The Owners of 5 & 7 Upton Place, Langford Strata Plan 38498 v Swift
[2024] WADC 35
•29 MAY 2024
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: THE OWNERS OF 5 & 7 UPTON PLACE, LANGFORD STRATA PLAN 38498 -v- SWIFT [2024] WADC 35
CORAM: EGAN DCJ
HEARD: 4 & 5 AUGUST 2022, 31 AUGUST & 1 SEPTEMBER 2023
DELIVERED : 29 MAY 2024
FILE NO/S: CIV 878 of 2021
BETWEEN: THE OWNERS OF 5 & 7 UPTON PLACE, LANGFORD STRATA PLAN 38498
Plaintiff
AND
REBECCA GAYE SWIFT
Defendant
Catchwords:
Strata Titles Act 1985 (WA) - Strata Titles disputes - Jurisdiction of the District Court of Western Australia - Strata Titles - By-laws - Whether invalid - Whether oppressive or unreasonable - Recoverability of claimed amounts
Legislation:
Civil Judgments Enforcement Act 2004 (WA)
District Court of Western Australia Act 1969 (WA)
Strata Scheme Management Act 2015 (NSW)
Strata Titles Act 1985 (WA)
Strata Titles Amendment Act 2018 (WA)
Strata Titles General Regulations 1996 (WA)
Supreme Court Act 1935 (WA)
Result:
Judgment for the plaintiff
Representation:
Counsel:
| Plaintiff | : | Mr C S Gough |
| Defendant | : | Mr P R Monaco |
Solicitors:
| Plaintiff | : | McComish Legal |
| Defendant | : | GV Lawyers |
Case(s) referred to in decision(s):
Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 [2021] FCAFC 121; (2021) 287 FCR 388; (2021) 396 ALR 27
Barwan Holdings Pty Ltd v Peter Robert Dyson as trustee for the Dyson Property Trust (Unreported, WADC, Library No 4884, 30 April 1996)
Byrne v The Owners of Ceresa River Apartments Strata Plan 55597 [2016] WASC 153
Byrne v The Owners of Ceresa River Apartments Strata Plan 55597 [2017] WASCA 104
Civic Video Pty Ltd v Paterson [No 3] [2014] WASC 321
Cooper v The Owners - Strata Plan 58068 [2020] NSWCA 250
Coscuez International Pty Ltd v The Owners - Strata Plan No 46433; The Owners - Strata Plan No 46433 v Coscuez International Pty Ltd [2022] NSWCATCD 201
D'Alessandro v Legal Practitioners Complaints Committee (1995) 15 WAR 198
Evans v The Atrium, The Owners of Strata Plan 11104 [2022] WADC 120
Gray v Sirtex Medical Ltd formerly known as Paragon Medical Ltd [2009] WASC 126
Hooper and the Owners of the Pines at Ellenbrook SP 37402 [2007] WASAT 145
O'Halloran v Legal Profession Complaints Committee [2013] WASCA 59
Perkins Investments (WA) Pty Ltd ATF The Perkins Investment Trust and Austpro Management Services Group Pty Ltd [2021] WASAT 71
Province Leader of the Oceania Province of the Congregation of the Christian Brothers v Lawrence [2021] WASCA 77
The Owners of 5 & 7 Upton Place Langford Strata Plan 38498 and Swift [2020] WASAT 165
The Owners of Mount Bakewell Resort, Strata Plan 18228 v York‑Mt Bakewell Caravan Park Pty Ltd [No2] [2021] WADC 3
Thomson v STX Pan Ocean Co Ltd [2012] FCAFC 15
Westpac Banking Corp v The Bell Group Ltd (in liq) [2009] WASCA 166
Wybenga and The Owners of Chandler Court Strata Plan 19347 [2020] WASAT 102
EGAN DCJ:
Introduction
In broad terms this matter concerns the ability of the plaintiff, a strata company, to recover a debt from a strata lot owner, the defendant, in reliance on a particular by-law, by-law 16, of a survey-strata scheme (and throughout this decision I will refer to that by-law as 'By-law 16'). The ability of the plaintiff to rely on By‑law 16 is disputed by the defendant, who argues that it is invalid on a number of bases.
The debt which the plaintiff is seeking to recover is, in the scheme of things, significant, and has arisen in the context of a dispute between the parties concerning a gum tree (a Corymbia citridora, or lemon scented gum tree) which was located on the strata lot of the defendant - that lot being Lot 1 on Strata Plan 38498.
The dispute concerning the gum tree had a history of its own and, amongst other things, involved the plaintiff commencing proceedings CC1608/2019 in the State Administrative Tribunal (the Tribunal) on 18 October 2019 (Tribunal proceedings).
By the Tribunal proceedings, the plaintiff (as applicant) sought orders for the removal of the gum tree from the defendant's strata lot. It is not necessary to traverse the detail of the Tribunal proceedings other than to observe that:
(a)the plaintiff (as applicant in those proceedings) sought the orders from the Tribunal on the basis that the gum tree was causing, or had the potential to cause, damage to common property of the strata company in the form of dislodgment to the main driveway, surrounding curbing and pavement, and also that the gum tree was a hazard, or was likely to cause a nuisance, to other strata lots and/or occupiers of those lots. In addition, the plaintiff (as applicant) argued that the defendant (as respondent in those proceedings) was in breach of various strata company by-laws passed by the plaintiff relating to: the use and enjoyment of common property (Schedule 1, by-law 1(2)(a)); nuisance (Schedule 1, by-law 1(2)(b)); and obstruction of common property (Schedule 2, by‑law 2); and
(b)the defendant (again, as respondent) defended the Tribunal proceedings and opposed the orders being granted, arguing, amongst other things, that there was no justification for the gum tree to be removed, and in particular, that the removal of the gum tree was not required in order to repair existing damage to common property, or to prevent future potential damage. The defendant (as respondent) also argued that she was not in breach of any of the existing by-laws, including, necessarily, the ones referred to at [4(a)].
On 31 December 2020, and following a contested two-day hearing in October of that year, the Tribunal concluded, amongst other things, that there had been a breach of the by-laws by the defendant (as respondent). Relevantly, the Tribunal stated as follows:[1]
… taking into consideration the interests of the parties, equity and consideration of the evidence … concerning the dispute as well as the nature of [the plaintiff (as applicant)] breach of the by-laws … the relief sought by [the plaintiff (as applicant)] corresponds with and responds to the grounds proved by the strata company. The efficacy of the relief, being the removal of the tree (including roots and stump) will avoid further damage from the tree to the common property and neighbouring lots as well as enabling [the plaintiff as applicant] to manage the common property for the benefit of all lot proprietors consistent with the strata company's duties and obligations under the [Strata Titles Act 1985 (WA)].
[1] The Owners of 5 & 7 Upton Place Langford Strata Plan 38498 and Swift [2020] WASAT 165 [122].
As a result, the Tribunal ordered that by 5 February 2021, the defendant (as respondent):[2]
(a)do all things necessary to remove the [gum tree] including the roots and stump located at the south-western corner of [Lot 1]; and
(b)the tree removal work set out in (a) above shall be carried out by contractor(s) with suitable insurance. The work shall take place at reasonable times and on reasonable prior notice to [the plaintiff].
[2] The Owners of 5 & 7 Upton Place Langford Strata Plan 38498 and Swift.
The Tribunal further ordered that if the defendant (as respondent) failed to comply with the orders set out above, then the plaintiff (as applicant):[3]
… may enter [the defendant's] Lot 1 to do all things necessary to remove the tree, including inspecting and carrying out all necessary works to remove the tree (including the roots and stumps).
[3] The Owners of 5 & 7 Upton Place Langford Strata Plan 38498 and Swift.
The Tribunal also ordered that:[4]
[The plaintiff (as respondent)] shall bear the costs of the works contemplated by [the orders].
[4] The Owners of 5 & 7 Upton Place Langford Strata Plan 38498 and Swift.
Notably, and notwithstanding its success in the Tribunal proceedings, the plaintiff (as applicant) did not seek an order from the Tribunal for its legal costs and associated expenses. As the Tribunal explained:[5]
At the outset, [the plaintiff (as applicant)] made it clear that in these proceedings, it was not seeking an order from the Tribunal requiring [the defendant] to pay its legal costs and associated expenses or any order in regards to [By-law 16] (Debt recovery). Rather, it was explained at hearing that there are separate proceedings on foot concerning those matters.
