TRAYNOR and THE OWNERS OF THE RISE II STRATA PLAN 9173
[2020] WASAT 47
•6 MAY 2020
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: STRATA TITLES ACT 1985 (WA)
CITATION: TRAYNOR and THE OWNERS OF THE RISE II STRATA PLAN 9173 [2020] WASAT 47
MEMBER: DR B MCGIVERN, MEMBER
HEARD: DETERMINED ON THE DOCUMENTS
DELIVERED : 6 MAY 2020
FILE NO/S: CC 1698 of 2019
BETWEEN: MARY ELLEN TRAYNOR
Applicant
AND
THE OWNERS OF THE RISE II STRATA PLAN 9173
Respondent
Catchwords:
Strata tiles - Bylaw conferring exclusive use and enjoyment of portion of common property to proprietor of a lot - Bylaw imposing reciprocal obligation on lot proprietor to maintain and repair that portion of common property - Responsibility for repair of defective brickwork in wall along boundary of exclusive use area - Extent to which boundary wall is included within exclusive use area - Construction of bylaw - Strata company's duty to maintain and keep common property in good serviceable repair - Strata company's duty not limited by approved budget expenditure and proposed expenditure in budget
Legislation:
Strata Titles Act 1966 (WA), s 5(5)
Strata Titles Act 1995 (WA), s 3(1), s 3(2), s 3A, s 3AB, s 21F, s 35(1), s 42, s 42(2), s 42(4), s 42(8), s 83(1), Sch 1, Sch 2
Result:
Application allowed
Category: B
Representation:
Counsel:
| Applicant | : | In Person |
| Respondent | : | In Person |
Solicitors:
| Applicant | : | N/A |
| Respondent | : | N/A |
Case(s) referred to in decision(s):
Byrne v The Owners of Ceresa River Apartments Strata Plan 55597 [2016] WASC 153
Clark and The Owners of Waterfront Mews - Strata Plan 14082 [2011] WASAT 110
Drexel London (a firm) v Gove [2009] WASCA 181
Jordan v Van Schoubroeck [2005] WASCA 120
Maludra Pty Ltd & Ors and Owners of Windsor Towers & Ors [2012] WASAT 160
Maludra Pty Ltd and Owners of Windsor Towers Strata Plan 80 [2017] WASAT 112
Stann and The Owners of Beau Vista Strata Plan 12008 [2012] WASAT 227
REASONS FOR DECISION OF THE TRIBUNAL:
Introduction
The applicant is the proprietor of lot 3 known as unit 3B (Lot 3) on strata plan 9173, which created the strata scheme known as 'The Rise II' (Scheme), and brings this application pursuant to s 83(1) of the Strata Titles Act 1985 (WA) (ST Act). The respondent is the strata company of the Scheme (Strata Company).
Pursuant to orders made on 7 February 2020, the matter is to be determined entirely on the documents comprising:
a)the grounds of the application and the orders sought, together with a bundle of supporting documents, filed by the applicant on 7 January 2020;
b)the response to the application, together with a bundle of supporting documents, filed by the respondent on 29 January 2020; and
c)copies (searches) of Strata Plan 9173, Notification of Change of By-laws J545601 and Certificate of Title Volume 1592 Folio 638 (for the applicant's lot) filed with the Tribunal by the applicant on 6 November2019.
In very broad terms, the dispute between the parties concerns responsibility for the repair of brickwork and mortar joints in structures within or bordering exclusive use areas in the Scheme; specifically, in the areas identified as being for the exclusive use of Lot 3.
Background
The Scheme is a development comprising single and double storey brick and tile residential units on a parcel of land at 131 Drabble Road, City Beach, comprising 12 lots and common property.
Amongst the documents contained in the applicant's bundle is a report (numbered 67227 and headed 'Follow Up Investigation Report') from David Clark, on behalf of Houspect WA, regarding an inspection carried out at the Scheme property on 16 October 2019 (Report). Fromphotographs contained in the Report, it is apparent that the Scheme contains a number of structures, including external and boundary walls, constructed principally of brick (with some walls having limestonefootings).
