RAVENSCROFT and THE OWNERS OF ST ANDREWS LIFESTYLE VILLAGES - STRATA PLAN 42129
[2005] WASAT 223
•24 AUGUST 2005
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
STREAM: COMMERCIAL & CIVIL
ACT: STRATA TITLES ACT 1985 (WA)
CITATION: RAVENSCROFT and THE OWNERS OF ST ANDREWS LIFESTYLE VILLAGES - STRATA PLAN 42129 [2005] WASAT 223
MEMBER: DR B DE VILLIERS (MEMBER)
HEARD: 15 AUGUST 2005
DELIVERED : 24 AUGUST 2005
FILE NO/S: CC 2167 of 2005
BETWEEN: BRENDA MAI RAVENSCROFT
Applicant
AND
THE OWNERS OF ST ANDREWS LIFESTYLE VILLAGES - STRATA PLAN 42129
Respondent
Catchwords:
Property - Strata titles - Settlement of a dispute – Compliance with by-laws – Compliance with meeting procedures - Resolution without dissent
Legislation:
Strata Titles Act 1986 (WA), s 3AC, s 35, s 83(1)
Result:
Orders made
Category: B
Representation:
Counsel:
Applicant: Selfrepresented
Respondent: Selfrepresented
Solicitors:
Applicant: Self-represented
Respondent: Self-represented
Case(s) referred to in decision(s):
Nil
Case(s) also cited:
Nil
REASONS FOR DECISION OF THE TRIBUNAL:
Summary of the Tribunal's decision
The applicant sought orders under s 83(1) of the Strata Titles Act 1985 (WA) (the Act) to address what she believed were serious shortcomings in the management and decision‑making processes of the scheme. She alleged that the respondent has acted in breach of the Act management statement that is registered as Schedule 1 by‑laws.
The respondent opposed the application contending that all its actions are in compliance with the Act and by‑laws.
The applicant sought the following orders:
(i)an order to oblige the respondent to produce proper records of revenue received from the common property;
(ii)an order to set aside the decision by the respondent to amend the contract of the caretaker to enable him to reside off site;
(iii)an order to set aside the decision by the respondent to allow a shop to operate in unit 17;
(iii)an order to set aside the decision by the council of owners to close the gymnasium;
(iv)an order to oblige the respondent to ensure that the caretaker properly accounts for monies he receives from gaming activities such as the pool table and pinball; and
(v)an order to require that the respondent complies with the provisions of the Act and the by‑laws when it convenes meetings, as well as in the conduct of such meetings.
The applicant and witnesses gave evidence of the alleged breaches of the Act and by‑laws by the respondent. The respondent and witnesses in turn gave evidence of what they believe are compliance with the Act and by‑laws.
The following orders are made:
1.Application for order 1 was dismissed on grounds that no wrongdoing could be found on the part of the respondent.
2.Application for order 2 was dismissed on grounds that no wrongdoing could be found on the part of the respondent.
3.Application for order 3 was dismissed on grounds that unit 17 is clearly demarcated as a "shop" in the contract.
4.The respondent was ordered to submit the decision of the council of owners to close the gymnasium to the 2005 Annual General Meeting for it to be affirmed or varied.
5.The respondent was ordered to ensure that the caretaker complies with the requirements of par 3.3 of the Caretaker Agreement that requires him to keep proper account of all funds coming into his possession or control and the expenditure of such funds.
6.The respondent was ordered to clarify the duty statement of the caretaker to ensure his duties and reporting as "caretaker" and his private activities as "rental agent" are clearly demarcated.
7.The respondent is ordered to ensure that the conduct of meetings of the council of owners, Annual General Meetings and Extraordinary General Meetings are convened and conducted in accordance with the provisions of the Strata Titles Act and by‑laws.
Background
The St Andrews Lifestyle Village is situated close to Yanchep to the north of Perth at 56 St Andrews Drive, Yanchep. The village comprises 17 units, of which unit 17 is reserved as a "shop" and unit 14 is reserved as a "managers unit". The remainder units are a combination of two and three bedroom units.
The overall style and layout of the village is best described as a combination of a holiday and residential theme. Schedule 1 by‑law 16(1) describes the scheme as "residential and in keeping with a resort theme". The strata plan indicates two notifications of change of by‑laws. The management statement was registered on 5 November 2002 as Schedule 1 and Schedule 2 by-laws.
Only a few owners occupy their units on a full time residential basis while the majority (at time of the application) make their units available for short-term holiday and conference accommodation. The dual identity of the scheme is set out as follows by Schedule 1 by‑law 16(2):
"Whilst it is intended that the operation of the premises overall is to be a residential resort as described above, it will also integrate with and continue in part as a short stay holiday accommodation venue."
