The Owners Of Oceanique SP 52385 and MD and DK Giggins CT Pty Ltd

[2017] WASAT 36

THE OWNERS OF OCEANIQUE SP 52385 and MD & DK GIGGINS CT PTY LTD [2017] WASAT 36

Jurisdiction:	STATE ADMINISTRATIVE TRIBUNAL	Citation No:	[2017] WASAT 36
Act:	STRATA TITLES ACT 1985 (WA)
Case No:	CC:300/2014	Heard:	23 JUNE 2015 (FINAL WRITTEN SUBMISSIONS FILED ON 24 NOVEMBER 2016)
Coram:	MR D AITKEN (SENIOR MEMBER)	Delivered:	23/02/17
No of pages:	26	Judgment Part:	1 of 1
Result:	Application successful
Category:	B
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Parties:	THE OWNERS OF OCEANIQUE SP 52385 MD & DK GIGGINS CT PTY LTD DAWID RAFAL BANASIK DOMINIKA BANASIK MALGORZATA BANASIK WIESLAW BANASIK
Catchwords:	Strata titles ­ Whether word 'residence' in a by­law means a permanent place of abode ­ Operation of s 42(3) Strata Titles Act 1985 (WA) ­ Whether word 'illegal' in a by­law includes non­compliance with permitted uses under a town planning scheme
Legislation:	City of Mandurah Town Planning Scheme No 3 Planning and Development Act 2005 (WA), s 218, Pt 14 Strata Titles Act 1973 (NSW), s 58(6) Strata Titles Act 1985 (WA), s 35(1)(a), s 42, S 42(3), s 79(2), s 81(1), s 81(10), s 83(1), s 93(1), Pt VI
Case References:	Byrne v The Owners of Ceresa River Apartments Strata Plan 55597 [2016] WASC 153 Casuarina Rec Club Pty Ltd v The Owners Strata Plan No 77971 [2011] NSWCA 159 Grant and The Owners of Rosneath Farm - Strata Plan 35452 [2006] WASAT 162 Mackie v Henderson [2011] WASC 197 MD and DK Giggins CT Pty Ltd and The Owners of Oceanique Strata Plan 52385 [2015] WASAT 101 Salerno v Proprietors of Strata Plan 42724 (1997) BPR 15 The Owners of Ceresa River Apartments Strata Plan 55597 and Haines [2015] WASAT 72 White v Betalli [2006] NSWSC 537
Orders	The Tribunal will make the following orders: ,1. The proprietors of lots 11 and 49 on Strata Plan 52385 shall refrain from advertising that their lots are available for let, lease or occupation on any other basis, for a term of less than three months in any 12 month period.,2. The proprietors of lots 11 and 49 on Strata Plan 52385 shall refrain from entering into any letting agreement, leasing agreement, or any agreement conferring a right to occupy their lots, for a term of less than three months in any 12 month period.,3. It is declared that these orders shall not cease to have any force and effect two years after the making of these orders.
Summary	This proceeding concerned a dispute regarding whether a particular by­law in a strata scheme prohibits 'short­stay accommodation'.,The by­law provides that a lot may be used only as a residence and also that a lot shall not be used for any purpose that may be illegal.,The respondents admitted that they had advertised their lots (apartments) as available for short­term letting and had accepted accommodation bookings for periods as short as two nights.,There were three issues to be determined.,The first issue was whether the word 'residence' in the by­law means a permanent place of abode or whether it distinguishes between different types of uses, such as residential, commercial or industrial. The Tribunal determined that it means a permanent place of abode.,The second issue was whether the by­law operates to prohibit or restrict the leasing of lots contrary to s 42(3) of the Strata Titles Act 1985 (WA). The Tribunal determined that it does not.,The third issue was whether the word 'illegal' in the by­law means contrary to any legal restriction or prohibition or just contrary to criminal law. The Tribunal determined that it meant contrary to any legal restriction or prohibition, which includes the restrictions on uses under the town planning scheme which applies to the strata scheme.,The Tribunal decided that the use of the lots owned by the respondents for short­stay accommodation breached the by­law, both because that use was not a use of those lots as a residence and also because that use was illegal because it was contrary to the town planning scheme which applies to the strata scheme.,The Tribunal did not accept the contention by the first respondent that the Tribunal should exercise its discretion to decline to make an order in respect of the breach of the by­law.,The Tribunal also did not accept the contention of the first respondent that the Tribunal should make orders in the terms proposed by the first respondent, instead of orders in the terms sought by the applicant, and the Tribunal made the orders sought by the applicant.

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL ACT : STRATA TITLES ACT 1985 (WA) CITATION : THE OWNERS OF OCEANIQUE SP 52385 and MD & DK GIGGINS CT PTY LTD [2017] WASAT 36 MEMBER : MR D AITKEN (SENIOR MEMBER) HEARD : 23 JUNE 2015 (FINAL WRITTEN SUBMISSIONS FILED ON 24 NOVEMBER 2016) DELIVERED : 23 FEBRUARY 2017 FILE NO/S : CC 300 of 2014 BETWEEN : THE OWNERS OF OCEANIQUE SP 52385

Applicant

AND

MD & DK GIGGINS CT PTY LTD
First Respondent

DAWID RAFAL BANASIK
DOMINIKA BANASIK
MALGORZATA BANASIK
WIESLAW BANASIK
Other Respondents

Catchwords:

Strata titles ­ Whether word 'residence' in a by­law means a permanent place of abode ­ Operation of s 42(3) Strata Titles Act 1985 (WA) ­ Whether word 'illegal' in a by­law includes non­compliance with permitted uses under a town planning scheme

Legislation:

City of Mandurah Town Planning Scheme No 3

Planning and Development Act 2005 (WA), s 218, Pt 14
Strata Titles Act 1973 (NSW), s 58(6)
Strata Titles Act 1985 (WA), s 35(1)(a), s 42, S 42(3), s 79(2), s 81(1), s 81(10), s 83(1), s 93(1), Pt VI

Result:

Application successful

Summary of Tribunal's decision:

This proceeding concerned a dispute regarding whether a particular by­law in a strata scheme prohibits 'short­stay accommodation'.