The Report noted that a previous inspection of the Scheme property, carried out on 18 May 2019, had identified items requiring attention which included 'repointing of the mortar between the brickwork'. The subject of the Report was a follow-up inspection, to inspect and report on the effectiveness and workmanship of the new repointing of the mortar between the face brickwork carried out on units 8B and 9B.
It is common ground between the parties that there were and are defects in the brickwork of various structures in the Scheme. It is also common ground that in 2019 the Strata Company budgeted $12,000 towards brickwork repairs.
The applicant provided the following history:
There is a history of defective bricks and mortar joints occurring at TheRise since initial construction in 1981. A compensation payment of several thousand dollars from the brick manufacturer was insufficient to address the problem and successive projects have been undertaken to replace defective bricks and to repair fretted mortar joints as they occur through time. For the 2019 year a budget item for $12000 was approved for the repair of brickwork. This item was scoped and estimated by the previous council of owners.
Similarly, the Strata Company relevantly stated:
Repairs to the brick works was a part of the works earmarked in the 2018/2019 budget but was not undertaken by the Council of Owners (CoO) of that period. At the May 2019 AGM an amount of up to $12 000 was allocated for the repair of bricks and replacement of mortar as deemed necessary[.]
Brick repair work was carried out on all 12 units. This work was documented in detail and costed. Approximately five years ago, brick work was carried out again on all 12 units[.]
The applicant asserts, and it does not appear contentious, that repair work is required to the brickwork and mortar joints of walls of the garage that is identified as being for the exclusive use and enjoyment of the proprietor of Lot 3. The dispute between the parties concerns the responsibility for that repair work, with the applicant contending that the costs should be borne by the Strata Company, and the Strata Company contending that they should be borne by the applicant.
The orders sought by the applicant are:
1.That the project to repair the brickwork is recommenced as soon as possible and continued until the approved budgetary sum of $12000 is reached or the required repair work is completed.
2.That work on unit 3B be commenced first and that a minimum of 40 bricks are replaced and several metres of mortar joints are repaired within the garage of unit 3B.
Regulatory framework
The strata plan for the Scheme was registered on 25 March 1981 pursuant to the Strata Titles Act 1966 (WA) (1966 Act), prior to the commencement of the ST Act. Such schemes are known as 'legacyschemes'.
However, as noted in Maludra Pty Ltd and Owners of Windsor Towers Strata Plan 80 [2017] WASAT 112 (Maludra 2017) at [196], despite the Scheme being registered pursuant to the 1966 Act, the provisions of the ST Act will, subject to the transitional provisions, apply to it.
Pursuant to s 3(1) of the ST Act, the common property of a strata scheme is that part of the land which does not comprise the lots on the strata plan. Further, pursuant to s 35(1) of the ST Act, the Strata Company is obliged to properly repair, maintain, renew, replace, control and manage the common property in the Scheme for the benefit of all proprietors.
Of particular relevance to this matter, however, s 42(8) of the STAct allows a strata company, by a resolution without dissent, to create a bylaw to grant exclusive use and enjoyment of, or special privileges to, a lot proprietor of all or part of the common property. Such by-laws may attach conditions to the conferral, including 'the proper maintaining and keeping in a state of good and serviceable repair' of the common property the subject of the grant.
Lot boundaries
The identification of lot boundaries is relevant to determining the extent of the common property (which, as noted above, is to be ascertained by exclusion, being the whole of the land that does not comprise a lot).
Because, at the time of registration, the Scheme did not make any specific provision regarding boundaries of lots, those boundaries were initially determined under s 5(5) of the 1966 Act, pursuant to which lot boundaries were at the centre of the floors, walls and ceilings.
As noted above, however, upon commencement of the ST Act its provisions (subject to the transitional provisions) applied to the Scheme. The transitional provisions of the ST Act preserve the estate or interest of lot proprietors in legacy schemes on the commencement of the ST Act except to the extent of the change of any boundaries provided for by the ST Act and its amendments: Maludra 2017 at [196], citing Maludra Pty Ltd & Ors and Owners of Windsor Towers & Ors [2012] WASAT 160 (Maludra 2012) at [54] - [57] and Jordan v Van Schoubroeck [2005] WASCA 120 (Jordan) [25] [26].