[5] The Owners of 5 & 7 Upton Place Langford Strata Plan 38498 and Swift [6].
Those 'separate proceedings' as referred to by the Tribunal are the current proceedings.
The jurisdictional issue
Before turning to consider the current proceedings and the issues raised therein, I must first deal with a jurisdictional issue.
During the course of the trial a jurisdictional issue was raised by the court which had the potential to impact on the defendant's ability to argue before this court, by way of defence, that By‑law 16 is invalid.
That issue arose because of particular provisions set out and contained within both Part 13 and Schedule 5 of the Strata Titles Act 1985 (WA) (ST Act). The provisions within Part 13 are as follows:
197.Scheme disputes
(1)This Part provides for resolution by the Tribunal of the following disputes (scheme disputes) -
(a)a dispute between scheme participants about -
(i)the scheme documents, including the validity of scheme by‑laws; or
…
(iv)a resolution or decision of a strata company or the council of a strata company, including its validity; or
…
(2)The following are scheme participants -
(a)the strata company for the strata titles scheme;
…
(d)a member of the strata company for the strata titles scheme;
(e)the occupier of a lot in the strata titles scheme;
(f)the registered mortgagee of a lot in the strata titles scheme;
…
(emphasis added)
199.Declarations
(1)In a proceeding under this Act, the Tribunal may make a declaration concerning a matter in the proceeding instead of any order the Tribunal could make, or in addition to any order the Tribunal makes, in the proceeding.
(2)The Tribunal's power to make a declaration is exercisable only by a legally qualified member (or by the Tribunal constituted of a legally qualified member and other members).
(3)Without limitation, a declaration may be made that -
…
(c)a specified scheme by‑law is or is not invalid; or
(d)a specified decision or resolution of a strata company is or is not invalid; or
…
200.Orders
(1)In a proceeding under this Act, the Tribunal may make any order it considers appropriate to resolve the dispute or proceeding.
(2)Without limitation, the orders that may be made by the Tribunal on an application under this Act include the following -
(a)an order requiring a scheme document to be amended in a specified manner (including in a manner that effects a subdivision);
…
(n)an order that the strata company is to be taken to have passed or not to have passed a specified resolution required under this Act or the scheme by‑laws as an ordinary resolution, special resolution, resolution without dissent or unanimous resolution;
…
(6)An order requiring amendment of a scheme document -
(a)must specify the extent to which the amendment is subject to the obtaining of the approvals and consents that would otherwise be required under this Act; and
(b)does not take effect until the Registrar of Titles registers the amendment of the scheme document.
Besides the above provisions in Part 13 of the ST Act, Schedule 5 clause 30 provides as follows:
30.Proceedings
(1)A proceeding in the District Court or Tribunal under this Act commenced before commencement day must be dealt with as if the amending Act had not been enacted.
(2)A proceeding under this Act that could have been, before commencement day, commenced in the District Court must instead be commenced in the Tribunal and the Tribunal has jurisdiction to hear and determine the matter.
(again, emphasis added)
The above provisions were introduced into the ST Act by the Strata Titles Amendment Bill 2018 (WA) (Amendment Bill), the Explanatory Memorandum for which states, amongst other things, as follows:
8.Fast and efficient resolution of strata disputes
The State Administrative Tribunal will become the one‑stop‑shop for strata disputes and will be given sufficient powers to resolve those disputes quickly, cheaply and effectively.
Background
The Tribunal's jurisdiction to resolve strata disputes is limited by the current Act. For example, the Tribunal cannot resolve disputes between a strata manager and a strata company. The Tribunal is also limited to making a monetary order in a strata dispute of no more than $1000 under the current Act.
The result is that strata disputes are heard in four different forums - the Magistrate's Court, District Court, Supreme Court and the State Administrative Tribunal.
Expanding the Tribunal's jurisdiction to resolve strata disputes
The Tribunal will be given the jurisdiction to resolve strata disputes arising from the performance or failure to perform a function conferred or imposed on a person under the amending Act. Examples of the expansion of jurisdiction include that the Tribunal will be able to make orders to resolve disputes:
a.between the strata manager and the strata company
b.arising from the seller's obligation to provide a buyer information before and after the contract for the sale of a lot in a scheme
c.about the validity of a resolution of the strata company and
d.about the validity of a by-law.
Increasing the Tribunal's powers to quickly and effectively resolve strata disputes
The Tribunal's powers will be increased to resolve strata disputes quickly and effectively. Examples of the increased Tribunal powers include:
a.The $1000 limit on the Tribunal making monetary orders will be removed
b.The Tribunal will be given the power to make a summary decision at a directions hearing
c.People who have standing will be able to apply directly to the Tribunal to resolve a dispute without having to go through other more expensive dispute resolution processes
d.The Tribunal will have the power to order the strata company to terminate or vary a contract for the provision of a service or amenity to the strata company or owners
e.where a person (scheme developer or strata manager) has a duty under the amending Act to disclose to the strata company commission they have received and that duty is breached, the Tribunal can order that person to pay the commission to the strata company.
Enforcing Tribunal orders will be made easier
Enforcing a non-monetary order (an order to do or not do something) given by the Tribunal is difficult. It requires the Tribunal order and other documents to be filed with the Supreme Court. Enforcing monetary orders of the Tribunal is relatively straight forward and can be done by filing the Tribunal order with a Court.
The amending Bill will give the Tribunal the power to convert a non-monetary order to a monetary order. If a person is ordered by the Tribunal to do something and they do not comply, the Tribunal will be able to order that person to pay money to the other person equal to what it would cost to carry out the non‑monetary order.
(again, emphasis added)
In addition, during the course of the Second Reading Speech of the Amendment Bill, the then Minister for Lands, stated, amongst other things:[6]
… Strata disputes will be resolved more quickly, cheapy and effectively through a single specialist forum. The State Administrative Tribunal will become the one‑stop‑shop for strata disputes and will be empowered to resolve disputes quickly, cheaply and effectively. …
[6] Saffioti R (Minister for Lands), 'Extract from Hansard', 28 June 2018.
In light of the provisions set out at [13], and against the backdrop of that which is set out at [14] - [15], this court queried whether the Tribunal had exclusive jurisdiction to determine the invalidity of a by‑law such as By‑law 16. In the event that the Tribunal had exclusive jurisdiction, then the defendant would, in effect, be required to seek a stay of the current proceedings in order to seek a declaration from the Tribunal under s 199(3)(c) of the ST Act as to the invalidity of the by‑law.
Before dealing with the parties' submissions on this issue, it is convenient to observe that the Annual General Meeting (AGM) of the plaintiff at which By‑law 16 was considered (and about which there was much focus in the current proceedings) took place on 20 November 2018; that is to say, that the AGM occurred prior to the amendments to the ST Act under the Strata Titles Amendment Act 2018 (WA) (ST Amendment Act) coming into operation on 1 May 2020. Consequently, at the time of the AGM, the provisions of the ST Act as they were immediately prior to the ST Amendment Act were applicable.
As a consequence, in this matter it is necessary to consider relevant provisions of the ST Act prior to the ST Amendment Act, as well as provisions under the ST Act. In the circumstances, I will refer to the ST Act prior to the ST Amendment Act, as the 'Old ST Act'.
I turn then to the parties' submissions on the jurisdictional issue.
The plaintiff submitted[7] that the court did not have jurisdiction to decide matters regarding the validity of By‑law 16 as advanced by the defendant, but that it did have jurisdiction to deal with the plaintiff's claim for recovery of a debt relying on By-law 16. In support of this submission the plaintiff relied upon s 99 and s 97 of the Old ST Act, together with the decision of Herron DCJ in The Owners of Mount Bakewell Resort, Strata Plan 18228 v York‑Mt Bakewell Caravan Park Pty Ltd [No2].[8] Section 99 and s 97 of the Old ST Act provide as follows:
[7] Plaintiff's submissions on s 97 STA dated 12 August 2022.
[8] The Owners of Mount Bakewell Resort, Strata Plan 18228 v York‑Mt Bakewell Caravan Park Pty Ltd [No2] [2021] WADC 3 (Mount Bakewell Resort).
97.Power of SAT to invalidate a resolution or election
(1)Where, pursuant to an application by a proprietor or first mortgagee of a lot for an order under this section, the State Administration Tribunal considers that the provisions of this Act have not been complied with in relation to a meeting of the strata company, the State Administrative Tribunal may, by order -
(a)invalidate any resolution of, or election held by, the persons present at the meeting; or
(b)refuse to invalidate any such resolution or election.
