OWNERS OF GLENGARY 240 MILL POINT ROAD, SOUTH PERTH, STRATA PLAN 2684

Appointment of administrator ­ Factors to be considered ­ Turns on own facts

State Administrative Tribunal Act 2004 (WA), s 47

Strata Titles Act 1985 (WA), s 102, s 102(1), Sch 1, by­law 8(2), by­law 8(2)(a)

Adair and The Owners of Mosman Apartments, Strata Titles Referee decision number ST950505 delivered 14 July 1995

Parker and The Owners of Timberside Villas ­ Strata Plan 27426 [2006] WASAT 254

1 The applicant is a lot owner in the strata complex at 240 Mill Point Road, South Perth.

2 He made application to this Tribunal for orders that he and several other lot owners be appointed as an administrator of the respondent, strata company.

3 During the currency of the proceedings a new strata manager was appointed. Further, the applicant was also elected as a member of the respondent's council of owners.

4 Despite those steps, the applicant raised numerous complaints concerning the present strata manager and some members of the present council of owners.

5 The Tribunal found that the appointment of an administrator was a measure of last resort.

6 The Tribunal examined the complaints raised by the applicant in respect to recent actions of the current strata manager and council of owners. In so doing, it did not consider there was any basis to warrant the appointment of an administrator and dismissed the application.

7 Mr Huning is a lot owner in the strata complex at 240 Mill Point Road, South Perth, Strata Plan 2684. Mr Huning seeks to have the Tribunal appoint himself and several other lot owners as administrators of the respondent strata company.

8 There have been attempts to resolve this matter by mediation.

9 Despite those attempts, the matter has not resolved. At a directions hearing held on 12 November 2009, the parties were required to file any documents and submissions upon which they relied, by 21 December 2009, following which the matter was to be determined on the documents. Both parties filed documents subsequent to 21 December 2009 and those documents have been considered by the Tribunal in determining this matter.

10 Mr Huning has filed the following documentation in respect to this application:

1. Application and supporting documentation filed 24 July 2009.
2. Letter and supporting documentation filed 10 August 2009.
3. Letter and supporting documentation filed 21 December 2009.
4. Letter and supporting documentation filed 3 February 2010.
5. Letter filed 9 March 2010.

11 The respondent strata company has filed submissions from their current strata manager, dated 27 January 2010 and 24 February 2010. At the directions hearing on 12 November 2009, the current strata manager advised the Tribunal that she was instructed to represent the respondent. Both parties have also filed submissions related to the outcome of a failed mediation of 30 September 2009. The Tribunal did not have regard to those submissions.

12 The application is made pursuant to s 102 of the ST Act. Relevantly, s 102(1) of the ST Act provides:

(a) in consequence of the making of an order under this Part a duty is imposed on a strata company;

(b) a duty is otherwise imposed by this Act or the by­laws on a strata company;

(c) a duty is imposed by this Act or the by­laws on the chairman, secretary or treasurer of a strata company or on the council of a strata company; or

(e) in the case referred to in paragraph (a), on the application of the person who obtained the order so referred to;

(f) in a case referred to in paragraph (b) or (c), on the application of a person having an estate or interest in a lot the subject of the scheme concerned; or

(g) in the case referred to in paragraph (d), on the application of the judgment creditor,

by order appoint an administrator (being a person who has consented in writing to the appointment) to perform that duty and any other duty specified in the order or to pay that judgment debt, as the case may require.

13 The issue of the appointment of an administrator was dealt with by Senior Member Raymond in the matter of Parker and The Owners of Timberside Villas ­ Strata Plan 27426 [2006] WASAT 254 (Parker). In that matter, the Tribunal made clear that the appointment of an administrator is an order of last resort.

14 In essence, Mr Huning's submissions raise concerns as to the management of the strata company over time.

15 He submits that from March 1996 ­ March 2006, the strata company was managed by four lot owners, without engaging a strata manager.

16 Thereafter, the strata complex was managed by a real estate agent. That person is no longer the strata manager. The respondent appointed a new strata manager in late 2009. At the directions hearing on 12 November 2009, Mr Huning indicated he was pleased with the newly appointed strata manager. However, this view has changed and he continues to maintain that an administrator should be appointed.

17 Much of the submissions and information put before the Tribunal by Mr Huning is now out of date, as it relates to the activities of the former strata manager and former council of owners.

18 As a result, the Tribunal intends to focus on the information concerning the management of the strata company since on or about 12 November 2009.