All units contribute to a levy from which a caretaker is retained and the maintenance and upkeep of the common property are funded.
Some owners have separate agreements with the caretaker as rental agent to rent their units out for short term stays. These agreements fall completely outside the ambit of the affairs of the strata company. This practice is recognised to be lawful in accordance with Schedule 1 by‑law 31(4). The commercial side of renting out a unit is therefore a matter for the owner and rental agent and do not form part of the business of the strata company.
Although the residential‑cum‑holiday arrangement is in accordance with the by‑laws, the dual identity of the scheme and misunderstandings arising from it, have in part contributed to conflict between the owners. The fact that business of the rental process has been discussed at meetings of the council of owners has caused the applicant to mistakenly conclude that the scheme management and the commercial rental process fall within the responsibility of the respondent.
The parties and other owners were invited to make written submissions in support and against the application and at the hearing held on 15 August 2005, a total of eight persons gave evidence. Section 83(1) of the Act enables the Tribunal to make an order for the settlement of disputes as raised in the application.
I will now turn to the respective orders sought and consider the relevant evidence.
Revenue raised from common property
The applicant contends that the caretaker has received monies from visitors for the use of the common property and that such monies have not been paid into the administration account as per Schedule 1 by‑law 33. The by‑law reads as follows:
"The strata company shall, subject to certain terms and conditions permit The Caretaker to rent part of the common property comprising the Recreation Area or various parts of the Recreation Area from the strata company on a short term basis, either on hourly, half day or daily rate as required, with all net rentals agreed on being paid into the administrative account of the strata company. The rental rates are to be agreed to by the strata company by a special resolution and reviewed from time to time."
In evidence it was alleged by the applicant that income derived from activities on the common property such as karaoke evenings and conferences are not properly accounted for in accordance with the by-laws and the caretaker agreement. The applicant tendered photographs of a conference that took place on the premises on 21 May 2005. Other witnesses such as Mrs Mountford (owner of unit 11) and Mr Garth (who took the photographs) also confirmed that they had witnessed the conference.
Mrs Deelen (owner of unit 7 and secretary of the council of the strata company) explained that according to a resolution of the Annual General Meeting adopted on 1 November 2003, guests of owners are not required to pay for the use of the common property. The resolution was passed unanimously. Consequently, persons who utilise units for short-term stay such as conferences are entitled to use the common property for free on a first come first served basis. This arrangement applies to all short-term residents including guests that may visit the units of owners who reside in the scheme. Visitors who do not utilise accommodation in the scheme are required to pay a rate of $100 per day or part thereof for use of the common property.
Mr Leveridge (owner of unit 8 and secretary-elect of the council) confirmed that in order to enhance the scheme as a conference destination, the facilities on the common property are available free of charge to all short-term residents. According to him, the short term rental occupation of the units range between 30 per cent – 40 per cent, which means the wear and tear brought about by conference goers is less than if the units were permanently occupied by owners. He confirmed that the common area is available on a first come first served basis that does not discriminate against permanent residents.
Mr Kallen (caretaker and owner of units 6 and 17) reiterated that since his appointment he has not charged nor received any funds for use of the common property.
Mr Carlton (strata title manager) who has been responsible for the management of the scheme since the registration of the strata plan, explained that the renting out of individual units and the use of common property by short term tenants, fall completely outside the scope of the strata company's management. Any income derived from the renting of a unit is a matter for the rental agent (caretaker) and the proprietor of the unit and falls outside the responsibilities of the respondent and its managing agent.
If the caretaker were to rent out common property for use by external persons who are not tenants, he is required to account for such income. However, no evidence was presented that renting out of common property has occurred since the appointment of the current caretaker.
Mr Carlton confirmed that the financial records produced for the strata company are accurate and in accordance with the requirements of the Act.
It appears to the Tribunal that the use of the common property by short‑term tenants has caused the applicant some confusion. It seems to her as if short‑term tenants are paying for the use of common property. Her perception has been strengthened by ongoing references in council of owners meetings to rental arrangements, negotiations with Best Western, placing a computer in the gymnasium to "cover the Best Western requirement for a data port" (Council Minutes, 2 April 2004), marketing of the holiday complex and reports by the caretaker in which he comments on strata scheme as well as rental matters.