(2)The State Administrative Tribunal shall not make an order under subsection (1) refusing to invalidate a resolution or election unless it considers -
(a)that the failure to comply with the provisions of this Act did not prejudicially affect any person; and
(b)that compliance with the provisions of this Act would not have resulted in a failure to pass the resolution, or have affected to result of the election, as the case may be.
…
99.Order for variation or manner of payment of contributions
(1)Where, pursuant to an application by a proprietor or by a mortgagee in possession (whether by himself or another person) for an order under this section, the State Administrative Tribunal considers that any amount of contributions levied under section 36 is inadequate or excessive, or that the manner of payment of contributions is unreasonable, the State Administrative Tribunal may -
(a)order variation of the amount; or
(b)order payment of contributions in a different manner; or
(c)make orders under paragraphs (a) and (b).
(2)Where an order under subsection (1) takes effect in relation to a contribution levied by a strata company that has been wholly or partly paid in respect of a lot, the strata company shall -
(a)where the contribution required to be paid in respect of the lot pursuant to the order is greater than the amount already paid in respect of the lot - be deemed to have determined to make a levy under section 36 of an amount equal to the difference between the amount already paid in respect of the lot and the amount of the contribution required to be paid in respect of the lot pursuant to the order; or
(b)where the contribution required to be paid in respect of the lot pursuant to the order is less than the amount already paid in respect of the lot - refund to the proprietor by whom, or on whose behalf, the payment had already been made an amount equal to the difference between the amount already paid in respect of the lot and the amount of the contribution required to be paid in respect of the lot pursuant to the order.
In Mount Bakewell Resort, his Honour considered an appeal from a decision by the learned registrar to grant summary judgment in favour of the plaintiff in that case. The appeal was by way of a new hearing,[9] and by the proceedings, the plaintiff was seeking to recover a sum of money from the defendant for outstanding levies. In the appeal, the defendant filed written submissions alleging both error in law and in fact on the part of the learned registrar.[10] At the hearing of the appeal, counsel for the defendant raised a new matter not covered by the written submissions, and that matter concerned the validity of the contributions levied by the plaintiff on the basis that there had been a failure to comply with particular provisions of the Old ST Act.[11] His Honour found that the defendant's submissions on that issue were misconceived[12] and determined, amongst other things, that s 36(4)(c) of the Old ST Act enabled a strata company to recover any contribution levied as a debt due.[13] His Honour turned to consider the way in which disputes regarding strata levies are dealt with and resolved, and in doing so set out s 99 of the Old ST Act dealing with orders by the Tribunal concerning, amongst other things, contributions levied under s 36 of the Old ST Act, and the unreasonableness of the manner of payment of contributions.
[9] Mount Bakewell Resort [4].
[10] Mount Bakewell Resort [6].
[11] Mount Bakewell Resort [8].
[12] Mount Bakewell Resort [29].
[13] Mount Bakewell Resort [31].
Relevantly, his Honour then stated as follows:
37Therefore, by s 99 [of the Old ST Act], if a proprietor disputes the strata levies charged by a strata company under s 36 it must commence proceedings in the State Administrative Tribunal which has the power to order a variation of the amounts charged or order payment of the contributions in a different manner.
38The District Court has no jurisdiction to determine disputes over strata levies. The jurisdiction to determine such disputes is exclusively with the State Administrative Tribunal.
In the current proceedings the plaintiff submits, in effect, that although Herron DCJ was referring to s 99 of the Old ST Act, the same reasoning employed by his Honour would be applicable when considering s 97 of the Old ST Act, the only difference being that s 99 of the Old ST Act dealt with strata levies, whilst s 97 of the Old ST Act dealt with the validity of resolutions.
The defendant submitted, first and foremost, that there is no equivalent provision to s 97 of the Old ST Act within the ST Act,[14] and that in any event the ST Act does not grant exclusive jurisdiction to the Tribunal to determine the validity of by-laws. In support of this latter proposition the defendant relied upon various provisions of the ST Act, although with respect, none of those provisions appear to advance the matter. However, the defendant also relied on:
(a)s 58(1) of the District Court of Western Australia Act 1969 (WA) (District Court Act); and
(b)the decisions in both Barwan Holdings Pty Ltd v Peter Robert Dyson as trustee for the Dyson Property Trust,[15] and Evans v The Atrium, The Owners of Strata Plan 11104.[16]
[14] Defendant's submissions on s 97 STA dated 15 August 2022 and 29 March 2023.
[15] Barwan Holdings Pty Ltd v Peter Robert Dyson as trustee for the Dyson Property Trust (Unreported, WADC, Library No 4884, 30 April 1996) (Barwan Holdings).
[16] Evans v The Atrium, The Owners of Strata Plan 11104 [2022] WADC 120 (Evans).
Section 58(1) of the District Court Act provides as follows:
Where in an action before the Court any defence or counterclaim of the defendant involves matters beyond the jurisdiction of the Court, that defence or counterclaim does not affect the competence of the Court to dispose of the whole matter in controversy, so far as it relates to the demand of the plaintiff and the defence thereto, but no relief exceeding that which the Court has jurisdiction to administer shall, subject to section 51, be given to the defendant upon that counter claim.
No authorities were provided by the defendant discussing s 58 of the District Court Act and I myself have not been able to identify any of relevance. Nonetheless, the wording of the section seems plain, and on its face would permit the defendant to raise the invalidity of By‑law 16 as a defence to the plaintiff's claims in the current proceedings.
Barwan Holdings is a case from 1996 and, as such, was determined not only at a time when the Tribunal did not exist,[17] but also before provisions of the nature set out at [13] were incorporated into the ST Act. Furthermore, whilst a form of s 97 of the Old ST Act was in place in 1996, it was in a different form, in that there were references to 'the referee' (being a reference to the Strata Titles Referee[18]) rather than the 'State Administrative Tribunal'. Moreover, and importantly, the matter was determined on appeal from a decision of the referee, and so the appeal was by way of a new hearing. For all of these reasons the decision in Barwan Holdings is of no assistance.
[17] The Tribunal was established on 4 January 2005 by the State Administrative Tribunal Act 2004 (WA).
[18] See s 71 Strata Titles Act 1985 Reprinted as at 22 April 1996.
Evans was an appeal from a decision by the deputy registrar of this court to strike out a defendant's counterclaim. In the appeal, Massey DCJ was called upon to consider whether this court had jurisdiction to hear and determine the counterclaim, by which the defendant in the proceedings claimed, amongst other things, that the plaintiff owed duties as treasurer or chairman of the strata company to:
(a)cause or require the defendant to observe the obligations of the ST Act and by‑laws;
(b)observe and follow the lawful instructions and decisions of the Council of Owners, of the defendant and the owners;
(c)manage the common property for the benefit of all of the owners pursuant to s 35 of the ST Act;
(d)perform the functions of respondent including those under s 35 of the ST Act, pursuant to s 44 of the ST Act and s 4 of the by‑laws;
(e)keep the books of account referred to in s 35(1)(f) of the ST Act; and
(f)prepare the statement of accounts referred to in s 35(1)(g) of the ST Act.[19]
[19] Evans [13].
In addition to those matters involving the ST Act, the defendant in Evans also alleged that the plaintiff in those proceedings had committed various breaches of fiduciary duty, equitable duty, as well as breaches of duty of care.
Relevantly, the plaintiff in Evans relied upon Schedule 5 clause 30(2) of the ST Act which is reproduced at [13] in support of a submission that the court did not have jurisdiction to deal with those aspects of the counterclaim dealing with the ST Act. In addition, the plaintiff in those proceedings argued that it was well established that a counterclaim is a separate and distinct proceeding, although it may for convenience be heard at the same trial as the original action. Finally, and relevantly, the plaintiff in those proceedings also referred to the explanatory memorandum and second reading speeches in relation to the Amendment Bill, and the Minister's reference during the course of the second reading speech that the Tribunal was to become 'the one‑stop‑shop for strata disputes'.[20]
[20] Evans [37] - [42].