Accordingly, upon the commencement of the ST Act, its provisions regarding lot boundaries applied to the Scheme (in place of s5(5) of the 1966 Act).
The 'ordinary position' as to the boundaries of any cubic space arising from the definition of 'lot' and 'floor plan' under s 3(1) of the STAct, when read with s 3(2) of the ST Act, is that:
[T]he inner surface of the walls of a lot that correspond with the lines on the strata plan comprise the vertical boundaries of the lot and the horizontal boundaries of the lot comprise the underside of the ceiling and the upper surface of the floor. 'Wall' is defined to include a door, a window or other structure dividing a lot from common property or from another lot[.]
(see Maludra2017 at [197] referring to Maludra 2012 and Jordan)
However, the definition of 'lot' in s 3(1) is expressed as being subject to s 3AB of the ST Act, and s 3(2) of the ST Act (which defines the boundaries of any cubic space referred to in paragraph (a) of the definition of floor plan) is stated to apply 'except where s 3AB applies'. Accordingly, the 'ordinary position' described above applies only to the extent that s 3AB of the ST Act does not apply.
Section 3AB of the ST Act fixes the boundaries of lots and parts of lots (other than boundaries that are external to a building) for such 'single tier strata schemes' as are caught by the terms of s 3A. The Scheme is a single tier strata scheme as defined, being a strata scheme in which nolot or part of a lot is above or below another lot: s 3(1) ST Act. However, the Scheme does not otherwise fall within the terms of s 3A of the ST Act, which limits the application of s 3AB to:
•schemes the strata plans for which (subject certain conditions) were registered on or after the commencement of s 6 of the Strata Titles Amendment Act 1996: sub-sections (a) and (c); and
•other schemes in respect of which a resolution made under s 21F (that the boundaries of lots or parts of lots in the scheme are to be fixed by reference to the boundaries provided for by s 3AB) has been registered or deemed (in the case of existing small strata schemes) to be registered: sub-section (b).
By reason of the Scheme falling outside the ambit of s 3A ST Act, s 3AB does not apply to it and, therefore, the 'ordinary position' outlined in [20] above applies.
Bylaws
Default by-laws contained in Sch 1 and Sch 2 to the ST Act are deemed to be the by-laws of every strata company: s 42(2) ST Act. However, as noted in Byrne v The Owners of Ceresa River Apartments Strata Plan 55597 [2016] WASC 153 (Byrne) at [53] - [55], those default by-laws may be amended or replaced in two ways: by inclusion of a management plan when a strata plan is first lodged for registration, or at any time thereafter in accordance with the relevant provisions of s 42 of the ST Act.
In the latter case, any by-law changes made after a scheme is registered must be voted on at a General Meeting of the strata company. To be effective, by-law variations must within three months of the passing of the resolution adopting the amendments, be registered on the strata plan where they are recorded on the encumbrance schedule: s 42(4) ST Act. Registration is effected by lodging a Notification of Change of By-Law form with Landgate.
When a by-law conferring exclusive use and enjoyment of, orspecial privileges to, a lot proprietor is registered, Landgate requires that the portion of the common property that is subject to exclusive use or special privilege be clearly defined by a sketch that contains sufficient information to accurately define the affected area.
The Exclusive Use By-Law
On 25 November 1996, a Notification of Change of By-laws No G335308 (Notification G335308) was registered on the Strata Plan, which added the following Schedule 1 by-law (By-Law 16):
BY-LAW 16
'Pursuant to the power conferred on the strata company pursuant to Section 42(8) of the Strata Titles Act 1985 the strata company confers on the proprietors ''exclusive use and enjoyment of the portion of the common property coloured YELLOW on the plan annexed hereto and marked with the respective lot number'''.
