reference to 'management, control, use and enjoyment' of a lot in that decision. The power in s 42(1)(c), of course, extends to 'lots and the common property'. As the Court said in that case, the breadth of the words is to be considered 'singularly and collectively'. The subject matter in s 42(1)(c) is a composite phrase, in relation to which it may be 'misleading to construe [the] composite phrase simply by combining the dictionary meanings of its component parts'.[89] The question of characterisation in this case is, therefore, not to be approached by pulling apart the composite phrase into its constituent words, selecting one meaning, divorced from the context in which they appear, and then reassembling the provision,[90] as the appellants' submissions referred to in [156] above might be thought to suggest.
[89] XYZ v Commonwealth[2006] HCA 25; (2006) 227 CLR 532, [19] (Gleeson CJ), [102] (Kirby J).
[90] Sea Shepherd Australia Limited v Commissioner of Taxation [2013] FCAFC 68; (2013) 212 FCR 252 [34] (Gordon J; Besanko J agreeing).
Significantly, in that context, s 42(1)(c) refers to 'the lots and any common property' (that is, the entirety of the land that might be the subject of a strata scheme), and by the words 'management, control, use and enjoyment' the sub‑section contemplates all the activities and dealings that might be envisaged in relation to that land.
As already noted, whether by‑laws are properly characterised as by‑laws 'relating to' these matters is not to be determined by asking whether the by‑laws can be seen to concern only, or even substantially only, such matters. Rather, the process of characterisation involves a question of fact and degree as to whether there is a sufficient connection – sufficiency being evaluated in light of the text, context and purpose of s 42 and the Act as a whole – to conclude that the by‑laws 'relat[e] to' these matters.
So understood, s 42(1)(c) is broad enough to include by‑laws that deal with and regulate the proposed conversion of a lot into common property and its transfer out of the scheme. As we have concluded in relation to grounds 2 and 4, that could not include providing for a mechanism for such a conversion and transfer that would be contrary to the mechanisms prescribed by the Act (for the reason that to do so would be inconsistent with the Act). But, as we have also concluded, that is not what by‑laws 64, 65, and 66 purport to do. Rather they provide, as by‑laws, both notice and acknowledgement that a conversion and transfer of Lot 216 would be the subject of the necessary resolutions under the Act and, by amended by‑law 64, that they had been the subject of those resolutions. By including the outcome of the resolutions as amended by‑law 64, the by‑laws also ensured that the Strata Company would be bound, as part of its obligations under s 35(1)(a) of the Act, to give effect to the resolutions for the conversion and transfer of Lot 216 that had been passed at the First AGM.
Similarly, by‑law 66 provided a mutual covenant between the Strata Company and the proprietors (including subsequent proprietors) that they would also act in accordance with, and not seek to obstruct, the conversion and transfer of Lot 216.
Each of those effects, in our view, is properly to be characterised as, and the by‑laws are themselves properly to be characterised as, relating to the 'management, control, use and enjoyment' of Lot 216 (which is currently a 'lot' and is proposed to be 'common property' for the purposes of its transfer). In particular, while the by‑laws are, as we have concluded above, consistent with the provisions of the Act, they nevertheless make important provision for the management and control of Lot 216, which reinforces those other provisions of the Act. For example:
(a)by‑law 64 provides an additional basis (through the Strata Company's obligation to enforce the by‑laws) for the Strata Company's obligation to carry the transaction into effect; and
(b)by‑law 66 provides an additional basis upon which subsequent proprietors are obliged (in addition to any contractual obligations they have) not to take action to prevent the transaction.
It may be correct to say that, as a matter of law, by‑laws 64, 65 and 66 were not strictly necessary in order to create a legal obligation on the part of the Strata Company to give effect to the transaction. As Murray J held in Miller v Owners of Marina Village, s 19(2) itself 'provide[s] both the power and authority, and duty, so far as a strata company is concerned' to give effect to the resolution without dissent. To that extent, as counsel for Birchwood accepted at the hearing of the appeal, the by‑laws were something of a 'belts and braces' approach to ensure that the transaction would be carried into effect.[91]
[91] Appeal ts 67 ‑ 68, 79 ‑ 80.
