Owners Of Sorrento Beach Strata Plan 18449 and Slomp
[2010] WASAT 131
•22 SEPTEMBER 2010
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
STREAM: COMMERCIAL & CIVIL
ACT: STRATA TITLES ACT 1985 (WA)
CITATION: OWNERS OF SORRENTO BEACH STRATA PLAN 18449 and SLOMP [2010] WASAT 131
MEMBER: DR B DE VILLIERS (MEMBER)
HEARD: DETERMINED ON THE DOCUMENTS
DELIVERED : 22 SEPTEMBER 2010
FILE NO/S: CC 1591 of 2009
BETWEEN: OWNERS OF SORRENTO BEACH STRATA PLAN 18449
Applicant
AND
ANDREW SLOMP
Respondent
Catchwords:
Strata title Variation of unit entitlement Opposition to proposed variation of unit entitlement Unreasonable opposition to variation Award of costs if actions were unreasonable Factors to consider to determine if actions were unreasonable
Legislation:
Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA)
State Administrative Tribunal Act 2004 (WA), s 84, s 87, s 87(1)
Strata Titles Act 1985 (WA), Pt VI, s 16(1), s 16(4), s 16(6), s 16(7), s 77, s 77B, s 78, s 81(7), s 103H(2)
Result:
The application is dismissed
Category: B
Representation:
Counsel:
Applicant: Mr M Atkinson
Respondent: Mr R Graham
Solicitors:
Applicant: Atkinson Legal
Respondent: Vogt Graham Lawyers
Case(s) referred to in decision(s):
Gill & Ors and Wildnight Pty Ltd [2008] WASAT 135
Pearce & Anor and Germain [2007] WASAT 291 (S)
Taj Coffee Company Pty Ltd and Plaza Arcade [2009] WASAT 107
REASONS FOR DECISION OF THE TRIBUNAL:
Summary of Tribunal's decision
The dispute is about an application for costs that the applicant contended it had to incur as a result of the opposition of the respondent to an application for variation of unit entitlement. The applicant contended that the respondent acted unreasonably in opposing the variation.
Although the Tribunal, as a general rule, cannot award costs under the Strata Titles Act 1985 (WA), one of only a few exceptions is that if a respondent opposes an application for a variation of unit entitlement and the Tribunal finds that the opposition was unreasonable, then the respondent can be ordered to pay the costs incurred by the successful applicant.
In this matter, which was determined on the papers, the respondent consented ultimately to a variation to unit entitlements without the need for a hearing. Prior to the respondent consenting, however, several directions hearings took place and it was contended by the applicant that time and money had been wasted due to the unreasonable behaviour of the respondent who, the applicant contended, was motivated by financial gain to delay proceedings.
The respondent contended that he acted within his rights since he wished to have access to the expert report on which the applicant relied for the variation of unit entitlement and to seek his own expert advice. The applicant contended that the proposed schedule of unit entitlement had been available for a prolonged period of time and that the time spent during directions hearings was an unreasonable opposition to the variation. The applicant claimed that an order should be made for:
a)the costs incurred during the directions hearings, or
b)for the preparation of the expert report and matters related thereto.
The Tribunal considered the actions of the respondent and found that he had not acted in a manner that could be termed 'unreasonable'. There may have been some delays but, at the same time, account must be taken that the respondent and the Tribunal had the right to require from the applicant to sight the expert report upon which the proposed variation was based. The fact that the applicant only provided the report after orders of the Tribunal contributed to the time lost. It was not reasonable for the applicant to rely on a schedule of proposed unit entitlements without an expert report to substantiate the recommendations.
The application for costs was dismissed.
Issue
The issue in dispute is whether costs should be awarded against the respondent on the basis that his opposition to a variation of unit entitlement was unreasonable.
Background and facts
The application for a variation of unit entitlement pursuant s 16(1) and, alternatively, s 103H(2) of the Strata Titles Act 1985 (WA) (ST Act) was lodged on 12 October 2010.
Initially, several respondents were listed, but after the Tribunal had made orders at the first directions hearing for respondents to indicate their desire to participate in the proceedings, only Mr Slomp said he wanted to be heard. The other respondents consented to the variation. The application was, therefore, amended to remove the names of all the other respondents except for Mr Slomp.