The by­law provides that a lot may be used only as a residence and also that a lot shall not be used for any purpose that may be illegal.
The respondents admitted that they had advertised their lots (apartments) as available for short­term letting and had accepted accommodation bookings for periods as short as two nights.
There were three issues to be determined.
The first issue was whether the word 'residence' in the by­law means a permanent place of abode or whether it distinguishes between different types of uses, such as residential, commercial or industrial. The Tribunal determined that it means a permanent place of abode.
The second issue was whether the by­law operates to prohibit or restrict the leasing of lots contrary to s 42(3) of the Strata Titles Act 1985 (WA). The Tribunal determined that it does not.
The third issue was whether the word 'illegal' in the by­law means contrary to any legal restriction or prohibition or just contrary to criminal law. The Tribunal determined that it meant contrary to any legal restriction or prohibition, which includes the restrictions on uses under the town planning scheme which applies to the strata scheme.
The Tribunal decided that the use of the lots owned by the respondents for short­stay accommodation breached the by­law, both because that use was not a use of those lots as a residence and also because that use was illegal because it was contrary to the town planning scheme which applies to the strata scheme.
The Tribunal did not accept the contention by the first respondent that the Tribunal should exercise its discretion to decline to make an order in respect of the breach of the by­law.
The Tribunal also did not accept the contention of the first respondent that the Tribunal should make orders in the terms proposed by the first respondent, instead of orders in the terms sought by the applicant, and the Tribunal made the orders sought by the applicant.

Category: B

Representation:

Counsel:

Applicant : Mr M Atkinson and Mr A Shaw
First Respondent : Mr M Hemery
Other Respondents : Mr D Banasik (In Person)

Solicitors:

Applicant : Atkinson Legal
First Respondent : Hotchkin Hanly
Other Respondents : N/A

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

Byrne v The Owners of Ceresa River Apartments Strata Plan 55597 [2016] WASC 153
Casuarina Rec Club Pty Ltd v The Owners Strata Plan No 77971 [2011] NSWCA 159
Grant and The Owners of Rosneath Farm - Strata Plan 35452 [2006] WASAT 162
Mackie v Henderson [2011] WASC 197
MD and DK Giggins CT Pty Ltd and The Owners of Oceanique Strata Plan 52385 [2015] WASAT 101
Salerno v Proprietors of Strata Plan 42724 (1997) BPR 15
The Owners of Ceresa River Apartments Strata Plan 55597 and Haines [2015] WASAT 72
White v Betalli [2006] NSWSC 537

REASONS FOR DECISION OF THE TRIBUNAL:

Introduction

1 This proceeding concerns a dispute regarding whether a particular by­law in the strata scheme known as 'Oceanique' (the Strata Scheme) prohibits what the parties refer to as 'short­stay accommodation'.

2 The Strata Scheme was created on 3 June 2010 by the registration of Strata Plan 52385 (the Strata Plan) under the Strata Titles Act 1985 (WA) (ST Act). It is situated in Dawesville, within the City of Mandurah and contains 66 lots (hereafter referred to either as lots or apartments), located within two eight storey buildings.

3 The applicant, The Owners of Oceanique Strata Plan 52385 (the Strata Company) is the strata company of the Strata Scheme and the respondents are the owners of apartments in the Strata Scheme. MD & DK Giggins CT Pty Ltd (Giggins) is the owner of Apartment 11 (which is lot 11 on the Strata Plan, of which Giggins has been the registered proprietor since 6 February 2013). Dawid Banasik, Dominika Banasik, Malgorzata Banasik and Wieslaw Banasik (the Banasiks) are the owners, as tenants in common in equal shares, of Apartment 49 (which is lot 49 on the Strata Plan, of which the Banasiks have been the registered proprietor since 24 August 2011).

4 The by­laws of the Strata Company are contained in the management statement which was registered as Instrument L335896 when the Strata Plan was registered.

5 By­law 18 in Schedule 1 of those by­laws (By­law 18) provides:

Use of Lots

(1) A lot may be used only as a residence but may include use as a home office if first approved in writing by both the City of Mandurah and the council of the strata company its agents or servants but such approval to be at the absolute discretion of the council of the strata company.

(2) A proprietor, occupier or other resident shall not use the lot that he owns, occupies or resides in for any purpose that may be illegal or injurious to the reputation of the parcel including the soliciting of persons for use as a place of prostitution.

6 Both Giggins and the Banasiks admit that they have advertised their apartments as available for short term letting and have accepted accommodation bookings for periods as short as two nights (short­stay accommodation).

7 The Strata Company contends that this is a breach of By­law 18 and Giggins and the Banasiks contend that it is not.

The issues

8 The question to be decided by the Tribunal is whether Giggins and the Banasiks, by allowing the use of their apartments for short­stay accommodation, are breaching By­law 18.

9 The issues, identified by the parties, which need to be determined to decide that question are as follows:

1) Are Giggins and the Banasiks breaching By­law 18(1) by allowing the use of their apartments for short­stay accommodation? This turns on the construction of the meaning of the words '[a] lot may be used only as a residence' in By­law 18(1) (the residence issue).

2) If the residence issue is determined in the affirmative, does By­law 18(1) operate to prohibit or restrict the lease of the apartments owned by Giggins and the Banasiks contrary to s 42(3) of the ST Act (the s 42(3) issue)?

3) Are Giggins and the Banasiks breaching By­law 18(2) by allowing the use of their apartments for short­stay accommodation? This turns on the construction of the meaning of the word 'illegal' in By­law 18(2) (the illegality issue).

The history of the proceeding

10 The proceeding has a lengthy history, with a number of twists and turns which have delayed the determination of the matter.

11 The proceeding was commenced by the filing of an application by the Strata Company seeking an order that Tanya Dilollo (Ms Dilollo), as the owner of Apartment 10 (which is lot 10 on the Strata Plan, of which Ms Dilollo has been the registered proprietor since 23 February 2011), and Giggins 'refrain from short term letting their respective apartments and any current and future bookings be cancelled/forfeited accordingly'.

12 The grounds for seeking that order were stated to be that:

• Short­term letting is against the City of Mandurah 'zoned or permitted usage', which is Class 2a (Standard Residential) and any use otherwise is an offence.

• By-law 18(1) states that a lot must only be used as a residence, which means a place of domicile or permanent home.

• Short­term guests create antisocial behaviour and treat common property with varying levels of disrespect as opposed to a long­term identifiable resident.