The fact that a by‑law might create obligations that replicate other legal obligations from other sources does not affect their proper characterisation for the purposes of s 42(1)(c) of the Act. Indeed, given that by‑laws are maintained on a publicly accessible register, and are therefore intended to provide notice in relation to matters affecting the lots and common property to prospective purchasers, there may be good reason to include particular uncompleted obligations of a Strata Company, such as the completion of the transaction, within by‑laws (rather than relying solely upon contractual disclosure of such matters).
The learned primary judge was correct to conclude that by‑laws 64, 65 and 66 fell within the scope of the by‑law making power in s 42(1) of the Act.
Grounds 1 and 3 fail.
Does s 83(4) of the Act prevent the Tribunal from making orders for the settlement of the dispute (ground 6)?
By ground 6, the appellants contend that s 83(4) of the Act prevented the Tribunal from making orders for the settlement of the dispute in relation to the Strata Company's failure to give effect to by‑laws 64, 65 and 66 (and so in turn prevented the learned primary judge from making the orders under s 105(9)(b) of the State Administrative Tribunal Act 2004 (WA)).
Section 83(4) of the Act provides an exception to the Tribunal's general dispute resolution power in s 83(1) of the Act. Relevantly s 83(4) prevents the Tribunal making:
an order … for the settlement of a dispute … with respect to the exercise or performance of … a … duty or function … where that … duty or function may … only be exercised or performed pursuant to a … resolution without dissent.
The appellants submit that, as the dispute in the present case concerned the failure of the Strata Company to give effect to by‑laws 64, 65 and 66, which, in turn, reflected the resolutions passed without dissent at the First AGM, the duty or function sought to be enforced was one that fell within the exception in s 83(4).[92]
[92] See Appellants' amended submissions [54] (WAB 44).
The learned primary judge concluded that s 83(4) had no application because the required resolutions under s 10 and s 19 of the Act had already been passed without dissent.[93] Birchwood submitted that his Honour's conclusion in relation to s 83(4) was 'clearly correct'.[94] Implicit in the learned primary judge's conclusion is the proposition that s 83(4) does not operate so as to prevent the settlement of a dispute about a failure of a strata company to perform a duty, when that duty has in fact arisen as a consequence of a unanimous resolution or a resolution without dissent. That is, the learned primary judge, at least implicitly, construed s 83(4) to be limited to those cases where the relevant dispute arises in circumstances in which a unanimous resolution or a resolution without dissent is required, but has not been, or there is a dispute as to whether such a resolution had been, obtained.
[93] Primary reasons [84].
[94] First respondents' amended submissions [14] (WAB 58).
In this case there is no doubt, and no dispute, that the necessary resolutions without dissent were obtained. Ground 6 therefore turns on the proper construction of s 83(4) and whether it applies in those circumstances so as to displace the jurisdiction of the Tribunal.
Principles of statutory construction
The principles of statutory construction are well settled. Statutory construction involves attribution of meaning to statutory text. The Court's task in that regard must begin and end with the statutory text as a whole, considered in its context, including its objectively discerned statutory purpose.[95]
[95] Thiess v Collector of Customs [2014] HCA 12; (2014) 250 CLR 664 (Thiess v Collector of Customs) [22] ‑ [23] (French CJ, Hayne, Kiefel, Gageler and Keane JJ).
As to the last matter, statutory purpose, French CJ, Hayne, Kiefel, Gageler and Keane JJ said in Thiess v Collector of Customs:[96]
Objective discernment of statutory purpose is integral to contextual construction. … For:
'it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary; but to remember that statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning.'
[96] Thiess v Collector of Customs [23] (French CJ, Hayne, Kiefel, Gageler and Keane JJ) (footnotes omitted).