After several further directions hearings the Tribunal, on 15 April 2010, made consent orders whereby the unit entitlement was varied pursuant to s 16(1) of the ST Act.
The applicant indicated at the same time when the consent orders were made, that it wished to claim for costs, and programming orders were made. After receipt of submissions from both parties, the Tribunal ordered on 12 August 2010, with the consent of the parties, that the matter be dealt with on the documents.
It is not contested that efforts had been ongoing for many years within the scheme to vary unit entitlement. The background is set out in the respective submissions and there is no need for the Tribunal to repeat it in detail.
As far back as 20 May 2003, the council considered a report from a licensed valuer, Mr John Martin, on a possible variation of unit entitlement. This is the same valuer who, in these proceedings before the Tribunal, was retained by Mr Slomp.
Various options for variation to unit entitlement were discussed during the ensuing years. There is some dispute between the parties as to the exact knowledge and involvement of Mr Slomp in those discussions since he became proprietor of Lot 88 in November 2007, but it is not disputed that Mr Slomp was aware of the efforts to adjust unit entitlements to ensure a fair and equitable arrangement, and that he was aware that experts had been retained to give advice to the strata council. It was generally accepted that if the unit entitlements were adjusted, Mr Slomp would be most negatively affected since the scheme operates as a resort and income from commercial activities is distributed on the basis of unit entitlement. If Mr Slomp's unit entitlement were reduced (as recommended by the experts and ultimately consented to by Mr Slomp) he would receive substantially less income.
In December 2007, the strata company retained a valuer, Mr John Garmony, to assess the unit entitlements and to make recommendations. The proposed unit entitlement recommended by Mr Garmony, dated 18 March 2008, was attached to the notice of the Extraordinary General Meeting scheduled for May 2009.
At the Extraordinary General Meeting, which was held on 5 May 2009, the proposed changes to unit entitlement were defeated. Mr Slomp voted against the proposed variation.
The strata company was authorised, at the Extraordinary General Meeting of 5 May 2009, to commence proceedings with the Tribunal.Mr Slomp voted against such action being commenced.
The application was lodged by the strata company on 12 October 2010. Mr Slomp withdrew his opposition to the proceedings after the experts had met. Consent orders were made by the Tribunal on 15 April 2010 for the schedule for unit entitlement to be varied.
Statutory framework
The application for costs is brought under s 16(6) of the ST Act, which provides as follows:
The State Administrative Tribunal shall not order a party who opposes an application under this section to pay the costs of a successful application unless the State Administrative Tribunal considers the actions of that party in relation to the application to have been unreasonable.
Submissions by the parties
The submissions of the parties can be summarised as follows.
On the part of the applicant it is contended that:
•Mr Slomp had a pecuniary interest to retain the existing unit entitlement. As a result, he attempted to prevent an adjustment and when it became clear that the process was moving ahead, he caused a delay so as to reap the benefits of the summer rental income.
•Mr Slomp had been fully aware of the discussions to adjust unit entitlement and the two expert reports that had been obtained. The reports were consistent in findings and recommendations. This is evidenced in the consent orders the Tribunal made to vary the unit entitlement.
•The conduct of Mr Slomp prior to and during the Tribunal proceedings was motivated principally to delay proceedings and to unreasonably resist the variation to entitlement.
•Mr Slomp ultimately consented to the variation of unit entitlement that had been recommended before the Tribunal proceedings had commenced. The proceedings before the Tribunal were therefore unnecessary.
•There are sufficient grounds for the Tribunal to award costs on the basis of the unreasonable opposition of Mr Slomp to the variation of unit entitlement.
•There are two bases upon which costs could be awarded: firstly, on narrow grounds for the time wasted in the directions hearings this amounts to $4,686 and, secondly, for the cost of the entire variation process, including the cost of producing the expert report. This amounts to $31,368.76.
On the part of the respondent, it is contended that:
•Although Mr Slomp had had some involvement in the discussions over a period of time about variations to unit entitlements, he did not have the level of detailed knowledge about the expert reports as is suggested by the applicant.
