Strata Titles Update - October 2023

Cases

When can an owner get retrospective approval for improvements or alterations made to their lot?

JTA le Roux v The owners of Bunker Bay Resort Strata [2023] WASAT 13

An owner (‘Mr Le Roux’) improved his property with an external storeroom, boundary walls, painting of weather boards and window frames, underground water tank, outdoor spa and a rooftop antenna (we only deal with the first two in this article) without obtaining the strata company’s approval under the Strata Titles Act 1985 (WA) (‘STA’) or the by-laws. Mr Le Roux’s request for retrospective approval was denied by the strata company. Mr Le Roux applied to the State Administrative Tribunal (‘SAT’) for:

1. exemption from approval of structural alterations under the Strata Titles Act 1985 (WA) (‘STA’); or
2. orders that the strata company should be deemed to have passed resolutions for approval.

Each Scheme owner was notified of the application and allowed to join the proceedings.

The owner painted the weather boards and window frames a different colour than that approved by the strata company under the by-laws. SAT decided that:

1. The majority of the residential lot owners painted their weather boards and window frames the same colour as that of Mr Le Roux.
2. Changing the colour of paint is not a structural approval and compliance with s.90 of the STA[1] is not required.
3. Approval for colour changes under the by-laws required a resolution without dissent (‘RWD’).
4. Under s.200(2)(n) of the STA, SAT has a wide discretion to order that the strata company is taken to have passed an RWD.
5. The factors which it may consider when exercising this wide discretion are principles of reasonableness, fairness and equity, the interests of the parties and due consideration of all the information.
6. The resolution must be deemed to have been passed considering that most of the weather boards and window frames in the Scheme have been painted the same colour and the strata company made only a general objection.

Take away

Strata companies that allow a practice of noncompliance with aesthetic guideline by-laws may later have difficulty enforcing these by-laws.

Importance of consistency of by-laws with the STA according to the Supreme Court of Appeal

Kelly v Birchwood Consolidated Pty Ltd [2023] WASCA 76

The Strata Company passed by-laws at the first AGM when the developer held all the votes, allowing a lot to be converted into common property and transferred out of the scheme (‘By-Laws’). When the developer asked the strata company to give effect to the By-Laws five years later, the strata company and several owners applied to the State Administrative Tribunal (‘SAT’) for an order invalidating the By-Laws. SAT found for the owners, but the developer successfully appealed to the Supreme Court. The strata company and the owners, in turn, appealed to the Supreme Court of Appeal (‘SCA’).

The strata company and the owners alleged the By-Laws were invalid on 3 grounds:

1. The By-Laws created an alternative mechanism to the STA for converting the lot to common property and transferring it out of the scheme, causing the By-Laws to be invalid. The SCA found that the By-Laws contemplated the requirements of the STA would be followed because they expressly recognised the need for compliance with the STA.
2. A transfer of the common property after the conversion can only be registered when accompanied by a resolution without dissent (‘RWD’) at the time of the transfer. The SCA found that the strata company had a separate legal personality and perpetual succession the fact that its owners changed did not excuse it from the performance of a prior RWD.
3. The By-Laws were inconsistent with the obligation of the strata company in s.35 (now s.91) of the STA because it did not allow for the management of the common property to the benefit of all scheme owners. The allegation was that the By-Laws caused the common property to be managed for the benefit of the developer alone and not any of the other owners. The SCA found that the time the By-Laws were made are the relevant time to assess benefit. The SCA found that when the By-Laws were made they were to the benefit of all owners since the developer owned all the lots at the time.

Take away:

1. By-laws concerning a future proposed development of the common property should specifically refer to compliance with the STA.
2. The validity of by-laws is assessed with respect to the circumstances at the time when they were made.

What is the position if all the requirements of an EGM notice have not been complied with, and does it invalidate the resolutions taken at the EGM

Adder Holdings Pty Ltd v Owners of Harbour Pines Strata Plan [2023] WASAT 120

The applicant was the administering body of a strata titled retirement village scheme (‘Scheme’). The strata company convened an Extraordinary General Meeting (‘EGM’) at which several resolutions were taken. The applicant applied to SAT for a declaration that these resolutions were invalid because the EGM was improperly convened and for other relief. We intend to focus on SAT’s findings concerning whether the EGM was properly convened.

The SAT’s findings were the following:

1. An EGM must be convened by the council on the written request of owners holding 25% of the unit entitlements in the scheme. The EGM notice did not record the requesting owners’ unit entitlements and it was not apparent from the notice that the 25% requirement was met. SAT was satisfied on the evidence that the 25% requirement was met and decided the failure to record the unit entitlements was not fatal to the notice.
2. The notice did not specify the details of all the business to be conducted at the meeting. SAT decided that according to the STA, the EGM notice only needed to state the general nature of the business to be conducted, which it did.
3. The applicant who was an owner of 7 lots did not receive notice of the EGM. SAT decided s.129(3) of the STA applied, which provided that an accidental failure to give notice did not invalidate the proceedings at the EGM.
4. SAT found that the notice did not comply with the following mandatory requirements in s129(2) of the STA:
   1. It did not specify the time of the meeting.
   2. It did not specify the venue of the meeting.
   3. It did not include the method of voting (whether by electronic communication or otherwise) of the EGM.

