Strata Corporation 12753 Inc v REN - [2022] SADC 134

District Court of South Australia
(Civil)
STRATA CORPORATION 12753 INC v REN
[2022] SADC 134
Judgment of his Honour Judge Durrant
11 November 2022
REAL PROPERTY - STRATA AND RELATED TITLES - MANAGEMENT AND CONTROL
The applicant is the strata corporation for a building comprised of 52 residential units in which the respondent converted a unit from one to multiple bedrooms. The applicant claims that in breach of the Strata Titles Act 1988, the respondent failed to obtain authorisation to carry out those works and seeks an order that the respondent restore the unit to its original one-bedroom state. Following the conversion of the unit the respondent granted leases or licences in respect of each of the bedrooms. The applicant claims that in breach of the Act the respondent failed to obtain authorisation to grant any lease or licence over part of the unit and seeks both an order that the respondent refrain from leasing or licencing any part of the unit and a declaration any lease or licence is void.
Held:
(1) The respondent has breached the Strata Titles Act 1988, by failing to obtain authorisation from the strata corporation to carry out prescribed works on the unit.
(2) The respondent has breached the Strata Titles Act 1988, by failing to obtain authorisation from the strata corporation to lease or licence part of the unit.
Strata Titles Act 1988 (SA) ss 3, 4, 5, 12, 13, 18, 19, 20, 25, 27, 29, 35, 41, 44; Magistrates Court Act 1991 (SA) s 38; Planning, Development and Infrastructure Act 2016 (SA); Development Act 1993 (SA) ss 3, 32, 33, 40; Real Property Act 1886 (SA), referred to.
Harradine v District Court of South Australia [2014] SASC 96; City of Mitcham v Fusco [2002] SASC 423; Piazza & Anor v Strata Corporation 10147 Inc & Anor [202] SASCFC 27; HG Royal Park Pty Ltd v Strata Corporation 7176 Inc & Anor [2007] SASC 348, considered.

STRATA CORPORATION 12753 INC v REN
[2022] SADC 134
Introduction

The applicant is the strata corporation for a building known as the Mansions on Pulteney.[1] The respondent has converted Unit 24 in that building from one to several bedrooms.[2]
[1] Strata Titles Act 1988, Part 3; Originating Application (FDN 10; Strata Plan 12753; The Mansions on Pulteney is located at 21 Pulteney St, Adelaide; Affidavit of Lynne Kaye Veness affirmed 9 August 2022, [3].
[2] Affidavit of Lynne Kaye Veness affirmed 9 August 2022, [19].
The applicant claims the respondent failed to obtain authorisation to carry out those works and seeks an order to restore Unit 24 to its original one-bedroom state.[3]
[3] Strata Titles Act 1988, ss 29, 41A(9)(c).
Following the conversion of Unit 24, the respondent granted leases or licences in respect of each of the several bedrooms created. The applicant claims the respondent failed to obtain authorisation to grant any lease or licence over part of Unit 24 and seeks both an order the respondent refrain from further leasing or licencing Unit 24 and a declaration any existing lease or licence is void.[4]
[4] Ibid, s 44.
Nature of Proceedings
The applicant was permitted to bring these proceedings.[5]
[5] Ibid, s 41A (3); Record of Outcome (FDN 7), 16 August 2022.
In determining this application, I must act in accordance with good conscience, equity, and the substantial merits of the case without regard to technicalities and legal forms.[6]
[6] Strata Titles Act 1988, ss 41A (7); see Magistrates Court Act 1991, s 38 and cases in respect thereof including Harradine v District Court of South Australia [2014] SASC 96.
In conducting this trial, I have informed myself as I see fit, have not been bound by the rules of evidence, have asked the parties questions, and have heard evidence about what occurred.[7]
[7] Ibid.
Relevant Legislation
29—Alterations and additions
(1)Subject to subsection (1a), a person must not carry out prescribed work in relation to a unit unless the person is authorised to do so—
(a)where all of the units comprised in the strata scheme consist of non-residential premises—under the articles of the strata corporation; or
(b)in any case—by special resolution of the strata corporation.
