THE OWNERS OF BIJOU MARINA VILLAGE - STRATA PLAN 36747 & OTHERS

Strata Titles - Application for interim orders - Strata Plan 36747

State Administration Tribunal Act 2004 s 78, s 83(1)(b)

Strata Titles Act 1985 s 35(1), s 82(2), s 83(1)

1 In his application, the applicant sought the following orders on both an interim and permanent basis:

"1. The proprietors of Units 1, 2, 3, 4, 6, 10, 11, 12, 13 and 15 of Bijou Marina Village refrain from advertising that their units are available for lease and refrain from entering into lease agreements for short-stay or holiday accommodation.

2. The proprietors of Units 1, 2, 3, 4, 6, 10, 11, 12, 13 and 15 of Bijou Marina Village be required to terminate or cancel any current lease agreements for short-stay or holiday accommodation and to take all steps necessary to ensure that any tenants vacate within 14 days of making this order;

3. The strata company of Bijou Marina Village from now on enforce its by-laws in relation to the matters in paragraphs one and two above."

2 The application, which is brought pursuant s 83(1) of the Strata Titles Act 1985 ("Act"), was filed on 18 February 2005. On 1 March 2005, by order of the Tribunal, the application for interim orders was adjourned to a directions hearing on 11 March 2005.

3 At that hearing, the applicant was represented by Ms Lee of counsel. The part-owner of one lot, Mr Smith, and a representative of the strata manager, Ms Logiudice, also appeared. After hearing from the parties, I made the following interim order:

"There be an interim order under s 82(2) (of the Act) that the proprietors of all units of 'Bijou Marina Village - Strata Plan 36747' refrain from advertising that their units are available for lease on a short-stay or holiday accommodation basis and from entering arms-length lease agreements for short-stay or holiday accommodation."

4 On 7 April 2005, the Tribunal received a written request in accordance with s 78 of the State Administrative Tribunal Act 2004 from Anderson Kershaw, solicitors for all of the proprietors against whom the applicant seeks orders and the proprietors of unit or lot 9 who have subsequently been joined as respondents, requesting written reasons for the decision in relation to the interim order. These are those reasons.

5 Strata plan 36747 ("the plan") was registered on 1 September 1999 pursuant to the Act, which continues to be the relevant Act.

6 The parcel, known as "Bijou Marina Village" is situated at lot 589 Spinnaker Boulevard, Port Geographe, Busselton. When first registered, the plan comprised 36 lots. Subsequently, 19 lots were converted to common property. The remaining 17 lots have had what are described as "villa units" constructed on them. Since 19 February 2004, the applicant has been the owner of lot 14, which appears to have been one of the first, if not the first, unit to be constructed and occupied.

7 At the time of registration of the plan, a management statement was lodged pursuant to s 5C of the Act. Upon registration of the management statement, the by-laws set out in the statement are regarded as by-laws made by the strata company under s 42 of the Act: s 5C(5) of the Act.

8 The management plan provided for the adoption of the by-laws in schedules 1 and 2 in the management statement. The following provisions in Sch 2 of the management statement are relevant for present purposes:

No lot be used for any purpose that contravenes any by-law of the Strata Company or requirement or by-law of the local government authority and any other authority that may have jurisdiction over the use to which a lot may be put.

2. Behaviour of proprietors, occupiers and tenants within the scheme

A proprietor, occupier or tenant of a lot shall not:

(a) use any lot or part of the common property for any purpose which may be a breach of any Strata Company by-law applying to the scheme, any local government authority regulation or by-law, or any other government and regulating authority law..."

9 Section 35(1) of the Act, so far as it is relevant, states:

(b) control and manage the common property for the benefit of all the proprietors ..."

"Where an application for an order under this Division states in his application that he requests an interim order, the State Administrative Tribunal may, if satisfied on reasonable grounds that by reason of the urgent circumstances of the case it should do so -

(a) make under this subsection as an interim order any order that may be made under this Division with respect to the application ..."

"The State Administrative Tribunal may, pursuant to an application of a strata company, an administrator, a proprietor, a person having an estate or interest in a lot or an occupier or other resident of a lot, in respect of a scheme, make an order for the settlement of a dispute, or the rectification of a complaint, with respect to the exercise or performance of, or the failure to exercise or perform, a power, authority, duty or function conferred or imposed by this Act or the by-laws in connection with that scheme on any person entitled to make an application under this subsection or on the council or the chairman, secretary or treasurer of the strata company."

12 Among the materials provided by the applicant with his application was a facsimile dated 18 June 2004 from Barry Payne, Customer Services Officer of the Shire of Busselton, advising that:

• the parcel was zoned 'Residential R20' under the Shire of Busselton District Town Planning Scheme 20;

• given the zoning, short-stay or holiday accommodation is a non-permitted use; and

• there are no agreements or approvals in place to allow any short-stay or holiday accommodation use of the land.

13 The applicant has produced the following evidence of advertising of some lots for short-term and holiday accommodation leasing:

• A facsimile dated 14 February 2004 on the letterhead of "The Tides Port Geographe Marina Tavern and Restaurant" of 21 Spinnaker Boulevard, Busselton, advising of the availability of "Bijou units for the period the 17th to 23rd June" and nominating units 1, 3, 4, 11, 12, 13 and 15, and possibly unit 2.

• A print out of a website of Port Geographe Waterside Villas, of 21 Spinnaker Boulevard Busselton, advising of the availability for holiday leasing of "Bijou Villas."

• Brochure titled "Port Geographe Waterside Villas" providing generic information.

