Strata Titles Update - April 2023

Cases

The importance of notice requirements for votes outside a general meeting

Konig and The Owners of Tranby on Swan Strata Plan 2232 [2021] WASAT 156

In this case, the Tribunal considered the consequences of a failure to provide notice of a proposed ordinary resolution outside a general meeting, for works to replace balustrades forming part of the common property.

The applicant argued that, because of various deficiencies in the voting process, the respondent had not met the requirements of section 120(8) of the Strata Titles Act 1985 (WA) (“Act”). The primary deficiency relied on was the failure to give adequate notice, in breach of section 123 of the Act, because all or some of the owners were given less than 14 days notice of the proposed resolution.

The Tribunal decided that the failure to allow sufficient time (being 14 days notice of the proposed resolution) resulted in the resolution not being passed. The reason for this decision was summarised at [52]:

‘It is noteworthy that the requirement for 14 days notice in s 123(7)(a) is definitional. That is, a resolution is an ordinary resolution passed other than at a meeting if (amongst other things) 14 days notice of the terms of the proposed resolution is given. In the absence of the definitional requirements under s 123(7), there is no ordinary resolution.’

Importantly, the applicant didn’t need to prove that the proposed resolution would have been defeated by a majority of the owners entitled to vote (which was a consideration relevant under the former Act).

Take away: This case provides a useful summary of the requirements for the procedure for voting outside a general meeting and a warning about the consequences of a failure to strictly comply with the Act.

What are the requirements for a strata company to obtain insurance cover and when will it qualify for an exemption

The Owners of High Rise Strata Plan 8245 [2022] WASC 450

This matter concerned a strata titles scheme in Port Hedland and its obligations concerning insurance under the Act:

1. The obligation under s.97(1)(a) of the Act is to insure all its insurable assets against fire, storm, tempest, lightning, explosion and earthquake for replacement value.
2. The exemption under s.97(2) of the Act specify that if the strata company took all reasonably practical steps to obtain insurance, but no insurer is willing to provide insurance on reasonable terms, the strata company must obtain insurance that most closely meets the requirements.
3. The strata company has a right under s.97(3) of the Act to apply to the State Administrative Tribunal (‘SAT’) for an exemption from complying with s.97.

The strata company was quoted an insurance premium of $1,027,000 to comply with its insurance obligation for 2020-2021, which was substantially more than the 2019 -2020 premium of $312,152. The reasons for the increase circled around cyclone and related risks in Port Hedland.

The strata company applied under s.97(3) for an exemption to comply with s.97(1)(a). SAT refused the application and the strata company appealed to the Supreme Court. The Supreme Court allowed the appeal and remitted the matter back to SAT to decide what order should be made under s.97(3) of the Act.

As part of its judgment the court provided guidelines for how s.97 should be interpreted and when an exemption can be allowed under s.97(3):

1. s.97(1) is a mandatory insurance scheme for the benefit of lot owners;
2. s.97(2) imposes a less stringent obligation than s.97(1) available in certain circumstances and s.97(3) provide an exemption to the obligations in s.97(1) and (2);
3. s.97(3) gives SAT a broad discretion to grant an exemption, which should be exercised giving regard to the following considerations:
   1. whether it would be reasonable for the strata company not to insure having regard to circumstances such as the protection of the lot owners’ assets through another arrangement that will work just as well;
   2. has the strata company taken all reasonably practicable steps available to it to obtain the required insurance and was no insurance company willing to insure on reasonable terms that meet the s.97(1) requirements? An example where insurance will not be on reasonable terms is where the insurance premium is excessive.
   3. has the strata company taken all reasonably practicable steps available to it to obtain the required insurance and was no insurance company willing to insure on reasonable terms that closely meet the s.97(1) requirements.

Take away: This case provides guidance to strata companies that are faced with unreasonable insurance premiums or conditions that wants to apply for an exemption.

Breach of strata by-laws: Excessive garbage in and around the lot

The owners of Dianella Court Strata Plan 14961 v Subasic [2023] WASAT 25

In this case, the strata company commenced proceedings in SAT against an owner alleging that they stored garbage within their carport and rear yard visible from the common driveway. The strata company alleged that the owner breached Schedule 2 default by-laws 11(c) and 14.