(1a)Subsection (1) does not apply to—
(a)prescribed work carried out in compliance with a direction under section 23 of the Housing Improvement Act 1940; or
(b)prescribed work carried out on a unit in a strata scheme consisting only of 2 units if the work is approved development under the Planning, Development and Infrastructure Act 2016.
(1b)Where a person carries out prescribed work referred to in subsection (1a)(b), the strata corporation may, by notice in writing to the owner of the unit, require the owner to carry out, within a reasonable period fixed in the notice, specified work to remedy any structural deficiency caused by the work.
(2)Where a person acts in contravention of subsection (1), the strata corporation may, by notice in writing to the unit holder, require him or her to carry out, within a reasonable period fixed in the notice, specified work—
(a)to remedy any structural deficiency caused by the work; or
(b)to restore the unit to its previous state.
(6)In this section—
prescribed work in relation to a unit means—
(a)the erection, alteration, demolition or removal of a building or structure;
(b)the alteration of the external appearance of a building or structure.
……………….
44—Dealing with part of unit
(1)Subject to this section, a unit holder may not enter into any dealing with a part of the unit unless—
(a)the dealing is to be effected by amendment to the strata plan; or
(b)the dealing consists of the granting, surrendering or extinction of an easement.
(2)Subject to any other law, a unit holder may grant a lease or licence over a part of a unit—
(a)if all of the units comprised in the strata scheme consist of non-residential premises; or
(b)where paragraph (a) does not apply—
(i)if the lease or licence is granted to another unit holder; or
(ii)if the lease or licence is authorised by unanimous resolution of the strata corporation (but no authorisation is required in relation to a lease or licence over the whole of a unit).
(3)Where a unit holder acts in contravention of this section—
(a)the dealing is void and no instrument purporting to give effect to the dealing may be lodged for registration; and
(b)the unit holder is guilty of an offence.
Penalty: Division 8 fine.
Established Facts
The following has been established.
The applicant is the strata corporation of property in strata plan 12753 at 21 Pulteney Street, Adelaide known as the Mansions on Pulteney.[8]
[8] Affidavit of Lynne Kaye Veness affirmed 9 August 2022, [3].
The Mansions on Pulteney is comprised of 52 units used for owner occupation, long term rental and short-term rental.[9] Unit 24 was originally configured as a one-bedroom unit and an open plan living, kitchen and meals area.[10]
[9] Ibid, [12].
[10] Ibid, [21].
On 29 August 2018, the respondent told the strata manager of the strata corporation she intended to purchase and renovate Unit 24 and put-up walls to create five to six bedrooms.[11]
[11] Ibid, [20], [22], [23] and [24].
On 3 September 2018, the management committee of the strata corporation met and considered the intention of the respondent. The committee determined the proposed renovations were ‘prescribed works’ and were ‘strongly against the proposal’.[12] The committee instructed the manager to advise the respondent and her agent the committee did not support renovation.[13]
[12] Ibid, [26].
[13] Strata Titles Act 1988, s 29(6)(a); Ibid, [26], Exhibit LV 6.
On 4 September 2018, the strata manager informed the agent of the respondent and the owner of Unit 24, that the renovation would not be approved by the strata corporation.[14]
[14] Affidavit of Lynne Kaye Veness affirmed 9 August 2022, [27].
On 4 September 2018, the respondent applied to the City of Adelaide for development approval to undertake internal renovations to Unit 24.[15]
[15] Ibid.
On or about 7 September 2018, the respondent became the registered proprietor of Unit 24 and a member of the strata corporation.[16]
[16] Strata Titles Act 1988, ss 3, 18(4); Affidavit of Lynne Kaye Veness affirmed 9 August 2022, [20];
Following the purchase, during April and May 2019, the respondent erected walls within Unit 24 to convert it from a single bedroom, bathroom, living and meals area, hallway and kitchen to five bedrooms, a bathroom, hallway and kitchen.[17]
[17] T9.18- 19.
On 3 May 2019, the manager informed the respondent ‘[y]ou do not have approval from the Strata Corporation to undertake’ the work requested and demanded that she ‘cease work immediately and restore the unit to its original state’.[18]
[18] Affidavit of Lynne Kaye Veness affirmed 9 August 2022, [32].