13 A directions hearing was held and orders were made which required the parties to file with the Tribunal and give to each other statements of issues, facts and contentions and the documents on which they intended to rely. The Strata Company was also required to give notice of the application to the persons referred to in s 79(2) of the ST Act, to give them the opportunity to notify the Tribunal that they wished to participate in the proceeding.

14 As a result of that notice the Banasiks notified the Tribunal that they wished to participate in the proceeding and the Tribunal joined them as additional respondents.

15 The Strata Company applied to amend the application to seek orders in the following terms (the Proposed Orders):

(1) The proprietors of lots 10, 11 and 49 on Strata Plan 52385 shall refrain from advertising that their lots are available for let, lease or occupation on any other basis, for a term of less than 3 months in any 12 month period.

(2) The proprietors of lots 10, 11 and 49 on Strata Plan 52385 shall refrain from entering into any letting agreement, leasing agreement, or any agreement conferring a right to occupy their lots, for a term of less than 3 months in any 12 month period.

(3) It is declared that these orders shall not cease to have any force and effect 2 years after the making of these orders.

16 The Tribunal allowed the amendment of the application and made orders for the parties to file with the Tribunal and give to each other amended statements of issues, facts and contentions and bundles of documents and listed the matter for a final hearing.

17 The Banasiks notified the Tribunal that they would not be preparing a statement of issues, facts and contentions and they would not be defending themselves against the application and they would accept the Tribunal's decision in the matter. Subsequently, the Banasiks have not been actively involved in the proceeding.

18 The parties requested the opportunity to mediate the matter and, accordingly, the Tribunal vacated the final hearing and referred the matter to mediation.

19 The result of the mediation was that:

• Ms Dilollo, Giggins and the Banasiks gave an undertaking (the Undertaking) that they would not advertise that their lot was available for let, lease or occupation for a term of less than three months in any 12 month period (defined in the Undertaking as short­stay accommodation) and that they would not accept any new bookings for short­stay accommodation.

• The Strata Company agreed to convene a general meeting for the consideration of a proposed motion by Giggins to amend By­law 18.

• The mediation was finalised and the matter was listed for a further directions hearing to enable the general meeting to be held.

20 The proposal to amend By­law 18 was not successful.

21 At the next directions hearing, Ms Dilollo consented to orders being made in the terms of the Proposed Orders and the application against Ms Dilollo was otherwise dismissed. That left Giggins and the Banasiks as the remaining respondents.

22 The Tribunal made orders for Giggins and the Banasiks to file with the Tribunal and give to the Strata Company a bundle of the further documents on which they proposed to rely in the proceeding and a list of the witnesses that they proposed to call, together with a short summary of the evidence to be given by each witness, and listed the matter for a further directions hearing to then review the readiness of the matter to be listed for a final hearing and make further programming orders, if necessary. The orders also recorded that Giggins and the Banasiks acknowledged that the Undertaking which they had given at the mediation would continue until the determination of the matter.

23 At the next directions hearing, at the request of the newly appointed solicitors for Giggins, the Tribunal made orders for Giggins to file and give to the Strata Company a substituted responsive statement of issues, facts and contentions and a substituted bundle of documents to enable Giggins to amend its position regarding the issues, facts and contentions, which it said arise in the proceeding.

24 There was then a further directions hearing at which the matter was listed for final hearing and, at the request of the parties, the Tribunal ordered that the Strata Company file and give to Giggins a reply to Giggins' substituted responsive statement of issues, facts and contentions and that Giggins and the Strata Company each file with the Tribunal and give to each other an outline of submissions and list of authorities.

25 Giggins then commenced a proceeding in the Tribunal by filing an application under s 93(1) of the ST Act seeking a declaration that By­law 18(1) is invalid (the Invalidity Proceeding). As a result of that development, the Tribunal vacated the final hearing of this matter and listed it for a directions hearing to determine whether the Invalidity Proceeding should be determined by the Tribunal prior to the final hearing of this matter or whether the two matters should be heard and determined together.

26 At that directions hearing, orders were made to ensure that the persons referred to in s 79(2) of the ST Act were given the opportunity to file a submission or participate in the Invalidity Proceeding. There was no response from any of those persons.

27 A further directions hearing was held for each of the matters and orders were made for the parties to file submissions in each of the proceedings, and both proceedings were listed for a final hearing on the same date, with the Invalidity Proceeding to be heard first.

28 The decision was reserved at the conclusion of each final hearing.

29 Shortly thereafter, the solicitors for the Strata Company wrote to the Tribunal pointing out that, subsequent to the final hearings, the Tribunal had published its decision in another matter, which was relevant to the residence issue in this proceeding; see The Owners of Ceresa River Apartments Strata Plan 55597 and Haines [2015] WASAT 72 (Ceresa). The Strata Company sought leave to file submissions on the residence issue in light of the decision in Ceresa and the Tribunal gave leave for each party to file submissions in respect of that issue.

30 Subsequently, the solicitors for the Strata Company wrote to the Tribunal advising that the decision in Ceresa was the subject of an appeal to the Supreme Court. The President of the Tribunal then made an order that the reserved decision in this proceeding was to be held in abeyance until after the publication of the decision of the Supreme Court regarding that appeal, following which the proceeding would be listed for a directions hearing to consider whether the parties would be given the opportunity to file further submissions in light of that decision.

31 The Tribunal made its decision in the Invalidity Proceeding, which was to dismiss that proceeding; see MD and DK Giggins CT Pty Ltd and The Owners of Oceanique Strata Plan 52385 [2015] WASAT 101.

32 The decision of the Supreme Court regarding the appeal against Ceresa was subsequently delivered and published; see Byrne v The Owners of Ceresa River Apartments Strata Plan 55597 [2016] WASC 153 (Ceresa No 2) and this proceeding was then listed for a directions hearing.

33 However, before that directions hearing was held the solicitors for the Strata Company wrote to the Tribunal advising that the decision in Ceresa No 2 was the subject of an appeal to the Court of Appeal. The President of the Tribunal then made an order that the reserved decision in this proceeding was to be held in abeyance until after the publication of the decision of the Court of Appeal regarding that appeal, following which the proceeding would be listed for a directions hearing to consider whether the parties would be given the opportunity to file further submissions in light of that decision.