•Mr Slomp did not delay the proceedings before the Tribunal in an effort to gain benefit from the seasonal fluctuations of the scheme. The occupation profile of the scheme was, in any event, not as heavily skewed towards the summer months as is suggested by the applicant.
•The Tribunal is, in essence, an own cost jurisdiction (s 87 of the State Administrative Tribunal Act 2004 (WA) SAT Act) and, although s 16(6) of the ST Act allows for costs to be awarded, the general philosophy against which the Tribunal considers costs applications must be adhered to.
•Mr Slomp exercised his rights and should not be punished for it. Mr Slomp was entitled to sight the expert report on which the applicant relied. The respondent was also entitled to seek expert advice and he did so by retaining Mr Martin. The two experts met, as ordered by the Tribunal, and they reached agreement. Their agreement was accepted by Mr Slomp.
•The applicant is, in part, responsible for the delay since it did not file an expert report when the proceedings commenced. If a report had been filed, a lot of time would have been saved. The Tribunal criticised the applicant in its oral decision handed down on 1 February 2010, for not filing an expert report, while at the same time expecting Mr Slomp to accept the recommendations that resulted from the unfiled report.
•No costs order should be made since Mr Slomp did not act unreasonably.
Consideration
As pointed out by both parties, the Tribunal is, in essence, an own costs jurisdiction (s 87(1) SAT Act).
The cost regime of the Tribunal in reality is more complex and nuanced than is portrayed in s 87(1) of the SAT Act. The Tribunal must consider a range of factors when a costs application is made. It must also take into account any provisions of the enabling Act that may widen or reduce its scope for awarding costs.
In these proceedings, the Tribunal must therefore take into account the provisions of s 87 of the SAT Act, as well as those of s 16(6) of the ST Act.
The Tribunal will briefly reflect on the costs regime of the State Administrative Tribunal and the costs regime under the Strata Titles Act before it considers what is meant by 'unreasonable' in s 16(6) of the ST Act.
Costs regime under the SAT Act
The Tribunal will first consider the costs regime pursuant to s 87 of the ST Act.
In the matter of Pearce & Anor and Germain[2007] WASAT 291 (S) an overview was given by his Honour, Chaney J of the costs regime applied by the Tribunal and the criteria to be considered prior to the award of costs. In the matter of Gill & Ors and Wildnight Pty Ltd [2008] WASAT 135 the criteria were summarised as follows:
18Since its inception, several decisions have been handed down by the Tribunal in regard to costs: refer, for example to the decisions of Bilek and Vata Investments Pty Ltd [2005] WASAT 153; Quah and AMP Life Limited [2005] WASAT 169; Chew and Director-General of the Department of Education and Training [2006] WASAT 248; Summerville and Department of Education and Training and Ors [2006] WASAT 368 (S) and Clifford and Shire of Busselton [2007] WASAT 89 (S).
19These and other decisions were recently analysed and discussed by the Tribunal's Deputy President, Judge Chaney, in the matter of Pearce and Anor and Germain [2007] WASAT 291 (S) (Pearce). The decision was handed down on 9 May 2008.
20In Pearce, his Honour set out the following principles for the consideration of costs applications by the Tribunal:
(i)The starting point of the Tribunal is that it is a 'no cost' jurisdiction ([8]).
(ii)The cost regime that was applicable to the previous Commercial Tribunal does not apply to the State Administrative Tribunal ([11]).
(iii)The objectives of the State Administrative Tribunal are furthered by its being essentially a 'no cost' jurisdiction ([17]).
(iv)Where there is a genuine dispute and the respective rights are unclear and parties seek a determination, the 'starting point remains that each party should expect to pay their own costs' ([24]).
(v)The Tribunal does have the power to award costs, and it is not appropriate to 'delineate the particular circumstances' in which the discretion to award costs would be exercised favourably ([22]).
