The Owners of Roslyn Strata Plan 35960 v Maguire [No 2]
[2015] WADC 15
•20 FEBRUARY 2015
THE OWNERS OF ROSLYN STRATA PLAN 35960 -v- MAGUIRE [No 2] [2015] WADC 15
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2015] WADC 15 | |
| Case No: | CIV:1852/2012 | 12 FEBRUARY 2015 | |
| Coram: | GOETZE DCJ | 20/02/15 | |
| PERTH | |||
| 10 | Judgment Part: | 1 of 1 | |
| Result: | Appeal dismissed | ||
| PDF Version |
| Parties: | THE OWNERS OF ROSLYN STRATA PLAN 35960 BRADLEY JOHN MAGUIRE |
Catchwords: | Strata titles Levies against proprietor of strata units Failure to pay levies Requirements for recovery of levies Restriction on powers of expenditure by strata company Requirement for disclosure of general nature of budget expenditure, including legal fees, by notice before general meeting |
Legislation: | Strata Titles Act 1985 (WA) |
Case References: | Sisto and The Owners of Glenway Gardens Apartments [2005] WASAT 282 Velovski v The Owners of Hector Gardens - Strata Plan 6448 [2004] WASTR 12 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Appellant (Defendant)
AND
BRADLEY JOHN MAGUIRE
Respondent (Plaintiff)
Catchwords:
Strata titles - Levies against proprietor of strata units - Failure to pay levies - Requirements for recovery of levies - Restriction on powers of expenditure by strata company - Requirement for disclosure of general nature of budget expenditure, including legal fees, by notice before general meeting
Legislation:
Strata Titles Act 1985 (WA)
Result:
Appeal dismissed
Representation:
Counsel:
Appellant (Defendant) : Mr B H Taylor
Respondent (Plaintiff) : Mr T E Nelson
Solicitors:
Appellant (Defendant) : Taylor Olivier
Respondent (Plaintiff) : Atkinson Legal
Case(s) referred to in judgment(s):
Sisto and The Owners of Glenway Gardens Apartments [2005] WASAT 282
Velovski v The Owners of Hector Gardens - Strata Plan 6448 [2004] WASTR 12
- GOETZE DCJ:
Introduction
1 By this action, the plaintiff strata company seeks to recover outstanding levies from the defendant, Bradley John Maguire, who is the owner of two units in the complex known as Roslyn Strata Plan 35960.
2 Mr Maguire entered a conditional appearance to the writ of summons and sought to set the writ aside by chamber summons pursuant to O 12 r 6 of the Rules of the Supreme Court 1971 (as amended).
3 In his affidavit supporting the chamber summons, Mr Maguire swore that:
3. To the best of my knowledge, there has been no resolution of the plaintiff approving the commencement of these proceedings. In the circumstances, I believe that these proceedings have been commenced in the name of the plaintiff without any lawful authority and are liable to be dismissed.
4 By written submissions, Mr Maguire further argued that:
(1) the notice calling for the annual general meeting of the strata company held on 27 March 2012 failed to specify that there was special business to be conducted thereat, namely a motion seeking to commence this action against Mr Maguire;
(2) further, the general nature of the special business and the costs to be incurred in respect of any legal action against him was not detailed sufficiently, or at all; and
(3) the expenditure of monies in this action will exceed the statutory authority of the council of the strata company.
5 Mr Maguire's summons came on for hearing before the learned registrar on 19 April 2013. That summons was dismissed on 3 May 2013. Mr Maguire now appeals that decision.
The statutory scheme
6 Pursuant to the scheme of the Strata Titles Act 1985, the registered proprietors from time to time of Roslyn Strata Plan 35960 constitute a strata company, which is capable of suing and being sued.
7 The strata company is entitled to impose levies seeking contributions from proprietors of strata lots – s 36(1)(a), (b) and (c).
8 By s 44 of the Act, the functions of the strata company shall, subject to the Act and to any restriction imposed or direction given at a general meeting, be performed by the council of the strata company which shall perform its functions in accordance with and in the manner provided by the by-laws set out in sch 1 to the Act which, in the instant case, have not been amended in any way. However, there is a restriction on the powers of expenditure by a council as set out in the Act as follows:
47. Restrictions on powers of expenditure
(1) Except as authorised by or under this section the council of a strata company shall not, in any one case, undertake expenditure exceeding the sum obtained by multiplying —
(a) a sum per lot fixed by special resolution of the strata company; or
(b) if no such sum is fixed, the prescribed amount per lot,
by the number of lots that are the subject of the scheme.