The statutory purpose of legislation may be discerned from an express statement of purpose in the statute, inference from its text and structure and, where appropriate, reference to extrinsic materials. The purpose must be discerned from what the legislation says, as distinct from any assumptions about the desired or desirable reach or operation of relevant provisions.[97]
[97] Certain Lloyd's Underwriters v Cross [2012] HCA 56; (2012) 248 CLR 378 [25] - [26] (French CJ & Hayne J).
By the process of construction, words having an apparently clear ordinary or grammatical meaning may be ascribed a different legal meaning.[98] As observed in CIC Insurance v Bankstown Football Club,[99] in a passage cited in many cases since, 'if the apparently plain words of a provision are read in the light of the mischief which the statute was designed to overcome and of the objects of the legislation, they may wear a very different appearance'. When a literal meaning of words in a statute does not conform to the evident purpose or policy of the particular provision, it is appropriate for the court to depart from the literal meaning.[100] However, questions of degree arise and it will be more difficult to displace an interpretation that has a powerful advantage in ordinary meaning and grammatical sense.[101]
[98] CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 (CIC Insurance v Bankstown Football Club), 408 (Brennan CJ, Dawson, Toohey & Gummow JJ); Project Blue Sky [69] (McHugh, Gummow, Kirby and Hayne JJ); R v A2 [2019] HCA 35; (2019) 269 CLR 507 (R v A2) [32] (Kiefel & Keane JJ).
[99] CIC Insurance v Bankstown Football Club, 408 (Brennan CJ, Dawson, Toohey & Gummow JJ).
[100] Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 (Cooper Brookes), 321; R v A2 [37] (Kiefel & Keane JJ).
[101] Cooper Brookes (321); SAS Trustee Corporation v Miles [2018] HCA 55; (2018) 265 CLR 137 (SAS Trustee Corporation v Miles) [64] (Edelman J).
Where the text, read in context, permits of more than one potential meaning, the choice between those meanings may ultimately turn on an evaluation of the relative coherence of each with the scheme of the statute and its identified objects or policies.[102]
[102] SAS Trustee Corporation v Miles [20] (Kiefel CJ, Bell & Nettle JJ).
Finally, the provisions of the Act must be understood, if possible, as parts of a coherent whole:[103]
A legislative instrument must be construed on the prima facie basis that its provisions are intended to give effect to harmonious goals. Where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions.
Ground 6 – disposition
[103] Project Blue Sky Inc [70] (McHugh, Gummow, Kirby and Hayne JJ) (footnotes omitted); Aldi Foods Pty Ltd v Shop, Distributive & Allied Employees Association [2017] HCA 53; (2017) 262 CLR 593 [16] (Kiefel CJ, Bell, Keane, Nettle, Gordon and Edelman JJ).
The power conferred on the Tribunal by s 83(1) is a power to settle a dispute or rectify a complaint of a particular, stipulated character. The stipulated character is that the dispute or complaint is one that is with respect to the exercise or performance of, or failure to exercise or perform, a power, authority, duty or function conferred or imposed by the Act or the by‑laws on persons including, relevantly, a strata company.
Section 83(4) employs corresponding language. It limits the power conferred by subsection (1) by expressly precluding the making of an order for the settlement of a dispute (or rectification of a complaint) with respect to the exercise or performance of, or the failure to exercise or perform, a power, authority, duty or function where that power, authority, duty or function may only be exercised or performed pursuant to a unanimous resolution, resolution without dissent or a special resolution.
Thus, approached purely grammatically, in isolation and without reference to its objectively discernible purpose, s 83(4) would appear to apply to any circumstances in which the duty or function sought to be enforced in the Tribunal is one which, according to the terms of the Act, requires a unanimous resolution or resolution without dissent (or indeed a special resolution), regardless of whether such a resolution has in fact been obtained.
While recognising the force of that construction, in our view, in the context of the Act as a whole and in light of its statutory purpose, such a broad construction of s 83(4) must be rejected. Rather, as the primary judge at least implicitly held, on its proper construction, s 83(4) of the Act only operates to prevent the Tribunal from settling a dispute about the failure to exercise a duty or function, which requires a unanimous resolution, resolution without dissent or special resolution, where the dispute concerns or includes the failure, or an alleged failure, to obtain the requisite resolution.
