Transport Workers Union Of Australia and the Owners Of Strata Plan 8921 (Beaufort Centre)

[2012] WASAT 239

JURISDICTION     :   STATE ADMINISTRATIVE TRIBUNAL

STREAM:   COMMERCIAL & CIVIL

ACT: STRATA TITLES ACT 1985 (WA)

CITATION:   TRANSPORT WORKERS UNION OF AUSTRALIA and THE OWNERS OF STRATA PLAN 8921 (BEAUFORT CENTRE) [2012] WASAT 239

MEMBER:   MS NATASHA OWEN-CONWAY (MEMBER)

HEARD:   13 AUGUST 2012

DELIVERED          :   10 DECEMBER 2012

FILE NO/S:   CC 169 of 2012

BETWEEN:   TRANSPORT WORKERS UNION OF AUSTRALIA

PL & DY HARRIS SUPERANNUATION FUND
SENZA COFFEE PTY LTD
Applicants

AND

THE OWNERS OF STRATA PLAN 8921 (BEAUFORT CENTRE)
Respondent

Catchwords:

Strata titles ­ Perth Parking Management Act 1999 (WA) fees payable by respondent strata company ­ All strata scheme car parking bays incorporated into certain individual lots ­ Respondent strata company's attempt to levy contributions by certain lot proprietors to respondent's fund for payment of administrative expenses and in particular Perth Parking Management Act 1999 (WA) fees other than in proportion with number of car parking bays incorporated into individual lots ­ Respondent's attempt to adjust past levies to financial year 2008 ­ 2009 ­ Certain lot proprietors with no car parking bays incorporated into their lots issued with credit notes by respondent strata company ­ No basis to issue levies other than in accordance with s 36(1)(c)(i) of the Strata Titles Act 1985 (WA)

Legislation:

Land Valuers Licensing Act 1978 (WA)
Perth Parking Management Taxing Act 1999 (WA)
Perth Parking Management Act 1999 (WA), s 4, s 7, s 11
Strata Titles Act 1966 (WA)
Strata Titles Act 1985 (WA), s 14(2), s 14(2a), s 36, s 42, s 42B, s 79(2), s 81, s 81(7), s 83(1), s 84, s 99A, Sch 1, Sch 2

Result:

Application successful

Summary of Tribunal's decision:

The respondent strata company issued invoices to the lot proprietors in a strata scheme whose lots incorporated car parking bays, so as to effectively allocate all of the respondent strata company's expenses paid pursuant to the Perth Parking Management Act 1999 (WA) to those lot proprietors. The invoices also sought to adjust past levies back to the 2008 ­ 2009 financial year. Lot proprietors whose lots did not incorporate any car parking bays were issued with credit notes by the respondent strata company. The relevant by­laws did not provide for the respondent strata company to raise levies against lot proprietors for the payment of any of the respondent strata company's administrative expenses, other than in proportion to the unit entitlements of each lot. The Tribunal concluded that the respondent strata company was not entitled to issue the invoices and credit notes. The Tribunal ordered the respondent strata company to withdraw the invoices and credit notes, make appropriate adjustments to the lot proprietors' accounts with the respondent strata company to reflect the respondent strata company's entitlement to levy lot proprietors in proportion to the unit entitlements of each lot.

Category:    B

Representation:

Counsel:

Applicants:     Mr M Atkinson

Respondent:     Mr G Vellacott

Solicitors:

Applicants:     Atkinson Legal

Respondent:     Butcher Paull & Calder

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

Nil

REASONS FOR DECISION OF THE TRIBUNAL: 

The application

1. On 1 February 2012, Ms Chevaunne Swarts, the original applicant, made application to the Tribunal for orders against the respondent strata company (respondent). Pursuant to s 83(1) of the Strata Titles Act1985 (WA) (ST Act). The Tribunal's summary of those orders is as follows:

   1)That the respondent retracts the invoices and credit notes which purport to retrospectively adjust the earlier allocation between lot proprietors of the City of Perth Parking Licence Fees (referred to below), which were levied on and paid by the respondent, upon the basis of car parking bay ownership rather than the unit entitlements of lot proprietors.