(2) Subsection (1) does not apply to —
(e) expenditure authorised by the strata company in general meeting as part of the budget of the company.
…
(7) Where proposed expenditure to which subsection (1) applies would exceed an amount calculated in accordance with that subsection, the council shall —
(a) submit the proposal for determination at a general meeting of the strata company convened for the purpose of, or for purposes which include, consideration of the proposal; and
(b) if the proposed expenditure is in respect of work to be performed or the purchase of personal property, submit at least 2 tenders to that meeting with the proposal.
All business shall be deemed special that is transacted at an annual general meeting, with the exception of the consideration of accounts and election of members to the council, or at an extraordinary general meeting.
10 Further, by-law 11(5) relevantly provides that:
Not less than 14 days' notice of every general meeting specifying the place, the date and the hour of meeting and in case of special business the general nature of that business, shall be given to all proprietors … .
11 By-laws 12(6) and (7) require a majority vote at a general meeting on a show of hands.
Facts
12 At various annual and extraordinary general meetings of the strata company, it has imposed levies upon the unit proprietors of Roslyn Strata Plan 35960. The levies imposed upon Mr Maguire in respect of his two units are as follows:
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13 Mr Maguire takes no issue with either the reasons for the imposition of the various levies or the amounts of the levies. However, he has failed to pay the levies.
14 On 5 November 2011, the council of the strata company resolved that the strata company should proceed to recover the levies then outstanding. Thereafter, further levies were imposed upon unit proprietors but, Mr Maguire has not paid these levies either.
15 The council also resolved to obtain a quotation from strata plan lawyers for the costs associated with institution of legal proceedings.
16 On 21 February 2012, correspondence was sent to Mr Maguire from a council member seeking to discuss the outstanding levies. Then, on 12 March 2012, Mr Maguire received a letter of demand from a council member threatening the institution of legal proceedings if he did not contribute his levies.
17 Then, by notice dated 12 March 2012, the proposed budget for the strata company for the year commencing 1 February 2012 was sent to all unit proprietors. That notice also called for an annual general meeting of the strata company on 27 March 2012.
18 The notice at item 8 is headed as 'Special Business'. At item 8.3, it is headed as 'Proposed Budget'. The proposed budget provided with the notice of the general meeting included a series of line entries for various items, including a line entry for legal fees in the sum of $40,000. It is pertinent to note from the proposed budget that this provision of legal fees was an almost ten-fold increase on the legal fees incurred in the prior year. It was provided against a total proposed budget in the sum of $53,320.
19 Next, on 26 March 2012 and before the general meeting, Mr Maguire wrote a long letter to the council objecting to spending beyond the statutory limit of s 47(1) of the Act. Mr Maguire complained that insufficient detail of the true nature of the business to be conducted at the annual general meeting was provided with the notice of the general meeting and that such detail as was provided was either vague or uncertain. He referred to certain specific items, but he neither referred to the budget for legal expenditure, nor did he query the need for such expenditure. In reality, there was no need for him to do that because he must have known the reason for that proposed expenditure, or at least part of it, given the above history.
20 Mr Maguire was the only proprietor in arrears in respect of the levies.
21 It should be observed Roslyn Strata Plan comprises six units in total. Three of the five proprietors other than Mr Maguire attended the council meeting on 5 November 2011 and three of those five unit proprietors attended the general meeting on 27 March 2012, with the fourth unit proprietor attending by proxy. Mr Maguire did not attend at the general meeting. He was the only proprietor of a unit who was neither present nor represented by proxy.
22 The proposed budget was unanimously approved by all of those unit holders in attendance at the general meeting.
The argument on appeal
23 At the hearing of the appeal, Mr B H Taylor as counsel for Mr Maguire, expressly conceded that, as a matter of fact, the council of the strata company did, on 5 November 2011, resolve to proceed with recovery action against any proprietor who was in arrears with levies due and payable to the strata company and who remained in arrears.
24 Mr Taylor further expressly conceded that, as a matter of law, the council had power to so resolve. These were proper concessions. It is not necessary for the strata company in general meeting to pass such a resolution.
25 This action has therefore been commenced in a lawful manner. There was no need for the provision of notice of special business, ie, to commence this action, to be provided prior to a general meeting. There was no need to provide the general nature of that special business in such a notice. There was no need to approve the commencement of this action at a general meeting.