(vi)Some of the factors (not an exhaustive list) that may contribute to the Tribunal making a cost order are for example -
a.A party has conducted itself unreasonably, particularly where the conduct leads to unnecessary costs to the other party.
b.A party has conducted itself inappropriately, particularly where the conduct leads to unnecessary costs to the other party.
c.Where credibility of evidence is at the heart of a matter.
d.Where the application undermine the integrity of proceedings under the relevant Act.
e.The relative weakness of a case, it being incredible or implausible or 'obviously unmeritorious'.
f.If a party has to embark in proceedings to 'vindicate its clear contractual entitlements'. ([22] [24])
The SAT Act therefore provides for a hybrid costs arrangement whereby the point of departure is for each party to bear their own costs, but room exists for exceptions where costs orders can be made.
Costs regime under the Strata Titles Act
If the SAT Act provides a narrow scope for costs orders, the ST Act is even more restricted. Section 81(7) of the ST Act provides as follows:
The State Administrative Tribunal cannot make any order for the payment of costs in connection with an application for an order except
(a)when allowing an applicant to amend an application, to compensate persons for time unnecessarily spent in connection with the application; or
(b)under s 103H(8).
No reference is made in s 81(7) of the ST Act to the power of the Tribunal to award a costs order under s 16(6) of the ST Act. The Tribunal notes the reasoning of Mr Atkinson that an oversight may have caused the omission since in s 16(4) of the ST Act, the Tribunal is given the explicit power to award costs. In addition, and perhaps more convincing, is that s 81(7) is dealing only with applications for orders under Pt VI, noting that s 77, s 77 B and s 78 of the ST Act refer to applications under this Part. There must, in accordance with the rules of interpretation, be an attempt to give meaning to all the words of the statute and this approach would enable both sections to operate without any inconsistency.
The Tribunal will therefore proceed on the basis that it can award costs pursuant to s 16(6) of the ST Act.
The discretion of the Tribunal to award costs, pursuant to s 16(6) of the ST Act, is predicated on a finding that the Tribunal 'considers the actions of that party (who opposes the variation of unit entitlement) in relation to the application to have been unreasonable'.
Unreasonable actions
This brings us to the question of whether the actions of Mr Slomp in opposing the variation of unit entitlement in these proceedings were unreasonable.
The applicant contends, in essence on three grounds, that the opposition of Mr Slomp to a variation of unit entitlements in these proceedings was unreasonable, namely:
a)He was aware of efforts over a period of time to vary unit entitlement;
b)He had access to the expert reports considered by the strata company; and
c)He had a financial gain to delay proceedings.
Mr Slomp, in essence, contends that his opposition to the proceedings was not unreasonable for the following reasons:
a)He had been part of the process but could not recall all the details and was entitled to exercise his rights to vote against a variation;
b)He had seen schedules of proposed variation of unit entitlement but no expert report, as such, was made available or filed when the proceedings were commenced; and
c)The fact that his unit entitlement was most affected was not material and, even if it was, that gave him further justification to scrutinise the proposed variation.
The ST Act does not define what is meant by 'unreasonable'. The parties, respectively, referred the Tribunal to the actions of Mr Slomp and the strata company, but they did not offer a benchmark against which the actions could be assessed as being reasonable or unreasonable.
In the matter of Taj Coffee Company Pty Ltd and Plaza Arcade [2009] WASAT 107 (Taj) the Tribunal commented, as follows, in regard to the test that should be applied for 'reasonability' when a landlord refuses to consent to an assignment of a lease in the context of the Commercial Tenancy (Retail Shops) Agreements Act1985 (WA):
30In the matter of Noranda Australia Ltd v Lachlan Resources NL (1988) 14 NSWLR 1 the court found that the role of the Tribunal is not to review the process in order to decide if the decision of the landlord was 'correct', but rather to consider the entire process and decide whether, on the basis of the facts as they objectively exist, if [sic] the withholding of consent was unreasonable.
31The Tribunal must, as a general principle, be cautious and slow to intervene in the way in which a landlord considers an application for assignment. The landlord has the right to make a commercial decision and to consider the risks if an assignment were to occur, but at the same time, Parliament has built a safeguard for tenants, to ensure that a landlord acts 'reasonably' in its consideration of an application to assign a lease. A landlord therefore does not have an uncontrolled veto over a proposed assignment.
...
