SAMARDZIC and OWNERS OF 178 COLLIER ROAD EMBLETON STRATA PLAN 31300

[2011] WASAT 99

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL

STREAM:   COMMERCIAL & CIVIL

ACT: STRATA TITLES ACT 1985 (WA)

CITATION:   SAMARDZIC and OWNERS OF 178 COLLIER ROAD EMBLETON STRATA PLAN 31300 [2011] WASAT 99

MEMBER:   MR S ELLIS (SENIOR SESSIONAL MEMBER)

HEARD:   23 MAY 2011

DELIVERED          :   EDITED REASONS DELIVERED ORALLY ON

23 MAY 2011

FILE NO/S:   CC 779 of 2010

BETWEEN:   NEZIRA SAMARDZIC

SPASOJA SAMARDZIC
Applicants

AND

OWNERS OF 178 COLLIER ROAD EMBLETON STRATA PLAN 31300
Respondent

Catchwords:

Strata titles - Inconsistency between unit entitlement and value

Legislation:

Strata Titles Act 1985 (WA), s 103H, s 103H(3)

Result:

Unit entitlement varied

Category:    B

Representation:

Counsel:

Applicants:     Self­represented

Respondent:     Ms K Richardson (Acting as Agent)

Solicitors:

Applicants:     Self-represented

Respondent:     Richardson Strata Management Services

Case(s) referred to in decision(s):

Nil

REASONS FOR DECISION OF THE TRIBUNAL: 

Summary of Tribunal's decision

1. The Tribunal's reasons, taken from the transcript and edited in minor respects, were as follows.

2. The applicants applied under s 103H of the Strata Titles Act 1985 (WA) for an order varying the unit entitlements of the owners of Strata Plan 31300.

3. The Tribunal accepted evidence of a licensed valuer, Mr K Eaton, about the respective values of the lots in the Strata Plan.  His evidence showed that there was an inconsistency between the unit entitlements of the lots and the aggregate value of all the lots in the Strata Plan.

4. The Tribunal considered that this discrepancy was unfair and anomalous and ordered that the unit entitlements be amended to reflect the value of the lots in the strata plan so as to reflect Mr Eaton's evidence.

Introduction

1. This is an application under s 103H of the Strata Titles Act 1985 (WA) (ST Act).

2. What that section requires me to consider is whether the proportion that the unit entitlement of any lot in the scheme bears to the aggregate unit entitlement of all lots in the scheme is not consistent with the proportion that the value of that lot bears to the aggregate value of all lots in the scheme, and whether the lack of consistency is sufficiently great as to be unfair or anomalous.  If I am satisfied of both those matters, I can then make an order amending the schedule of the unit entitlement registered in respect of the scheme.

Background

1. The applicants in this matter are Mr and Mrs Samardzic, who are registered as the proprietors of Lot 1, 178 Collier Road, Embleton, Western Australia.  That development is the subject of Strata Plan 31300.  They say that they are paying more than their fair share of the strata levies, which they say are based on an out of date assessment of the unit entitlements.

2. Their application was opposed by Mr and Mrs Knapinski who were the owners of Lot 5 on the strata plan.  Their address is Unit 4, No 8 Palmer Place, Embleton.  They do not have a Collier Road address because their unit is closer to Palmer Place.  Mr Eaton, a licensed valuer, gave evidence that, in fact, the two parts of the strata plan were divided by a chain.

3. There was a general meeting of the owners of the development on 15 February 2011.  The purpose of that meeting was to consider and possibly approve a varied unit entitlement which was based upon a letter dated 27 January 2011 from Mr Eaton.  That letter set out his opinion as to the appropriate distribution of units between the unit holders and would have resulted in a substantial alteration of unit entitlements as compared to the existing unit entitlement.  In particular, the unit entitlement of Lot 1 was to become 33 units out of a total of 400, which reflects about 8.27% of the total unit entitlement, and Mr and Mrs Knapinski's unit entitlement was to become 58 units out of 400, which reflects about 14.35% of the total.

4. Mr Eaton sets out in that letter unit entitlements for each of the units and sets out, in brief terms, some of the factors which led him to arrive at those unit entitlements.  The unit entitlements are based on a value which he gave to each of the lots of the parcel.  The value given to Unit 1 was $320,000, the value given to Unit 5 was $555,000 and the total value of the development was $3,865,000.  He also includes photographs of the various units.

Submissions and evidence

1. The Tribunal was provided with copies of the minutes of the meeting held on 15 February 2011.  It appears that the resolution in favour of amending the unit entitlements was lost.  Mr and Mrs Knapinski dissented, as was their right, from that resolution.