Having decided that the EGM notice did not comply with all the mandatory requirements, SAT next had to decide whether the resolutions taken at the EGM were valid. SAT said that the validity of resolutions passed at a general meeting depends on several matters set out in Part 8 Division 3 of the STA, including whether:

1. There was compliance with the notice requirements. SAT said that a failure to comply with notice requirements will not automatically invalidate a resolution made at the meeting. It will depend on whether failure to comply will be unfair to an owner or would have resulted in a different outcome.
2. A quorum was established according to the procedural requirements for an EGM. SAT decided on the evidence before it there was a quorum.
3. The voting procedures for an EGM were complied with. All the resolutions at the meeting were ordinary resolutions. SAT was not satisfied that the resolutions were passed by ordinary resolution for the following reasons:
   1. The minutes of the EGM recorded that the resolutions were carried by a show of hands with reference to who voted against the motions. No indication was given of whether any owner abstained from voting.
   2. There was insufficient evidence before SAT to prove that the resolutions were passed by more than 50% of the number of lots for which votes were cast.
   3. The fact that the minutes of the EGM were confirmed at the subsequent AGM could not ratify this defect.

Take away:

1. It is important to comply with the requirements in s.129 of the STA regarding notice of an EGM or an AGM. However, non-compliance does not in all circumstances invalidate the general meeting.
2. Proper minutes concerning the number of votes for, against and who abstained from voting need to be taken to confirm whether motions were carried.

Short facts

What may be included in a debt recovery by-law?

Andrews and The Owners of Coralie Gardens Strata Plan 44374 [2022] WASAT 2 provides useful guidance about the interpretation of by-laws generally, and the limits of what may be included in a debt recovery by-law and payment of costs in disputes in the Tribunal.

The applicant and the strata company had been involved in an earlier dispute in the Tribunal. During the earlier dispute, the strata company passed and registered a by-law which provided, relevantly, that the strata company must levy contributions regarding debt recovery costs solely on the owner of the litigation lot concerned.

The applicant sought an order that a costs recovery by-law was invalid because:

1. it could not apply retrospectively to costs incurred in the earlier dispute; and
2. any costs recovery must be made by applying for an order in the Tribunal, and not by way of a by-law.

The Tribunal decided that the costs recovery by-law was not invalid.

Ordinarily, the usual order is that each party must pay their own costs of a dispute in the Tribunal. Importantly, the case makes it clear that a strata company may register a by-law, which changes this usual order, and gives a strata company protection against costs if a dispute arises in the Tribunal.

A novel third way of levying contributions for water consumption

In a strata scheme with no separate water meters measuring consumption the strata company can charge owners for water supplied in the 3 ways listed below according to GSG Holdings and Bowe [2023] WASAT 68. The third option is often overlooked as an option to introduce a different measure of charging contributions to owners.

1. in proportion to the unit entitlements of their respective lots (s.100(1)(c)(i) of the STA);
2. in accordance with a by-law that provides for a different basis for levying contributions (s.100(c)(ii) of the STA); or
3. in accordance with a contract in place between the strata company and the owner of the lot (s116(1)(g) of the STA).

Legislation

The Transfer of Land Amendment Act 2022 that came into force on 7 August 2023 amended sections 58, 105, 183, Schedule 2A clause 21 Z, 31E and 31K of the Strata Titles Act 1985.

The background to these amendments was the removal of duplicate certificates of title. Duplicate certificates of title will no longer be created or issued, and any existing duplicate certificates of title will no longer have any legal effect.

Interesting strata facts

TV Show Apartments ranked

Many classic TV shows are set in the main character’s apartment. These apartments are generally spacious, tastefully decorated and fitted out with comfortable and expensive furniture. Who decorated the nerds in Big Bang Theory’s apartment and how Monica afforded the chic and spacious apartment with a view in Manhattan, will remain a mystery.

In 2023 the Top 20 TV show apartments were ranked by Nimvo:

1. Mad about you – Paul and Jamie’s apartment.
2. Seinfeld – Jerry’s apartment.
3. What I like about you – Valerie and Holly’s Crib.
4. Gossip Girl – Chuck Bass and Nate Archibald’s Penthouse Suite.
5. Master of none – Dev’s apartment.
6. That Girl – Ann Marie’s Place.
7. How I met your mother – The apartment.
8. The Mary Taylor Moore Show – Mary’s apartment.
9. Friends – Monica’s apartment.
10. The Jefferson’s – Deluxe apartment in the sky.

Real estate statistics, facts and news

1. The least affordable places in Western Australia to rent (taking several factors and not only price into account), according to Renovation Capital, are Mandurah, Bunbury and the northern outback of Western Australia with towns such as Broome and Kununurra.
2. The highest grossing Airbnb in Perth, according to the West Australian, is a South Perth Apartment that earned over $200,000 in the last financial year.
3. Western Australia has the highest home ownership rate in Australia of 58.2%.
4. Property prices in Perth grew 6.6% during the last financial year, the highest of all capital cities in Australia.
5. New stamp duty concessions are aimed to boost the development of multi-storey apartment buildings in WA. A proposed new law will offer immediate stamp duty concessions for of-the-plan buyers of apartments in multi-storey buildings of up to $50,000.

[1] S. 7A and 7B of the pre-May 2020 STA.