34 The solicitors for Giggins subsequently wrote to the Tribunal seeking an order that Giggins be released from the Undertaking. A directions hearing was held before the President who made an order that the Strata Company was to provide an undertaking as to damages and if that undertaking was not provided then the Tribunal would give its decision in this proceeding, rather than the decision being held in abeyance until after the publication of the decision of the Court of Appeal.

35 The solicitors for the Strata Company wrote to the Tribunal stating that the Strata Company would not provide an undertaking as to damages and the matter was therefore listed for a directions hearing to consider whether the parties were to be given the opportunity to file submissions in light of the decision in Ceresa No 2. The Tribunal made orders giving the parties the opportunity to file such submissions and the Tribunal has now made its decision in this proceeding.

The evidence

36 The following documents were received into evidence at the final hearing:

• Strata Company's Bundle of Documents;

• Strata Company's Supplementary Bundle of Documents;

• Giggins' Substituted Bundle of Documents;

• Strata Company's Second Supplementary Bundle of Documents;

• Strata Company's Third Supplementary Bundle of Documents;

• Giggins' Second Substituted Bundle of Documents; and

• Stata Company's Witness Bundle of Documents.

37 Ms Fiona Louise Mullen, Manager of Planning and Land Services of the City of Mandurah (the City) was called as a witness by Giggins at the final hearing.

38 Ms Mullen identified within the documents a letter sent to her by the solicitors for Giggins and a letter sent by her to the solicitors for Giggins in response. In her letter of response, Ms Mullen stated that the City did not have any current plans to instigate enforcement action in respect of Giggins permitting its apartment to be used for short­stay accommodation. In response to a question from counsel for Giggins, Ms Mullen confirmed that this remained the position of the City 'on the evidence or the lack of evidence that the City has'. In response to a question from counsel for the Strata Company, Ms Mullen agreed that 'in very general terms' if the City receives cogent evidence of a land use contrary to a local planning scheme the City would prosecute the matter.

39 In response to questions from counsel for the Strata Company, Ms Mullen gave the following evidence in respect of the application of the City of Mandurah Town Planning Scheme No 3 (TPS 3) to the Strata Scheme:

• TPS 3 contains a definition of short­stay accommodation as meaning 'where occupation by any person is limited to a maximum of three months in any 12 month period'.

• The Strata Scheme is located within the urban development zone of TPS 3.

• TPS 3 provides for an outline development plan to be prepared and approved by the City to set the specific zonings for a particular area of land within the urban development zone for the purposes of TPS 3.

• An outline development plan was approved by the Council of the City (the City Council) on 16 December 2008 for the area of land which is described as the Port Bouvard Southport Precinct, within which the Strata Scheme is located.

• That outline development plan provides that the zoning for the land on which the Strata Scheme is located is 'permanent residential/short­stay accommodation', with all land use development to be in accordance with a development guide plan (DGP) approved by the City Council.

• There was an approved DGP in place in 2007 (approved by the City Council on 10 August 2006) for the part of the land in the Port Bouvard Southport Precinct, which is described as the Southport Resort Precinct, within which the Strata Scheme is located. That DGP was replaced by another DGP for the Southport Resort Precinct (approved by the City Council on 27 November 2008), which in turn was replaced by another DGP for that precinct (approved by the City Council on 23 October 2012), which is the current approved DGP for the precinct.

• Each version of the DGP for the Southport Resort Precinct provides that the uses on the land on which the Strata Scheme is located, which is described as 'Precinct 2: The Apartments', are restricted to residential apartments 'which may be utilised for short-stay purposes, subject to management agreement between the owner of an apartment and the operator of the resort/hotel' and that the short-stay accommodation components shall be managed by a single management entity.

40 It should be noted at this point that the DGP for the Southport Resort Precinct includes 'Precinct 1A: The Hotel', which adjoins 'Precinct 2: The Apartments' and it is not in dispute that a hotel has not been constructed in Precinct 1A.

Determination of the issues

41 The Tribunal will deal with each of the issues in turn by setting out the contentions of the Strata Company and Giggins and then determining the issue.

The residence issue

42 The residence issue turns on the construction of the meaning of the words '[a] lot may be used only as a residence' in By­law 18(1).

43 In Ceresa No 2, Pritchard J held that the by-laws of a strata company should be characterised as a statutory contract, rather than as subsidiary legislation, and at [75] - [79] stated as follows:

The ordinary principles of contractual construction should guide the construction of the By­Laws. They are that the rights and liabilities of parties under a term of a contract are determined objectively, by reference to the contract's text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose. However, in the case of the By­Laws, those principles are subject to four qualifications.

First, to the extent that their terms permit, the By­Laws should be construed so that they are not inconsistent with the ST Act (bearing in mind that a strata company has no power to make a by­law which is inconsistent with the ST Act).

Secondly, in interpreting a term of a contract which is ambiguous, it is possible in some circumstances to refer to objective extrinsic material to ascertain the meaning of the term. However, in the context of the By­Laws, caution should be exercised in going beyond the language of the By­Laws and their statutory context to ascertain their meaning, and a tight rein should be kept on having recourse to surrounding circumstances. (That reflects the fact that although … the by­laws of a strata company may be inspected by third persons, such persons would ordinarily have no access to the circumstances surrounding the making of those by­laws.)

Thirdly, the statutory context of the by-laws of a strata company should be taken into account by the Court in construing the By­Laws. That statutory context includes the fact that the function of the By­Laws is to regulate the rights and liabilities of the Respondent, the proprietors of the lots in the Complex and certain other parties with rights or interests in the lots and the common property in the Complex.

Fourthly, in ascertaining the meaning of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood its terms to mean. That will involve a consideration of the language used, the circumstances addressed by the contract, and the commercial purpose or objects to be secured by the contract. Unless a contrary intention is indicated, the court will approach the task on the assumption that the parties intended to produce a commercial result, so that the contract should be construed so as to avoid it making commercial nonsense or working a commercial inconvenience. However, in the case of the By­Laws, there is no basis for saying that they should be interpreted as a business document, with the intention that they be given business efficacy. That does not mean that the By­Laws may not have a commercial purpose, and be interpreted accordingly, but due regard must be paid to the statutory context in so doing.