Conversely, the defendant in Evans argued, amongst other things, that Schedule 5 clause 30(2) of the ST Act did not expressly address the circumstance of where proceedings had already been commenced elsewhere which subsequently raised matters pursuant to the ST Act, and that the clause did not exclude the jurisdiction of this court, or prohibit the defendant from raising in its defence or counterclaim issues relating to the ST Act.[21] In addition, the defendant in those proceedings argued, in effect, that Parliament could not have intended the bifurcation of a dispute between the District Court and the Tribunal when the same facts would need to be considered in relation to both scheme disputes (that is, ST Act disputes) and non-scheme disputes (that is, non-ST Act disputes).
[21] Evans [45].
Following consideration of the matter, and after discussing the decision in Perkins Investments (WA) Pty Ltd ATF The Perkins Investment Trust and Austpro Management Services Group Pty Ltd[22] (which is discussed further below at [34]), Massey DCJ held, amongst other things, that:[23]
69… the counterclaim seeks relief not only for matters which fall within the definition of scheme disputes, but also for the non‑scheme disputes …
70In my view, the word 'proceeding' used in [Schedule 5 clause 30(2)] refers to the whole of the proceeding, rather than to a specific part of it.
71Whilst I accept that the plaintiff and defendant are 'scheme participants' as defined in the [ST Act], it is apparent that the dispute in its entirety is not a scheme dispute. Whilst the Tribunal has jurisdiction over scheme disputes pursuant to s 197(1) [of the ST Act] it does not have jurisdiction over the non-scheme disputes which are part of the defendant's counterclaim.
72If the entirety of the dispute, as was the case in Perkins, was a scheme dispute then it may be that the proceeding must be commenced in the Tribunal. That is not the case here.
73I adopt what Pritchard P said in Perkins at [60] that 'far clearer words of exclusion would be required to confer jurisdiction on the Tribunal so as to exclude this court's long-standing jurisdiction to deal with questions concerning the validity of claims for breaches of fiduciary duty and other relief unrelated to scheme disputes'.
74In my view there can be no doubt that this court has jurisdiction to deal with the non-scheme disputes whilst the Tribunal also has jurisdiction to deal with the specific question relating to the scheme disputes matters.
75In my view, the jurisdiction of this court to determine scheme disputes has not been extinguished. What is prohibited is the commencement of a proceeding.
[22] Perkins Investments (WA) Pty Ltd ATF The Perkins Investment Trust and Austpro Management Services Group Pty Ltd [2021] WASAT 71 (Perkins).
[23] Evans [69] - [75].
In addition, his Honour stated as follows:[24]
These matters demonstrate the absurdity of bifurcating proceedings relating to the counterclaim. It will be necessary for the District Court to consider the defence relating to the alleged breaches of the [ST Act] by the plaintiff, as well as the allegations of the failure to raise levies raised in the defence, and it seems nonsensical that it should not also consider those breaches in relation to the [ST Act] when considering the counterclaim rather than have those matters determined in another forum.
[24] Evans [80].
In Perkins, Pritchard P was called upon to consider, amongst other things, whether Schedule 5 clause 30(2) of the ST Act prevented a party from advancing an argument, whether by way of defence or counterclaim, in a jurisdiction other than that of the Tribunal. Relevantly, Pritchard P stated as follows:[25]
In my view, nothing in cl 30(2) prohibits a purchaser from advancing an argument, whether by defence or counterclaim, in response to proceedings commenced by the vendor, in another court, to enforce performance of the Contract.
[25] Perkins [58].
Her Honour stated further that:[26]
… far clearer words of exclusion would be required to confer jurisdiction on the Tribunal, so as to exclude the Supreme Court's long‑standing jurisdiction to deal with questions.
[26] Perkins [60].
I respectfully agree with Massey DCJ in Evans that the jurisdiction of this court is not extinguished to deal with scheme disputes which are raised by way of defence or counterclaim. I do so largely on the basis of s 58 of the District Court Act (which I note was not raised before his Honour), but also because, like both his Honour, and Pritchard J in Perkins, I consider it highly unlikely that Parliament would have intended proceedings of the nature before me would be bifurcated in the way suggested by the plaintiff.
Of course, if the defendant in the current proceedings was seeking to pursue a counterclaim in the proceedings concerning the validity of By‑law 16 and/or seeking relief concerning the same, which went beyond the jurisdiction of this court, then s 58 of the District Court Act would prevent this court from dealing with that relief. Furthermore, if the defendant instigated proceedings in this court to resolve the validity of By‑law 16, her action could have been struck out on the basis that jurisdiction for that matter would properly rest with the Tribunal.
It follows from that which is set out at [20] - [37] that I consider that this court does have jurisdiction to deal with the defendant's arguments raised by way of defence concerning the invalidity of By‑law 16.
Having disposed of the jurisdictional issue, I turn then to the current proceedings and the issues raised therein.
Current proceedings
By writ of summons dated 16 March 2021, the plaintiff commenced the current proceedings against the defendant claiming monies and unpaid contributions associated with breaches of the by‑laws referred to at [4(a)] as determined by the Tribunal. For all intents and purposes, those monies and unpaid contributions in the Tribunal proceedings arise from, or were incurred in, the commencement and maintenance of the Tribunal proceedings.
As at the date of the writ, the plaintiff claimed a total amount of $208,738.77 comprised as follows:
Table 1
Details
Amount
Interest up to 19/01/2021
Total
Legal enforcement costs 24/12/19
$24,189.73
$3,932.14
$28,121.87
Payment received (insurance claim 21/8/20)
-$56
Strata management administrative costs 17/3/20
$3,300.00
$342.57
$3,642.57
Legal enforcement costs 17/3/20 $15,855.95 $1,645.98 $17,501.93 Legal enforcement costs 17/3/20 $1,617.00 $167.86 $1,784.86 Expert reporting enforcement costs 28/4/20 $847.00 $87.93 $934.93 Legal enforcement costs 7/5/20 $13,921.05 $1,246.79 $15,167.84 Legal debt recovery costs 16/9/20 $10,226.70 $342.10 $10,568.80 Legal enforcement cost 16/9/20 $72,879.51 $2,437.97 $75,317.48 Witness expenses SAT 2/10/20 $1,127.50 $31.94 $1,159.44 Strata management administrative costs 2/10/20 $9,075.00 $257.08 $9,332.08 Additional gutter cleaning 7/10/20 $220.00 $5.97 $225.97 Legal enforcement costs 11/11/20 $39,208.95 $649.90 $39,858.85 Legal enforcement costs 04/03/21 $1,409.65 $1,409.65 Strata management administrative costs 03/03/21 $3,712.50 $3,712.50 TOTAL $197,534.54 $11,148.23 $208,738.77
The plaintiff commenced the proceedings because the defendant refused, and continues to refuse, to pay the amounts the subject of invoices detailed in Table 1.
The plaintiff also claims interest, and that interest is said to be due and payable at the prescribed rates of:
(a)15% per annum on amounts due and payable prior to 1 May 2020; and
(b)11% per annum on amounts due and payable from 1 May 2020,
from the due date of the various dates of issue of the invoices comprising the $197,534.54 as calculated in column 2 of Table 1.
In the alternative to interest at the rates of 15% and 11% referred to at [43], the plaintiff claims interest at the rate of 6% from the due date of the various dates of issue of the invoices comprising the $197,534.54 as calculated in column 2 of Table 1.
In the proceedings, and as alluded to at [1], in order to affect a recovery from the defendant of the monies claimed, the plaintiff relies on By‑law 16.
By-law 16 is a debt recovery by-law which the plaintiff says forms part of the plaintiff's strata by-laws (as amended and adopted under Schedules 1 and 2 of the Old ST Act pursuant to s 42 of the Old ST Act).
As stated at [17], By-law 16 was the subject of consideration at the plaintiff's AGM on 20 November 2018.
By-law 16 is set out below (noting that within the by-law a reference to the 'Strata Company' is a reference to the plaintiff):
16. Debt Recovery
That the costs incurred by the Stata Company to recover fees and levies due under Section 36 of the Strata Titles Act (1985) [which is a reference to the Old ST Act] or recovery of costs associated with a breach of bylaws, insurance claims or excess or work carried out by the strata company, will be fully recoverable from the indebted lot owner. Costs include but are not limited to administrative fees charged to the Strata Company by the strata manager, legal fees incurred as a result of the failure to pay levies, or other costs and any other fees and charges applicable.
