POLARIS PROPERTIES (WA) PTY LTD and PICKWORTH
[2018] WASAT 31
•1 MAY 2018
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: STRATA TITLES ACT 1985 (WA)
CITATION: POLARIS PROPERTIES (WA) PTY LTD and PICKWORTH [2018] WASAT 31
CORAM: MS R PETRUCCI (MEMBER)
HEARD: DETERMINED ON THE DOCUMENTS
DELIVERED : 1 MAY 2018
FILE NO/S: CC 1946 of 2017
BETWEEN: POLARIS PROPERTIES (WA) PTY LTD
Applicant
AND
JENNIFER JANE PICKWORTH
Respondent
Catchwords:
Strata scheme (not single tier scheme) - Two‑lot scheme - Strata lot proprietor - Obligation of strata company - Effect and maintain insurance in the name of the strata company - Proprietor may insure if strata company in default - Other proprietor to contribute to insurance premium - Amount of contribution
Legislation:
Restraining Orders Act 1997 (WA), s 34(a)(i)
State Administrative Tribunal Act 2004 (WA), s 9, s 60(2)
Strata Titles Act 1985 (WA), s 3(1), s 36, s 36(1)(a), s 36(1)(c), s 36A, s 36A(3), s 36B, s 53E, s 54, s 54(1)(a), s 55(1), s 56, s 56A, s 84, Pt VI of Div 3, s 103, s 103J, s 103L, Sch 1, By‑law 6
Result:
Application allowed
Category: B
Representation:
Counsel:
| Applicant | : | Mr B Grubb |
| Respondent | : | N/A |
Solicitors:
| Applicant | : | Metaxas & Hager |
| Respondent | : | N/A |
Case(s) referred to in decision(s):
Nil
REASONS FOR DECISION OF THE TRIBUNAL:
Introduction
On 26 September 2017 Polaris Properties WA Pty Ltd (applicant) applied to the Tribunal for an order under s 103L(2)(c) of the Strata Titles Act 1985 (WA) (ST Act) requiring Ms Jennifer Jane Pickworth (respondent) to pay to the applicant the amount of $1,426.87.
The applicant is the proprietor of strata lot 4 (Unit 2) on Strata Plan 4712 for the Ithaki Building located at 60 North Street, Cottesloe (the property). The respondent is the owner of strata lot 3 (Unit 1) of the same strata plan. The original Strata Plan 4712 was registered on 1 April 1977. Subsequently in 2009 the original lots 1 and 2 and common property were re-subdivided into lot 3 and lot 4. There are only two lots in the scheme (twolot scheme). However, it is not a single tier scheme as defined in s 3(1) of the ST Act because part of a bathroom of Unit 2 sits above Unit 1.
The applicant asserted that it paid the insurance premium of $4,102.55 (premium) to CHU Underwriting Agencies Pty Ltd (CHU) for the property for the period 29 April 2017 to 29 April 2018 (current insurance period) in order that the property be insured as required by s 56A of the ST Act.
On 26 October 2017 the Tribunal referred the matter for mediation. That was discontinued due to the non-attendance by the respondent. Subsequently, on 15 December 2017 the Tribunal ordered the applicant to file with the Tribunal and provide a copy to the other party a statement of issues, facts and contentions it says arises in the proceeding and all affidavits it wishes to rely on in the proceeding. Further, the Tribunal ordered the respondent to provide her own statement of issues, facts and contentions setting out by reference to the applicant's statement whether she accepted, rejected the issue, fact or contention identified by the applicant and any other issues, facts, issues and contentions the respondent says arise in the proceeding and all affidavits she wishes to rely on in the proceeding.
Finally, the Tribunal ordered that the proceeding be determined entirely on the documents (s 60(2) of the State Administrative Tribunal Act 2004 (WA) (SAT Act)). The last documents were received by the Tribunal on 8 February 2018 and on 12 February 2018, the Tribunal reserved its decision.
In these reasons all legislative references are to the ST Act unless otherwise expressly stated.