By contrast, in our view, on its proper construction, s 83(4) does not prevent the Tribunal from enforcing, relevantly, a duty that has been enlivened by a unanimous resolution or a resolution without dissent where there is no dispute about the fact of the resolution.
There is an alternative construction, which is not our preferred construction but is more tenable than the broad, literal construction identified in [184] above. On the alternative construction, if and only if the particular duty (or power, authority or function) the performance or non-performance (or exercise) of which is the subject of the dispute is one which, by a provision of the Act may only be performed pursuant to a resolution involving more than a simple majority, s 83(4) will operate to exclude any power for the Tribunal to settle the dispute.
Our reasons for our preferred construction (and the reasons why the alternative construction is more tenable than the broad construction) are as follows.
Having begun with consideration of the text, we turn to the objectively discerned statutory purpose of s 83(4).
In the context of the Act as a whole, in our view, the evident purpose of s 83(4) is to preserve the principle, reflected throughout the Act, that a variety of acts of a strata company, or of proprietors in a scheme, may only occur where there is a sufficient level of support amongst the proprietors as a whole (reflected in the various kinds of resolution defined in the Act) ranging from a simple majority to unanimity. In addition to s 10 and s 19, dealt with in this appeal, the need for greater than a simple majority is found in many provisions of the Act, including s 7(2), s 8A, s 15, s 18, s 20, s 30 and s 53C. In some of these provisions, for example s 7(2), s 10, s 15 and s 19, the taking of a certain step is prohibited unless the requirements for a stipulated degree of support are met. In others, such as s 18, s 20 and s 30, the requirements for a stipulated degree of support are an essential element of the conferral of the power(s) conferred by the provision.
Given the number and variety of these provisions, it would potentially defeat the rights of proprietors and the legislative scheme if, through its general dispute resolution mechanism in s 83(1), the Tribunal could dispense with the voting requirements of the Act. The breadth of that general dispute resolution power bespeaks the need for some qualification to its breadth in order to preserve the essential structure of the limitations created by the Act, referred to in [190] above, on the exercise of powers conferred and duties imposed by the Act. Hence the purpose of s 83(4): to prevent an exercise of the power in s 83(1) from defeating those limitations. In context, in our view, no other purpose for s 83(4) of the Act can be discerned.
This purpose is reinforced by the presence of s 51(1) of the Act, set out at [43] above. Section 51 provides that, where a unanimous resolution or a resolution without dissent is necessary, but not obtained, for an act to be done, a person in the majority in favour of the resolution may apply to the District Court for an order deeming the resolution to have been passed as a unanimous resolution or resolution without dissent. Section 51 reveals an intention to provide that the voting requirements of the Act (as to unanimous resolutions and resolutions without dissent) may be, in effect, dispensed with only pursuant to a court order. [104]
[104] Section 103C of the Act makes similar provisions enabling the Tribunal to make orders, in certain circumstances, deeming special resolutions to have been duly passed by a strata company. See also s 51A, which deals with cases concerning two lot schemes where a unanimous resolution is required.
In this way the purpose of s 51 points to, and confirms, the purpose of s 83(4). Read together, those provisions reveal that s 83(4) of the Act is intended to ensure that the Tribunal cannot exercise the jurisdiction that is exclusively entrusted to the District Court by s 51 of the Act.
As noted above, in our view, there could be no other sensible purpose attributable to s 83(4). On the contrary, to construe the provision so as to prevent the Tribunal from enforcing a duty that has been enlivened by a unanimous resolution or a resolution without dissent, would result in a construction of the Act as a whole whereby it would provide no effective remedy for the failure to perform that duty. At the hearing of the appeal the appellants accepted that the effect of their construction would be that the Act would provide no means of enforcing such a duty.[105] The appellants' construction, therefore, would attribute to the legislature an intention that the Act should provide no mechanism to ensure that what a strata company has resolved to do, by unanimous resolution or resolution without dissent, actually gets done.[106]
[105] Appeal ts 58.