39In the recent decision of EDWF Holdings 1 Pty Ltd and EDWF Holdings 2 Pty Ltd [2008] WASC 275 (EDWF Holdings) the principles that ought to guide the Tribunal were clearly set and summarised out by Martin CJ. The principles derive from the High Court decision in Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 which was described by Martin CJ as the 'leading High Court authority on the subject': [191]
40In summarised form the principles (see [191], [192] and [197]) are as follows:
1.The assignor carries the burden of proving that consent was unreasonably withheld.
2.In the context of a covenant relating to the consent of one party to an assignment of the interest of another, the word 'unreasonably' can be equated to 'arbitrarily', in the sense that consent was withheld 'without reasonable cause['].
3.The question of whether consent was unreasonably withheld is to be assessed subjectively, in the sense that the focus of inquiry is upon the Retail Shops Actual reasons of the party refusing consent at the time of refusal, although (somewhat inconsistently) at trial that party may rely upon a ground not taken at the time of refusal.
4.A party refusing consent is not bound to give reasons, although failure to do so leads more readily to the inference that the refusal was unreasonable.
5.A refusal motivated by the purpose of depriving the other party of a benefit to which that party was entitled under the contract is unreasonable.
6.A doubt based on reasonable grounds as to the assignor's (sic - assignee's) willingness or ability to perform its obligations under the contract is a reasonable basis for refusing consent.
41Two further criteria were also identified namely:
7.The assessment will be subjective, in the sense that it will turn upon the information available to the landlord at the time consent was refused, but objective, in the sense that the court will apply the standards of the reasonable man to the assessment of the conduct of the landlord. Accordingly, if insufficient information is provided to the party whose consent is sought, the refusal of consent will be reasonable, although the maintenance of that refusal may become unreasonable if adequate information is later supplied: [192]
8.The refusal of consent to an assignment to a creditworthy tenant carrying on a lawful and permitted use can be reasonable if based upon considerations relevant to the relationship between landlord and tenant (such as, in this case, the tenancy mix in the shopping centre): [197]
42The Chief Justice then set out the following process that should guide the Tribunal in determining the question before it (with emphasis):
First, the court should identify the reasons why the party refused consent at the time consent was refused. If, having identified those reasons, the court finds that they were objectively reasonable (in the sense that a reasonable person could refuse consent for those reasons) that they were relevant to the relationship between the parties to the agreement, and that it has not been established that the factual premises upon which the refusal was based were erroneous, that will be the end of the inquiry - the other party will have failed to discharge the onus of proof that consent was unreasonably withheld. However, if the court does not conclude that there were relevant reasons which provided a reasonable basis for the decision to refuse consent at the time the decision was made, or that the reasons depended upon a factual premise that was false, it will be open to the party who refused consent to sustain that conclusion by reference to other reasons, supported by objective facts which exist at the time of the hearing. [204]
The Tribunal must therefore consider all the facts before it and make a determination if it is satisfied that, objectively, a reasonable person 'could' oppose the proceedings under s 16 of the ST Act on the basis of the same facts as those presented by Mr Slomp, and whether Mr Slomp's actions could be classified as arbitrary and without justification.
Directions hearings
In order to assess the actions of Mr Slomp, the Tribunal will consider the circumstances of the respective directions hearings that took place since the application was lodged:
1st directions hearing: 22 October 2010
This was the first directions hearing after the application had been lodged. General orders were made for notice of the application to be given to all proprietors. Proprietors were ordered (Order 3) to indicate on or before 13 November 2009 whether they wished to participate in the proceedings or not. Those proprietors who wished to participate were ordered to attend the directions hearing scheduled for 19 November 2010. Proprietors were put on notice (Order 5) that if no one indicated a desire to oppose the application or to participate in the proceedings, the orders as sought by the strata company may be made.
Mr Slomp did not take any action at this directions hearing that could be classified as 'unreasonable'.
2nd directions hearing: 19 November 2009
Mr Slomp informs the Tribunal he wishes to be heard. All the other proprietors withdraw from the proceedings. The matter is set down for a directions hearing to be held on 21 January 2010 'at which Mr Slomp must inform the Tribunal if he wishes to oppose the application following receipt of the valuer's report'.