It was explained in evidence that St Andrews Lifestyle Village with its character as a residential and holiday village, offers short‑term tenants the same right to use the common facilities as owners of units. The Tribunal is therefore satisfied that the perception of the applicant is not founded on fact, and that the respondent had explained convincingly that the affairs of the scheme do not include the renting out of individual units.
In order to prevent misunderstandings from arising, the respondent should deal exclusively with matters arising from the strata scheme. The caretaker is retained for maintenance of the common property and care must therefore be taken as to not confuse his role as employee of the respondent with his private activities as rental agent for some units.
The Tribunal could not find any evidence to substantiate the claim by the applicant that the caretaker has charged or received revenue for the use of common property or that he has failed to account for monies received in breach of the by‑laws or in breach of his contract of appointment.
The application for order 1 should therefore be dismissed.
Caretaker to reside on site
The applicant contends that the by‑laws require the caretaker to reside on site and that the respondent had breached the by‑laws by allowing the caretaker to reside in a nearby town. The amendment to the caretaker's agreement to enable him to live off-site is therefore void.
Schedule 1 by‑law 17 on which the applicant relies reads as follows: "It is intended that The Caretaker will be the proprietor of lot 17 and reside in the scheme …" (own emphasis).
The applicant explained that one of the reasons why she bought a unit in the scheme was the assurance that a caretaker would be on site permanently to take care of security and maintenance problems. The applicant conceded that she had agreed previously to an arrangement to allow the then caretaker not to live on site but alongside the scheme. She now contends that the current arrangement whereby the caretaker resides in a village removed from, albeit close to the scheme, is a breach of the by‑laws.
The by‑law expresses an ideal and an objective but it is clearly not a binding requirement for the caretaker to reside on site. Had the strata company at time of registration of the by‑laws intended that the caretaker "must" reside on site, a clearer expression of words could have been used. Instead of saying it was "intended" for the caretaker to reside on site, words such as "required to", or "must", or "obliged to" reside on site could have been used.
The use of the word "intended" is a valid objective but does not constitute a guarantee that regardless of circumstances it would occur.
The Caretaker Agreement between the current caretaker Mr Kallen and the respondent dated 20 February 2004 provides that:
"The Caretaker shall be the owner of lot 17 (the office and shop) and of lot 14 (the caretaker's residence) and either he or his nominee (who has been approved by the strata company council and the council of owners) must provide the services of a natural person as the resident caretaker of the Resort …" (par 3.5)
Parts of what appears to be a standard caretaker agreement had been deleted and initialled by Mr Kallen and a representative of the respondent. Those parts that had been removed dealt with the requirement for the caretaker to "permanently occupy the lot 14 Residence".
Various witnesses for the respondent explained why the standard agreement was varied to enable Mr Kallen to reside off‑site.
Mrs Deelen explained that the council had "extreme difficulty" in finding a caretaker and they were becoming "desperate" as it became likely that the position would remain vacant.
Mr Leveridge added that the council was "looking down the barrel" as they had explored several avenues to find a suitable person but without success.
Mr Kallen explained that he had heard of the position but was not interested to reside on site as unit 14 comprised only a one bedroom apartment.
An arrangement was therefore made for Mr Kallen to continue to reside in the nearby town, but with an ongoing responsibility to attend to any emergency in the scheme when necessary. Mr Kallen implemented measures to ensure that he could be reached if an after hour emergency occurs.
The recommendation to amend the caretaker agreement was discussed and unanimously approved by the Annual General Meeting held on 1 November 2003.
The applicant disputes the accuracy of the minutes of the said meeting. According to her, she supported the resolution on the understanding that the caretaker may reside "adjacent" to the scheme rather than "nearby" as is recorded in the minutes. The applicant acknowledged in evidence, that by supporting the word "adjacent" she had agreed in principle for the caretaker to reside off‑site.
The Tribunal understands the frustration and disappointment expressed by the applicant in regard to the place of residence of the caretaker. She expected a caretaker to reside on site to attend to urgent matters. She could, however, not point to any breaches of service standards caused by the caretaker residing off‑site.
Some of her frustration may also have been caused by a general break‑down of communication between her and the respondent.
The Tribunal accepts that the expectations of the applicant must be tempered by the reality that it may not always be possible for the respondent to find a caretaker who is willing to live in an one‑bedroom apartment on site. Alternative arrangements must then be made. Reality demands it. Although the by‑law expresses a desire for the caretaker to reside on site, it does not express it in obligatory terms. The respondent may in future continue to seek a caretaker who is agreeable to reside on site.