The issues
The applicant raised three issues requiring determination by the Tribunal as follows:
(a)Did the applicant pay the respondent's proportion of the premium for the property to effect and maintain insurance for the current insurance period?
(b)Can the Tribunal be reasonably satisfied that the applicant was justified pursuant to s 103L(3) in exercising the power under s 56A to effect and maintain insurance for the current insurance period?
(c)If the Tribunal is satisfied that the applicant was justified in the terms as required by s 103L(3), whether the Tribunal should order the respondent to pay to the applicant, pursuant to s 103L(2)(c):
(i)$1,426.87 ($800,000/$2.3 million x $4,102.55); or
(ii)$1,928.20 (47/100 x $4,102.55); or
(iii)such other reasonable proportion of the premium as the Tribunal may, in its discretion, determine.
The respondent agreed that issues (a) and (b) required determination by the Tribunal. However, the respondent submitted that there are other relevant issues that need to be resolved, including the dysfunctionality of the strata company as well as the competency and performance of CHU, and requested that the Tribunal refrain from making an order at this time because she has given a written commitment to the applicant to pay the percentage of the premium equal to $800,000/$2.3 million pending the decision of the Supreme Court in CIV 1996 of 2017 concerning an easement and the reinstatement of 'encroaching sewerage piping' (the Supreme Court proceeding).
The Tribunal acknowledges there are other issues as raised by the respondent (which are not before the Tribunal) which need to be resolved. However, taking into consideration all the circumstances of the case, including the objectives of the Tribunal which are set out in s 9 of the SAT Act, including that the Tribunal deals with matters speedily and to minimise costs to the parties, the Tribunal concludes that as the matter in this proceeding is confined to insurance, it is not appropriate for the Tribunal to refrain, at this time, from making its decision.
The Tribunal will determine the three issues as set out by the applicant.
The facts
The following facts were not disputed by the parties and the Tribunal so finds:
(a)At all relevant times, the applicant was the registered proprietor of Unit 2;
(b)At all relevant times, the respondent was the registered proprietor of Unit 1;
(c)The strata plan is not a single tier strata scheme. This is because part of a bathroom of Unit 2 sits above Unit 1;
(d)At the time of the 2016 CHU Insurance Policy Nomination:
(i)at about 1pm on 31 March 2016, a meeting of the proprietors took place in the garage of Unit 1 where the question of insurance was raised per the agenda (as set out in the respondent's email of 30 March 2016);
(ii)the respondent was expressly aware renovation works had been completed by the applicant in respect of Unit 2 some seven years earlier in 2009 and that as far as the respondent was concerned, the unit entitlements were out of date (as set out in the respondent's email of 2 April 2016 to Mr A Watson of CHU);
(iii)the respondent had disclosed to CHU her 'allegation' that the proprietors of Unit 2 were conducting an 'unlawful business' (as set out in the respondent's email of 22 April 2016 to Mr Watson of CHU); and
(iv)irrespective of the respondent's 'allegation', CHU had confirmed in writing to the respondent that 'the use of lots as short-term accommodation does not alter this quote' (as stated in the email of Mr Watson of CHU to the respondent dated 11 April 2016);
(e)With respect to the CHU renewal for the current insurance period, by email dated 11 May 2017 to the respondent, Ms L Wahlert, State Manager for CHU, wrote that the invitation to renew the insurance had expired on 29 April 2017 and that only a partial payment had been received from the proprietor of Unit 2. Further, Ms Wahlert stated in her email:
We can reduce the sum insured for U1 to a value approved by you if required and will hold cover on this policy for 7 days, 19 May 2017, to allow for any alteration and payment to finalise your insurance policy until expiry 29 April 2018;
(f)the applicant stated that the respondent agreed both in writing and by her conduct in accepting and paying the 2016 policy that unit entitlements have no relevance to the calculation by the parties of any CHU insurance premium liability; and
(g)the respondent had expressly stated the only application she will ever make to the Tribunal and/or the District Court is to 'appoint an administrator and … to terminate the scheme' (as set out in the respondent's email to Ms C Tsolakis dated 25 October 2017).