44 In Ceresa No 2, Pritchard J dismissed an appeal against the decision of the Tribunal in Ceresa, which decided that the words 'use [a] lot as a residence' in the by­law in Ceresa (the Ceresa By­law) are to be construed to mean the occupation of a lot in that strata scheme by a person with the intent to reside there permanently or for a substantial period of time, that is as a permanent place of abode, which excludes the use of a lot for the purposes of short­stay accommodation.

45 Giggins accepts that there are not any distinguishing differences between the wording of By­Law 18(1) and the Ceresa By-law. By-Law 18(1) provides that '[a] lot may be used only as a residence' and the Ceresa By­law provides that a proprietor 'may only use his lot as a residence'.

46 However, Giggins says that, because it was not raised by the appellant, there was a factor which was not taken into account by Pritchard J in Ceresa No 2 in the construction of the Ceresa By­law which is relevant and accordingly the construction of the Ceresa By­law in Ceresa and Ceresa No 2 should not be followed by the Tribunal in the construction of By­Law 18(1) in this matter.

47 Giggins says that the statement by Pritchard J at [109] of Ceresa No 2 that 'nothing in the ST Act prohibits a strata company from limiting or restricting a proprietor in the use of his or her lot, or from granting an occupancy right to his or her lot other than to a tenant for use as a "residence" (that is, as a permanent place of abode)' is not correct because s 42(3) of the ST Act is a provision which contains such a prohibition.

48 This is essentially the s 42(3) issue. However, because Giggins has raised it in respect of the residence issue the Tribunal will address it at this point.

49 Section 42(3) of the ST Act provides:

No by­law, amendment or repeal of a by­law is capable of operating so as to prohibit or restrict the devolution of lots or any transfer, lease, mortgage or other dealing therewith or to destroy or modify any easement implied or created by this Act.

50 Giggins says that under the first of the four qualifications to the ordinary principles of contractual construction set out by Pritchard J in Ceresa No 2 (that is, the by­laws should be construed so that they are not inconsistent with the ST Act), the Tribunal should not construe By­law 18(1) so as to restrict short­stay leasing, if another construction is open that allows it to operate without contravening s 42(3) of the ST Act.

51 Giggins says that in Ceresa No 2 there were two different constructions of the meaning of 'residence' in the Ceresa By­law before Pritchard J. Giggins says that the first construction, which was accepted by her Honour, referred to the 'intent' of the occupancy and if all of the relevant circumstances, looked at objectively, indicated an intent to occupy the lot permanently, then the occupancy was for a residence. Giggins says that the second construction before her Honour was that residence referred to the 'type' of use to which the lot was put and that the word 'residence' was used in the Ceresa By­law to distinguish between different types of uses of lots (such as between residential, commercial or industrial uses) and thus should be construed solely referring to the use of a lot for habitable purposes regardless of the duration of the habitation or the intent of the occupant.

52 Giggins says that, unlike the first construction, the second construction does not give rise to the problem of conflict with s 42(3) of the ST Act and therefore does not 'fall foul' of the first qualification referred to by Pritchard J and should be adopted by the Tribunal in construing By­Law 18(1). Giggins contentions regarding why it says the second construction is not contrary to s 42(3) are detailed in [62] to [63] below, in the determination of the s 42(3) issue.

53 Giggins contends that in Ceresa No 2 it was not argued that s 42(3) of the ST Act would render the Ceresa By­law inoperative if short­stay accommodation by way of lease was prohibited and that s 42(3) did not appear to have been drawn to the attention of Pritchard J and therefore it was not taken into account in her Honour's consideration of the construction of the words 'use [a] lot as a residence' in the Ceresa By­law. Giggins contends that, therefore, the construction of the Ceresa By­law in Ceresa No 2 should not be adopted by the Tribunal in respect of By­law 18(1).

54 The Strata Company says that there is nothing in Ceresa No 2 to indicate that Pritchard J did not consider s 42(3) of the ST Act, the facts in this proceeding are not distinguishable from those in Ceresa and, as Giggins concedes, there are no distinguishing differences between the Ceresa By­law and By­law 18(1) and, accordingly, By­law 18(1) is to be construed in the manner determined by Pritchard J in Ceresa No 2.

55 The Tribunal does not accept Giggins' contention that Pritchard J did not take s 42(3) of the ST Act into account in Ceresa No 2. In the Tribunal's view it is clear from [113] of Ceresa No 2 that Pritchard J considered the provisions of the ST Act, including s 42, thoroughly and therefore the Tribunal does not accept the contention that her Honour did not take s 42(3) into account when stating at [109] of Ceresa No 2 that 'nothing in the ST Act prohibits a strata company from limiting or restricting a proprietor in the use of his or her lot, or from granting an occupancy right to his or her lot other than to a tenant for use as a "residence" (that is, as a permanent place of abode)'.

56 Accordingly, the Tribunal has decided that 'residence' must be given the same meaning in By-law 18(1) as it was given in Ceresa and Ceresa No 2, namely that it means a permanent place of abode.

57 The Tribunal has therefore determined the residence issue in the affirmative, that is Giggins and the Banasiks are breaching By­law 18(1) by allowing the use of their apartments for short­stay accommodation.

58 Even if the Tribunal is wrong in its view that Pritchard J took s 42(3) of the ST Act into account in Ceresa No 2, the Tribunal is of the view (for the reasons given below in respect of the s 42(3) issue) that the construction of By­law 18(1) to mean that a lot in the Strata Scheme cannot be used for short­stay accommodation does not contravene s 42(3).

The s 42(3) issue

59 The s 42(3) issue is whether, in light of the determination by the Tribunal of the residence issue, By­law 18(1) contravenes s 42(3) of the ST Act.

60 The s 42(3) issue has already been dealt with in part above in the determination of the residence issue. However, both Giggins and the Strata Company also made submissions in respect of s 42(3) as a separate issue. To the extent that those submissions have not been dealt with in the determination of the residence issue, the Tribunal will now address them.

61 Giggins contends that if By­law 18(1) is construed to prohibit the letting of an apartment for short­stay accommodation, then the by­law will contravene s 42(3) of the ST Act by restricting the ability of the owner of an apartment in the Strata Scheme to lease the apartment, because it will preclude the leasing of the apartment to 'the short­stay accommodation market'.

62 Giggins says that a mere restriction on the type of 'use' of a lot, though it might limit the class of tenants, does not contravene s 42(3) of the ST Act. Giggins refers to a number of decisions in New South Wales regarding s 58(6) of the Strata Titles Act 1973 (NSW) (NSW ST Act), which is in similar terms to s 42(3) of the ST Act, as authority for that proposition.