The Tribunal does not find reason to conclude that the respondent had acted in breach of the by‑law by amending the caretaker agreement. The Tribunal reaches this conclusion for the following three reasons: firstly Schedule 1 by‑law 17 does not make it obligatory for the caretaker to reside on site. Secondly the applicant had agreed for the caretaker to reside off‑site although she preferred the word "adjacent" to "nearby". Thirdly the decision to allow the caretaker to reside off‑site was approved by the Annual General Meeting of 1 November 2003 after account was taken of the difficulty faced by the council to recruit a person to reside on site.
The application for order 2 should therefore be dismissed.
Operating a shop in unit 17
The applicant contends that the operating of a shop in unit 17 is in breach of the by‑laws.
The "Contract Documents" of the St Andrews Lifestyle Village sets out in the unit entitlement Schedule that unit 17 will operate as a "shop". The Caretaker Agreement also refers to unit 17 as "the office and shop" (cl 3.5).
Witnesses confirmed that unit 17 had been operating as a shop since the commencement of the scheme.
The Tribunal can therefore not find substance in the allegation that the operation of a shop in unit 17 is in breach of the by‑laws.
The application should be dismissed.
Closing of gymnasium
The applicant contends that the respondent breached the requirements of Schedule 1 by‑law 30 by closing the scheme's gymnasium.
The applicant contends that the gymnasium was closed without proper authorisation and in breach of the by‑laws. According to the applicant one of the reasons why she bought into the scheme was the existence of a gymnasium. The council decided to remove the equipment and the area is now being utilised as a "waiting" and "internet" room.
Schedule 1 by‑law 30 refers in the heading to the swimming pool, gymnasium and residents lounge. However, the by‑law does not guarantee that a gymnasium will be provided for under any circumstance. It only requires that the use of the gymnasium will, as is the case of the swimming pool and resident's lounge, be reserved for owners and their guests.
Minutes of council of owners meetings over a period of time reflect the increasing state of disrepair of the gymnasium, the lack of funds to maintain and replace equipment and the insurance risks faced by the respondent it the matter was left unattended. The applicant was present at some of the council meetings where concerns regarding the gymnasium were discussed.
The council minutes of 7 June 2003 refers to the equipment as follows: "Exercise bike needs to be repaired or replaced; weights need a good clean; and Kevin will tighten bolts on the other equipment." The council minutes of 7 February 2004 records that "The new carpet has been installed, which has improved the area considerably and the dangerous equipment has been removed." The caretaker reported on 11 March 2004 that the gymnasium was not utilised and expressed his concern about the state of equipment and the risk of danger to users thereof. The council minutes of 2 April 2004 record that the gymnasium equipment is dangerous, rarely used and will be placed in storage. A computer terminal will then be placed in the room for convenience of guests. Council minutes dated 4 March 2005 notes that the gymnasium equipment had been removed but it is kept in storage for any owner to collect for their private use. The decision to remove the equipment was, however, not tabled or discussed at the Annual General Meeting held on 29 October 2004.
The records of discussions in council meetings regarding the gymnasium are confirmed in evidence. Mrs Deelen described the equipment as "extremely dangerous" and that the respondent faced a "risk of litigation". There were insufficient funds to replace the equipment and in light of the low intensity of use of the gymnasium, the council decided to refurbish the room as a computer/internet room.
Mr Leveridge gave evidence that the cost to maintain the gymnasium was high and the equipment resembled a second hand state with a high public liability risk. Council did not have funds to repair, maintain or replace it and decided to use the space more appropriately by providing for a computer and internet facility.
The Act sets out the duties of the strata company in s 35. The respondent has an obligation not only to keep common property in good repair, but also to reduce the risk of injury caused by default equipment. The duties and powers of the council are set out in Schedule 1 by‑law 4(1). The council is responsible to manage the scheme subject to any restrictions set at a general meeting.
The Tribunal accepts the evidence that the equipment in the gymnasium fell in a state of disrepair and required substantial funds to replace it or for the room to be used for another purpose. It is, however, unfortunate that the council did not discuss the decision with the owners at the Annual General Meeting held on 29 October 2004. The meeting could affirm or vary the decision of council.
The Tribunal accepts that the removal of the gymnasium equipment was justified in light of the state of disrepair thereof and the need for a computer room for residents and guests. The Tribunal therefore finds that the actions of the council were not in breach of the by‑law but the council should have reported on the decision at the Annual General Meeting of 2004.
The respondent should place the decision to remove the gymnasium equipment on the agenda of the 2005 Annual General Meeting for it to be affirmed or varied.
Monies received from games
The applicant contends that the caretaker has received monies from the pool table and other coin operated equipment without accounting for it as required by the Caretaker Agreement.