The strata company alleged that the garbage adversely impacted owners and occupiers of other lots who had legitimate concerns for their comfort and hygiene. The garbage had a foul odor, was visible from the outside of the lot and not in keeping with the rest of the building, attracted cockroaches and other insects and was a risk to the hygiene of other lots.

SAT found that:

1. 1. The strata company provided several written notices of contravention pursuant to section 47(2) of the Act to the owner, of which one complied with all the provisions of section 47(2) of the Act.
2. 2. The placement of the garbage in the proximity of other lots was a risk to the hygiene of other lots and the garbage was visible from outside the lot and was not in keeping with the rest of the building.

SAT ordered the owner to remove the garbage within 12 weeks.

Short facts

When can proceedings be commenced or continued in the District Court and not in SAT:

In Evans v The Atrium, the owners of Strata Plan 1114 [2022] WADC 120 the District Court had to decide whether it or SAT had jurisdiction to hear a Strata Company’s (‘SC’) counterclaim. Although clause 30(2) of Schedule 5 to the Act states that a proceeding that could have been commenced in the District Court before 1 May 2020, must now be commenced in SAT the District Court found that it had jurisdiction to hear the counterclaim for the following reasons:

1. the disputes in the proceedings consisted of Scheme Disputes (see s.197(1) of the Act) and disputes that are not Scheme Disputes;
2. ‘proceedings’ in clause 30(2) of Schedule 5 to the Act refers to the whole and not only a part of the proceedings;
3. SAT has jurisdiction over Scheme Disputes, but not over non-Scheme Disputes that form part of the defendant’s counterclaim;
4. only if the entirety of the dispute is a Scheme Dispute it has to be commenced in SAT;
5. parliament did not intend that one part of the dispute should be heard in SAT and a different part of the dispute should be heard in the District Court.

Take away:

1. In proceedings commenced before 1 May 2020 in the District Court, the parties should consider this decision when they have to decide where to commence a counterclaim.
2. Where the disputes between the parties consist of scheme and other disputes the parties should consider commencing the proceedings in the District Court or other court that has jurisdiction over all the disputes.

What will qualify as a structural alteration for purposes of section 87 of the Act?

According to section 87, an owner cannot do a structural alteration to its lot without a resolution without dissent or written approval of all owners. In this context it is important to know what will qualify as a structural alteration. SAT has found that the following alterations to a lot will qualify as structural alterations:

• A brick wall.
• A fence made out of metal posts and panels.
• A metal gate.
• A concrete slab.
• A retractable pergola.
• A garage.
• A temporary portable gazebo.

It is important to note that each case will always be decided on its facts and any of the above alterations may under different circumstances be found not to be a structural alteration.

Take away: Many different structures can be considered a structural alteration and it is advisable to obtain the necessary resolution or consent before effecting the alteration. Retrospective approval can be costly and difficult to obtain.

Concerns that the person counting the votes at an AGM council members election might not be impartial

The Act, Regulations and default by-laws do not make provision for an independent person or a scrutineer to scrutinise the voting process and counting of votes in a council election. If you are concerned about the fairness of the process you can do the following:

• Propose a by-law providing for an impartial person to count the votes in council elections. The by-law will be a governance by-law and will have to be passed by a resolution without dissent.
• Ask the chairperson to appoint someone impartial to count the votes under governance by-law 5(7), if it applies to your strata company.
• If your by-laws are silent concerning the appointment of a scrutineer or impartial person, the chairperson likely has the power to appoint such a person, if asked to do so by the meeting.
• The owners voting at the meeting, can waive their rights to a secret vote, and allow every vote to be made public.

Legislation

No amendments to the Act came into effect in March 2023.

Interesting strata facts

• The NSW Government legislated the first version of Strata Title Legislation in Australia. The Conveyancing (Strata Title) Act, 1961 came into force on 1 July 1961. The first strata title building in Australia was Lindsay Gardens situated at 189 Liverpool Road, Burswood, Sydney. The Local Council approved Lindsay Gardens on 28 July 1961. The first act dealing with strata titles in Western Australia came 4 years later, namely the Strata Titles Act 1966 (WA), which came into operation in September 1967.
• The most expensive city to buy an apartment in is Hong Kong. A two-bedroom flat costs on average AUD 2,917,000. The cheapest country is Egypt where a two-bedroom flat costs AUD 55,890.
• The most expensive commercial strata space in Australia in 2022 was a development in 350 George Street Sydney that was selling at $30,000 per sqm.

Disclaimer re content

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