   2)That the respondent review the applicant's financial records for the past seven years and make the necessary adjustments to the levies charged by the respondent to the lot proprietors, so as to ensure that all City of Perth Parking Licence Fees, which were levied on and paid by the respondent, are allocated amongst lot proprietors on the basis of the unit entitlements of the lot proprietors.

   3)That the respondent refunds to the applicant, as the proprietor of Lot 25 all reasonable costs and out of pocket expenses incurred regarding this matter.

2. The grounds of the application are expressed as follows:

   Based on section 36, and the absence of a specific by[­]law as per section 42[,] all expenses[,] including City of Perth Parking Licence Fees[,] are to be allocated on the basis of unit entitlement.

The applicants

1. At the time of making the application, the then applicant, Ms Swarts, claimed to be the proprietor of Lot 25, Nos 80 ­ 82 Beaufort Street, Perth, known as the Beaufort Centre.  From the documents that were filed subsequently by Ms Swarts on 27 February 2012, it appears that Ms Swarts was the joint proprietor of Lot 25 of the strata scheme in issue, along with Ms D Heys.  After the commencement of the proceeding, and following the joinder of Ms Heys as another (third) applicant, Ms Swarts and Ms Heys sold their interest in Lot 25 to Mr and Mrs Harris (as joint tenants) as to one half share (as the trustees of the PL & DY Harris Superannuation Fund), and Senza Coffee Pty Ltd as to one half share (as tenants in common).  Mr and Mrs Harris and Senza Coffee Pty Ltd were joined to the proceedings.  Mr and Mrs Harris, as the trustees of the PL & DY Harris Superannuation Fund, were joined to the proceeding as the fourth applicants, and Senza Coffee Pty Ltd was joined to the proceedings as the fifth applicant.

2. The Tribunal had ordered that notice be given to all parties who fell within the categories referred to in s 79(2) of the ST Act. During the course of a number of directions hearings, it became clear that another lot proprietor was in dispute with the respondent, or wished to be heard in respect of the issue of allocation of the City of Perth Parking Licence Fees to the lot proprietors. By consent of the parties, the Tribunal made an order that all other interested parties who wished to join the applicants be joined as applicants. As a consequence, the Transport Workers Union of Australia became the second applicant. The Transport Workers Union of Australia owns Lot 28 and Lot 29 of the strata scheme. On 28 June 2012, Ms Swarts and Ms Heys (the first and third applicants) sought the Tribunal's leave to withdraw from the proceeding upon the basis that they no longer held an interest in Lot 25, the contract with the fourth and fifth applicants having settled. The Tribunal granted those orders. Thereafter, the remaining applicants have been referred to as the 'applicants'.

The issues

1. Ultimately, the Tribunal was asked to decide whether the respondent was entitled to levy contributions on lot proprietors in the strata scheme in respect of any licence fees paid or payable by the respondent pursuant to the Perth Parking Management Act 1999 (WA) (PPM Act) and the Perth Parking Management Taxing Act 1999 (WA) (PPMT Act) (Perth Parking Licence Fees), otherwise than in proportion to the unit entitlement of the respective lot proprietors.

The facts

1. There were no relevant factual disputes between the parties.  The facts as found by the Tribunal are as follows

   •On 26 February 1981, the respondent strata company was created when Strata Plan 8921 was registered pursuant to the now repealed Strata Titles Act1966 (WA).

   •On 28 February 2001, the strata company changed its name to The Owners of Beaufort Centre Strata Plan 8921, pursuant to the ST Act.

   •The strata scheme, created on registration of the strata plan, is now subject only to the default by­laws in Sch 1 and Sch 2 of the ST Act, after earlier additional by­laws were appealed.

   •On 26 June 2000, Ms Swarts became a co­proprietor of Lot 25 in the scheme.

   •On 16 July 1999, the PPM Act came into effect.

   •On 7 August 1999, the PPMT Act came into effect.

   •The lots in the scheme are used for commercial purposes, not private residential purposes.

   •The respondent strata company is obliged to, and has paid, licence fees to the Western Australian Department of Transport in respect of the car parking bays of the strata scheme, pursuant to the PPM Act.