The relevant provisions of the ST Act
Section 36 provides:
(1)A strata company shall
(a)establish a fund for administrative expenses that is sufficient in the opinion of the company for the control and management of the common property, for the payment of any premiums of insurance and the discharge of any other obligation of the strata company; and
(b)determine from time to time the amounts to be raised for the purposes described in paragraph (a); and
(c)raise amounts so determined by levying contributions on proprietors
(i)in proportion to the unit entitlements of their respective lots; or
(ii)where a bylaw referred to in section 42B or an order under section 99A is in force, in accordance with that bylaw or order;
and
(d)recover from any proprietor, by action in a court of competent jurisdiction if necessary, any sum of money expended by the company for repairs or work done by it or at its direction in complying with any notice or order of a competent public authority or local government in respect of that portion of the building comprising the lot of that proprietor.
…
(2)A strata company may
(a)establish a reserve fund for the purpose of accumulating funds to meet contingent expenses, other than those of a routine nature, and other major expenses of the strata company likely to arise in the future; and
(b)determine from time to time the amounts to be raised for the purpose described in paragraph (a); and
(c)raise amounts so determined by levying contributions on the proprietors in proportion to the unit entitlements of their respective lots.
(3)Except in so far as and to the extent that the bylaws of a strata company may empower the council of that company to exercise the functions in subsections (1)(a), (b) and (c) and (2), those functions shall be performed by and in accordance with resolutions of proprietors passed at a general meeting of the strata company.
(4)Any contribution levied under this section
(a)becomes due and payable to the strata company in accordance with the terms of the decision to make the levy; and
(b)if not paid when it becomes due and payable, bears interest on the amount unpaid at the rate of simple interest prescribed, unless the company determines (either generally or in a particular case) that an unpaid contribution shall bear no interest or interest at a lesser rate; and
(c)including interest accrued under paragraph (b), may be recovered as a debt by the strata company in a court of competent jurisdiction and the strata company may agree to a compromise of such a debt.
(5)Interest paid or recovered under subsection (4) or (6) shall form part of the fund to which the contribution belongs.
(6)Subject to section 43(4), a proprietor of a lot is liable in respect of any contribution levied under this section and any interest thereon, jointly and severally with any person who was liable to pay that contribution and interest when that proprietor became the proprietor of that lot, to pay so much of that contribution and interest as was unpaid when he became the proprietor of that lot.
Section 36A provides:
1)Despite sections 35, 35A and 36, the provisions of this Act
(a)specified in the table to this subsection; or
(b)prescribed by the regulations,
do not apply to a strata company for a twolot scheme.
Table
section
relating to
35(1)(f)
minutes of meeting, books of account
35(1)(g)
statements of account
35(1)(i)
receptacle for postal delivery
35A(1)
Roll of proprietors etc.
36(1)(a)
Fund for administrative purposes
(2)Nothing in subsection (1) prevents a strata company for a twolot scheme doing anything described in a provision referred to in the table to that subsection.
(3)Despite subsection (2), a strata company for a twolot scheme cannot establish a fund for administrative purposes, as mentioned in section 36(1)(a), except pursuant to a bylaw made by it.
(4)The operation of this section is subject to any order for the time being in force under section 103A.
Section 54 provides:
(1)In this section
'strata company' means a strata company for a scheme other than a single tier strata scheme.
(1a)Subject to subsection (4) and section 103J, a strata company shall
(a)insure and keep insured the building to the replacement value against fire, storm and tempest (excluding damage by sea, flood or erosion), lightning, explosion and earthquake; and
(b)effect and maintain insurance in respect of damage to property, death, or bodily injury for which the strata company could become liable in damages in an amount of not less than $5,000,000 or such other amount as may be prescribed in place of that amount.
…
(4)In the case of a survey strata scheme, the obligation of the strata company under subsection (1a) applies only to a building that is common property in the scheme.
Section 56 provides:
(1)Nothing in this Division limits any right of a proprietor to effect insurance.
