THE OWNERS OF 43 KINSELLA STREET JOONDANNA STRATA PLAN 14493 and SJEPCEVICH

[2014] WASAT 15

JURISDICTION	:	STATE ADMINISTRATIVE TRIBUNAL
STREAM	:	COMMERCIAL & CIVIL
ACT	:	STRATA TITLES ACT 1985 (WA)
CITATION	:	THE OWNERS OF 43 KINSELLA STREET JOONDANNA STRATA PLAN 14493 and SJEPCEVICH [2014] WASAT 15
MEMBER	:	DR B DE VILLIERS (MEMBER)
HEARD	:	24 JANUARY 2013
DELIVERED	:	24 JANUARY 2014
PUBLISHED	:	5 FEBRUARY 2014
FILE NO/S	:	CC 1578 of 2013
BETWEEN	:	THE OWNERS OF 43 KINSELLA STREET JOONDANNA STRATA PLAN 14493 WHITE CITY INVESTMENTS PTY LTD TOMAS MIJATOVIC ERIN NICOLE MIJATOVIC RADMILA MIJATOVIC Applicants
AND
SHARNA SJEPCEVICH ADAM JOHN DIMITROFF OS WAVE PTY LTD T/AS ALL STRATA MANAGEMENT SERVICES Respondents

[2014] WASAT 15

FILE NO/S : CC 1592 of 2013

BETWEEN : ADAM DIMITROFF

SHARNA SJEPCEVICH
DEPARTMENT OF HOUSING
LUCY-ANNE SOSA
ALEKSANDRA MIJATOVIC
JUNE ROGERS
MARK WESLEY

Applicants

AND

THE OWNERS OF 43 KINSELLA STREET
JOONDANNA STRATA PLAN 14493
TOMAS MIJATOVIC
ERIN MIJATOVIC
RADMILA MIJATOVIC
WHITE CITY INVESTMENTS PTY LTD
OS WAVE PTY LTD

Respondents

Catchwords:

Strata title - Appointment of administrator - Factors to take into account

Legislation:

Strata Titles Act 1985 (WA), s 102

Result:

Administrator appointed

Summary of Tribunal's decision:

The management for the strata scheme has for all practical purposes come
to a standstill as a result of internal disputation and conflict between the
proprietors. The proprietors are in agreement that an administrator should be

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appointed for the strata scheme. They disagree, however, as to who the administrator should be and what the terms of reference of the administrator should be.

Two potential names for administrators were put forward, namely Mr Pino Monaco and Mr Peter Munday. The respective sides to the dispute strongly opposed the candidate put forward by the other side.
The Tribunal observed that both persons would be suitable administrators due to their experience and expertise in strata title. The Tribunal rejected the criticism that was levelled against both candidates. The Tribunal said that in order to appoint the most suitable candidate it had to take into account the duties and functions that were expected to be discharged by the administrator. After consideration of the duties and functions and upon reflection of the experiences and cost structure of the two candidates, the Tribunal appointed Mr Peter Munday as the administrator. Mr Munday was appointed for a set period. The Tribunal rejected the proposal that the Tribunal should retain a role of oversight of the administrator. The Tribunal said that the orders to appoint the administrator were final orders, and if any proprietor or the administrator sought further orders, a fresh application could be lodged.

These are the Tribunal's published written reasons based on the transcript

of oral reasons.

Category: B

Representation:

CC 1578 of 2013

Counsel:

Applicants	:	Mr Tomas Mijatovic (In Person)
Respondents	:	Ms S Sjepcevich and Mr A Dimitroff (In Person)

Solicitors:

Applicants	:	N/A
Respondents	:	N/A

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CC 1592 of 2013

Counsel:

Applicants : Mr A Dimitroff, Ms S Sjepcevich and

Mr A Mijatovic (In Person)

Respondents : Mr T Mijatovic (In Person)

Solicitors:

Applicants	:	N/A
Respondents	:	N/A

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

Hockey & Anor and Owners of Mount Bakewell Resort Strata Plan 18228

[2013] WASAT 64

Huning and Owners of Glengary 240 Mill Point Road, South Perth Strata Plan

2684 [2010] WASAT 40

Parker and The Owners of Timberside Villas - Strata Plan 27426

(2006) 44 SR (WA) 282; [2006] WASAT 254

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REASONS FOR DECISION OF THE TRIBUNAL:

Background

1              The proprietors in this strata scheme are embroiled in an ongoing

conflict that has brought all management processes to a halt. The disputes are varied, and include allegations of unauthorised expenditure, improperly constituted meetings, voting irregularities, lack of transparency, inadequate record keeping of expenditure, unauthorised entering into contracts with third parties, and several other alleged breaches of the Strata Titles Act 1985 (WA) (ST Act).