'A proprietor shall be responsible for the proper maintenance and the keeping in a state of good repair any portion of the common property in respect of which the proprietor has the exclusive use and enjoyment under this by-law but shall not carry out any works to or upon such property (other than of a maintenance or repair nature) without first obtaining the consent of the strata company.'
The exclusive use sketch (EUS) included with Notification G335308 identifies two courtyards (front and rear), a porch and a garage as being for the exclusive use and enjoyment of Lot 3. The boundaries of the front courtyard and garage areas are shown on the sketch as principally comprising brick walls, while the rear courtyard is principally bounded by a timber fence.
Issue
As noted above, the dispute concerns whether the applicant or the Strata Company is responsible for the repair and maintenance of the walls comprising the perimeter of the areas (and in particular, the garage) identified on the EUS as being for the exclusive and enjoyment of the proprietor of Lot 3.
Since the obligation in By-Law 16 is in terms that a proprietor 'shall be responsible for the proper maintenance and the keeping in a state of good repair any portion of the common property in respect of which the proprietor has the exclusive use and enjoyment under this by-law', thatobligation attaches only to the area included in the conferral.
The dispute therefore falls to be determined by, and the principal issue for the Tribunal to decide is, whether and the extent to which an area identified as being for the exclusive use and enjoyment of a lot proprietor under By-Law 16 (Exclusive Use Area) is inclusive or exclusive of any wall corresponding with the line on the EUS marking perimeter of that area (Boundary Wall).
Parties' contentions
The applicants' contentions may be summarised as follows:
•There is no dispute concerning the obligation to repair 'internal walls', being walls wholly contained within the cubic space of an Exclusive Use Area. Theapplicant accepts that the lot proprietor, and not the Strata Company, is responsible for the repair of such internal walls. The dispute concerns BoundaryWalls.
•The language of By-Law 16 is ambiguous in relation to the extent to which Boundary Walls are to be included within an Exclusive Use Area.
•Any area marked on the EUS as being an Exclusive Use Area is owned by the lot proprietor to whom exclusive use is assigned, and no longer forms part of the common property.
•Accordingly, the boundary of an Exclusive Use Area is to be determined in accordance with that area being part of a lot (and therefore in accordance with s 3(1) and s 3(2) of the ST Act), such that 'the boundaries are defined by the inner surface of the floor, walls and ceiling and that the walls outside of this cubic space are common property and the responsibility of the [Strata Company]'.
•That conclusion is supported by several recent maintenance projects undertaken by the StrataCompany on roofs and Boundary Walls of various areas marked for the exclusive use and enjoyment of other lots within the Scheme.
The Strata Company's contentions may be summarised as follows:
•An Exclusive Use Area does not cease to be part of the common property.
•The obligation to maintain and repair Boundary Walls is to be determined in accordance with By-Law 16, read together with s 3A and s 3AB of the ST Act (although only sub-paragraph (a) of the latter provision is referred to in the respondent's written submissions), having the effect that the obligation falls on the lot proprietor to whom exclusive use is assigned rather than on the Strata Company.
•The strata company is not required to repair any defective brickwork or mortar joints proximate to the internal surface of any Boundary Wall of the garage marked for the exclusive use and enjoyment of the proprietor of Lot 3.
•To the extent that brick repair works have been undertaken by the Strata Company, those works were carried out on all 12 units with the scope of the approved work being complete.
Consideration
Relevance of lot boundaries
As outlined in [14] and [16] above the identification of lot boundaries, in accordance with the approach outlined in [20] above, determines the extent of the common property in the Scheme.
This in turn determines the extent of the areas that could be conferred (with any associated conditions), pursuant to by-laws made under s 42(8) of the ST Act, for the exclusive use and enjoyment of a proprietor. That is, to the extent that an area (and any structure or part of a structure on it) forms part of a lot, it can never be the subject of any conferral of rights, or any associated conditions, made under s 42(8) of the ST Act because that provision applies only to common property.
By logical extension, the provisions of the ST Act directed to determining lot boundaries do not have any direct application when determining the boundaries of Exclusive Use Areas, which are contained within the common property.