19 In that regard, Mr Huning has filed submissions and documents on 21 December 2009, 3 February 2010 and 9 March 2010.

20 Those documents include a copy of a Notice of General Meeting and Meeting Agenda sent to the lot owners for the holding of an extraordinary general meeting (EGM) on 21 December 2009.

21 Item 2 of the EGM Meeting Agenda indicates that due to the lack of financial information tabled at the Annual General Meeting (AGM) on 30 July 2009, the strata manager would give a verbal report of the financial status of the strata company at the EGM on 21 December 2009.

22 Under Special Business, an administrative fund budget and the determination of a levy contribution were proposed.

23 A copy of the proposed administrative fund budget was attached to the Notice of General Meeting for the period from 1 May 2009 to 30 April 2010.

24 The EGM agenda for 21 December 2009 stated that the administrative fund budget allowed for a surplus to cover insurance premiums due and payable by the strata company on 1 April 2010. A levy of contributions for the administrative fund of $18.77, inclusive of GST, per unit of entitlement per quarter was also proposed.

25 Although Mr Huning made written submissions on 21 December 2009, those submissions have been overtaken by the written submissions made on 3 February 2010, which followed the EGM held on 21 December 2009. In his 3 February 2010 submission, Mr Huning referred to the current strata manager advising the Tribunal at the directions hearing on 12 November 2009, that she thought the deficit in the strata company budget was $7,000 or more.

26 In his submissions of 21 December 2009, Mr Huning complained that no satisfactory explanation had been given as to the cause of such a possible deficit. However, in his submissions of 3 February 2010, Mr Huning acknowledges the explanation for the deficit given by the current strata manager at the EGM held on 21 December 2009, was due to a loan from the former strata management company to the strata company. As a result, his submissions of 3 February 2010 complain that the current strata manager should have called the EGM earlier and that the information provided to lot owners prior to the EGM on 21 December 2009 should have provided more information as to the extent of the deficit.

27 Mr Huning also claims that he was given no satisfactory explanation by the current strata manager as to how a new budget for the financial year 2009­2010 could be passed.

28 Mr Huning also refers to a second notice of the EGM, held on 21 December 2009, being placed in his mailbox on 18 December 2009. He complains that this should have been provided 14 days prior to the holding of the meeting.

29 Mr Huning's submissions, and some of his various letters to the strata company, also complain as to the change in a scheduled meeting date of the council of owners, from 20 January 2010 to 14 January 2010. Mr Huning maintains that the change in the date was not made in accordance with by­law 8(2), Sch 1 of the ST Act.

30 Mr Huning also complains that despite the council of owners agreeing to meet monthly, since the EGM on 21 December 2009, this has not occurred.

31 Mr Huning, who, since 21 December 2009, has been appointed a member of the council of owners, complains as to the outcomes of that council of owners' meeting and, in particular, the possibility that new members of the council of owners have the ability to be outvoted by other members of the council of owners.

32 Mr Huning has also raised concerns as to the cleaning of the complex, and a delay in actioning a proposal by Mr Huning that his son undertake this cleaning.

33 In essence, Mr Huning suggests that the current strata manager and the new council of owners have not lived up to an image of changing the approach to the management of the strata company, and maintains there is a need for the appointment of an administrator.

34 The strata manager has filed submissions and documents on behalf of the respondent strata company on 28 January 2010 and 24 February 2010.

35 The respondent submits that all lot owners were sent a notice of the proposed holding of an EGM for 21 December2009 on 2 December 2009. It is submitted that a further letter was then sent to all lot owners on 17 December 2009, attaching copies of the financial statements for the respondent for the period 1 May 2008 ­ 30 April 2009 and 1 May 2009 to 31 October 2009. The respondent admits there was an error in the letter of 17 December 2009 referring to the EGM as an AGM.

36 The respondent's submissions explain that although it was the current strata manager's intention to call the EGM in early December 2009, due to her unavailability, it had to be delayed until 21 December 2009.

37 The respondent's submissions of 24 February 2010 detail the findings by the present strata manager of the deficit in the budget of the respondent. It is submitted that the budget passed at the AGM on 30 July 2009 was incorrect. The respondent maintains that the respondent's financial records revealed that the insurance policy, due for payment on 1 April 2009 and paid on 31 May 2009, did not form part of the income and expenditure statement or the balance sheet, when presented to the AGM on 30 July 2009. Further, it is submitted that the financial records revealed that the previous strata manager had journalled a loan by the then strata manager to the respondent on 31 May 2009, in order to meet the payment of the respondent's insurance premium. As a result, the respondent submits that had that loan been shown in the financial statement tabled at the AGM on 30 July 2009, it would have revealed a loss for the period of $6,290.12.