2              The proprietors are all in agreement that the current situation is

untenable and that the only way out is the appointment of an administrator pursuant to s 102 of the ST Act. The proprietors only differ as to who the administrator should be and the period of appointment. In other cases where an application is brought pursuant to s 102 of the ST Act, the dispute is usually whether an administrator should be appointed.

3              In this case, it is agreed by the parties, and accepted by the Tribunal,

that an administrator should be appointed. It is clear from the evidence before the Tribunal that the strata company is not able to discharge its duties pursuant to the ST Act, that the scheme has become dysfunctional, and that the requirements of s 102(1) for the appointment of an administrator are met.

4              At a directions hearing that took place on 5 December 2013, the

Tribunal made orders for the parties to make further submissions as to the identity of a preferred administrator, the terms of reference and matters incidental thereto. Both sides made detailed submissions, filed statements of evidence, and participated fully during the hearing to promote their point of view.

The issues

1. The issues to be determined by the Tribunal can be summarised as

   follows:

   1)        Who should be the appointed administrator?

   2)       What should be the terms of reference of the administrator?

   3)        What should be the terms of appointment of the administrator?

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4)        What should be the term of appointment?

Statutory framework

6              The statutory framework within which the application is determined

is s 102 of the ST Act which deals with orders appointing an
administrator. Section 102 provides as follows:

Order appointing administrator

(1)

Where -

(a)	in consequence of the making of an order under this Part a duty is imposed on a strata company; or
(b)	a duty is otherwise imposed by this Act or the by-laws on a strata company; or
(c)	a duty is imposed by this Act or the by-laws on the chairman, secretary or treasurer of a strata company or on the council of a strata company; or
(d)	a judgment debt is owed by a strata company,

the State Administrative Tribunal may -

(e)	in the case referred to in paragraph (a), on the application of the person who obtained the order so referred to; or
(f)	in a case referred to in paragraph (b) or (c), on the application of a person having an estate or interest in a lot the subject of the scheme concerned; or
(g)	in the case referred to in paragraph (d), on the application of the judgment creditor,

by order appoint an administrator (being a person who has consented in writing to the appointment) to perform that duty and any other duty specified in the order or to pay that judgment debt, as the case may require.

(2)

If it appoints an administrator under subsection (1), the State Administrative Tribunal may also order that the administrator shall have and may exercise and perform -

(a) all of the powers, authorities, duties and functions of the strata company for the parcel to which the order relates or of the chairman, secretary or treasurer of that strata company or the council of that strata company; or

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(b)	any one or more of those powers, authorities, duties or functions as specified in the order; or
(c)	all of those powers, authorities, duties and functions except those specified in the order.

(3)

An order made under this section may be revoked or varied by the State Administrative Tribunal upon the application of the administrator or a person entitled to apply for an order of the kind sought to be revoked or varied.

(4)

Where the State Administrative Tribunal makes an order under
subsection (1) -

(a)	no person other than the administrator appointed by the order may, while that administrator holds office, exercise or perform any power, authority, duty or function which the administrator is authorised to exercise or perform by that order or an order under subsection (2); and
(b)	any act or thing done or suffered by that administrator in the exercise or performance of such a power, authority, duty or function has the same effect as it would have had if the order had not been made and it had been done or suffered by the person or body who, but for the order, would have been entitled or required to exercise or perform the power, authority, duty or function.

(5)

The appointment of an administrator under this section may be made upon such terms and conditions (including terms and conditions as to remuneration by the strata company and the duration of the appointment) as are specified in the order making the appointment.

(6)

An administrator appointed under subsection (1) who exercises or performs a power, authority, duty or function pursuant to an order under subsection (1) shall, forthwith after its exercise or performance -

(a)	make a written record specifying the power, authority, duty or function and the manner of its exercise or performance; and
(b)	serve the record on the strata company for the scheme to which the order relates.