63 In particular, Giggins refers to the decision of Windeyer J in Salerno v Proprietors of Strata Plan 42724 (1997) BPR 15 (Salerno), which held that a by­law which provided that the proprietor or occupier of a lot must not smoke or allow smoking within a lot or within the common property did not contravene s 58(6) of the NSW ST Act. Giggins refers to the comment by Windeyer J in Salerno that a by­law which has the effect of prohibiting the lease of a lot to persons who are smokers might be invalidated by s 58(6) of the NSW ST Act, because it would not control the conduct of such persons within the lot, but would prevent the leasing of that lot to such persons whether or not they smoked within the lot.

64 Giggins says that if By­law 18(1) is construed to allow a lot only to be used as a place of permanent habitation then that would prohibit the leasing of a lot for habitation on a temporary basis. Giggins contends that such a construction of By­law 18(1) would not control the conduct of persons within the lot, but would prevent the leasing of a lot to persons who wished to lease the lot on a short­stay basis, which would be contrary to s 42(3) of the ST Act 'in the sense explained' by Windeyer J in respect of s 58(6) of the NSW ST Act in Salerno.

65 Giggins also refers to the statement by Senior Member Raymond in Grant and The Owners of Rosneath Farm - Strata Plan 35452 [2006] WASAT 162 (Grant) at [119] ­ [120] that a requirement in a by­law that the leasing of a lot shall be through the strata company operated contrary to s 42(3) of the ST Act and should be severed from the by­law because it is a provision that is capable of restricting the ability to lease, because the strata company does not have access to the market to the same extent as a professional real estate agent. Giggins contends that if By­law 18(1) is construed to prohibit the use of a lot for short­stay accommodation, then it should be 'struck down' because it will restrict the ability of a lot owner to lease their lot because it precludes leasing to a segment of the market that is the short­stay accommodation market.

66 The Strata Company says that the New South Wales cases cited by Giggins support the Strata Company's contention that s 42(3) of the ST Act does not operate to prohibit or restrict any lease of Giggins' lot, or the Banasiks' lot, and that in each of those cases the by­law being considered was held to be effective to prevent a particular use of a lot, notwithstanding that it might operate to limit the class of prospective tenants. The Strata Company also says that, contrary to the disputed by­law in Grant, By­law 18(1) does not limit 'the conduit' through which the owner of a lot may lease their lot.

67 In Salerno at 15,458 Windeyer J states as follows:

The purpose of s 58(6) [of the Strata Titles Act 1973 (NSW)] as was the purpose of its predecessor, s 13 the Strata Titles Act 1961 (NSW), appears to be to prevent restraints on alienation, leasing or mortgaging. Thus it is clear that a by-law requiring the consent of the body corporate to transfer or lease would be invalid. The argument of the defendant is that the by­law does not offend against s 58(6) because it does not restrict in this case the leasing of the lots but rather controls, or seeks to control, the conduct of persons within the lots of the strata plan. Any person whosoever is free to purchase or take a lease of the lots; what those persons are not free to do is to smoke or allow smoking within the lot.

In my opinion, that argument is correct. It is supported by the decision of Waddell CJ in Equity in Bapson Pty Ltd v Puyeti Pty Ltd (1990) NSW Titles Cases 80-002. That case concerned the validity of a by-law intended to restrict the number of businesses of a particular type which could operate in a particular centre. The by-law in question was held to be invalid for reasons irrelevant here. However, His Honour went on to deal with the argument which had been raised that the by-law was contrary to s 58(6) in that it operated to restrict the use of the lots and thereby limited the right of leasing or transferring those lots. He said:

However, while a restriction on use might limit the number of potential transferees or lessees, I do not think that it can be regarded as a restriction on transfer or leasing or on any of the transactions mentioned.

68 In Grant at [67] and [128] Senior Member Raymond states as follows:

I consider [s 42(3) of the ST Act] is intended to catch by-laws, which in themselves are capable of prohibiting or restricting the devolution of a lot, by way of the method or procedures which are prescribed as a prerequisite to that devolution occurring.

As I have reasoned above I consider that s 42(3) is intended to operate in relation to the mechanisms by which the devolution of lots or any transfer, lease, mortgage or other dealing is effected.

69 In the view of the Tribunal, adopting the reasoning in the statements by Windeyer J in Salerno and Senior Member Raymond in Grant, s 42(3) of the ST Act is intended to catch a by­law which restricts the method or procedure by which a lot may be leased, for example by requiring the consent of the strata company to a lease or by requiring that a lease must be arranged through a strata company.

70 By­law 18(1), in itself, does not restrict any lease of a lot by prescribing any method or procedure as a prerequisite to that leasing occurring.

71 Whilst the restriction on the use of lots imposed by By­law 18(1), so that they can only be used as a residence (within the meaning given to that term in Ceresa and Ceresa No 2) might limit the number of potential lessees, it cannot be regarded as a restriction on the leasing of the lots for the purposes of s 42(3) of the ST Act.

72 Therefore, the Tribunal has determined that By­law 18(1) does not contravene s 42(3) of the ST Act.

The illegality issue

73 The illegality issue turns on the construction of the meaning of the word 'illegal' in By­law 18(2).

74 The Strata Company refers to the definition of 'illegal' in the Oxford English Dictionary (3^rd ed, 2010) as meaning 'contrary to or forbidden by law, esp. criminal law'.

75 The Strata Company contends that the use of their apartments for short­stay accommodation by Giggins and the Banasiks is illegal because it contravenes s 218 of the Planning and Development Act 2005 (WA) (PD Act). Section 218 provides that a person who contravenes the provisions of a town planning scheme commits an offence. The Strata Company contends that it is not possible for lots in the Strata Scheme to be used for short­stay accommodation under TPS 3, because under the provisions of the DGP for the Southport Resort Precinct the permitted uses of those lots are restricted to permanent residential apartments, which may only be utilised for short­stay purposes if there is a management agreement between the owner of a lot and the operator of the resort/hotel, which has not been built.

76 Giggins contends that there are two questions which must be decided by the Tribunal to determine the illegality issue. The first question is the construction of the provisions of By­law 18(2) and the second question is whether, on that construction, the use of Giggins' lot for short­stay accommodation is a purpose that is illegal.