By letter dated 16 May 2019, lawyers for the applicant told the respondent: no approval had been given to convert Unit 24 from one bedroom to five or six bedrooms; she had failed to cease work as requested by the strata manager; the works were unauthorised; the applicant was concerned she had breached s 29 of the Strata Titles Act 1988 (the Act); the applicant may require her, within a reasonable period, to restore the premises to its previous state; and she was required to immediately cease all works and refrain from carrying out any further works.[19]
[19] Ibid, [35].
On 25 November 2019, the applicant held its annual general meeting.[20] The meeting noted ‘the owner of Unit 24 had carried out renovation works in her apartment which transformed the 1 bedroom apartment into 5-7 rooms…[and]…the owner did not obtain approval from the Strata Corporation…prior to the works being carried out’.[21] Further, it was noted that the strata corporation committee had requested the respondent ‘to provide evidence’ that ‘[r]emedial works had been carried out to make the apartment compliant with the retrospective development approval that had been lodged and approved by the City of Adelaide’.[22]
[20] Ibid, [49].
[21] Ibid, Exhibit LV 17.
[22] Ibid.
On 19 December 2019, the manager requested the respondent to ‘complete all remedial works as required by the Adelaide City Council pursuant to their development approval granted 10 October 2019’.[23] Further, the respondent was requested to ‘provide a report from the Adelaide City Council confirming that the apartment is fully compliant’.[24]
[23] Exhibits R5 and R7.
[24] Ibid.
The respondent has carried out building work to convert Unit 24 from one bedroom to five or six bedrooms. From time to time, the respondent has entered into lease or licence agreements in respect of Unit 24 whereby she would lease or licence to individual lessees or licenses bedrooms in the unit.[25]
[25] Affidavit of Lynne Kaye Veness affirmed 9 August 2022, [50]- [58]; T9. 25- 28.
Issues for consideration
Several issues arise for consideration.
First, whether the work carried out on Unit 24 is ‘prescribed work’ under the Act and whether the respondent required authorisation by way of a special resolution of the applicant to carry out that work.[26] Second, in the event the respondent required authorisation by way of special resolution, whether the respondent was so authorised.[27]
[26] Strata Titles Act 1988, s 29(6)(a).
[27] Ibid, 29(1)(b).
Third, whether the respondent required authorisation by way of unanimous resolution of the applicant to grant a lease or licence over a part of Unit 24.[28] Fourth, in the event the respondent required authorisation by way of unanimous resolution, whether the respondent was so authorised.
[28] Ibid, s 44(2)(b)(ii).
Submissions of Applicant
The applicant submitted the works were ‘prescribed works’[29] and authorisation was required by way of special resolution.[30] As no special resolution had been passed authorising the work, submitted the applicant, the works were carried out in breach of the Act.[31]
[29] Ibid, s 29(6).
[30] Ibid, s 3, 29 (1)(b).
[31] Ibid, s 29(1)(b).
Further, submitted the applicant, a lease or licence of part of a unit could only be granted if authorised by unanimous resolution of the strata corporation.[32] As no unanimous resolution had been passed, submitted the applicant, the leasing or licencing of parts of Unit 24 by the respondent had been in breach of the Act.
[32] Ibid, s 44(2)(b)(ii).
Submissions of Respondent
The respondent said she had obtained development approval for the work under the Development Act1993.[33] Further, she submitted, that development approval, the building classification of the Mansions on Pulteney and the approved existing residential use of the building, meant no further authorisation had been required for the work or the subsequent leasing of parts of Unit 24.
[33] Replaced by the Planning Development and Infrastructure Act 2016, (Planning, Development and Infrastructure Act (Commencement) Proclamation 2017; Planning, Development and Infrastructure Act (Commencement) Proclamation 2019.
Alternatively, the respondent submitted, the development approval constituted an amendment to the strata plan and by her purchase of Unit 24, each member of the strata corporation had agreed to the works. That meant, she submitted, the resolutions required by the Act were unnecessary as the unit holders had all agreed by default.