38 It is for this reason that the present strata manager suggested the further EGM of 21 December 2009 to deal with this deficit and allow sufficient further funds be levied upon lot owners to ensure the respondent's budget was in surplus.

39 Mr Huning's application seeks the appointment of an administrator.

40 This is governed by s 102 of the ST Act. This provision allows the Tribunal to appoint an administrator to carry out, amongst other things, the duties imposed by the ST Act or by­laws.

41 The Tribunal adopts the comments made by Senior Member Raymond in Parker, in which it was stated that the appointment of an administrator was a measure of last resort.

42 The following comments concerning s 102 of the ST Act of the former Strata Titles Referee, Mr Kronberger, in the matter of Adair and The Owners of Mosman Apartments, Strata Titles Referee decision number ST950505 delivered 14 July 1995 are relevant:

Paragraphs (a) and (b) of subsection 1 of section 102 clearly are not applicable in this case and what then must be considered is whether a duty is imposed by the Act or by­laws on the strata company, the chairman, secretary, treasurer or council of the strata company. Although the Act does not go any further than that, in my view, a sensible reading of section 102 would mean that there has either been a refusal to carry out the duty, a failure to carry out the duty or an inability to carry out the duty.

43 The issue is whether, on all of the information provided by Mr Huning, the position has been reached which requires the appointment of an administrator.

44 Currently, the respondent is being managed by a recently appointed strata manager. The current strata manager represents the respondent in these proceedings as an agent. Prior to the appointment of the current strata manager, the respondent opposed the present application. As agent for the respondent, the current strata manager maintains that opposition. Mr Huning complains that as a member of the newly elected council of owners, he was not consulted in respect to the written submissions made by the current strata manager as agent for the respondent. Although it may have been courteous for the current strata manager to have referred the written submissions, filed on behalf of the respondent, to the council of owners before filing, it was not necessary pursuant to the ST Act. Further, it is clear the respondent opposed the proceedings well prior to the present council of owners being elected.

45 In addition, the present strata manager was appointed to act as agent for the respondent prior to the present council of owners being elected. As an agent for the respondent, who from the outset had opposed the proceedings, the current strata manager was entitled to make all relevant submissions as an agent for the respondent in support of the respondent's opposition to the proceedings.

46 Despite the recency of her appointment, the current strata manager recognised that the books of account of the respondent required attention. As a result, an EGM was called to enable the strata manager to report upon the respondent's financial state. Where deficits were considered to exist, the strata manager suggested an increase in the annual strata levies imposed upon the lot owners and suggested a once­off levy be raised to provide a surplus for the respondent.

47 As to the calling of the EGM, the strata manager has explained that although it was her intention to call the meeting in early December 2009, due to her unavailability it had to be rescheduled.

48 Mr Huning claims that in respect to the EGM of 21 December 2009, he received two notices, one on or about 2 December 2009 and one on or about 18 December 2009. Mr Huning suggested that the second of those notices was not compliant with the ST Act, as it was served late. However, the Tribunal does not consider anything turns on this issue, as clearly Mr Huning received the first notice of the proposed EGM. The purpose of the second notice dated 17 December 2009, was to distribute the financial information prior to the EGM, which could only have been beneficial to lot owners, including Mr Huning. It is clear from the minutes that Mr Huning attended the EGM and does not, therefore, appear to have been prejudiced in any way by receipt of the second notice of EGM. Although the notice of 17 December 2009 referred to the EGM as an AGM, this was clearly an oversight and again resulted in no prejudice being suffered by Mr Huning.

49 Finally, Mr Huning complains that as the present strata manager had indicated to the Tribunal at a directions hearing on 12 November 2009 that the respondent's accounts showed a deficit, the notices for the EGM should have included details of the strata manager's findings. The Tribunal does not consider the information provided to lot owners for the EGM lacked sufficient detail. The proposed meeting agenda made clear that the strata manager would give a verbal report to the lot owners on the respondent's financial position. Further, the notice of the EGM dated 17 December 2009, attached relevant financial information.

50 As to the financial state of the respondent, the financial records were examined by the current strata manager. That examination revealed that the previous strata manager had journalled a loan to the respondent on 31 May 2009 to pay insurance for the respondent. If this information had been shown in the financial statement for the respondent, it would have revealed that the respondent was suffering a financial loss of $6,290.12 at the time the budget was dealt with at the AGM on 30 July 2009.