77 The Tribunal will firstly deal with the question of the construction of the provisions of By­law 18(2).

78 Giggins accepts the dictionary meaning of 'illegal' referred to by the Strata Company and accepts that, without any consideration of context, 'illegal' could refer to any use of a lot that may be contrary to any legal restriction or prohibition, which would include TPS 3.

79 However, Giggins contends that, in the context of the language used in By­law 18(2) and the other by­laws of the Strata Company, the word 'illegal' in By­law 18(2) should be construed as meaning 'an offence under general criminal law enforceable by police'.

80 Giggins refers to the words 'including the soliciting of persons for use as a place of prostitution' at the end of By­law 18(2), which it says is a matter of 'criminal law enforceable by police' and that the evident intent is for By­law 18(2) to prohibit illegal uses of the same kind, that is uses contrary to 'criminal law enforceable by police'.

81 Giggins also refers to the words 'injurious to the reputation of the parcel' in By­law 18(2) and says the evident intent is for By­law 18(2) to prohibit illegal uses of a kind that could be injurious to the reputation of the parcel. Giggins says that the use of a lot in breach of the 'criminal law enforceable by police' could be injurious in this sense, but that it strains language to suggest that the use of a lot that is illegal in the broader sense of the word could be injurious to the reputation of the parcel.

82 Giggins also says that a number of the other by­laws of the Strata Company refer to 'compliance with directions of legal enforcement agencies other than police' and says that if illegal use in By­law 18(2) was intended to refer to a use amounting to an offence enforceable by an agency other than police, then there would be no need for those other by­laws. Giggins says that the evident intent of the by­laws is to leave it to 'non­police agencies' to enforce such laws and that construing By­law 18(2) to restrict use contrary to relevant planning laws is contrary to that evident intent.

83 By­law 18(2) uses the disjunctive 'or' between the word 'illegal' and the words 'injurious to the reputation of the parcel', which means that they are separate types of use which are prohibited. In the Tribunal's view the words 'including the soliciting of persons for use as a place of prostitution' in By­law 18(2) are part of a composite phrase which refers to the use of a lot which is injurious to the reputation of the parcel and not part of a composite phrase which refers to the use of a lot which is illegal. Therefore, the Tribunal does not accept the contention by Giggins that the reference to prostitution provides any context for the construction of the meaning of illegal.

84 The Tribunal also does not accept the contention by Giggins that the eight other by­laws of the Strata Company referred to by Giggins provide any context which requires the word 'illegal' in By­law 18(2) to be given a different meaning to its ordinary meaning and, in particular, that it ought to be construed to mean only forbidden by criminal law. One of those other by­laws is By­law 18(1), with regard to the provision that the use of a lot may include use as a home office if approved by both the City and the Strata Company. That is a provision which potentially permits a particular use of a lot, not a prohibition of a use. Therefore, the Tribunal does not accept Giggins' contention that it provides any context for the construction of the meaning of the word 'illegal' in By­law 18(2) with regard to the prohibition of uses of a lot. Four of those by­laws require the Strata Company, not owners or occupiers of lots, to comply with certain regulatory standards, whereas By­law 18(2) is concerned with the use of a lot by the owner or occupier of the lot. Those by­laws therefore do not provide any context for the construction of the meaning of the word 'illegal' in By­law 18(2) with regard to the prohibition of uses of a lot. The three other by­laws relate to specific obligations imposed on the owner of a lot such as carrying out work in respect of a lot, complying with standards if a smoke detector or alarm system is fitted, and complying with any requirements of the City regarding the disposal of rubbish. None of those things relate to the use of a lot and, therefore they do not provide any context for the meaning of the words 'not use [a] lot … for any purpose that may be illegal'.

85 Accordingly, the Tribunal has decided that there is nothing in the context of By­law 18(2) or the other by­laws of the Strata Company which require the word 'illegal' in By­law 18(2) to be given the meaning contended for by Giggins. The words 'use [a] lot … for any purpose that may be illegal' in By­law 18(2) should be given their ordinary meaning which is a use contrary to any legal restriction or prohibition, which includes any use contrary to the provisions of TPS 3.

86 The Tribunal will now deal with the question of whether the use of Giggins' lot and the Banasiks' lot for short­stay accommodation is a use that is illegal for the purposes of By­law 18(2).

87 Giggins contends that if the Tribunal construes 'illegal' in By­law 18(2) to include the use of a lot contrary to TPS 3, the use by Giggins of its lot for short­stay accommodation does not breach TPS 3 and, consequently, does not breach By­law 18(2).

88 Giggins accepts that there are two preconditions under TPS 3 for the permitted use of lots in the Strata Scheme for short­stay accommodation which are, firstly, a management agreement between the owner of a lot and the operator of the proposed resort/hotel and, secondly, having all short­stay accommodation managed by the operator of the proposed resort/hotel.

89 Giggins does not dispute that the proposed resort/hotel has not been developed and therefore it is impossible for it to meet those two preconditions. Giggins says that, given that it is impossible for it to meet those preconditions, the Tribunal should find that it is 'permitted to exercise its right' to provide short­stay accommodation without meeting the preconditions.

90 Giggins makes the point that the City has not taken action against it for breach of TPS 3. Giggins says that the Strata Company has the right to seek a review by the Tribunal under Pt 14 of the PD Act if aggrieved by a decision of the City in respect of the failure to exercise a discretionary power under TPS 3, such as the enforcement of the provisions relating to short­stay accommodation. Giggins says that the Strata Company has had ample opportunity to 'compel' the City to exercise its discretion to enforce TPS 3 and has failed to do so, without reason, and in the circumstances the Tribunal should exercise its discretion to decline to make any order in the Strata Company's favour in respect of the alleged breach of By­law 18(2).

91 The Tribunal does not accept Giggins' argument that because it is impossible for it to meet the two preconditions under TPS 3, it should be permitted to provide short­stay accommodation without meeting the preconditions. Those preconditions are in the DGP for the Southport Resort Precinct made under TPS 3 for a reason and should not simply be ignored. If Giggins wants to be free of those preconditions, then it will need to persuade the City to remove them.

