Grewal v The Owners of 918 Hay Street Perth Strata Plan 40672

[2018] WADC 176

JURISDICTION     :   DISTRICT COURT OF WESTERN AUSTRALIA

IN CIVIL

LOCATION:   PERTH

CITATION:   GREWAL -v- THE OWNERS OF 918 HAY STREET PERTH STRATA PLAN 40672 [2018] WADC 176

CORAM:   STAUDE DCJ

HEARD:   12 DECEMBER 2018

DELIVERED          :   18 DECEMBER 2018

FILE NO/S:   CIVO 82 of 2018

BETWEEN:   SEHDEV GREWAL

Applicant

AND

THE OWNERS OF 918 HAY STREET PERTH STRATA PLAN 40672

Respondent

Catchwords:

Strata Titles Act 1985 - Section 51 application for declaration - Resolution without dissent required to amend by-law - Allocation of exclusive use of common property between lot owners - Whether building management considerations bear on discretion to make declaration - Turns on own facts

Legislation:

Strata Titles Act 1985

Result:

Declaration made

Representation:

Counsel:

Applicant	:	Mr C S Williams
Respondent	:	Mr P A Monaco

Solicitors:

Applicant	:	Solomon Brothers
Respondent	:	GV Lawyers

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

Ebony Nominees Pty Ltd v Woodbrook [2016] WADC 126

McHattie v Tuscan Investments Pty Ltd (1997) 18 SR (WA) 231

STAUDE DCJ:

Introduction

1. Before the court is an application by originating summons for a declaration pursuant to s 51 of the Strata Titles Act 1985 that:

   The motions voted on at an extraordinary general meeting of the defendant on 18 April 2018 to the effect that the by‑laws in schedule 1 to the Act, as they applied to the company be repealed, amended and added to as follows:

   1.1By‑law 26(2), which gives the proprietors of Lot 28 and Lot 29 the rights to exclusively use the area marked in 'B' on the plan attached to the by-laws, is repealed, and the words '2.  Lots 28 and 29 having exclusive use over the area marked 'B' on the attached plan' are deleted from by‑law 26; and

   1.2The following by-law 26A is added to schedule 1:

   26A Exclusive Use

   Notwithstanding by-law 26, which shall not apply to this by-law:

   1.The proprietors of Lot 28 shall have the exclusive use of that portion of the common property that is labelled 'F' on the attached plan marked 'C'; and

   2.The proprietors of Lot 29 shall have the exclusive use of that portion of the common property that is labelled 'G' on the attached plan marked 'C'.

   were supported to the extent necessary for a special resolution under the Act and are sufficient to authorise the acts proposed by those resolutions.

2. The effect of the declaration, if made, would be to deem the resolutions to be resolutions without dissent, thus enabling the proposed amendment of the by-laws.

3. I heard and allowed the application on 12 December 2018.  I indicated that I would publish reasons.  They are as follows.

4. I am satisfied that the summons was served on the owners of lots of strata plan 40672 in accordance with s 51(2). No owner has entered an appearance. That fact is not without significance, given that s 51(3) provides that the court may not order costs against a party who opposes the order sought unless the court considers the actions of that party to have been unreasonable.

5. The defendant, being the strata company, was represented and made submissions that did not support or oppose the relief sought, but informed the court of considerations that in the defendant's opinion were relevant to the exercise of the court's discretion.  Principally those considerations relate to governance.  The court was not informed by the defendant of any reasons that may have been expressed by any dissenting lot owner for their opposition to the motions.

Statutory power

1. The statutory power to make the order sought is explained by Parry DCJ in Ebony Nominees Pty Ltd v Woodbrook [2016] WADC 126, [23] - [35].

2. Section 51(1) enables the court to order that a resolution shall be deemed to have been passed as a unanimous resolution or a resolution without dissent if three requirements are met, namely, that:

   1.a unanimous resolution or a resolution with dissent is required by the Act before a proposed act may be done;

   2.the resolution has been put to and voted on at a duly convened general meeting of the strata company and supported to the extent necessary for a special resolution; and

   3.the applicant seeking the declaration is the person included in the majority in favour of the resolution.