Mr Slomp did not take any action at this directions hearing that could be classified as 'unreasonable'.
3rd directions hearing: 21 January 2010
Due to the failure of Mr Slomp or his legal representative to attend the directions hearing, the order, as sought by the applicant, is made and the schedule of proposed unit entitlement is accepted.
Although Mr Slomp failed to attend the directions hearing, the Tribunal, in its decision of 1 February 2010, accepted the explanation of his legal representative as to why he failed to attend. The Tribunal found in due course that the failure of Mr Slomp, or his legal representative, Mr Graham, to attend the directions hearing, could not be attributed to unreasonable action on the part of Mr Slomp.
4th directions hearing: 28 January 2010
At the request of Mr Slomp's legal representative, the Tribunal hears an application for the orders that were made on 21 January 2010 to be reopened pursuant to s 84 of the SAT Act. Section 84 of the SAT Act provides that a party who was not present when a determination was made, can seek an order for the proceedings to be reopened.
5th directions hearing: 1 February 2010
The Tribunal hands down its decision as to whether the matter should be reopened. It finds in the affirmative; namely, that Mr Slomp and his legal representative, Mr Graham, had offered a reasonable explanation as to why they failed to attend the directions hearing on 21 January 2010.
In regard to whether the failure to attend can be attributed to Mr Slomp, the Tribunal found as follows:
The [T]ribunal accepts that Mr Slomp should not suffer detriment for the failure of his solicitor to attend what was in effect a directions hearing. Mr Slomp was under the impression that the matter is being taken care of and there was no requirement for him to attend in person (T: 5, 010210).
The Tribunal also commented, as follows, in regard to the orders that were made on 19 November 2010:
The order made by the [T]ribunal on 19 November 2009 did not order Mr Slomp to file a report or to indicate the nature of his opposition to the application. … The order merely required from him to indicate whether he wanted to oppose the application (T: 6, 010210).
In regard to the contention that Mr Slomp stood to benefit financially from any delays to give effect to a variation to unit entitlement, the Tribunal observed as follows:
There was no other evidence to this effect. But account must be taken that the status quo has been in place for some time and that the owners have been willing to deal with it. The [T]ribunal should not be hastened into a decision that may suit some owners and prejudice others without proper consideration of the merits of the dispute (T: 7, 010210).
In regard to the absence of an expert report to justify the proposed schedule of unit entitlements, the Tribunal commented as follows:
The [T]ribunal was surprised to be told by Mr Shaw that there is no expert report available to show how Mr Garmany [sic] had arrived at the new proposed unit entitlement. Given the seriousness with which the owners are seeking a variation, one would have thought that a report which justified the recommendations would be available to disgruntled owners.
In effect, Mr Slomp, who arguably stands to lose the most, is expected by the owners to accept a new schedule of unit entitlement without an expert report that justifies the particular proposal. This seems unreasonable to the [T]ribunal. …
However, although it would have been useful to have had a respondent's report sooner, the irony is that if the matter had gone to a hearing the applicant would not have had a report readily available. … (Tribunal emphasis: (T: 7, 010210.)
The Tribunal went on to make programming orders for the matter to be heard. Parties were required to file their respective expert reports, the experts were required to confer, and the matter was set down for a hearing to be held on 9 April 2010. It must be noted that at this stage only a proposed schedule of unit entitlement was available. There was no expert report before the Tribunal to explain how the proposed variation was arrived at, the methodology used, and so on. The hearing date was later adjourned to 14 April 2010.
Mr Slomp did not take any action at this directions hearing that could be classified as 'unreasonable'.
6th directions hearing: 13 April 2010
The hearing scheduled for 14 April 2010 is vacated in light of the agreement reached between the parties on a variation of unit entitlement. The applicant applies for a cost order and the matter is set down for a directions hearing on 15 April 2010.
Mr Slomp did not take any action at this directions hearing that could be classified as 'unreasonable'.
The Tribunal makes this finding on the basis of the following:
•Efforts to vary unit entitlement had been ongoing for many years (since 2003 at least), even before Mr Slomp became a proprietor. The applicant could have taken action much earlier. There is no evidence before the Tribunal, other than a submission of the applicant, that Mr Slomp delayed the proceedings on purpose to obtain a financial benefit.