92 The fact that the City has not taken any action against Giggins or the Banasiks in respect of a breach of TPS 3 is not relevant to the question of whether they are breaching By­law 18. It is a matter for the City as to how it deals with any possible breach of TPS 3. It is clear from the evidence of Ms Mullens that up to the date of the final hearing the City had not received what she referred to as 'cogent evidence' of a land use contrary to TPS 3. That situation may subsequently change. The Strata Company does not have any duty or obligation to compel the city to enforce TPS 3. The duty of the Strata Company is to enforce its by­laws in accordance with the provisions of s 35(1)(a) of the ST Act.

93 The Tribunal is satisfied on the balance of probabilities (which is the civil standard of proof applicable to this proceeding) on the evidence before it, which is very clear, that the use of the apartments owned by Giggins and the Banasiks for short­stay accommodation is contrary to the provisions of TPS 3 and is therefore illegal for the purposes of By­law 18(2) and in breach of By­law 18(2).

94 The Tribunal does not accept the contention by Giggins that the Tribunal should exercise its discretion to decline to make an order in respect of the breach of By­law 18(2). Both By­law 18 and the DGP for the Southport Resort Precinct containing the two preconditions to the use of apartments in the Strata Scheme for short­stay accommodation were in place when Giggins and the Banasiks purchased their apartments. In Mackie v Henderson [2011] WASC 197 at [41], Edelman J, in dealing with the issue of the exercise of a discretion to declare a by­law to be invalid, referred to the comment made by White J in White v Betalli [2006] NSWSC 537 regarding a 'windfall' which would be conferred on the owner of a lot in a strata scheme if a by­law was declared to be invalid and the comment made by Young JA in Casuarina Rec Club Pty Ltd v The Owners Strata Plan No 77971 [2011] NSWCA 159, that people who buy a lot in a strata scheme buy with notice of the by­laws, so that it can hardly ever be said that the by­laws create an injustice. The Tribunal is of the view that the same can be said about By­law 18 and TPS 3 and it is not appropriate for the Tribunal to exercise its discretion under s 83(1) of the ST Act not to make an order in respect of the breach by Giggins and the Banasiks of By­law 18.

Decision

95 As a result of the determination of the issues the Tribunal has decided that Giggins and the Banasiks are breaching By­law 18 by allowing the use of their apartments for short­stay accommodation.

96 Accordingly, the Tribunal will make orders against Giggins and the Banasiks.

The terms of the orders

97 As has already been stated, the Strata Company originally sought an order that the original respondents refrain from the short­term letting of their apartments, but the Strata Company subsequently amended the application to seek the Proposed Orders.

98 Giggins proposes that, instead of the Proposed Orders, the Tribunal should make the following orders against it:

1) Subject to paragraph (2), the proprietor of lot 11 will not grant a right to occupy its lot for accommodation to any other person, other than with the intent that the grantee of the right:

i) will reside in the lot permanently, or for a substantial period of time;

ii) will call the lot home; or

iii) will have the lot as their fixed address.


2) The provisions of paragraph (1) do not apply if the right to occupy lot 11 is granted to the other person by way of a lease.

3) It is declared that these orders shall not cease to have any force and effect two years after the making of these orders.

99 It is noted that Giggins does not oppose order 3 of the Proposed Orders, which is the same as order (3) of the orders proposed by Giggins. That order is sought by the Strata Company due to s 81(10) of the ST Act, which provides that an order made under Pt VI of the ST Act ceases to have any force or effect upon the expiration of the period of two years unless the order provides otherwise.

100 However, Giggins opposes orders 1 and 2 of the Proposed Orders on the grounds that they 'suffer from three difficulties' which Giggins says arise from the decision in Ceresa No 2. Giggins says that those 'difficulties' are as follows:

1) Ceresa No. 2 does not give any guidance as to when the 'cut-off' point is between 'short­stay' and 'permanent accommodation'.

2) Given it is the intent with which the occupancy is granted, determined objectively, that counts, considerations other than the length of time are relevant. For example, if a person sells their home and takes on a short­stay let of a lot while they look for another home to buy, the lot may well be their only fixed address or home, even though the period of time may only be a matter of one or two months.

3) If the short­stay accommodation is by way of lease, as opposed to the grant of some other occupancy right such as a license, then s 42(3) of the ST Act would be contravened.

101 The Tribunal does not accept the contention by Giggins that orders should be made in terms of orders 1 and 2 of the orders proposed by Giggins for the following reasons.

102 Giggins and the Banasiks gave the Undertaking in the terms of orders 1 and 2 of the Proposed Orders. Furthermore, the Undertaking defined the letting, lease or occupation of a lot for a term of less than three months in any 12 month period as 'short­stay accommodation'. In the Tribunal's view, Giggins and the Banasiks thereby accepted the terms of orders 2 and 3 of the Proposed Orders.

103 TPS 3 contains a definition of 'short­stay accommodation' meaning 'where occupation by any person is limited to a maximum of three months in any 12 month period', which is consistent with the terms of the Proposed Orders.

104 Ms Dilollo consented to orders in the terms of the Proposed Orders.

105 Making the orders in the terms of the proposed orders will provide certainty and clarity regarding what is prohibited.

106 For the reasons already given, there is no contravention of s 42(3) of the ST Act if the orders restrain the proprietors of lots 11 and 49 from leasing those lots for a term of less than three months in any 12 month period.

107 Section 81(1) of the ST Act provides that if the Tribunal makes an order sought by an applicant the order may be expressed in terms different from the order sought, so long as it does not differ in substance from the order sought. Therefore, it is not open to the Tribunal to make an order that differs in substance from the Proposed Orders.

108 The orders proposed by Giggins differ in substance from the Proposed Orders.

109 The Tribunal has therefore decided that it should make orders in terms of the Proposed Orders in respect of the lots owned by Giggins and the Banasiks.

Orders

The Tribunal will make the following orders:

1. The proprietors of lots 11 and 49 on Strata Plan 52385 shall refrain from advertising that their lots are available for let, lease or occupation on any other basis, for a term of less than three months in any 12 month period.

2. The proprietors of lots 11 and 49 on Strata Plan 52385 shall refrain from entering into any letting agreement, leasing agreement, or any agreement conferring a right to occupy their lots, for a term of less than three months in any 12 month period.

3. It is declared that these orders shall not cease to have any force and effect two years after the making of these orders.

I certify that this and the preceding [109] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

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MR D AITKEN, SENIOR MEMBER