2. It is apparent to the Tribunal, from an examination of the strata plan documents provided by the applicants and comprised in the applicants' list of documents, that the strata scheme has undergone a number of subdivisions over the years since registration in 1981.  It is also clear that, originally, the car parking areas on the plan formed part of the common property of the strata scheme in which all lot proprietors, from time to time, hold an interest.  Later (in about 1981), a by­law was passed by the respondent in general meeting to permit the respondent to grant exclusive use licences in respect of parts of the common property.  Whether or not this concerned the car parking areas is not disclosed by the evidence.  Later still (in about 1994), that by­law was repealed and the car parking lots were incorporated into certain individual lots as part of a subdivision or re­subdivision.

3. It is also apparent that the by­laws referred to in Sch 1 and Sch 2 of the ST Act comprise the whole of the governing rules of the scheme for the purposes of this dispute. It is apparent to the Tribunal that in the course of undergoing subdivision and re­subdivision since 1981 (including where the car parking areas were incorporated into certain individual lots of the scheme), a certificate of a licensed valuer was obtained to identify and certify the unit entitlements of each lot as subdivided and re­subdivided from time to time. That certificate is to be completed following a valuation of the strata scheme and the individual lots comprised in the strata scheme and represents the value of the individual lots in proportion to the value of the scheme as a whole within an acceptable range. The valuation undertaken to support the certificate must be undertaken pursuant to the Land Valuers Licensing Act 1978 (WA) (LVL Act) (s 14(2) and s 14(2a) of the ST Act). In undertaking that valuation, the land that was formerly common property car parking and which was incorporated into and included as part of certain individual lots, possibly affected the value of those certain individual lots (usually by increasing the value of those individual lots), the value of the common property in which all lot proprietors have an interest, and the value of the individual lots that lost the interest in the areas of land and the improvements formerly comprised in the common property (usually by decreasing the value of the common property and thereby decreasing the value of each other lot to some extent). Those adjusted land and improvement values may impact upon the proportion of the value of each of the individual lots to the value of the whole of the strata scheme. Where that has occurred, the unit entitlements of the individual lots may require adjustment so that the individual lots incorporating the car parking bays are allocated an increase in unit entitlements, and those that have lost common property rights to the car parking are allocated decreased unit entitlements. There have been variations to the unit entitlements in this strata scheme, but there is no evidence that it related to the changes to the car parking rights. It may well be related to the changes to the car parking rights within the strata scheme, but the parties did not address that issue in the evidence.

4. The allocation of the unit entitlements to each individual lot is the means by which equity is sought to be achieved in terms of the rights and liabilities of individual lot proprietors and the group of owners in the scheme as a whole.  The mathematical calculation and the values ascribed to the individual lots as a consequence of the subdivision and re­subdivision, is not the subject of any evidence, but the Tribunal may infer that as a licensed valuer has issued a certificate of the revised and adjusted unit entitlements following the subdivision and re­subdivision, the same was undertaken in accordance with the LVL Act and the ST Act, and that the rights and liabilities of the individual lot proprietors are accurately represented by the allocation of the unit entitlements for each lot as certified by the valuer who issued the certificate.

The statutory framework and the rules of the strata company

1. It is common cause that the PPM Act deems the respondent strata company to be the owner of the car parking bays for the purposes of the PPM Act, and is the party which, under the PPM Act and the PPMT Act, is liable to pay the Perth Parking Licence Fees, imposed on it by that legislation, to the Western Australian Department of Transport. Section 4 of the PPM Act provides:

   In this Act, unless the contrary intention appears ­

   …

   lot, in relation to a strata scheme or survey-strata scheme, has the same definition as in the Strata Titles Act 1985[.]

   …

   Owner, in relation to land or a building, means ­

   (a)if the land or building is part or all of the common property or of a lot of a strata scheme or survey-strata scheme ­ the strata company for the scheme[.]  (Tribunal emphasis)

2. Section 7 of the PPM Act provides:

   The owner of land or a building in the Perth parking management area must not permit a vehicle to be parked on the land or in or on the building unless ­

   (a)the land or building is used solely for private residential purposes;

   (b)the owner has a parking bay licence that permits the vehicle to be parked there; or

   (c)the vehicle is a prescribed vehicle or is parked in prescribed circumstances.

   Penalty: $5 000.