(2)Insurance effected by a proprietor does not affect, and shall not be taken into consideration in determining the amount payable to a strata company under a contract of insurance entered into between it and an insurer pursuant to this Division, notwithstanding anything contained in that contract of insurance.
Section 56A provides:
If a proprietor considers that a strata company is in breach of any obligation to insure imposed on it by this Act, the proprietor may effect and maintain in the name of the strata company such insurance as he thinks the strata company ought to effect and maintain to meet that obligation.
Section 84 provides:
(1)The State Administrative Tribunal is empowered to make an order that
(a)requires a party to the dispute before it to pay money not exceeding the sum of $1,000 to a person specified in the order;
…
(2)An order made by the State Administrative Tribunal may direct that the order shall be complied with within a period specified in the order.
…
Finally, s 103L provides:
(1)A person who as a proprietor has paid a premium or other charge
(a)for any insurance effected or maintained under section 56A; or
…
may apply to the State Administrative Tribunal for an order under this section.
(1a)An application under subsection (1)(b) is to be made within 3 months after the day on which the payment is made.
(2)An order under this section is an order
(a)varying the amount of contributions levied under section 36 in a way that the State Administrative Tribunal considers necessary to ensure that the cost of any premium or other charge referred to in subsection (1) falls fairly on all proprietors of lots in the scheme; or
(b)requiring the strata company to allow the applicant a credit, against contributions payable by the proprietor, for any premium or other charge paid by him; or
(c)where
(i)in accordance with section 36A or 36B there is no fund under section 36(1)(a); or
(ii)the applicant is no longer a proprietor,
that any proprietor or the strata company pay to the applicant a proportion of any premium or other charge referred to in subsection (1).
(3)On the making of an application under subsection (1) the State Administrative Tribunal may make an order under this section if satisfied that the applicant was justified in
(a)exercising the power in section 56A to effect or maintain insurance; or
…
(4)The amount of a contribution required to be paid by a proprietor pursuant to an order under this section shall be deemed to have been levied on that proprietor by the strata company under section 36(1)(c).
The respondent's objection
The respondent stated that from when she purchased Unit 1 she had the unit insured 'as if' it was a nonstrata unit until early/mid1985 when she became aware of the need for the strata company to have insurance of the buildings located at the property. Consequently, the respondent said that she endeavoured to engage the applicant in arranging for the strata company to discharge its duty to properly insure the buildings.
The strata meeting held on 30 March 2016, according to the respondent, was convened to discuss and resolve, among other things, strata insurance for the buildings. The respondent stated that she proposed Unit 1 be insured for $750,000 at that meeting. Despite subsequent difficulties, the respondent said that in April 2016 she contributed to the premium based on a value of $900,000 for Unit 1 for the period 29 April 2016 to 28 April 2017 (the previous insurance period) in order to get insurance for the buildings by the strata company. The respondent asserted that she did not agree that this arrangement was 'an agreement in perpetuity' and expected to be consulted regarding future insurance arrangements.
In relation to the current insurance period, the respondent accepts the applicant paid the premium. However, the respondent asserted that the applicant made the payment purportedly on behalf of the strata company. The respondent stated there was no prior consultation or discussion with her about the premium for the current insurance period. Further, the respondent stated that the applicant and/or the strata company failed to send to her a copy of the renewal invitation or to advise her that payment of the insurance had been made by way of instalment on 11 April 2017 and 22 May 2017. The respondent said that it was only after her complaint to CHU that CHU emailed to her, on 11 May 2017, 'the invitation to renew' which had already expired on 29 April 2017 and which had not been 'paid in full'.
The respondent said she subsequently received a letter from the applicant's lawyer/proxy demanding that she pay a portion of the premium for the current insurance period equal to $800,000/$2.3 million of the premium or an amount of $1,426.87 by close of business on 30 May 2017 failing which the applicant's lawyer/proxy stated 'I am instructed to make an immediate application to the State Administrative Tribunal to recover the insurance premium amount pursuant to sections: 53E(4) and s103L…' (the demand letter).