26 Mr Taylor then submitted that any authority from the annual general meeting to approve expenditure to commence legal proceedings against Mr Maguire was invalid because:
1. by-law 12(1) deemed all business transacted at the annual general meeting to be special business, with the exception of the consideration of accounts, which Mr Taylor submitted, meant only past accounts, not future proposed expenditure;
2. by-law 11(5) required the giving of notice of any special business to be transacted at a general meeting, including the general nature of that special business. Mr Taylor complained that the reason for the allocation of $40,000 for legal fees in the budget was not specified; and
3. section 47 of the Act prohibited the council from undertaking expenditure above a certain level which, in the circumstances of this case, amounted to expenditure of more than $390.
27 Mr Taylor relied on two decisions, being Velovski v The Owners of Hector Gardens - Strata Plan 6448 [2004] WASTR 12 and Sisto and The Owners of Glenway Gardens Apartments [2005] WASAT 282.
28 In Velovski, the agenda for the general meeting included an item calling for a resolution that the council arrange the installation of a brick fence and security gates at a strata title complex comprising 106 lots at a cost not to exceed $78,000.
29 It can be seen that the need for installation was to be determined by the annual general meeting and then referred back to the council to implement. No further information was provided.
30 At the general meeting, the views of the proprietors differed. From [19] and [20] of the Strata Titles Referee's decision, it can be seen that about 20 of the unit proprietors voted on the resolution. The requirement for a quorum at a general meeting is that 50% of the proprietors must be present either personally or by proxy. Many of those present did not vote. It seems that this was because insufficient information had been provided to them.
31 The Strata Titles Referee ruled that there was a failure to provide plans and specifications for the proposed works and no detail was provided as to how and when the $78,000 was to be raised. Further, s 47(7) had not been complied with.
32 In Sisto, the strata title complex comprised 117 units. From [40] of the reasons, 55 proprietors were present or represented by proxy at a general meeting. The issue of the strata company raising funds by a levy on proprietors came into question. A budget was produced for the general meeting with a motion to adopt it. There was explanation given by way of a covering note which provided details as to the expenditure to be incurred in the 'upgrade/improvement of common areas'. The works to be undertaken had been the subject of discussion at previous owners' meetings of the strata company between 2003 and 2004. It was held that sufficient information was provided.
Findings
33 In each of Velovski and Sisto, the requirement for substantial building work was to be resolved by the strata company; not the council. In Velovski, there was a notice of motion before the annual general meeting. In Sisto, the general meeting was considering its annual budget. It is logical that the nature, detail and cost of works should have been provided to the general meeting in each of those cases from which it can be seen that regard must be had to the subject matter of the expenditure, the quantum of the expenditure to be incurred and the numbers of units and proprietors involved, which, in those cases exceeded 100 units. Regard may also be had to prior discussions, if any. It follows that the facts of any given matter may impact upon detail when disclosing the general nature of the special business required to be transacted at the general meeting.
34 In this case however, it is now conceded that the council validly authorised the commencement of this action. The council did not then immediately incur expenditure. Rather, the annual general meeting approved a proposed budget on 27 March 2012, including provision for legal fees of $40,000. After that, the writ issued on 28 June 2012. It follows that by s 47(1) and (2), expenditure on legal fees for this action has been authorized by the general meeting approving the proposed budget.
35 It can be accepted, without deciding, that the proposed budget requiring approval at the general meeting in this case was special business. Notice of that general meeting was given on 12 March 2012. Special business was itemized in the notice calling for the meeting, including the provision of the proposed budget. It follows that the general nature of that proposed budget was required to be provided. The proposed budget was provided in full and the general nature thereof was disclosed in a series of line entries for the different proposed expenditures, including legal fees detailed as:
Admin – Legal fees - $40,000.00
36 These line entries themselves are a sufficient description of a general nature of the component parts of the proposed budget. They detail the nature of each such item and the budget therefor.
37 Further, the requirement for the proposed expenditure of $40,000 for legal fees to be spent either in whole or in part recovering unpaid levies from Mr Maguire arose in circumstances outlined above at [12] – [22] in which he and each of the other four unit proprietors could reasonably be taken to have known the general nature of the special business constituted by the line entry for legal fees.
38 The limit under s 47(1) restricting council expenditure did not apply to expenditure authorised by the strata company in general meeting as part of the budget of the company, as set out in s 47(2)(e). The proposed budget was adopted at the annual general meeting on 27 March 2012 and any expenditure for legal expenses was therefore authorised up to the $40,000 limit.
39 Finally, s 47(7) does not apply in the circumstances of this case by reason that it only applies to expenditure to which s 47(1) applies. However, s 47(1) does not apply because the proposed expenditure was authorized under s 47(2) by the strata company in general meeting as part of the budget of the company.
40 The appeal must fail.
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