3. Section 11 of the PPM Act provides that the licence granted may only be renewed upon payment of the fee.

4. For the purposes of these proceedings, it is not relevant how or why the legislature elected to draft the PPM Act and the PPMT Act so as to 'deem' strata companies as being the 'owners' of car parking bays and liable for the Perth Parking Licence Fees. What is relevant is that, having identified that an expense for which the respondent is liable as a matter of law, the ST Act provides how the contributions towards the payment of that expense are to be levied on all the lot proprietors by the respondent. Section 36(1)(a) of the ST Act provides that a strata company shall:

   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[.]  (Tribunal emphasis)

5. The Tribunal is satisfied, as a matter of law, that the PPM Act imposes an obligation on the respondent to pay the Perth Parking Licence Fees for the number of car parking bays marked on the strata plan for that strata scheme. Section 36(1)(a) of the ST Act empowers the respondent to create a fund from which it shall draw to pay the obligations imposed on the respondent, either by way of the ST Act (control and management of common property and insurance premiums), or by any other means (including the obligation imposed on the respondent by the PPM Act). The ST Act also prescribes the method of how that fund is to be raised. Section 36(1)(c) and s 36(1)(d) of the ST Act provides that the strata company shall:

   (c)raise amounts so determined by levying contributions on the proprietors ­

   (i)in proportion to the unit entitlements of their respective lots; or

   (ii)where a by­law referred to in section 42B or an order under section 99A is in force, in accordance with that by­law 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.

6. There is no s 42B ST Act by­law contained in the respondent's by­laws, and no order made under s 99A of the ST Act in force in this matter. Section 42B of the ST Act provides:

   (1)By­laws made by a strata company under section 42 may provide for a method of assessing contributions to be levied on proprietors under section 36 otherwise than in proportion to the unit entitlement of their respective lots.

   (2)Such a by­law may relate to contributions to all of the expenses of the strata company or to one or more particular kinds of expenses.  (Tribunal emphasis)

7. Section 42B of the ST Act confers on the respondent the power to make a by­law that provides for a different method of assessing contributions to be levied on proprietors under s 36 of the ST Act, other than in respect of their unit entitlements for all of the expenses, some of the expenses, or particular kinds of expenses. The process of creating any such by­law must comply with the prescriptive requirements of the ST Act: see s 42 of the ST Act. In this case, there is no by­law that has been made, pursuant to s 42 of the ST Act, of the kind permitted by s 42B of the ST Act in respect of all of the expenses of the respondent, or any particular kind of expenses of the respondent, such as the Perth Parking Licence Fees, which the respondent is obliged to pay. That is, there is no validly created by­law that entitles the respondent to use a method different to the unit entitlement method of raising funds to pay for any of the respondent's expenses. It is not sufficient for the respondent's council of owners to conclude that levies will be imposed on the lot proprietors on a basis other than that provided for by s 36(1)(c) of the ST Act.

8. Section 99A of the ST Act provides:

   A proprietor who is aggrieved by the operation of a by­law referred to in section 42B may apply to the State Administrative Tribunal for an order under this section.

9. In this matter, there is no Tribunal order made pursuant to s 99A of the ST Act application at all. There could not be such an order in this matter because there is no by­law that has been made pursuant to s 42B of the ST Act.

Tribunal's consideration

1. At the annual general meeting (AGM) on 22 August 2011, there was a resolution that a budget of levies was to be raised in accordance with unit entitlements, at a particular rate per unit entitlement. This resolution, identified in item 12 of the minutes, is entirely consistent with s 36(1)(c)(ii)of the ST Act. The issue of the means by which lot proprietors with car parking bays within their lot should account and pay for a contribution to the PPM Act annual fee appears to have been raised in item 3 of the minutes of the AGM:

   Mr Rogers advised that the cost should be charged against the various lots …

   Mr Swarts raised a concern that back dating any relevant charges to individual lots for a period of time that this expense was met by the Strata Company would be difficult[,] given those individual lots with commercial leases in place during this time may have otherwise passed on this expense to its tenants.