2. On 31 March 2011, Member Bertus de Villiers made directions that a copy of the orders made on 31 March 2011, together with the expert report of Mr Eaton, be given to each of the owners of units at the strata plan.  Mr and Mrs Knapinski assert that, although they received some communication from the strata management, they were not provided with a copy of the letter dated 27 January 2011.  However, a copy of that letter had been annexed to the notice of the meeting in February 2011, and they were therefore familiar with its contents and able to include comments in relation to Mr Eaton's letter in their response dated 4 May 2011 which was provided to the Tribunal.

3. The existing unit entitlement to the strata plan, set out in Exhibit 3 (Sheet CA1), was not in dispute between the parties:  Units 1 and 2 each have 22 out of 100 units; Lot 4 has eight units; Lot 5 has eight units; Lot 6 has nine units; Lot 7 has nine units; and Lots 8 and 9 both have seven units.

4. Mr Eaton gave oral evidence at the hearing. He is an experienced valuer. He was licensed in 1983 and he indicated that he had undertaken hundreds of valuations of this type. Mr Eaton indicated that the unit entitlements appear to have been the product of an historical anomaly associated with the development and subsequent insolvency of the developer of the units, but, at the end of the day, how the entitlements came about is less important than whether, as at today's date, there is a disproportionality which falls within s 103H of the ST Act.

5. Mr and Mrs Knapinski objected to the application on a number of grounds, although they also stated that they agreed that there ought to be a revaluation of the unit entitlements. A number of the issues which they wished to raise were not, in my opinion, relevant to the issue under s 103H(3) of the ST Act. They were concerned about issues associated with parking. Mr and Mrs Knapinski were concerned that certain expenses had not been paid. They were concerned about insurance premiums. They had raised concerns about the bona fides of the corporate body. In my opinion, although these matters should, of course, be addressed if there is any merit to them, they do not impact upon the comparative valuations of the units.

6. Mr and Mrs Knapinski also raised issues in relation to the valuation of the units.  In their response of 4 May 2011, they argued that it was inevitable that the rear units would eventually split off and become a separate strata plan.  That may be the case but that does not address any present disproportionality in the units.  They also put to Mr Eaton that the valuation of Unit 8 was too high and, in particular, that it was unreasonable in light of the small land area of their holding.

7. Mr Eaton gave evidence that the size of a landholding is only one feature to be taken into account in determining the value of the various units and he gave evidence that he had taken into account other matters, such as the quality of the building, the size of the building and the views which might be obtained from it.  In the circumstances, I am not persuaded that his valuation of Unit 8 was erroneous or so wrong that the effect of his letter overall should not be accepted.

8. There were also assertions made that proper planning approval had not been obtained for a number of the units. The evidence before me did not persuade me that this was an issue which properly has a significant impact on the valuation of those units. If the issue of approval of those units is not resolved and if real threats arise which alter the value of those units, it may then be that the value of those units or those lots will be diminished and if that circumstance arises then it may be possible for a new application under s 103H of the ST Act to be made.

Conclusion

1. I accept the evidence of Mr Eaton and I accept that the values which he ascribes to the units are fair and reasonable.

2. The value of Lots 1 and 2 was only 8.27% of the aggregate value, but those lots presently have a unit entitlement of 22 out of 100 units.  It appears to me that the proportion which Lots 1 and 2 bear to the aggregate value of all the lots of the scheme is disproportionate and that this disproportionality or lack of consistency is sufficiently great as to be unfair and anomalous.  I consider that the unit entitlement ought to be amended so that it reflects Mr Eaton's letter of 27 January 2011.

3. In their application, Mr and Mrs Samardzic also complained about arrears of past unit levies that were owing. Their issue was that, as those past levies were based on the old unit entitlement, it was unfair. My powers under s 103H of the ST Act do not permit me to retrospectively vary unit levies that have been levied or charged.

Orders

1. The Tribunal makes the following orders:

   1.The unit entitlement of the owners of Strata Plan 31300 be amended to reflect the entitlements in the letter of Mr Eaton dated 27 January 2011, namely Lots 1 and 2 ­ 33 units, Lots 3 and 4 ­ 35 units, Lot 5 ­ 58 units, Lots 6, 7 and 8 ­ 57 units each and Lot 9 ­ 35 units.

   2.The body corporate to lodge a copy of these orders with the Registrar of Titles within 14 days of receipt.

   3.These orders continue to operate until further order.

I certify that this and the preceding [22] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

___________________________________

MR S ELLIS, SENIOR SESSIONAL MEMBER