Applying the above reasoning to the dispute at hand:
a)The applicant's contention that an Exclusive Use Area under By-Law 16 ceases to be common property and forms part of a lot must be rejected as being inconsistent with the unambiguous language of the ST Act, as well as By-Law 16 itself; and
b)To the extent that the parties contend that the provisions of the ST Act pertaining to the determination of lot boundaries may be directly applied to determine the extent to which an Exclusive Use Area incorporates a Boundary Wall, those contentions cannot be accepted.
Construction of By-Law 16
The extent of the Exclusive Use Area assigned to Lot 3 (and any associated obligation to repair that portion of the common property) by By-Law 16 must be determined by construing the by-law itself.
The proper approach to construing by-laws was set out in Byrne, as follows:
75The ordinary principles of contractual construction should guide the construction of the By-Laws. 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 By-Laws, those principles are subject to four qualifications.
76First, to the extent that their terms permit, the By-Laws 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 by-law which is inconsistent with the ST Act).
77Secondly, 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 By-Laws 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 by-laws 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 by laws.)
78Thirdly, the statutory context of the bylaws 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 By Laws 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.
79Fourthly, 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 By Laws, 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 By-Laws may not have a commercial purpose, and be interpreted accordingly, but due regard must be paid to the statutory context in so doing.
The language of By-Law 16 does not expressly address, and so (ascontended by the applicant) is ambiguous as to, the extent to which Boundary Walls are included within an Exclusive Use Area. Further, as noted above, there are no special registered provisions affecting the determination of boundaries in the Scheme, and the EUS delineating the Scheme's Exclusive Use Areas does not assist in clarifying the issue.
The construction of By-Law 16 must therefore resolve the textual ambiguity in relation to Boundary Walls taking into account the matters, including contextual considerations, identified in Byrne.
While, as noted above, the provisions of the ST Act pertaining to the determination of lot boundaries do not have direct application, those provisions are nevertheless of significant contextual relevance. This is because, as appears from the EUS, a number of the Exclusive Use Areas abut, or partly abut, lots in the Scheme.
The garage marked for the exclusive use of the proprietor of Lot 3 (Garage) is a useful example: part only (about two thirds) of the brick wall comprising the north western boundary of Garage also comprises the south western boundary of Lot 3, while the remaining portion of the same wall extends beyond Lot 3 and separates the Garage from other commonproperty.
Two possible competing constructions of By-Law 16 are that, to the extent that a Boundary Wall corresponds with a line on the EUS defining an Exclusive Use Area, the vertical boundary of the cubic space included in the Exclusive Use Area is:
a)the inner surface of the Boundary Wall (Inner Surface Construction) this construction mirrors the 'ordinary' approach to determining lot boundaries under s 3(1) ST Act, and most closely aligns with the applicant's contended position; or
b)the external surface of the Boundary Wall or, where the Boundary Wall is a shared boundary with another Exclusive Use Area or a lot, then the centre plane of the common Boundary Wall (External / Centre Plane Construction) – this construction mirrors the approach to determining lot boundaries under s 3AB ST Act, and most closely aligns with the respondent's contended position.
The Tribunal notes, for completeness, that it is not open to construe ByLaw 16 in a manner that would always extend the boundaries of an Exclusive Use Area to the external surface of any Boundary Wall. This is because, in circumstances where a Boundary Wall is shared with a lot (as opposed to another area within the common property), such a construction would be inconsistent with the express words of By-Law 16 and the ST Act (which, as outlined above, limit the operation of ByLaw16 to areas within the common property).
For the reasons outlined below, the Inner Surface Construction is to be preferred.
