BETWEEN : THE OWNERS OF ROSLYN STRATA PLAN 35960

Practice - Application to strike writ of summons - Lacking authority to commence proceedings

Bessant v Owner of Strata Plan 25788 [2005] WADC 141

1 REGISTRAR KINGSLEY: The plaintiff (Strata Company) sues the defendant (Maguire) for failing to pay various levies raised by the Strata Company between April 2010 and March 2012.

2 The writ has been served on Maguire and Maguire has entered a conditional appearance. Maguire has brought an application pursuant to O 12 r 6 Rules of the Supreme Court 1971 seeking orders that the writ of summons be set aside. In essence Maguire's submission is that the proceedings have commenced in the name of the Strata Company without lawful authority. Maguire supports the application by his affidavit sworn 10 December 2012.

3 The Strata Company opposed the application and has filed the affidavit of:

4 Maguire has filed a further affidavit sworn 8 March 2013.

5 The defendant's argument is that the proceedings are pursuant to a resolution allegedly passed at the Annual General Meeting (AGM) of the Strata Company held 27 March 2002. Pursuant to bylaw 12(1) (all references to a section or bylaw are references to a section of the Strata Titles Act 1985 or the bylaws of the Strata Company) all business transacted at an AGM shall be deemed special business. Pursuant to bylaw 5 if special business is to be transacted at an AGM 14 days notice must be given specifying the general nature of that special business.

6 Maguire submits that the notice of the AGM did not specify that the business of commencing legal proceedings against him would be discussed. Thus Maguire submits the resolution to commence these proceedings was not passed in accordance with the bylaws and is invalid.

7 The Strata Company argues that Strata Company Council at a meeting held on 5 November 2011 resolved to issue a final letter of demand to Maguire, and in the event of no positive response, to instruct the Strata Company lawyers to commence an action for recovery of monies owing. The Strata Company argues that the council had authority to make that decision.

8 Further, the Strata Company argues that the notice of the AGM included a proposed budget to apply from 1 February 2012. That proposed budget made provision for legal fees of $40,000. At the AGM held on 27 March 2012 the members resolved to adopt the proposed budget. The adoption of the budget was sufficient to authorise proceedings.

9 Maguire argues that pursuant to s 47(1) the Council cannot expend more than $65 per lot (the sum of $65 coming from reg 29 Strata Title General Regulation 1996). Thus the expenditure of up to $40,000 for legal fees is contrary to the Strata Titles Act.

10 The Strata Company being duly constituted in accordance with s 32(1), pursuant to s 32(3), is capable of suing and being sued. Section 36(1) provides that a strata company shall establish a fund for administrative expenses and raise amounts determined from time to time by levying contributions on proprietors in proportion to their unit entitlements. Section 36(4) provides that any contribution levied under the section, if not paid when it becomes due and payable bears interest and may be recovered as a debt by the strata company in a court of competent jurisdiction.

11 On 5 November 2011, the Council of the Strata Company resolved to proceed with recovery action against any owner who was in arrears with levies. Section 36(4) provides that any contribution levied including interest may be recovered as a debt by the Strata Company. No restriction is placed on the Strata Company as to how it is to resolve to commence proceedings - unlike s 36(3).

12 In my opinion that decision at the Council meeting on 5 November 2011 was all that was necessary to authorise the instructing of the Strata Company's lawyers (see Bessant v Owner of Strata Plan 25788 [2005] WADC 141 [19]).

13 Maguire submits that the Notice of 27 March 2012 AGM did not specify that the business of commencing legal proceedings would be discussed. In my opinion it was unnecessary for any resolution to be made at the AGM. The resolution made by the Council on 5 November 2011 is sufficient.

14 Maguire submits that the expenditure of $40,000 is in breach of s 47(1). Section 47(1) provides that the Council of a Strata Company shall not undertake expenditure exceeding the sum obtained by multiplying a sum fixed per lot by special resolution, or if no sum is fixed, the prescribed amount per lot, in this case $65 per lot.

15 The restriction imposed by s 47(1) does not apply to expenditure authorised by the Strata Company in general meeting as part of the budget of the Strata Company (see s 47(2)(e)). Notice of the proposed budget was received by Maguire (Maguire affidavit sworn 8 March 2013, page 20). The proposed budget was adopted at the AGM, and the expenditure for legal expenses authorised.

16 For these reasons I am of the opinion the Strata Company had the legal authority to commence these proceedings. I will hear counsel on orders to progress the action and on costs.