Not surprisingly, both By-law 16 and its consideration by strata lot owners at the AGM, was the subject of much evidence, submission and argument during the course of the trial. In effect, the plaintiff argued that By‑law 16 was validly passed at the AGM and thereby enabled the plaintiff to rely upon it when seeking to recover the debt from the defendant. Conversely, the defendant argued that By-law 16 is ultra vires, void ab initio, or invalid, and, as such, it does not grant the plaintiff the legal power or authority to impose a liability on the defendant.
Issues for determination
Based on the estimates provided by counsel for each of the parties as to how much time would be required to argue the matter, the trial of the matter was listed for two days of hearing on 4 and 5 August 2022. However, that estimate, and those hearing days, proved to be insufficient, and so, based on the availability of counsel for the parties, two further hearing days were set aside by the court for 31 August 2023 and 1 September 2023.[27] At the end of those hearing days counsel for the parties were requested by the court to provide an agreed statement of issues for determination within 28 days.[28]
[27] The court requested that the parties make themselves available to continue with the trial of the matter on the days following 5 August 2023, however counsel for the defendant had commitments elsewhere.
[28] In fact the court initially requested both an agreed list of contentions and written closing submissions within 7 days, however the court acquiesced to a request by counsel for that period to be 28 days.
Regrettably, that 28-day milestone was not met, and no agreed statement of issues for determination was ever provided. Instead, a list of contentious issues for determination was filed on behalf of the defendant on 15 November 2023, and approximately four weeks later, on 11 December 2023, a separate list of contentious issues for determination was filed on behalf of the plaintiff.
Also regrettably, and as might be evident from the fact that separate lists were provided, the parties were unable to reach agreement concerning the issues for determination. According to the plaintiff, the parties were unable to agree on the issues because:[29]
… the defendant continues to assert that the issues for contention include an examination of the way in which [By-law 16] was enacted and registered. The plaintiff does not see this as an issue that arises on the way the defendant has conducted the defence. In any event, even if such an examination was now undertaken there appears to be only one issue where the evidence requires any examination, and that involves whether [the defendant] voted in dissent at the AGM (as she now contends).
[29] Plaintiff's Outline of Contentious Issues for Determination dated 10 November 2023 and filed 11 December 2023.
In any event, counsel for the plaintiff identified four issues in its list of issues for determination, namely:
(i)Whether the plaintiff's by-laws contain the pleaded debt recovery by-law, that is, By-law 16. In terms of this matter the plaintiff says this issue is not in dispute, despite the fact that the defendant contends that By-law 16 is void ab initio. According to the plaintiff this is because transitional provisions set out and contained in the ST Amendment Act carry forward any existing by‑law and reclassified it correctly (if necessary).
(ii)Which party carries the burden of proof as to the existence or bona fides of By-law 16. In terms of this matter, the plaintiff says that once it has established the registration of the relevant by‑law (which it says it has done) it is a matter for the defendant to establish a case that the court ought to remove the by‑law. The plaintiff says further that in these proceedings the defendant has not sought to make an application for By-law 16 to be removed, and that until such time as an order is sought and made by the Registrar of Titles, then the by‑law can be relied upon.
(iii)Allegations as to the invalidity of By-law 16. In terms of this matter, the plaintiff says that even if the court were to permit some form of amendment to the relief sought by the defendant, the defendant would nevertheless need to establish one or more grounds as to why the court should intervene, and that the only possible basis would be whether the plaintiff dissented at the time By-law 16 was passed at the AGM, however the defendant's evidence in that regard is inconsistent with the evidence of every other witness who was at the AGM and gave evidence.
(iv)The allegation by the defendant that costs were excessive. As to this matter the plaintiff says, amongst other things, that the defendant failed to call any evidence whatsoever on the issue, thereby suggesting that there was no basis the court could make a finding in favour of the defendant on this issue.[30]
[30] Plaintiff's Outline of Contentious Issues for Determination dated 10 November 2023 and filed 11 December 2023.
On the other hand, counsel for the defendant identified 11 issues for determination, namely:
(i)At the time of the AGM were all the lot owners within the strata scheme financial?
(ii)At the AGM, as joint owners of a lot within the scheme, did Michael John Joyce and Lisa Carolyn Joyce require the appointment of a proxy to be eligible to be counted in the quorum for the AGM and to vote at the AGM?
(iii)At the AGM, as joint owners of a lot within the scheme, did the defendant and the State Housing [Commission] require the appointment of a proxy to be eligible to be counted in the quorum for the AGM and to vote at the AGM?
(iv)Did David John Cherry grant a valid proxy for the purposes of the AGM?
(v)Was there a quorum for the AGM?
(vi)Was the AGM validly constituted?
(vii)Did Michael John Joyce and Lisa Carolyn Joyce arrive at the AGM after the vote was taken for the By-law 16 resolution?
(viii)Was By-law 16 validly passed by a special resolution?
(ix)Does a Schedule 2 by-law have the legal capacity to impose legal liability on the defendant?
(x)Is By-law 16 oppressive or unreasonable?
(xi)Is the amount claimed by the plaintiff excessive?[31]
[31] Defendant's Contentious Issues for Determination dated and filed 15 November 2023.
It is of course somewhat unsatisfactory that counsel for the parties, as experienced as they are, were unable to agree on the issues for determination in the trial. Instead, the court has been left to identify for itself (and, it seems, the parties) the issues for determination, or, alternatively, left to decide which of the various issues as identified by the parties are ripe for determination.
There are difficulties with the various issues which counsel for both parties have identified, although there are perhaps more issues with those identified by counsel for the plaintiff. That is because, by those issues (or at least the first two) the plaintiff appears to proceed on the basis that By-law 16 can be relied upon by it until such time as the by‑law is removed as a by-law from the plaintiff's scheme of registered by-laws. Indeed, the plaintiff maintains that as the defendant has taken no such steps to remove By‑law 16 (by seeking an order for removal, or, alternatively, a declaration as to invalidity) then there is no legitimate basis for the defendant to defend the matter.
I respectfully disagree.
I consider that it is open to the defendant to defend the action on the basis, amongst others, that By-law 16 is invalid, and to do so without first having it removed as a by‑law or seeking a declaration as to its invalidity.[32]
[32] The defendant offered no explanation as to why she was not seeking a declaration concerning the validity of By‑law 16, but assumedly that was a forensic decision taken so as to avoid the possible application of s 200 of the ST Act - a section which would, in effect, enable the court to decline making such an order on discretionary grounds.
Leaving aside this matter, the plaintiff in its list of issues submits that resolution of the matter turns on whether By‑law 16 was passed by a resolution without dissent. The difficulty with this submission is that the plaintiff's primary position as set out and contained in the pleadings[33] is, in effect, that By‑law 16 only required a special resolution to be passed (although of course in the proceedings the plaintiff does argue that irrespective of what type of resolution was required to pass By-law 16 (that is, a special resolution or a resolution without dissent), that resolution was obtained at the AGM).
[33] Reply, par 2.
On the other hand, and in contradistinction to the plaintiff, the defendant, in her list of issues for determination, has sought to tease out each and every possible issue in the proceedings without giving due and proper consideration to which of them might appropriately be grouped together and/or disposed of in the one discussion, or, alternatively, given consideration to which issue or issues might fall away depending on how various of the issues are determined.
Against this background, and in order to progress the matter, I have had regard to the pleadings. By the pleadings, the plaintiff relies on By‑law 16 to effect a recovery from the defendant of costs incurred in the Tribunal proceedings.[34] Again, by the pleadings, the defendant defends the matter on four broad bases, namely that:
(a)there was no quorum at the AGM to enable By‑law 16 to be passed;[35]
(b)By-law 16 was a Schedule 1 by-law and not a Schedule 2 by‑law, and, as such, a resolution without dissent was required at the AGM (as opposed to a special resolution);[36]
(c)By-law 16 was not validly passed;[37] and
(d)if By-law 16 was validly passed, it is nonetheless invalid on the basis that it is oppressive or unreasonable.[38]
[34] Statement of Claim, pars 4 - 10.
[35] Statement of Defence, par 4.1.2.1.
[36] Statement of Defence, pars 4.1.2.2, 4.2.1, 4.2.4, 4.2.5, 4.2.6 and 4.2.7.
[37] Statement of Defence, pars 4.1.2.1 - 4.1.2.5 and 4.2.4 - 4.2.7.
[38] Statement of Defence, pars 4.4.1 and 8.