The Caretaker Agreement requires that the caretaker "must fully and promptly account to the Strata Company" for all funds coming within his possession and "credit to the Strata Company with the full benefits" of such income (par 3.3).
Mr Leveridge explained that the council decided to allow the caretaker to keep the monies received from the cash games on grounds that he had responsibility to service the machines and to replace equipment. The amount of income did not justify complex accounting requirements and the council wanted to simplify the procedure. This decision by council was endorsed by the Annual General Meeting held on 1 November 2003 (par 5.8 of the minutes).
Mr Kallen added that he does not receive any petty cash for maintenance of the games and that the council therefore decided it would be better for him to retain the limited income for use on maintenance rather than to request a refund each time a small cost is incurred. He added that he would not object to account for the income and expenditure albeit that very small amounts are received from the machines. For example, in June 2005 he collected a total of $7.50 for the pool table and soccer machine.
The Tribunal accepts that the respondent acted in good faith by simplifying the accounting of money received from the games. However, the applicant has a reasonable expectation that even though amounts are small, it would be properly accounted for. In such a way, open and accurate administration and compliance with the Act is ensured.
The application for an order should succeed. The Tribunal orders that the caretaker must comply with the requirements of par 3.3 of the Caretaker Agreement by keeping proper account for all funds coming into his possession or control.
Compliance with the Act and by‑laws in particular during the conduct of meetings
The applicant raised several complaints about the communication within the strata company and in particular the way in which meetings are conducted. The following are examples of complaints raised by the applicant and witnesses called by her:
a)Commercial matters regarding the renting of units are discussed at meetings of the council of owners.
b)Annual General Meetings are not conducted in accordance with formal meeting procedures.
c)Owners have been discouraged or even prevented to attend meetings.
d)Meetings are managed like a "kangaroo court" with attendees not being clear about the items under discussion, voting procedures, how votes are counted or the outcome of a vote.
e)Special majority voting requirements are not complied with.
f)The decision to oppose the application was unauthorised.
Witnesses on behalf of the respondent offered a different perspective on the conduct of meetings. According to the evidence by the strata manager, Mr Carlton, meetings of the scheme are managed in accordance with the Act and by‑laws. After meetings, the draft minutes are circulated for comment and the chairman signs the approved minutes. The secretary of the council is responsible for taking minutes of council meetings while he is responsible for taking minutes of Annual General Meetings and Extraordinary General Meetings.
Mr Carlton confirmed that some meetings had been disrupted due to personal friction between the applicant and other attendees. However, as a general rule, meeting procedures are adhered to. He admitted that a perception may exist that only "yes" votes are counted due to the fact that so many owners nominate proxies. The use of so‑called "postal votes" referred to a one‑off event where owners responded to a specific question by means of a postal vote.
Mr Carlton confirmed that the decision to oppose the application was authorised by the council of owners after he had notified them thereof.
The Tribunal could not find any specific examples of wrongdoing or serious non‑compliance with meeting procedures on the part of the respondent. The applicant misconstrued the meaning of "resolution without dissent" by interpreting it as an absolute veto to every owner regardless of his/her attendance at a meeting. In this regard the applicant is referred to s 3AC of the Act. However we note that the applicant and two other witnesses had very strong perceptions about being excluded from or discouraged to participate in the decision‑making process at Annual General Meetings. It is incumbent on all parties to make a serious attempt to remedy the situation.
The application for an order should succeed.
Orders
1.Application for order 1 is dismissed on grounds that no wrongdoing could be found on the part of the respondent.
2.Application for order 2 is dismissed on grounds that no wrongdoing could be found on the part of the respondent.
3.Application for order 3 is dismissed on grounds that unit 17 is clearly demarcated as a "shop" in the contract.
4.The respondent is ordered to submit the decision of the council of owners to close the gymnasium to the 2005 Annual General Meeting for it to be affirmed or varied.
5.The respondent is ordered to ensure that the caretaker complies with the requirements of par 3.3 of the Caretaker Agreement that requires him to keep proper account of all funds coming into his possession or control and the expenditure of such funds.
6.The respondent is ordered to clarify the duty statement of the caretaker to ensure his duties and reporting as "caretaker" and his private activities as "rental agent" are clearly demarcated.
7.The respondent is ordered to ensure that the conduct of meetings of the council of owners, Annual General Meetings and Extraordinary General Meetings are convened and conducted in accordance with the provisions of the Strata Titles Act and by‑laws.
I certify that this and the preceding [72] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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DR B DE VILLIERS, MEMBER
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