In the further alternative, the respondent submitted the annual general meeting on 25 November 2019, had passed a retrospective special resolution authorising the works.[34]
[34] Affidavit of Lynne Kaye Veness affirmed 9 August 2022, [49], by notation in the minutes that ‘the owner of Unit 24 had carried out renovation works in her apartment which transformed the 1 bedroom apartment into 5-7 rooms…[and]…the owner did not obtain approval from the Strata Corporation…prior to the works being carried out’ and that the strata corporation committee had requested the respondent ‘to provide evidence’ that ‘[r]emedial works had been carried out to make the apartment compliant with the retrospective development approval that had been lodged and approved by the City of Adelaide’.
In any event, the respondent submitted, oral and written discussions with members of the management committee, subsequent to the completion of the works and the leasing of parts of Unit 24, retrospectively authorised that work and the leasing of parts of Unit 24.
Discussion
Purpose and operation of the Act and the Development Act 1993
The now repealed Development Act 1993 had, as its object, the provision of proper, orderly and efficient planning and development in this State.[35] Development as defined in that Act was approved if, and only if, a relevant authority had assessed the development and granted a consent.[36] No development could be undertaken unless it was an approved development.[37] It was an offence to undertake development contrary to the Act.[38] Development included building works as defined and a change in the use of land. A change in use of land was a very well understood concept under the Development Act 1993, essentially a change in the use of land arises where the nature of the new use is not the same as the old.[39]
[35] Development Act 1993, s 3.
[36] Ibid, s 33.
[37] Ibid, s 32.
[38] Ibid, ss 33 and 40.
[39] City of Mitcham v Fusco [2002] SASC 423; (2002) 124 LGERA 196, [27]- [28].
The Act requires every strata title property to have a strata corporation to administer and maintain the common and other property of the corporation and to enforce the articles of the strata corporation.[40] All unit owners as defined are automatically members of the corporation, but tenants are not.[41] Unit owners are also guarantors of the liabilities of the corporation and corporation debts are enforceable against each unit owner directly. The strata corporation can delegate some of its functions to a management committee and may also appoint a strata manager to assist with management.[42] The articles constitute the rules of the strata corporation[43] and the corporation can make rules binding on the corporation, unit owners and tenants regarding the use of common property and the units, provided those rules do not contravene the Act or other laws. While Schedule 3 of the Act sets out model articles for all strata corporations, a strata corporation is also entitled to adopt their own articles or vary its existing articles.[44]
[40] Strata Titles Act 1988, s 25.
[41] Ibid, s 18(4).
[42] Ibid, s 27A, 27B.
[43] Ibid, s 19.
[44] Ibid, ss 19, 20.
Those two Acts address different things. The repealed Development Act 1993, regulated planning and development for the benefit of the community at large and the Act regulates the relationship and dealings between members of a strata corporation. The two acts are not in conflict, and neither are they inconsistent.[45] While they each require separate approval for building work no priority is asserted. In respect of the contention of the respondent, clear words would be required to record that approval under the Development Act 1993, constitutes approval for prescribed works under the Act. There is no textual support for that proposition. Rather, the two Acts sit easily together; all development had to be approved under the Development Act 1993 and development that was approved had to also be authorised by the strata corporation if it was prescribed work.
[45] By contrast, the Strata Titles Act 1988, must be read together and construed as if the Act and the Real Property Act 1886, constitute a single Act, Strata Titles Act 1988, s 4.
Therefore in respect of development, applicants for development had to comply with the Development Act 1993. Therefore in respect of ‘prescribed works’ and dealings with part of a unit, members of a strata corporation must comply with the Act. Given that, there is no need to consider the Development Act 1993, further. This application is concerned with the Act and must be determined having regard to its proper construction and application.
Were the building works ‘prescribed work’?[46]
[46] Strata Titles Act 1988, s 29(6)(a).
‘[P]rescribed work’ in relation to a ‘unit’ means ‘the erection, alteration, demolition or removal of a building or structure’.[47] Having taken a common-sense approach to construction of the Act and by giving those words their ordinary meaning, I find that the work to Unit 24 carried out by the respondent was ‘prescribed work’.[48] I find that the putting up of internal walls is the alteration of a building and the erection of a structure.
Did the respondent require authorisation to carry out those works?[49]
[47] Ibid ss 3, 29.
[48] Ibid, s 3.
[49] Ibid, 29(1)(b).