According to the respondent, three months passed when she did not hear further from the applicant or the applicant's lawyer/proxy about the demand letter until the applicant's lawyer/proxy sent a copy of the demand letter to the lawyer representing her in the Supreme Court proceeding.
The respondent accepted that a proprietor is entitled to pay building strata insurance if the strata company fails to do so. However, in this case, the respondent asserted that the strata company is not operational due to the noncooperation of the applicant and therefore the precondition was not met.
Further, the respondent asserted the applicant's application to the Tribunal is out of time as it was lodged beyond the three month time limit. Also, the respondent submitted that the Tribunal may only order that the respondent pay an amount not exceeding $1,000.
Finally, the respondent reiterating the various other issues including the dysfunctionality of the strata company, the conduct of CHU, modifications to Unit 2 and her written commitment to pay a portion of the premium for the current insurance year pending the outcome of the Supreme Court proceeding, submitted that the Tribunal should decide against making an order at this time in the nature sought by the applicant.
The applicant's position
The applicant stated that the respondent allowed the property to go uninsured as the respondent did not pay her portion of the premium for the current insurance period by 19 May 2017 as requested by CHU. Further, the applicant stated that during this time, when the insurance renewal was under a risk of lapsing, the respondent did not communicate with the applicant that it was not to insure the property with CHU.
Having paid the premium to cover both Unit 1 and Unit 2 for the current insurance period, the applicant stated that the respondent:
(a)allowed the current insurance period renewal to proceed in the express knowledge the applicant had subsequently paid the entire premium;
(b)accepted (and continues to accept) all the benefits which flow from the ongoing CHU insurance coverage of the respondent's unit paid for by the applicant;
(c)failed to identify any alternative insurer that is willing to insure the property and/or produce any quote in support thereof; and
(d)otherwise failed and/or refused to pay any portion of the premium.
In addition, the applicant asserted that since the nomination and the subsequent renewal of the insurance for the current insurance period, no steps have been taken by the respondent to rectify any of the 'out of date' unit entitlements (as alleged by the respondent) for the strata scheme.
Irrespective of this, the applicant asserted that the respondent agreed in writing and by her conduct in accepting and contributing to the premium for the previous insurance period for the property, agreed the unit entitlements have no relevance on any CHU insurance premium. Rather, the applicant stated the respondent asserted that the only application she will make to the Tribunal and/or the District Court is to 'appoint an administrator … to terminate the scheme' (as stated in an email from the respondent dated 25 October 2017 to Ms C Tsolakis, a solicitor employed by Metaxas & Hager).
The applicant submitted that upon registration the strata company was obliged to effect insurance otherwise it would have been in breach of s 56A. Further the applicant submitted, whether or not a chairman, secretary or treasurer had been appointed to the strata scheme pursuant to Sch 1 By-law 6, it is no lawful excuse for insurance not being provided in accordance with the ST Act, especially where:
(a)the respondent had the power to convene a meeting of the strata company pursuant to s 103 but the respondent failed and/or refused to do so;
(b)irrespective of (a), at about 1 pm on 31 March 2016, a meeting of proprietors took place in the garage of the respondent at Unit 1 where the question of insurance was raised but not resolved; and
(c)the respondent agreed to and did pay her share of the premium for the previous insurance period, notwithstanding that any meeting had, or had not, taken place and thereby ratified the payment.
In the applicant's view, there is otherwise no basis upon which the respondent may oppose an order by the Tribunal for payment of the respondent's share of the premium for the current insurance period, by reason that:
(a)the respondent initially chose CHU as the insurer for the strata scheme;
(b)at all relevant times CHU have acted in the best interests of the strata scheme by communicating to both the applicant and the respondent regarding mandatory statutory insurance for the strata scheme which is supported by the following correspondence between CHU and the parties:
(i)email from Mr Watson, Customer Service Officer for CHU to the respondent dated 11 April 2017;
(ii)email from Mr Watson to the respondent dated 29 April 2016;
(iii)email from Ms Wahlert, State Manager for WA for CHU to the respondent dated 11 May 2017;
(iv)email from Ms Wahlert to the respondent dated 26 October 2017;
(v)email from Ms Wahlert to the respondent dated 7 November 2017; and
(c)at all relevant times the employees of CHU have responded to the respondent's concerns regarding whether the insurance cover is binding despite the respondent's allegations as to the applicant's activities regarding short-stay accommodation (which are denied by the applicant).