Construing By-Law 16 in accordance with External / Centre Plane Construction would undermine, rather than promote, the coherent operation of By-Law 16 within the broader regulatory framework applying to the Scheme. This is usefully illustrated by considering its application to the north western Boundary Wall of the Garage (described in [43] above). Construing By-Law 16 in accordance with External / Centre Plane Construction would result in the north western boundary of the Garage being the external surface of the portion of the Boundary Wall extending beyond Lot 3, and the central plane of the same wall along the portion abutting Lot 3. For the reasons outlined in [23] above, the vertical boundary of Lot 3 would be the inner surface (viewed from within Lot 3) of the wall. This would lead to the incongruous result that a small portion of the fabric of the wall, being the area between the central plane and the inner surface of the wall comprising Lot 3, falling outside the Exclusive Use Area and outside Lot 3. The Strata Company would retain responsibility for the repair and maintenance of that portion, while the owner of Lot 3 would repair and maintain the remainder.
By way of contrast, construing By-Law 16 in accordance with the Inner Surface Construction promotes a more coherent operation of ByLaw 16 within the context of the Scheme. Such a construction would align the approach to determining the boundaries of Exclusive Use Areas with the approach to determining lot boundaries within the Scheme, and avoid the incongruity resulting from adopting different approaches to walls that constitute common boundaries between lots and Exclusive Use Areas. The Tribunal considers that this construction coheres with the statutory and commercial contexts in which By-Law 16 is intended to operate, and is to be preferred as representing the objective intention of its terms.
As such, the Exclusive Use Area comprising the Garage extends only to the inner surface of the Garage walls. It follows that the applicant's reciprocal obligation to maintain and repair the Garage extends to, but not beyond, the inner surface of the wall.
To the extent that the bricks and mortar constituting the fabric of the Garage walls (or other Boundary Walls) are defective, those defects necessarily extend beyond the inner surface of the wall, and therefore beyond the Exclusive Use Area which the applicant is obliged to repair under By-Law 16. Such defects are defects in or affecting common property in the Scheme, and so attract the Strata Company's obligations under s 35(1) of the ST Act.
Strata Company's obligation to repair
The obligation imposed on the Strata Company by s 35(1)(c) of the ST Act is to keep the common property 'in good and serviceable repair', and 'properly maintain' the common property. That obligation is continuing and is not fettered, limited or conditioned by the reserves of the Strata Company or the financial circumstances of the or the lot proprietors: Brosolo and Council of Owners of 25 St Leonards Strata Plan 352 [2008] WASAT 285 (Brosolo).
However:
The obligation imposed by s 35(1)(c) of the ST Act is not to guarantee the state of the common property to the mandated standard at all times. Rather, compliance with s 35(1)(c) of the ST Act and the obligation to 'maintain' requires there to be a 'process that involves acts of maintenance with the object of continuing the statutory standard'.
…
… Whether the process adopted is adequate to meet the procedural objective and complied with in any case is a question of fact - the facts concerning the process adopted, the facts concerning the compliance with that process and the facts concerning the type or level of deterioration of or damage to the common property.
(See Maludra 2017 at [203] - [204], citing Drexel London (a firm) v Gove [2009] WASCA 181 at [232]; Clark and The Owners of Waterfront Mews - Strata Plan 14082 [2011] WASAT 110; Stann and The Owners of Beau Vista Strata Plan 12008 [2012] WASAT 227)
It follows from the above that although the Strata Company may have set aside a particular sum towards the repair of defective brickwork in the Scheme, its obligations under s 35(1)(c) ST Act are not confined to or by that sum, but rather are to be informed by the statutory objective. Further, those obligations are owed to all lot proprietors, and the Tribunal would not, on the materials before it, be prepared to make an order that would necessarily preference the performance of repair work to the boundary walls of the Exclusive Use Areas of Lot 3.
Conclusion
The Tribunal is empowered to make orders either in terms of those sought by an applicant, or which do not differ in substance from those terms.
Noting the orders sought by the applicant (as set out in [11] above), and for the reasons outlined above, the Tribunal makes the orders that follow.
Orders
1.The respondent is to repair and maintain the brickwork and mortar joints of the walls of the garage of Lot 3 (known as unit 3B).
2.The repair work is to be commenced as soon as is reasonably practicable and is to continue until the repairs are complete.
I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
DR B McGivern, MCGIVERN
6 MAY 2020
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