3. In this case the amendment to the by‑laws was moved at an extraordinary general meeting of the defendant on 18 April 2018.  The motions in question required resolution without dissent in that, by amendment the defendant's by-laws they granted exclusive use of part of the common property, previously granted to the proprietors of lots 28 and 29 jointly, to those proprietors separately in portions marked 'F' and 'G' on the plan marked 'C'. 

4. The area shown on the plan marked 'C' is a rooftop area above lots 28 and 29.  The defendant decided in 2008 to grant exclusive use of that area to the proprietors of lots 28 and 29 for what were said to be privacy reasons.  Precisely what those reasons were is not clear.  Be that as it may, since then lots 28 and 29 have had exclusive use of the area.  Such exclusive use of that area does not impede access to other areas of the rooftop.

5. The reason for the motions is that the owners of lots 28 and 29 have agreed to sell lot 29 on terms that the exclusive use area be allocated proportionately to each of the units.  The effect of the motions on the status quo is negligible.

6. I am satisfied that the motions were passed by a substantial majority and to the extent necessary for a special resolution (as defined in s 3B of the Act) in that they were supported by votes having a value of 79.68% and 69.35% respectively of the aggregate unit entitlement of the lots in the scheme and by the votes of 77.42% and 64.52% respectively of the proprietors of the lots in the scheme, and that the votes against the motions had a value of 7.68% and 14.64% respectively of the aggregate unit entitlement of the lots in the scheme and were cast by 6.45% and 16/13% respectively of the proprietors of the lots in the scheme. 

7. I am satisfied also that the plaintiff was included in the majority who voted in favour of the motions having voted in his capacity as the proprietor of lot 26 and the co-proprietor of lot 28.

8. Hence, I am satisfied that the requirements that enliven the court's discretion to make the declaration sought have been met.

Discretionary considerations

1. The exclusive use area is the upper surface of an area of metal roof.  Lots 28 and 29 are on the top level (level 11) of the strata-titled building and are the only lots on that level.  The roof and its sub‑structure are common property.  The roof area does not provide any accommodation as such, but as the plaintiff counsel has remarked, it could be used for leisure.

2. I have read the submissions lodged by the defendant.  Essentially, they raise prudential considerations.  They reflect legal advice given to the defendant as to the ramifications of the allocation of exclusive use areas on the roof.  The advice given to the defendant is that the parameters of the exclusive use area lack precision and that the plan that demarcates the area is inadequate.  The advice is apposite to the situation as it is and has been since exclusive use of part of the roof was granted 10 years ago.

3. Given that the strata company is obligated by s 35(1)(c) to 'properly maintain and, where necessary, renew and replace' the roof, the issues for the defendant are said to be:

   (a)the precise horizontal plane and strata heights and depth and clear definition of the extent of the boundary being inclusive or exclusive of any nominated vertical structure or improvement of the upper side of the metal clad roof; and

   (b)the impact of that the use of the exclusive use affected area will have on the metal cladding structure, roof infrastructure and the building elements below the roof cladding;

4. The advice to the defendant includes a recommendation that the defendant's by-laws ought to include a by-law that addresses such matters as maintenance and replacement of the roof, insurance for damage to the roof, fire escape access to the roof, and access for plant and equipment maintenance, among other things, and that the by‑law should be accompanied by a plan prepared by a surveyor to accurately define the affected area horizontal and stratum boundaries. 

5. Adding such a by-law may well be a prudent measure on the part of the defendant.  However, the need for or desirability of doing so is not influenced by the motions as by-law 26 already permits exclusive use by the proprietors of lots 28 and 29.  Similarly, a survey of the roof may be desirable for building management purposes, but it is not necessitated by the proposed amendments.  Landgate has indicated that the plan marked 'C' is acceptable for registration.

6. The number of factors for consideration in this case are set out in McHattie v Tuscan Investments Pty Ltd (1997) 18 SR (WA) 231 and Ebony Nominees Pty Ltd v Woodbrook.  The factors identified in those cases are not exclusive.

7. In this case, taking into account:

   1.the extent of the majority in favour of the motions

   2.the benefit to the owners who are directly affected by the motions, being the owners of lots 28 and 29

   3.the lack of any proven detriment to any particular owner or owners, or the owners generally, and

   4.the negligible effect of the proposed change upon the status quo,

   the court is satisfied that a declaration deeming the motions to have been passed as resolutions without dissent should be made.

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.

RR
Associate to Judge Staude

17 DECEMBER 2018