The applicant contended that, on any objective basis, CHU is an acceptable insurer and that despite the respondent's protestations to the contrary, no alternative insurer nor any quote representing an alternative insurer's premium has been provided by the respondent, despite having months to source such information. Irrespective, the applicant asserted that it would not have any confidence that upon a change of insurers, that the respondent would not simply find herself again in another 'dispute' with the new insurers and such that the applicant will be subjected to the same dispute process each year until no insurers are left that would deal with the strata company because of the unreasonable conduct of the respondent.
The applicant asserted there is no merit in any of the other matters raised by the respondent in opposition to its application to the Tribunal. In particular, the applicant stated:
(a)contrary to the respondent's claim, Mr B Grubb, as nominated proxy for the applicant did not state that he will not attend any strata meetings and/or will vote in the negative on all proposed resolutions;
(b)the applicant never threatened the respondent with a violence restraining order. The letter from Mr Grubb to the respondent dated 7 April 2016 referred to s 34(a)(i) of the Restraining Orders Act1997 (WA) by reference to the term 'intimidating'; and
(c)the directors of the applicant are entitled to assert and pursue whatever legal remedies they choose against the respondent.
Finally, the applicant submitted that the Tribunal should exercise its power in favour of the applicant pursuant to s 103L(2)(c)(ii).
Consideration by the Tribunal
Payment of premium
It is not contested that the applicant paid the premium, an amount of $4,102.55, to CHU for insurance of the property for the current insurance period.
The requirement for a strata company to insure and keep insured the buildings to the replacement value against fire, storm and tempest (excluding damage by sea, flood or erosion), lightning, explosion and earthquake) and to effect and maintain insurance in respect of damage to property, death, or bodily injury for which the strata company could become liable in damages of not less than $5 million or such other amount as may be prescribed in place of that amount is set out in s 54(1)(a).
Section 54(1)(a) is subject to s 103J. However, in this case, s 103J does not apply. This is because no application has been made to the Tribunal for an order seeking exemption from s 54 or s 55(1).
Section 56A
This raises the second issue, that is, whether, pursuant to s 103L(3), the Tribunal can be reasonably satisfied that the applicant was justified in exercising the power in s 56A to effect and maintain in the name of the strata company such insurance as the applicant thinks the strata company (the Owners of Ithaki Strata Plan 4712) ought to effect and maintain to meet that obligation.
The respondent asserted that neither the strata company nor the applicant sent to her a copy of the insurance renewal invitation or to advise that payment had been made by way of instalment by the applicant. Further, the respondent asserted that it was only after she complained to CHU that CHU emailed to her on 11 May 2017 the invitation to renew which had already expired on 29 April 2017 and that the premium for the current insurance period had not been paid in full.
It is clear from CHU's email of 11 May 2017 to the respondent that CHU's primary contact for the strata company (being the insured entity) was 'Kestal'. The Tribunal notes that Mr and Mrs Kestal are both directors of the applicant. This explains why the respondent did not receive the invitation to renew. However, the respondent, having understood in 2016 the requirement for the strata company to discharge its duty to properly insurance the property, did nothing regarding the outstanding insurance for the current insurance period.
The applicant in its submissions stated that once the applicant had paid the premium, the respondent allowed the insurance renewal for the current insurance period to proceed in the express knowledge that the applicant had paid the premium, and accepted all the benefits which flowed from the insurance but failed to identify any alternative insurer willing to insure the property and otherwise failed or refused to pay any portion of the premium.
The respondent asserted that the strata company is non operational and therefore the applicant could not act as it did to renew the insurance with CHU.