2. On 6 January 2012, the respondent invoiced the applicants and all lot proprietors whose lots include a car parking bay, an amount of money alleged to be payable to the respondent for payments dating back to the 2008 - 2009 financial year by the respondent to the Western Australian Department of Transport for the Perth Parking Licence Fees in that period, in proportion to the number of car parking bays incorporated into the lot proprietor's lots.  The invoice also included an adjustment for levies rendered in the past upon the basis of unit entitlements.  It is proposed by the respondent that those lot proprietors whose lots do not incorporate any car parking bays would receive a refund of levies paid in the past, back to the 2008 - 2009 financial year in respect of the respondent's liability for the Perth Parking Licence Fees.

1. The letter from the respondent's managing agent, dated 6 January 2012, provides:

   The Council [has] determined that each Lot owner is to be proportionally charged the fees associated with the Perth Parking Licence based on the number of car [parking] bays held ([that is,] owned as part lot) as opposed to raising [these fees] based on unit entitlement as part of your normal strata levies.

   Accordingly, Richardson Strata Management Services [has] been instructed to stop the previous method of charging these fees to all Lot owners based on unit entitlement and to reverse by way of back­charge [and]/or refund those monies collected as part of your normal strata levies dating back to [the] 2008 ­ 2009 financial year.  (Tribunal emphasis)

2. Whilst the Tribunal acknowledges that there is power within the ST Act for the respondent in general meeting to resolve to change the basis in which the Perth Parking Licence Fee is contributed to by the lot proprietors, there are no by­laws that alter the respondent's entitlement to raise funds from the lot proprietors other than by way of levies calculated by reference to the unit entitlements of each lot.

3. In this proceeding, the Tribunal concludes that the respondent's exercise of the power conferred upon it by s 36(1) of the ST Act in issuing invoices and credit notes to the lot proprietors of the strata scheme, whereby the respondent has purported to adjust past levies back to 2008 - 2009 financial year in respect of the Perth Parking Licence Fees paid by the respondent for the 2008 - 2009 financial year, is in breach of s 36(1) of the ST Act. The Tribunal concludes that the respondent was not entitled to recover any monies in respect of those invoices and was not entitled to issue those credit notes. Further, the Tribunal concludes that the respondent is not entitled to raise levies in respect of its expenses, including the Perth Parking Licence Fees, other than in proportion to the unit entitlements of the individual lot proprietors of the scheme, unless a by­law created pursuant to s 42B of the ST Act is passed that allows a different method of allocation for that expense.

4. The Tribunal's power to make orders in this proceeding is limited by the provisions of s 81 and s 84 of the ST Act. The Tribunal is not empowered to award costs in this matter: see s 81(7) of the ST Act. As to the original application whereby the respondent was to review the then applicant's account (Ms Swarts' account), the Tribunal is satisfied that there is no evidence that the respondent has charged levies other than in proportion with the unit entitlements of the lot proprietors in the past. The respondent's issue of adjustment invoices and credit notes is an attempt to effect a contribution towards the Perth Parking Licence Fees other than in proportion to the lot proprietors' unit entitlements.

Other matters

Perceived injustice

1. The respondent asserted that it was unjust that the lot proprietors whose lots did not include any car parking bays should bear any cost associated with the car parking bays owned by other lot proprietors.  The Tribunal infers that the adjusted unit entitlements that have been registered following the subdivision and/or re­subdivsion of the lots do take into account the incorporation of the car parking bays into certain individual lots and the loss of an interest in those car parking bays from certain other lots.  There is no evidence of any inequity, in fact, and in the light of the adjustments made to the unit entitlements made from time to time following subdivision and re­subdivision, the Tribunal infers that there is no inequity that may be complained of by those lot proprietors whose lots do not include car parking bays.

2. If, however, there is any inequity in the allocation of the Perth Parking Licence Fees, or the expenses of the respondent generally amongst the lot proprietors, notwithstanding the adjustments made to the unit entitlements, it is open to the respondent to call a general meeting and resolve a new by­law pursuant to s 42 and s 42B of the ST Act in the manner called for by the ST Act. Until that time, the respondent may only raise funds from the lot proprietors in accordance with the allocated unit entitlements for each lot and not otherwise: see s 36(1)(c)(ii) of the ST Act.