51 As a result, the proposed budget discussed at the EGM on 21 December 2009, made allowance for the collection of a special levy to rectify this deficit and result in a surplus budget for the respondent. Therefore, a new annual budget for the respondent was adopted. There are no provisions in the ST Act which prevent a strata company moving to adopt a new budget during the same financial year. The Tribunal considers that the strata manager acted appropriately in indentifying the error in the budget passed on 31 July 2009 and took steps to ensure that the respondent was able to properly meet its liabilities.

52 On the whole, the Tribunal considers that the current strata manager has used her best efforts to ascertain as quickly as possible the current financial state of the respondent and suggested appropriate solutions at the earliest possible time.

53 Mr Huning is now a member of the respondent's council of owners. His submissions raise concerns that despite being on the council of owners, he may be outvoted. Such a possibility cannot justify the appointment of an administrator. The ST Act does not require every decision of a strata company to be made unanimously. Simply because there is the potential for Mr Huning to be outvoted whilst serving as a member of the council of owners, does not support a finding that the council of owners are acting improperly or in a way that warrants the appointment of an administrator. It is clear there is a history of dissatisfaction on Mr Huning's part in respect to past comments and actions of some of the present council of owners, who were members of the previously elected council of owners. However, there is nothing upon the information before the Tribunal to show that the present council of owners have not been duly elected or that they are presently waging a campaign to outvote Mr Huning, which has in any way resulted in decisions which are not in the best interests of the members of the strata company as a whole.

54 Mr Huning had raised some concerns as to the changing of the dates for the council of owners' meetings. He complains that the change of the council of owners' meeting from 21 January 2010 to 14 January 2010 did not comply with by­law 8(2)(a) of Sch 1 of the ST Act because a reason for calling the meeting had not been given.

55 Mr Huning's submissions of 3 February 2010 suggest that the original date suggested for the council of owners' meeting was 14 January 2010 but was changed by agreement to 20 January 2009. Mr Huning alleges that he then received an email from one of the members of the council of owners advising that the meeting was to be held on 14 January 2010.

56 The respondent's submissions do not address whether the date of the council of owners' meeting was changed from 20 January 2010 to 14 January 2010. Further, the minutes of the EGM held 21 December 2009 do not record when the council of owners were due to meet. The notice of the council of owners' meeting and agenda was dated 6 January 2010 and referred to the meeting being held on 14 January 2010. Clearly, Mr Huning had been given prior notice of the due date for the meeting, along with a copy of the agenda.

57 The substance of his complaint is that the notice for the calling of the council of owners' meeting failed to specify the reason for the calling of the meeting. However, the notice for the council of owners' meeting on 14 January 2010 provided an agenda. As a result, the Tribunal does not consider any inappropriate or unlawful act occurred by either the current strata manager or the council of owners in respect to the calling of the council of owners' meeting on 14 January 2010.

58 The remaining issue concerns complaints by Mr Huning as to the cleaning of the strata complex. However, Mr Huning's own correspondence of 12 January 2010, to the new strata manager, confirmed the delay related to the lack of funds to provide for the cleaning. Further, at the council of owners' meeting held 14 January 2010, the new strata manager was required to arrange for cleaners to attend the strata complex. Indeed, by 22 January 2010, the new strata manager accepted Mr Huning's son's offer to clean the complex. For these reasons, the Tribunal does not consider either the council of owners or the current strata manager has acted inappropriately in respect to resolving the issue of cleaning the complex.

59 The Tribunal considers the appointment of an administrator a measure of last resort. The Tribunal does not consider that any basis has been established to warrant the appointment of an administrator. Although there have been difficulties in the past between the council of owners and Mr Huning, and some concerns in respect to the previous strata manager, there is nothing at present to support the drastic step of appointing an administrator. Far from any persistent failure or refusal to exercise any duty, the evidence points to the new council of owners and strata manager endeavouring to address necessary issues confronting the strata company. As a result, there is no need to consider the suitability of Mr Huning or the other proposed lot owners as administrators.

60 Whatever might have been the merit of Mr Huning's complaints about the management of the respondent strata company in the past, the issues raised since the election of a new council of owners and the appointment of the new strata manager, on any objective measure, are not significant. The matter could have been capable of resolution without the need for a formal determination by the Tribunal.

61 It will be in the interests of all parties to use their best endeavours to resolve any issues which might arise in the future so as to avoid unnecessary recourse to the Tribunal. It is generally of little assistance in the resolution of issues for a party to engage in a constant stream of written or oral complaints.

62 Having regard to the lack of any real substance in the complaints levelled at the respondent since the appointment of the new council of owners and the strata manager, any future application may be at risk of summary dismissal under s 47 of the State Administrative Tribunal Act 2004 (WA) as an abuse of process, if it is similarly lacking in substance.

I certify that this and the preceding [62] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

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