The Tribunal finds that regardless of any issues that the respondent may have with CHU or with the applicant's use of Unit 2 or that the strata company is dysfunctional as well as other issues, there is nothing in s 54, s 56A, s 103L or any other provision or the schedules of the ST Act which supports the respondent's position. Rather, the ST Act is clear, particularly s 56A which provides that if a proprietor (e.g. the applicant in this case) considers that a strata company is in breach of any obligation to insure imposed on it by the ST Act, the proprietor may effect and maintain in the name of the strata company such insurance as the proprietor thinks the strata company ought to effect and maintain to meet that obligation.
The Tribunal concludes that in all of the circumstances of this case, the applicant was justified in exercising the power under s 56A to effect and maintain the insurance of the property for the current insurance period. Consequently, pursuant to s 103L(3), the Tribunal is satisfied that it may make an order under s 103L(2).
Section 103L(2)
This leads to the final issue, what order should the Tribunal make under s 103L(2).
The respondent asserted the application is out of time as it was lodged by the applicant with the Tribunal beyond the three month time limit. No legislative reference was provided to support this position. In any event the Tribunal concludes the respondent's assertion is misconceived. This is because s 103L(1a) provides that application under s 103L(1)(b) which concerns recovery of premium by strata company or proprietor where there is no administrative fund in single tier strata scheme as set out in s 53E needs to be made within three months. Section 103L(1a) has no application in this case as the strata scheme, as agreed by the parties, is not a single tier strata scheme.
Section 103L(2) provides that an order made under s 103L is an order in three alternate circumstances. In this case s 103L(2)(c) is relevant.
Section 103L(2)(c)(i) provides that an order under s 103L is an order that a proprietor pay to the applicant a portion of any premium referred to in s 103L(1) provided that in accordance with s 36A or 36B there is no fund under s 36(1)(a). Section 36(1)(a) deals with a fund for administrative expenses including any premiums of insurance. However, s 36A(3) provides that a strata company for a two-lot scheme, which is the case in the current matter, cannot establish a fund for administrative purposes as mentioned in 36(1)(a) except pursuant to a by-law made by it. In this case, there is no evidence that the strata company has established a fund as contemplated by s 36(1)(a) read with s 36A(3). Section 36B has no application in this case as that section applies for 3, 4 or 5 lot schemes.
Therefore, the Tribunal concludes that it may make an order under s 103L(2)(c) to require the respondent to pay to the applicant a portion of the premium for the current insurance period effected or maintained by the applicant in the name of the strata company in order to meet the obligations under s 56A.
The applicant put forward three alternative bases on which to calculate the amount to be paid by the respondent to the applicant pursuant to an order of the Tribunal under s 103L. They are:
(a)use a value of $800,000 for Unit 2 over a total value of $2.3 million for the property to arrive at an amount of $1,426.97; or
(b)use a unit entitlement of 47/100 for Unit 2 to arrive at an amount of $1,928.20; or
(c)calculate such other reasonable amount to as the Tribunal may determine.
Prior to the proceeding before the Tribunal, the applicant sought recovery of $1,426.97 from the respondent using the first of the alternative bases set out above (that is, $800,000/$2.3 million x $4,102.55 = $1,426.97).
The respondent stated that she would pay a percentage of the premium upon resolution of other issues referred to earlier in these reasons. In her statements to the Tribunal the respondent said she undertook to pay the amount of $1,426.97 upon resolution of the Supreme Court proceeding, as requested by the applicant before it made an application to the Tribunal seeking an order under s 103L.
The respondent in her email of 2 April 2016 to Mr Watson at CHU seeking a cover note included a statement that the building value insured as a starting point would be $2.3 million which would be broken down as $1 million for her unit (Unit 1) and $1.3 million for the other unit (Unit 2), that the payment would be agreed by both parties, and that a 'simple pro-rate breakdown on the relative values insured' would be appropriate and the proprietors could pay this directly to CHU. The respondent paid insurance for the previous insurance period based on a value of $900,000 for her Unit 1 on her evidence 'in order to finally resolve appropriate insurance cover for the strata company'.