As will be appreciated, there is some duplication, or commonality, between both the matters referred to immediately above, and the ones in the defendant's list of issues of determination as referred to at [54]. Nonetheless, depending on how the issues identified immediately above are resolved, certain of the other issues identified by the defendant in her list of issues for determination fall away (as well as certain issues not identified by the defendant in her list, but pleaded by her in the Statement of Defence).
In the circumstances, I propose to consider each of the four issues referred to at [61] as the issues for determination in the proceedings, however, it is convenient that they be dealt with in a different order. Accordingly, I will deal with those issues in the following order:
(a)Issue 1: Was By-Law 16 a Schedule 1 or a Schedule 2 by-law?
(b)Issue 2: Was there a quorum at the AGM?
(c)Issue 3: Was By-law 16 validly passed?
(d)Issue 4: Is By-law 16 nonetheless invalid?
Besides these four issues, there are a number of matters that might be categorised as residual issues, and to the extent necessary they will be dealt with under the heading 'residual issue(s)' following the discussion concerning the various issues.
There is the further issue (Issue 5) not identified by either party in their respective list of issues for determination, and that concerns the recoverability of the amount claimed by the plaintiff in the proceedings.
Before turning to address each of the five issues identified above, it is appropriate that various details concerning both the strata scheme and the legislative framework are set out.
The strata scheme & legislative framework
The strata scheme itself is located at 5 & 7 Upton Place, Langford, and is described in the strata plan as 'being three double storey brick and tile residential buildings which are situated on a portion of Canning Location and being Lot 365 on Plan 11013 and are known as 5 & 7 Upton Place, Langford' (strata complex).
The strata complex comprises nine residential lots, the owners of which were, at the time of the trial, as follows:
Lot No. Owner (sole proprietor / co-proprietor) 1 The defendant (sole proprietor), 5A Upton Place 2 David Cherry (sole proprietor), 5B Upton Place 3 Michael and Lisa Joyce (as co-proprietors), 5C Upton Place 4 Margaret Amito and Tokkene P'Batta, 7A Upton Place (co‑proprietors)[39] 5 Kylie Stratton (sole proprietor), 7B Upton Place 6 Annie Johnston (sole proprietor), 7C Upton Place 7 Samantha Wallin (sole proprietor), 7D Upton Place 8 Dean Cahill (sole proprietor), 7E Upton Place 9 Daniel Worth (sole proprietor), 7F Upton Place [39] It seems that the State Housing Commission may also have been a co-proprietor however nothing turns on that for the purposes of the proceedings.
There was one material change to the owners of one of the strata lots in the period between the date of the AGM referred to at [47] and 4 August 2022 (the first day of the trial). In this regard, prior to April 2020, the State Housing Commission was a co‑proprietor with the defendant on Strata Lot 1, and had been a co‑proprietor with the defendant since September 2000.[40], [41]
[40] Defendant's Trial Bundle, pages 1 - 2; ts 315.
[41] There was also a suggestion within the evidence of the defendant that Daniel Worth (Lot 9) became a strata lot owner in or about 2021 (see ts 315) however that is not supported/corroborated by the documentary evidence tendered at trial: see for example Exhibit 9 which shows that Mr Worth was the owner of Lot 9 at 31 July 2020, and in any event the parties appeared to proceed on the basis that Mr Worth was a strata lot owner at the date of the AGM and the trial. Regardless, nothing turns on the matter for the purposes of the proceedings.
The above change is relevant as voting entitlements at the AGM by strata lot owners (including, relevantly, co‑proprietors) was an issue in the proceedings, and that is an issue which will be discussed in due course.[42]
[42] Voting entitlements of Mr Worth as the owner of Lot 9 was not a significant issue in the proceedings for reasons discussed further in the judgment.
A strata scheme is the manner of division of a parcel of land into lots, or lots and common property, under a strata plan, and the manner and allocation of unit entitlements amongst the lots and the rights and obligations as conferred or authorised by the ST Act, between themselves, of proprietors, others having proprietary interest in, or the occupants of, the lots and the strata company.[43]
[43] Definition of 'strata scheme' in s 3(1) of the Old ST Act.
A strata company, relevantly for a strata scheme, is a body corporate constituted under s 14 of the ST Act (or s 32 of the Old ST Act) by the proprietors of the lots upon the registration of the strata scheme. The common property of a strata scheme relevantly comprises any lot or lots shown on the strata plan to be common property.[44]
[44] Definition of 'common property' in s 3(1) of the Old ST Act, and s 3(1) and s 10 of the ST Act.
In Western Australia, common property is 'held by the proprietors [in a strata scheme] as tenants in common in shares proportional to the unit entitlements of their respective lots'.[45]
[45] Section 13(7) of the ST Act.
The Old ST Act and the ST Act
Old ST Act
For the purposes of this matter relevant provisions of the Old ST Act are as follows:
Special resolution means a resolution that complies with sections 3B and 3C and also has the meaning given by section 3CA.
…
3AC.Resolution without dissent
(1)For the purposes of this Act a resolution without dissent is a resolution -
(a)passed at a duly convened general meeting of the strata company of which sufficient notice (as defined by section 3C) has been given and at which a sufficient quorum (as so defined) is present; and
(b)against which no vote is cast by a person entitled to exercise the powers of voting on the resolution conferred under this Act -
(i)voting at the meeting either personally or by proxy; or
(ii)voting in accordance with subsection (2).
(2)A person entitled to exercise the powers of voting conferred under this Act is also to be taken to vote -
(a)in support of a resolution if he signifies in writing served in accordance with sub section (3) that he agrees to the resolution; or
(b)against the resolution if he signifies in writing served in accordance with subsection (3) that he disagrees with the resolution,
within 28 days after the day of the meeting, whether that writing is signed by the person or by another person who at the time of the signing is entitled to exercise the power of voting in place of that person.
…
3B.Special resolution of strata company
(1)For the purposes of this Act a special resolution of a strata company shall be passed at a duly convened general meeting -
(a)of which sufficient notice (as defined by section 3C) has been given; and
(b)without limiting subsection (5), at which a sufficient quorum (as defined by section 3C) is present.
(2)Except where subsection (3) applies, a special resolution is passed if -
(a)it is supported by votes, within the meaning in subsections (4) and (5) -
(i)having a value of not less than 50% of the aggregate until entitlement of the lots in the scheme; and
(ii)of the proprietors of not less than 50% of the lots in the scheme;
and
(b)the votes, within the meaning in subsections (4) and (5), against the resolution -
(i)do not have a value of 25% or more of the aggregate unit entitlement of the lots in the scheme; or
(ii)are not cast by the proprietors of 25% or more of the lots in the scheme.
(3)A special resolution is passed in the case of a strata company for a scheme in which there are no more than the following number of lots, if it is supported by the votes, within the meaning in subsections (4) and (5), of the following number of proprietors -
(a)3 lots, the votes of the proprietors of not less than 2 of the lots; or
(b)4 lots, the votes of the proprietors of not less than 3 of the lots; or
(c)5 lots, the votes of the proprietors of not less than 4 of the lots.
(4)References in subsections (2) and (3) to votes are to the votes of persons entitled to exercise the powers of voting conferred under this Act voting at the meeting either personally or by proxy.
(5)Despite subsection (4), a person entitled to exercise the powers of voting conferred under this Act is also to be taken to vote -
(a)in support of a resolution if he signifies in writing served in accordance with subsection (6) that he agrees to the resolution; or
(b)against the resolution if he signifies in writing served in accordance with subsection (6) that he disagrees with the resolution,
within 28 days after the day of the meeting, whether that writing is signed by the person or by another person who at the time of the signing is entitled to exercise the power of voting in place of that person.
(6)The writing referred to in subsection (5) is not effective unless it is served -
(a)on the strata company; or
(b)where under section 36A or 36B a roll is not maintained by the strata company, on the other proprietors.
(7)A special resolution referred to in subsection (3) does not have effect -
(a)until the expiration of the period referred to in section 103D(2); or
(b)if an application is made for an order under that section, until the application is dismissed, or withdrawn; or
(c)if the State Administrate Tribunal refuses to make the order, until the time for appeal against the refusal has expired or any appeal has been dismissed or withdrawn or determined in such a way that an order under section 103D is not made.
(8)In subsection (3) lot does not include a lot in a survey‑strata scheme that is designated as a common property lot.