The Act is clear and capable of easy understanding. The respondent could not carry out prescribed work in relation to Unit 24 unless authorised to do so by special resolution of the strata corporation.[50]
[50] In this case the rules of the strata corporation are those contained in Schedule 3 to the Act, which are silent as to the authorisation of prescribed work.
I further find that no formal special resolution was put to a meeting of the strata corporation. The respondent said that on 25 November 2019, the strata corporation at its annual general meeting passed a special resolution retrospectively authorising the works.[51] She relied on the note in the minutes that ‘the owner of Unit 24 had carried out renovation works in her apartment which transformed the 1 bedroom apartment into 5-7 rooms…[and]…the owner did not obtain approval from the Strata Corporation…prior to the works being carried out…[and that the strata corporation committee] had requested the respondent to provide evidence’ that ‘[r]emedial works had been carried out to make the apartment compliant with the retrospective development approval that had been lodged and approved by the City of Adelaide’.[52]
[51] Affidavit of Lynne Kaye Veness affirmed 9 August 2022, [49].
[52] Ibid.

That note, which the respondent contends is a record of a special resolution, is a record of a discussion at the meeting which post-dates the works. That discussion had no formal status as required for a special resolution and in any event does not record a resolution authorising the prescribed works.[53]
[53] Piazza & Anor v Strata Corporation 10147 Inc & Anor [202] SASCFC 27, [39]- [40], [53]- [70].
Further, the respondent said that in oral and written communication with members of the management committee she told those persons about the work and the leasing and by doing so obtained retrospective authorisation for the works. It is unnecessary to make any finding in that respect because a management committee does not have power for which a special or a unanimous resolution is required by the Act.[54]
Did the respondent require authorisation to lease or licence part of the unit?[55]
[54] Strata Titles Act 1988, ss 27A, 27B, 29, 35(3); HG Royal Park Pty Ltd v Strata Corporation 7176 Inc & Anor [2007] SASC 348. [78].
[55] Ibid, s 44(2)(b)(ii).
I have earlier found that following the conversion of Unit 24 from one bedroom to five or six bedrooms, the respondent entered into leases or licence agreements in respect of individual bedrooms within Unit 24.[56]
[56] Affidavit of Lynne Kaye Veness affirmed 9 August 2022, [50]- [58]; T9. 25- 28.
The Act is also clear and capable of easy understanding on this topic. The respondent cannot grant a lease or licence over part of Unit 24 unless authorised to do so by unanimous resolution of the strata corporation.
As I understand the respondents’ submission, she contended a unanimous resolution by default was agreed approving the works by amendment of the strata plan when she purchased Unit 24 and in accordance with the development approval. As I have already mentioned, the development approval process under the Development Act 1993, was separate to any approval required under the Act. Further, the only mechanism for amendment of the strata plan is that set out in the Act.[57] No amendment was proved and in any event a strata plan divides the land into units and common property;[58] it does not have the purpose of approving prescribed works.
[57] Strata Titles Act 1988, ss 12, 12A and 13.
[58] Ibid s 5.
Finally, it is also unnecessary to make any finding in respect of the effect of asserted oral and written communication with members of the management committee because the management committee does not have power for which a special or a unanimous resolution is required by the Act.[59]
[59] Ibid, ss 27A, 27B, 29, 35(3); HG Royal Park Pty Ltd v Strata Corporation 7176 Inc & Anor [2007] SASC 348, [78].
Findings
I find the respondent breached the Act by failing to obtain authorisation from the strata corporation to carry out prescribed works on the unit[60] and by failing to obtain authorisation to lease or licence part of Unit 24.[61]
[60] Strata Titles Act 1988, s 29.
[61] Affidavit of Lynne Kaye Veness affirmed 9 August 2022, [58].
Orders sought
The applicant seeks orders that:
·the respondent restores Unit 24 to its original state;[62]
·the respondent refrain from leasing or licencing any part of Unit 24; and
·any lease or licence in respect of Unit 24 be declared void.[63]
[62] Strata Titles Act 1988, s 41A(9)(c).
[63] Ibid, s 44(3)(a).
Next Steps
I will hear the parties as to whether any orders or declarations should be made and as to costs on a date to be fixed.