The Tribunal notes that the property is insured for $2.3 million for the current insurance period. This was the value put forward by the respondent in her email to CHU on 2 April 2016 in regards to the previous insurance period. The respondent appears to have taken issue with 'out of date' unit entitlements. However, the respondent put forward the basis of apportionment in the previous insurance period of a 'simple pro-rate breakdown on the relative values insured' and had advised the applicant that she would pay the percentage of the premium equivalent to $800,000/$2.3 million for the current insure period upon resolution of the Supreme Court proceeding.
The amount payable using a percentage of 34.78% of the premium is less than what would be payable if the current unit entitlements were used. However, due to the respondent's concerns that the unit entitlements are 'out of date' the Tribunal decided it was not appropriate, in this case, to further consider the unit entitlements to determine what order to make under s 103L.
Taking into account all of the circumstances of this case, the Tribunal concludes that for the current insurance period the respondent be ordered, pursuant to s 103L, to pay to the applicant an amount equivalent to 34.78% of the premium paid by applicant for the current insurance period which in effect is what the respondent has agreed to pay. However, this is not to say that for future insurance periods, the parties are limited to determining their respective portion of any insurance premium payable using this percentage.
Finally, the Tribunal considered the respondent's submission that the Tribunal is limited to making an order requiring the respondent to pay an amount not exceeding $1,000. The Tribunal notes that both s 84 and s 103L are set out in Pt VI of Div 3 which deals with resolution of disputes and, orders that may be made by the Tribunal. While s 84 empowers the Tribunal to make an order that requires a party to the dispute to pay money not exceeding $1,000 to a person specified in the order, the Tribunal is of the view is that s 103L it is not limited by s 84. There are three reasons for this:
(a)Section 103L is a specific provision and s 84 is a general section and nothing in s 103L or in Pt VI of Div 3 provides that any order made by the Tribunal under s 103L is subject to s 84;
(b)Section 103L(2) provides that an order made under the section is an order with three different alternate outcomes. For example, s 103L(2)(a) provides that an order made under section 103L(2) is an order varying the amount of contributions levied under s 36 in a way that the Tribunal considers necessary to ensure that the cost of any insurance premium falls fairly on all proprietors of lots in the strata scheme. There is nothing in s 36 that limits the insurance premium for a proprietor to $1,000 or provides that s 36 is subject to s 84; and
(c)Section 103L(4) provides that the amount of the contribution required to be paid by a proprietor pursuant to an order under s 103L is deemed to have been levied on that proprietor by the strata company under s 36(1)(c). Again, nothing in that section limits the insurance premium for a proprietor to $1,000 or provides that s 36(1)(c) is subject to s 84.
The Tribunal concludes that s 103L is not limited by s 84. Therefore, in making an order under s 103L, the Tribunal is not limited to making an order for a party to a dispute before it to pay money to a person specified in the order not exceeding $1,000.
Finally, s 103L(4) provides that the contribution required to be made by the respondent pursuant to the Tribunal's order under s 103L is deemed to have been levied on the respondent by the strata company under s 36(1)(c).
Conclusion
For the reasons stated above, the Tribunal concludes that an order is to be made under s 103L(2)(c) requiring the respondent to pay to the applicant an amount equivalent to 34.78% of the premium of $4,102.55 paid by the applicant for the current insurance period. This is on the basis that the Tribunal is satisfied, pursuant to s 103L(3), that the applicant was justified in exercising the power under s 56A to effect and maintain insurance for the property for the current insurance period.
Order
The Tribunal orders:
1.By 1 June 2018, pursuant to s 103L(2)(c) of the Strata Titles Act 1985 (WA), the respondent must pay to the applicant an amount equivalent to 34.78% of the insurance premium of $4,102.55 paid by the applicant to CHU Underwriting Agencies Pty Ltd for the period 29 April 2017 to 28 April 2018.
I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
MS R PETRUCCI, MEMBER
1 MAY 2018
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