Proposed names of administrators

1. During the course of the proceeding, four names of potential administrators were raised, namely:

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• Mr Peter Munday;

• Mr Pino Monaco;

• Mr Mark Atkinson; and

• Mr Darrell Crouch.

8              Prior to the hearing, Mr Atkinson withdrew his name from the list of

potential candidates, and the proponents of Mr Crouch withdrew his name. The Tribunal is therefore presented with two proposed administrators: Mr Peter Munday and Mr Pino Monaco.

Submissions regarding the candidates for administrator

9              Both sides of the dispute put forward strong arguments as to why

their preferred candidate for administrator should be appointed. Those arguments are contained in the submissions, but they can be summarised as follows.

1. In favour of Mr Munday, the following was said:

• that he has extensive experience in strata title affairs, both managerial and legal, although he is not a lawyer;

• he has high credibility in the strata title industry; his charge-out rate is most effective in comparison to the tasks that are required;

• he has a basic understanding of the nature of this dispute;

• he has the ability to obtain expert advice where necessary; and

• he is familiar with disputes that arise in strata title proceedings in general.

1. In favour of Mr Monaco, the following was said:

• he is a legal practitioner and thereby subject to oversight by a professional board;

• he has extensive experience in legal aspects of strata title, as well as being a member of strata councils;

• he has high credibility in the strata title industry;

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• the nature of the dispute requires a legally qualified person as the administrator;

• he has no knowledge of the dispute, and thus comes with a clear mind; and

• he has the ability to source expertise if necessary.

12            Both sides of the dispute also put forward strong arguments as to

why the other side's candidate should not be appointed to the role of administrator. Those arguments are contained in the submissions but can be summarised as follows.

1. The following is a summary of the concerns about the appointment of Mr Monaco:

• he does not have sufficient hands-on experience with strata management on a daily basis;

• most of the work of the administrator would not require legal expertise, and therefore the cost-benefit ratio runs against Mr Monaco;

• there may be a possible conflict of interest due to Mr Monaco sharing the building in chambers with Mr Thomas at some stage; and

• an unwillingness on the part of Mr Monaco to read documents prior to the hearing to familiarise himself with the issues.

1. The following is a summary of the concerns raised about the appointment of Mr Munday:

• he does not have legal expertise for disputes as complicated as those in this proceeding;

• he may be disqualified because of a possible conflict, since he attended and chaired the general meeting on 18 December 2013, when he allowed voting to occur;

• he voted pursuant to proxies held by him;

• he got himself involved in the merits of the dispute; and, finally,

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• the reason for this proceeding is primarily as a result of Mr Munday's role at the general meeting of 18 December 2013, and therefore he should be disqualified.

The Tribunal's consideration

15            The Tribunal accepts that the person appointed to be the

administrator should, as far as possible, meet the requirements as set out in the matters of Huning and Owners of Glengary 240 Mill Point Road, South Perth Strata Plan 2684 [2010] WASAT 40; Parker and The Owners of Timberside Villas - Strata Plan 27426 (2006) 44 SR (WA) 282; [2006] WASAT 254; and Hockey & Anor and Owners of Mount Bakewell Resort Strata Plan 18228 [2013] WASAT 64 (Hockey), namely, that an administrator must be a person who is suitable, qualified, a specialist in the strata title field, and independent to the dispute. Both candidates proposed as administrators are of high quality. They come with impeccable credentials, and they are well-known in the strata title industry, including to the Tribunal. The strata scheme would be well served by either of these candidates. In fact, it is foreseeable that, whichever candidate is appointed, he may at some stage wish to seek advice and assistance from the other candidate.

16            The Tribunal notes the objections expressed by the two sides against

the candidate of the other side. None of those objections hold water. The objections were often exaggerated and poorly motivated. The objections were generally reflective of the inability of the parties to agree on anything, rather than a true concern with a specific candidate.