3C.Supplementary provisions to s. 3AC and 3B
(1)For the purposes of sections 3A and 3B -
(a)a sufficient notice of a meeting is given if at least 14 days' notice specifying the proposed resolution has been given; and
(b)a sufficient quorum is present if there are present at the meeting either personally or by proxy at the time when the resolution is voted on -
(i)the proprietors of not less than 50% of the lots in the scheme; and
(ii)proprietors whose votes have a value of not less than 50% of the aggregate unit entitlement of the lots in the scheme;
and
(c)the value of a vote cast by a proprietor of a lot entitled to vote in respect of that lot is equal to the unit entitlement of that lot.
(2)If a resolution specified in a notice of a meeting is passed with amendment at the meeting the strata company shall, not later than 7 days after the meeting, serve a copy of the amended resolution on each proprietor who was not present at the meeting either personally or by proxy at the time when the resolution was voted on.
(3)If subsection (2) is not complied with the amended resolution is of no effect.
(4)If subsection (2) applies, the right to vote conferred by section 3AC(2) or 3B(5) may be exercised in respect of the amended resolution.
…
3D.Unfinancial proprietors may vote in certain cases
Despite anything in the by‑laws of the strata company, a proprietor is entitled to exercise his powers of voting on a matter requiring a unanimous resolution or a resolution without dissent even though all contributions payable in respect of his lot have not been duly paid or other moneys recoverable under the Act by the strata company from him have not been paid.
…
36.Levy of contributions on proprietors
(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 by-law referred to in section 42B or an order under section 99A is in force, in accordance with that by-law 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.
(1a)If a mortgagee of a lot has entered into possession of the lot any contribution in respect of that lot maybe levied on the mortgagee.
(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 by-laws 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.
42.By-laws
(1)A strata company may make by‑laws, not inconsistent with this Act, for -
(a)its corporate affairs; and
(b)any matter specified in Schedule 2A; and
(c)other matters relating to the management, control, use and enjoyment of the lots and any common property.
(2)The provisions set out in Schedules 1 and 2 shall be deemed to be by‑laws of the strata company and may be amended, repealed or added to by the strata company -
(a)by resolution without dissent (or unanimous resolution, in the case of a two‑lot scheme), in the case of Schedule 1 by‑laws; or
(b)in accordance with any order of a court or the State Administrative Tribunal or any written law; or
(c)in any other case, by special resolution.
(2a)Each by‑law that is additional to the by‑laws in Schedules 1 and 2 or any amendment to a Schedule 1 or Schedule 2 by‑law shall be classified in the by‑laws as -
(a)a Schedule 1 by‑law; or
(b)a Schedule 2 by‑law.
(2b)A by‑law of the kind described in items 4, 6 and 8 in Schedule 2A is classified as a Schedule 1 by‑law and may only be made, amended or repealed by resolution without dissent (or unanimous resolution, in the case of a two‑lot scheme) of the strata company; but if such a by‑law is included in a management statement under section 5C lodged with a strata/survey‑strata plan it shall be deemed to be made in accordance with this subsection.
…
(4)No amendment or repeal of a by‑law or additional by‑law has effect until -
(a)the strata company has, not later than 3 months after the passing of the resolution for the amendment, repeal or additional by‑law, lodged a notice of the amendment, repeal or additional by‑law in the prescribed form with the Registrar of Titles, including in the case of a by‑law made under subsection (8) a description of the area affected; and
(b)the Registrar of Titles has made a reference to the amendment, repeal or additional by‑law on the appropriate registered strata/survey‑strata plan.
(4a)If a notice under subsection (4)(a) applies to the amendment or addition of a by‑law of the kind described in item 8 of Schedule 2A it must be accompanied by -
(a)a certificate given by every person who -
(i)has a registered interest in any lot proposed to be affected; or
(ii)is a caveator in respect of any such lot,
certifying his consent to the proposed re‑subdivision; and
(b)a certificate given by every person who has a registered interest in any lot the unit entitlement of which is proposed to be affected certifying his consent to the proposed allocation of unit entitlement set out in the application.
…
(6)Without limiting the operation of any other provision of this Act, the by‑laws for the time being in force bind the strata company and the proprietors and any mortgagee in possession (whether by himself or any other person) or occupier or other resident of a lot to the same extent as if the by‑laws had been signed and sealed by the strata company and each proprietor and each such mortgagee, occupier or other resident respectively and as if they contained mutual covenants to observe and perform all the provisions of the by‑laws.
…
44.Functions of councils
(1)The functions of a strata company shall, subject to this Act and to any restriction imposed or direction given at a general meeting, be performed by the council of the strata company.
(2)The council of a strata company shall be constituted and shall perform its functions in accordance with and in the manner provided by the by‑laws of the strata company.
Furthermore, s 32 of the Supreme Court Act 1935 (WA) (SCA) provides as follows:
32.Pre‑judgment interest, Court may order
(1)In any proceedings for the recovery of any money (including any debt or damages or the value of any goods), the Court may order that there shall be included, in the sum for which judgment is given, interest at such rate as it thinks fit on the whole or any part of the money for the whole or any part of the period between the date when the cause of action arose and the date when the judgment takes effect.
(2)This section does not -
(a)authorise the giving of interest upon interest; or
(aa)apply in relation to any general damages in respect of pain and suffering or the loss of the enjoyment or of the amenities of life awarded in relation to personal injury or the death of a person; or
(b)apply in relation to any debt upon which interest is payable as of right whether by virtue of any agreement or otherwise; or
(c)affect the damages recoverable for the dishonour of a bill of exchange.
(2a)In subsection (2)(aa) personal injury includes any disease and any impairment of a person's physical or mental condition.
The principles concerning s 32 of the SCA were stated, relevantly in Province Leader of the Oceania Province of the Congregation of the Christian Brothers v Lawrence[204] as follows:
[204] Province Leader of the Oceania Province of the Congregation of the Christian Brothers v Lawrence [2021] WASCA 77 (Lawrence).
Statutory pre-judgment interest: s 32 of the Supreme Court Act 1935 (WA) 57
57There is no common law power to make an order for the payment of interest to compensate for the delay in obtaining payment of what the court assesses to be the appropriate measure of damages for a wrongful act. If such interest is to be awarded at common law, it must be pursuant to statutory authority.65 The District Court's power to award pre-judgment interest in personal injury claims relies on s 32 of the Supreme Court Act - s 32 applying to the District Court by virtue of s 34 of the Supreme Court Act and s 57(1) of the District Court of Western Australia Act 1969 (WA).
…
59Five things ought to be observed immediately. First, s 32(1) provides for a discretion. The court 'may' order such interest. There is no entitlement to pre-judgment interest. Second, on its face the provision applies 'in any proceedings for the recovery of any money'. Third, by its terms the provision permits an order for interest that commences from the date that the relevant cause of action arose. Fourth, interest may be awarded for the whole or part of a certain period - the 'period between the date when the cause of action arose and the date when the judgment takes effect' (s 32(1)). Fifth, certain exclusions are provided for in s 32(2). These include two specific kinds of monetary recovery - particular types of general damages in relation to personal injury or death (s 32(2)(aa)) and any debt on which interest is payable as of right (s 32(2)(b)).
60It is established that:
1.A fourfold discretion arises in relation to s 32. Initially, whether to order interest at all. If so, further discretions arise as to: the interest rate to be applied; the amount on which interest accrues (which may be an amount less than the whole of the judgment); and, finally, over what period interest is to run.
2.The principles in relation to the award of pre-judgment statutory interest include the following:
(a)An award of interest up to the date of judgment is an award of interest in the nature of damages; it is compensatory in character. Thus understood it is an element in the attainment of the object of damages, namely, to compensate a claimant for the injury sustained. However, it 'should not be awarded as compensation for the damage done'.
(b)The reason for awarding interest is to compensate the claimant for having been kept out of the money which theoretically was due to him or her at the date the loss commenced - it operates to ensure that the claimant receives a current equivalent of money's worth.
(c)An award of interest on damages for personal injury should do no more than assist in the restoration of a claimant to the position in which he or she would have been but for the defendant's negligence.
61In the latter respect, the purpose or object of s 32 is to do more complete justice between the parties.
Also in Lawrence, the court stated as follows:[205]
The proper construction of s 32(1) of the Supreme Court Act 1935 (WA)
140There is no support for the appellant's contended construction in the text of s 32(1) of the Supreme Court Act. The legislative intention is clearly expressed. Four textual matters are of immediate significance.