Past practices

1. The thrust of the respondent's argument on this point is best summarised in its further statement of issues, facts and contentions, dated 12 July 2012, in the following manner:

   The strata company of Beaufort Centre Strata Plan 8921 had previously established a situation years ago, when the applicant was already a co­owner of Lot 25, whereby contributions in respect of the annual [car] parking fees imposed upon the strata company by the City of Perth were separately sought from and paid by proprietors in the same proportion as the number of car parking bays that formed part of their respective lots bore to the total number of car parking bays as were the subject of the Annual Parking Fees assessed to the strata company.

2. The respondent did not adduce any evidence in support of this assertion of past practices, or any evidence of the context of this alleged practice.

3. The Tribunal notes that the car parking bays were, at one stage, all part of the common property. As noted earlier, at one point in time, exclusive use licences were granted. It appears that those exclusive use licences (and the by­law permitting such grants) were revoked in favour of subdivision and re­subdivision of certain lots and the common property, so as to incorporate the car parking bays into certain individual lots. The information concerning the specific common property that was the subject of any exclusive use licences and the terms of the exclusive use licences is not before the Tribunal. It is possible that the alleged past practice may be explicable by reference to the exclusive use licences and the associated by­laws if the car parking bays were the subject of the exclusive use licences. Whilst such circumstances might explain any alleged past practice, it has no bearing on the position as it stands as at the date of the hearing and after the incorporation of the car parking bays into certain lots. In the absence of any specific by­law that entitles the respondent to allocate the Perth Parking Licence Fees other than in proportion to unit entitlements, the respondent is not permitted to depart from the rule referred to in s 36(1)(c)(ii) of the ST Act.

The invoices and credit notes ­ calculation issues

1. The respondent's letter dated 6 January 2012 to all owners of the Beaufort Centre contains an enclosed adjustment by way of a tax invoice for the Perth Parking Licence Fees for the period 1 July 2008 to 31 March 2012 in respect of, for example, Lot 25, and a schedule to explain the adjustment.  By way of example, the schedule indicates that Lot 25's car parking bay proportion of the Perth Parking Licence Fee has been calculated jointly with the fee allegedly associated with the car parking bay or bays included in Lot 16 to calculate the additional payment.  The amount calculated is $6,148.16, plus GST.  The assumption has been made in this calculation that the owners of Lot 25 (Ms Heys and Ms Swarts at the time), are also the owners of Lot 16.  It is apparent from the evidence before the Tribunal (minutes of AGM on 22 August 2011) that this is not correct.  This error raises serious doubts about the correctness of the assumptions and conclusions relied upon by the respondent in calculating the amounts in any invoices and credit notes.  Certainly, the invoice in respect of Lot 25 appears to be incorrect in a material way.  The Tribunal makes this comment in passing as no submissions were made in respect of the calculations.

Order

1. For the above reasons the Tribunal orders that:

   1.By 7 January 2013, the respondent shall withdraw any invoices and credit notes wherein the respondent has sought to adjust past levies charged and for current levies, so as to purport to allocate the expenses paid or to be paid by the respondent pursuant to the Perth Parking Management Act 1999 (WA), other than in proportion with the lot proprietors' unit entitlements pursuant to s 36(1)(c)(ii) of the Strata Titles Act1985 (WA).

   2.Further to order 1 above, by 7 January 2013, the respondent shall make any and all adjustments to all lot proprietors' accounts for the payment of levies in respect of any invoices and credit notes rendered by the respondent concerning the respondent's payment of fees pursuant to the Perth Parking Management Act 1999 (WA), so as to reflect the lot proprietors' obligation to contribute towards such fees in proportion with their unit entitlements pursuant to s 36(1)(c)(ii) of the Strata Titles Act1985 (WA).

   3.The respondent shall refrain from issuing invoices or credit notes to the lot proprietors for levies in respect of the respondent's administrative expenses, including any fees paid by the respondent pursuant to the Perth Parking Management Act 1999 (WA), other than in proportion with the lot proprietors' unit entitlements pursuant to s 36 of the Strata Titles Act 1985 (WA).

   4.Order 3 herein shall continue to have force and effect until further order, or until any by­law is created pursuant to s 42B of the Strata Titles Act 1985 (WA), or until further order.

I certify that this and the preceding [31] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

___________________________________

MS N OWEN-CONWAY, MEMBER