1. The Tribunal cannot, on the basis of those objections, rule out either of the two candidates. The Tribunal states this for the following reasons:

   1)        The concerns raised about the purported conflicts of interest of both candidates are not accepted. Mr Monaco and Mr Tomas Mijatovic may have practised from the same building, but other than sharing a street address there is no evidence to suggest any close association that would constitute a conflict. Mr Munday attended the general meeting on 18 December 2013, but he did so at the invitation of a majority of owners. He was requested to chair the meeting as a neutral person so as to prevent a repeat of previous conflict, and he voted in accordance with the instruction given to him by proxy. He has had

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no other involvement in the outcomes of the meeting, the facts surrounding the dispute, or giving advice to owners.

2)        As far as expertise is concerned, both candidates have strengths and weaknesses. There is no requirement for a lawyer to be appointed as administrator. In Hockey, only one professional candidate was put forward; namely, Mr Atkinson. That should not be read - as it appears Mr Tomas Mijatovic wanted to suggest - that preference should be given to a lawyer. The nature of this dispute requires managerial and legal expertise, and both candidates have those, albeit to varying degrees.

3)        The costs considerations are relevant but, at the same time, the Tribunal must be satisfied that the person who is appointed is best suited for the job, even if it means appointing Mr Monaco, who has a higher charge-out rate. It is noted that the proponents of Mr Munday also proposed Mr Atkinson, a lawyer. Their concern with the cost structure of Mr Monaco should therefore be given little weight in light of their own preference for Mr Atkinson to be appointed, who would also work in accordance with a similar cost structure as Mr Monaco.

18            In short, there is no obvious reason why either of the candidates

should be disqualified. The Tribunal will, in choosing a candidate, consider the main functions that are expected of the administrator and then determine, with those functions in mind, who is the most appropriately suited person.

19            In light of the documents before the Tribunal, it would appear that

the following are the main functions to be discharged by the
administrator:

• general administration of the scheme;

• securing the services of a strata manager for the period after the lapse of the administrator's appointment;

• obtaining records of expenditure and the auditing of books;

• consideration of legal proceedings, including the validity of contracts and resolutions; and

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• management decisions for the short, medium and long-term.

20            With those functions in mind, and with due consideration of the

expertise of Mr Monaco and Mr Munday, I have come to the conclusion that Mr Munday is most suited to be appointed as the administrator. The reasons for this conclusion are:

1)        Mr Munday has extensive practical experience in strata management. A substantial part of the duties of the administrator will be consistent with the day-to-day workings of a strata manager. There is no need for a lawyer to discharge those tasks.

2)        Finding a suitable strata manager for the scheme will require some groundwork, and this also falls within the expertise of Mr Munday. There is no need for a person with legal experience to recruit a strata manager.

3)        A substantial task of the administrator would be to collate and investigate all expenses that were incurred for the scheme. This is a typical function of strata managers, and if there is a person who refuses to hand over documents, Mr Munday can either seek legal advice or he can appear in person in the Tribunal.

4)        Mr Munday may not be admitted as a legal practitioner, but his knowledge of the ST Act is extensive. If a question arises that falls outside of his expertise, he can seek legal advice, or he can submit an application to the Tribunal to rule on a matter.

5)        The cost benefit of the services offered by Mr Munday far outweighs the cost benefit offered by Mr Monaco. The task for the administrator does not justify the appointment of a lawyer with a cost structure such as those tendered by Mr Monaco. It would, in simple terms, be overkill to appoint Mr Monaco for the tasks to be done.

6)        Special mention needs to be made of the allegation by Mr Tomas Mijatovic of the purported conflict of interest of Mr Munday. The Tribunal rejects those contentions for the following reasons:

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a)	Mr Mijatovic spoke in hyperbolical terms of the purported conflict, but offered no evidence to substantiate his claims. In fact, his reference to the statement of evidence of Ms Alexandra Mijatovic in paragraph 15(4) as proof that Mr Munday appointed Mr Crouch turned out to be plainly wrong, and even misleading. The opposite was the case. Mr Munday was invited by Mr Crouch to attend the annual general meeting as a neutral chairperson. Mr Munday did not appoint Mr Crouch. The Tribunal rejects the allegation of Mr Mijatovic.
b)	The attendance of Mr Munday at the general meeting in the capacity as an expert, neutral chairman is not extraordinary. Strata schemes, especially those with internal conflict, often invite an independent expert to chair a general meeting. There is no evidence before the Tribunal that Mr Munday gave any advice prior to the meeting, that he convened the meeting, or that he played an active role in regard to the dispute following the meeting. The Tribunal rejects the contention of Mr Mijatovic that the attendance of Mr Munday was the cause of the current conflict. The evidence is that the strata scheme has been embroiled in conflict for some time, and to suggest Mr Munday's presence at the general meeting caused it is again hyperbolic and unsupported by fact.
c)	The mere fact that Mr Munday is aware of aspects of the dispute does not equate to a conflict of interest. Mr Monaco was, after all, also briefed by Mr Mijatovic about the nature of the dispute prior to Mr Monaco putting in a proposal to be appointed as administrator. The administrator has a duty to all owners, and owners have recourse to the Tribunal if an administrator does not discharge his duties in accordance with the ST Act. The rights of all owners are therefore protected, and the ST Act offers checks and balances to ensure