[106] Appeal ts 31.
Given the provisions throughout the Act aimed at providing for efficient, and cost effective,[107] dispute resolution, in our view, the Court should be slow to attribute such an intention to Parliament.
[107] As to which see s 51(3), s 81(7) and s 103H(8) of the Act.
Ultimately, of course, it is necessary to attribute meaning to the statutory text. The Court is not justified in adopting a purposive construction that departs too far from the statutory text.[108]
[108] Taylor v The Owners - Strata Plan No 11564 [2014] HCA 9; (2014) 253 CLR 531 [40] (French CJ, Crennan & Bell JJ).
Returning to the text of s 83(4), the starting point, in our view, is that the restriction in s 83(4) operates in relation to particular disputes (i.e. 'for the settlement of a dispute'). It is necessary, therefore, to identify and characterise in each case the nature of the particular 'dispute'. All of the words commencing from 'with respect to' in s 83(4) are directed to identifying a particular type of dispute.
Taking account of s 84(3)'s evident purpose as already explained, those words, which variously refer to 'a power, authority, duty or function', are not referring to 'a power, authority, duty or function' found in the Act or by‑laws in the abstract. To the contrary, they are referring to the specific circumstances of, and the specific dispute in, the particular case. For example, in the case of a duty, these words direct attention to the particular duty alleged to arise in the context of the particular factual circumstances, the performance or non‑performance of which is the subject of the dispute.
On our preferred construction, if that particular duty is one which, by a provision of the Act may only be performed pursuant to a resolution involving more than a simple majority, and if there is a dispute as to whether that has occurred, then and only then s 83(4) will operate to exclude any power for the Tribunal to settle the dispute.
On the alternative construction, if and only if that particular duty is one which, by a provision of the Act may only be performed pursuant to a resolution involving more than a simple majority, then s 83(4) will operate to exclude any power for the Tribunal to settle the dispute.
On either of these constructions, s 83(4) did not preclude the Tribunal from making its orders in the present case.
In this case, as explained in [86] to [88] above, it was, relevantly, the alleged duty to carry into effect the transaction the subject of by‑laws 64, 65 and 66 that was the subject of the dispute founding Birchwood's application in CC 1728 of 2016. That dispute encompassed the parties' dispute as to the validity of the by‑laws, which in turn encompassed questions as to the efficacy of resolutions that were contemplated by, or gave rise to, the by‑laws. But the dispute the subject of CC 1728 of 2016 was a dispute 'with respect to' the duty to carry into effect the transaction the subject of by‑laws 64, 65 and 66; it was not a dispute with respect to a duty to comply with the resolutions. And the primary judge's orders, made in CC 1728 of 2016, were orders made to settle the dispute with respect to the alleged duty to carry into effect the transaction the subject of by‑laws 64, 65 and 66.
The fact that the by‑laws owed their existence to a unanimous resolution or resolution without dissent does mean that the dispute is properly characterised as one falling within s 83(4). Apart from anything else, were it otherwise that conclusion would apply to the duties existing in relation to all Schedule 1 by‑laws passed by resolution without dissent.
For these reasons, in our view, the dispute in the present case was not one falling within s 83(4) of the Act. Ground 6 fails.
Notice of contention
Having rejected each of the grounds of appeal, the appeal must be dismissed.
In those circumstances it is not appropriate to address Birchwood's notice of contention. The notice of contention raised large and novel questions as to the effect of management statements under the Act and the role of the Registrar of Titles in registering such statements. Those questions, which ranged well beyond the issues necessary to resolve the appeal, should be left for another day, should that day ever arrive.
Conclusion
The appeal must be dismissed.
I certify that the preceding paragraphs comprise the reasons for decision of the Supreme Court of Western Australia.
SC
Principal Associate to the Honourable Chief Justice Peter Quinlan
15 MAY 2023
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