•The applicant did not at the commencement of proceedings file an expert report with the application for a variation of unit entitlement. It merely relied on a proposed schedule of unit entitlement but it did not provide to the Tribunal any expert reasoning to show why the proposal should be endorsed pursuant to s 16 of the ST Act. The failure of the applicant to file an expert report contributed to the delay since the Tribunal had to order it to provide its report to Mr Slomp for consideration.
•Any proprietor, especially one that arguably stands to be most negatively affected, is entitled to see the reasoning of why a specific schedule of unit entitlement is proposed. There is no evidence before the Tribunal to support the contention that Mr Slomp was delaying the process on purpose or in a manner that can be described as unreasonable. The Tribunal accepts the explanation of Mr Slomp that after the experts had conferred, he accepted the recommendation of his own expert and agreed to the variation.
•In essence, the Tribunal accepts that Mr Slomp had relevant reasons which provided a basis for his decision to seek more information from the applicant.
7th directions hearing: 15 April 2010
The Tribunal approved the new schedule for unit entitlement. The Tribunal also made orders for submissions to be filed in regard to the application for costs by the applicant. The Tribunal explained to both parties what its approach is to costs orders and the test required by s 16(7) of the ST Act.
Mr Slomp did not take any action at this directions hearing that could be classified as 'unreasonable'.
8th and 9th directions hearings
Further orders were made in regard to the costs application. The order made on 12 August 2010 was that the matter will be determined on the documents .
Findings
Section 16(6) of the ST Act does not intend to operate in a punitive way. The mere fact that a party opposes a variation of unit entitlement does not automatically give rise to a costs order. Proprietors are entitled to question and debate the grounds for variation, since the unit entitlement goes to the very heart of the structure of the strata scheme.
The ST Act does not intend, by way of s 16(6), to bludgeon all proprietors into line without a healthy and informed debate.
The Tribunal is therefore given the discretion to assess the actions of opposing parties and to make a determination as to whether they acted 'unreasonable'. Although the ST Act does not define what is meant by 'unreasonable', the Tribunal found the test, as summarised in the Taj matter, as a useful guidance; namely, that Mr Slomp did not act arbitrarily and without any justification when he informed the Tribunal that he wanted to be heard.
The Tribunal accepts that Mr Slomp had been aware of efforts to vary the unit entitlement. The fact that he requested to be heard in these proceedings is not in itself unreasonable. The applicant may in fact have contributed to the delays in its failure to include with the application an expert report to justify the proposed variation to unit entitlement. Mr Slomp accepted the proposal as soon as possible after the experts had conferred. There was, as a result of the agreement, no need for a hearing.
The Tribunal does not accept the contention of the applicant that the 'only good and sufficient reason Mr Slomp could have had to oppose the application would have been if a valuer had advised him that the unit entitlements then in force were accurate' (para 21, strata company's response to respondent's submission on costs, 23 July 2010). First of all, the Tribunal is not required to determine what a 'good and sufficient reason' is. It is required to determine if the actions of Mr Slomp were unreasonable. Secondly, Mr Slomp acted within his rights to insist that he wanted to sight an expert report and not only the recommended schedule of proposed unit entitlements. It cannot be said that an owner who seeks to sight the actual report on which recommendations are based, is acting unreasonably.
The role of the Tribunal is not to review the conduct of Mr Slomp in order to decide if his decision to request to be heard in these proceedings was 'correct', but rather to consider the entire process before the Tribunal and decide whether, on the basis of the facts as they objectively exist, the actions of Mr Slomp were unreasonable.
The Tribunal does not consider the actions of Mr Slomp in relation to the application to have been unreasonable and, as a result, it 'shall not order a party who opposes an application under this section to pay the costs of a successful applicant' (s 16(6) ST Act).
The application for costs must therefore be dismissed.
Order
The application for costs pursuant to s 16(6) of the Strata Titles Act 1985 (WA) is dismissed.
I certify that this and the preceding [68] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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DR B DE VILLIERS, MEMBER
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