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that the administrator properly discharges his

obligations.

d) Mr Mijatovic also said repeatedly that Mr Munday was to be called as a witness to proceedings in another court, but Mr Mijatovic, when questioned by the Tribunal, conceded that no legal proceedings had been commenced and that Mr Munday has not been summoned to give evidence, again raising the concern that Mr Mijatovic was speaking in exaggerated and hyperbolical terms without facts to support what he said.

1. In summary, the Tribunal finds that the person best suited to be appointed as administrator is Mr Munday.

22            As far as the remainder of the questions is concerned, the parties are

in agreement - namely, that the administrator should be given plenary powers as provided for in s 102(2)(a) of the ST Act. This would enable the administrator to discharge all functions and duties of the strata company, including the auditing of accounts.

23            If there is any person or entity that refuses to hand to the

administrator documents or material of relevance to its duties, the administrator can apply to the Tribunal for orders to be made. The Tribunal is of the view that the powers pursuant to s 102(2)(a) of the ST Act are wide enough for the administrator to discharge his functions, and there is no need to clothe him with any other specific powers; for example, to obtain records, as was suggested by the parties.

24            The same applies in regard to the administrator's power regarding

possible legal proceedings. Section 102(2)(a) of the ST Act encompasses the right of the administrator to commence legal proceedings on behalf of the strata company.

25            There is no need for a specific order to be made about the

administrator reporting to the Tribunal, or the Tribunal retaining a form of oversight over the administrator. The Tribunal raised with the parties the question of the term for which the administrator should be appointed. Both parties indicated that they would prefer the Tribunal to have a watching and oversight role in order for the administrator to report back to the Tribunal. The Tribunal does not accept those requests. The order to appoint the administrator will be a final order. If, for whatever reason the

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administrator or an owner is of the view that new orders should be made or that existing orders should be varied, a fresh application can be lodged. The administrator will be appointed up to 1 August 2014. The remuneration of Mr Munday would be in accordance with the proposal he submitted.

1. In answer to the questions I raised at the beginning of the hearing, I give the following answers:

   1)        Who should be appointed as administrator? Mr Peter Munday.

2) administrator?

What should be the terms of reference of the s 102(2)(a) of the ST Act.

3) administrator?

What should be the terms of appointment of the per the proposal by Mr Munday dated 2 January 2014.

4)

What should be the term of appointment? 1 August 2014.

Orders

1. The orders of the Tribunal are as follows:

1.	Mr Peter Munday is appointed pursuant to s 102 of the Strata Titles Act 1985 (WA) as the statutory administrator administrating these orders of The Owners of Kinsella Street Joondanna Strata Plan 14493.
2.	The term of appointment of the administrator shall expire on 1 August 2014.
3.	The remuneration payable to the administrator shall be in accordance with Annexure B of the statement by Mr Munday dated 2 January 2014, a copy of which is attached to these orders.
4.	The administrator shall have, and may exercise and perform, all of the powers, authorities, duties and

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functions of the strata company, or of the chairman, secretary or treasurer of the strata company or the council of the strata company.

5.        The strata company, and all registered proprietors in the strata company, shall indemnify the administrator against all claims, actions, suits, causes of actions, debts, costs demands, losses, damages, judgments or other liabilities of any nature whatsoever incurred at any time by the administrator arising directly or indirectly from the performance or provision of services by the administrator pursuant to these orders.

I certify that this and the preceding [27] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

___________________________________

DR B DE VILLIERS, MEMBER

[2014] WASAT 15