141First, the power to order pre-judgment interest is granted in any proceedings for the recovery of any money. The words of the statutory provision are quite general. There is no differentiation between: (1) proceedings brought before or after the commencement of the provision; or (2) proceedings in respect of causes of action accruing before or after the commencement of the provision.
142Second, the point of time at which the power is to operate is the time at which judgment is to be given - the provision simply invites attention to the question whether, at that time, there is a proceeding before the court for the recovery of any money.
143Third, the provision authorises the court to order pre-judgment interest for the whole or any part of the period between the date when the cause of action arose and the date when the judgment takes effect. There is nothing which, in terms, confines the words 'the da te when the cause of action arose' to causes of action accruing after the commencement of the provision. It is correct that, as the appellant submits, those words circumscribe the period for which pre-judgment interest may be ordered and do not, expressly, identify the circumstances in which the discretionary power arises. But in identifying the outer limits of the court's power without distinction between causes of action accruing before and after the commencement of the statutory provision it can be seen that no differentiation is intended.
144Fourth, specific exclusions and restrictions which confine the power are provided for in s 32(2). None of those concern the time at which the proceedings were commenced or the time of accrual of the cause of action which grounds the proceedings.
145On an ordinary and natural reading of s 32(1), the text alone is sufficient for an intention to appear with reasonable certainty that the provision applies to proceedings for the recovery of money whensoever the underlying cause of action accrued. There are, however, two additional reasons why, assuming the presumptive rule of construction applies, a contrary intention appears with the necessary degree of certainty. Both the context and purpose of the provision militate in favour of that conclusion.
[205] Lawrence [140] - [145].
During her evidence, Jocelyn O'Donnell (Competent Strata) was cross‑examined at length concerning the nature of the arrangements that had been put in place in relation to, in effect, how the Tribunal proceedings (and the current proceedings) were being financed by the plaintiff. On this issue Ms O'Donnell gave evidence to the effect that:
(a)the plaintiff did not have the financial reserves to meet the costs of the Tribunal proceedings and the current proceedings;[206]
(b)she had explored various financing options including with banks, financiers, real estate agents, accountants, and others;[207]
(c)ultimately private finance up to $40,000 for a term of five years and at an interest rate of 11.8% was offered;[208]
(d)the plaintiff accepted a loan on those terms;[209] and
(e)subsequent to accepting that loan, the plaintiff, in effect, refinanced the loan with Lannock Finance, and that loan facility has had to be increased by the plaintiff from time to time to take account of increased costs.[210]
[206] ts 165.
[207] ts 155.
[208] ts 156 - ts 157.
[209] ts 156 - ts 157, ts 167.
[210] ts 169 and Exhibit 4. It is unclear as to precisely what interest rate is being incurred by the plaintiff for the loan facility provided by Lannock Finance, however there is no evidence to suggest it is not being provided at commercial rates.
The defendant did not seek to introduce any evidence of any nature to the effect that it was either unnecessary for the plaintiff to secure a loan facility to fund the Tribunal proceedings (or the current proceedings), or that the loan facilities which were secured by the plaintiff (from private finance and Lannock Finance) were on uncommercial terms or at uncommercial rates.
Section 8(1) of the Civil Judgments Enforcement Act 2004 (WA) (CJEA) provides as follows:
8.Interest on judgment sums
(1)Interest is to be paid on the unpaid amount of a judgment sum from the date of the judgment until the date on which the judgment sum is paid -
(a)at the rate prescribed by the regulations; or
(b)at the rate set by the court in the judgment or by an order made after the judgment is given.
As can be seen, by this section the court has a discretion to order a different rate of interest on the judgment sum, however that discretion is to be exercised having regard to the compensatory character of an award of post judgment interest.[211]
[211] Westpac Banking Corp v The Bell Group Ltd (in liq) [2009] WASCA 166 [33]; Civic Video Pty Ltd v Paterson [No 3] [2014] WASC 321 [7] - [12].
If an entitlement at law is required for rate of interest other than the statutory rate, then such an entitlement is provided for by s 26 of the Strata Titles General Regulations 1996 (WA): see [213] above. Otherwise, based on the evidence of Jocelyn O'Donnell (Competent Strata) a higher rate other than the statutory rate appears justified.
Conclusion
As has been revealed by these reasons, this dispute and the one before it in the Tribunal proceedings has arisen as between neighbours, those neighbours being the various strata lot owners of the strata complex.
Whilst the underlying dispute of the Tribunal proceedings concerned a gum tree situated on the defendant's lot, one cannot but bear in mind the adage 'good fences make good neighbours'.
Those words are contained within Mending Wall by American poet and Pulitzer prize winner, Robert Frost, and it is a poem which forms part of Frost's second collection of poetry published in 1914. Needless to say that it was published at a time when the concept of strata title had not been developed. On a fair reading of the poem, it would appear from Frost himself (as one of the two protagonists, or neighbours) was not supportive of fences other than for livestock, although the reason for that might be attributable to his custom of partaking on walks on the fields of Gloucestershire before the First World War. Had strata title been developed at the time Frost penned his work, or had Frost been living in a strata title lot, then his attitude towards fences (and trees on common property) might well have been different.
Nonetheless Mending Wall is seen by many as figuratively concerning justice, with rules and laws comprising the walls, and justice the process of wall‑mending where the wall has not been properly maintained. In the poem, the neighbours work together to mend the wall, or fill the gaps that have developed, and in doing so they wear their 'fingers rough'.
It would appear that prior to the Tribunal proceedings the plaintiff in this case took numerous steps to work with the defendant in an attempt to mend the proverbial wall, or fill the gaps, that had developed by reason of the gum tree. However, as is clear from the Tribunal decision, the defendant threatened legal proceedings at an early stage,[212] and in circumstances where not only had various strata lot owners expressed concern about the safety of the gum tree,[213] but also where the strata complex's gardener had provided a report raising concerns that the gum tree was causing damage to the common property. Notwithstanding that a works order was issued by the plaintiff to remove the gum tree, the defendant failed to comply. Even after the Tribunal proceedings had been commenced, a mediation between the parties at the Tribunal did not resolve the matter.[214] Ultimately the Tribunal found in favour of the plaintiff, stating, amongst other things, that:
… the removal of the tree … will avoid further damage from the tree to the common property and neighbouring lots as well as enabling the strata company to manage the common property for the benefit of all lot proprietors …
(emphasis added)
[212] See Tribunal decision [42].
[213] See Tribunal decision [41] - [43].
[214] See Tribunal decision [17].
In arriving at that decision, and applying Frost's Mending Wall figuratively, the Tribunal fulfilled its wall mending role, but the costs incurred by the plaintiff remain unpaid by the defendant.
In an attempt to avoid paying those costs, the defendant has maintained in these proceedings that the mechanism relied upon by the plaintiff to obtain the Tribunal's decision is invalid. Numerous bases have been advanced, perhaps even confected, by the defendant, in an attempt to overcome or avoid having to meet the plaintiff's costs of enforcing its rights to have the gum tree removed. Those bases have proved to be without merit, and so it is incumbent on this court to continue to mend the proverbial wall by ordering that the defendant pay to the plaintiff those costs and expenses necessarily incurred by it in having the defendant comply with her obligations pursuant to the rules and laws surrounding her.
In the circumstances, and for all of the reasons discussed above, and by way of summary, I find that:
(a)this court does have jurisdiction to deal with the defendant's arguments raised by way of defence concerning the invalidity of By‑law 16;
(b)there was no impediment to By‑law 16 being categorised by the plaintiff as a Schedule 2 by‑law and one which required a special resolution for it to be passed at the AGM of the plaintiff;
(c)three of the nine strata lot owners were unfinancial as at the time of the AGM, and thereby not entitled to vote at the AGM, a quorum existed at the AGM by reason of the fact that 50% of the six strata lot owners entitled to vote were present in person or by proxy;
(d)By‑law 16 was validly passed at the AGM;
(e)there is no basis to find that By‑law 16 is oppressive or unreasonable pursuant to s 46(j) of the ST Act; and
(f)otherwise, the plaintiff is entitled to recover the total amount referred to in column 2 of Table 1 and at the interest rates referred to at [43] of these reasons.
I will hear from the parties as to the appropriate form of orders.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
KT
Associate to the Judge
29 MAY 2024
0
7
7