• Print out from website of Geographe Bay Yacht Club advertising a yachting regatta during the period 25 February 2005 to 4 March 2005 advertising the "Bijou Villas" as available accommodation and providing a link to Port Geographe Villas' website.

14 The applicant's counsel submitted not that there was a serious question to be tried, but rather, that there was no question (and it was the fact) that there had been leasing of some lots for short-stay or holiday accommodation purposes, which clearly contravened the town planning scheme of the local government authority, and therefore the by-laws set out in the management statement. The applicant was entitled to expect the other lot owners would comply with the by-laws, and his amenity as a permanent resident was affected significantly by the contraventions that had occurred in the past and which, unless interim relief was granted, would continue to occur.

15 So far as the balance of convenience is concerned, Ms Lee on instructions withdrew the application for order 2 on an interim basis in recognition of the interests of third parties who had entered into lease agreements for short-stay or holiday accommodation in good faith and without knowledge of any legal impediment to that arrangement. In relation to order 1, she submitted that in light of the clear illegality of that type of leasing, the balance of convenience was clearly in favour of the applicant who was entitled, on an interim basis, to an order refraining advertising and future leasing which would not affect third parties. Ms Lee advised that the applicant would give the usual undertaking as to damages if required on the making of an interim order.

16 In relation to order 3, Ms Lee's submission was that the strata company appeared to have disregarded its obligations under the Act to enforce the by-laws, and that such an order on an interim basis would serve to ensure that the strata company is doing its job.

17 I was informed that the application was served on each of the individuals and companies named as respondents to the application, and the first respondent, the strata company. The strata manager's representative also indicated at the hearing that the strata manager had provided copies to all proprietors in accordance with s 79(2) of the Act.

18 A total of six written responses was received. No doubt influenced by the previous practice when matters such as this were dealt with by the Strata Titles Referee, those responses in the main were in the form of a letter which addressed the orders sought on an interim and permanent basis. Two of the responses were supportive of the application and four were opposed to it.

19 None of the responses in opposition to the application contested the assertion that the lots have been used for short-term holiday leasing. To the contrary, those responses accepted such leasing had occurred, and in at least one case it was admitted that the lot had been purchased with that very intention. Further, in response to a question at the hearing, Mr Smith admitted that lot 6, which he part owned, had been used for that purpose.

20 The matters raised in the responses in opposition included:

(a) Taken to extremes, the orders sought could prevent owners inviting guests.

(b) The unit was purchased on the basis of advice received by the real estate agent that it was suitable for short-term stay accommodation.

(c) Short-term stay accommodation is common in areas zoned "residential" in the Busselton region.

(d) The possible re-zoning of land currently zoned residential is an issue being dealt with in the Shire of Busselton, with a working group having been formed in 2000 to consider possible amendment to the scheme.

21 In the hearing, Ms Logiudice (who described her capacity as the "building manager") referred to discussions which were continuing among the owners regarding behaviour of all occupiers in the complex, as well as emphasising the apparent ambivalence of the Shire of Busselton to enforcement of its own town planning scheme. She rejected the allegation of failure by the strata company of its obligations to enforce the by-laws and submitted that the strata company was unable to dictate to individual proprietors the uses to which they put their lots.

22 Mr Smith referred to advice he had received in brief discussions with his solicitor that there was some question regarding the Tribunal's jurisdiction to make orders 1 and 2, and that the short-term leasing was not in conflict with the by-laws. He also referred to his belief that most of the proprietors of lots in the complex were not informed of the zoning requirements when they purchased their lots. He reiterated that short-term leasing of residentially zoned land is common practice in the Busselton realty and that as far as he was concerned this was a matter for the Shire.

23 I am satisfied that there exists a serious question to be tried in the application, namely, whether short-term leasing of units in the strata complex contravenes the town planning scheme and the by-laws of the strata company.

24 In the hearing, Ms Lee expressed the applicant's position in relation to the need for an interim order in the following way:

"We have constant use of the land in a non-permitted way, we've had a regatta down there which was clearly advertised for use by tourists. We have Easter coming up, there would be suggestion ... in the papers that there are leases already let for Easter, this needs to be acted on now."

25 I found this submission useful in dissecting the issue of the balance of convenience. The potential for inconvenience to innocent third parties who had already made arrangements to let one of the lots in the complex had been a matter of concern to me in my consideration of the interim orders sought. That concern dissipated when the applicant through his counsel indicated he no longer sought order 2 as an interim order.

26 In considering where the balance of convenience lay in respect of order 1, counsel's submission underlined the threat, from the applicant's perspective, of continuation of conduct in contravention, on the face of it, of the by-laws applicable to the strata scheme. That threat was avoidable by the making of an order along the lines of order 1. The defendant's interests on the making of the order would be protected by the applicant's undertaking as to damages, which, as I indicated in the hearing, was to be a condition of the making of the order, a matter to which I will refer later in these reasons. Further, the interests of third parties are again, important. In the absence of an interim order, continued leasing of the units might prejudice innocent third parties who were to enter into short-term leasing arrangements for some future time and arrange their affairs accordingly, only to have their arrangements dashed in the event that the application for final orders succeeds. I was satisfied that this is an "urgent circumstance" entitling the Tribunal to make such an order under s 82(2).

27 A further concern which I raised with the applicant's counsel at the hearing was that the evidence failed to link at least two proprietors with any incident of illegal letting. After Mr Smith's admission, out of all the lots referred to in the orders sought, one remained in respect of which there was a mere expression of belief by the applicant of leasing on the allegedly unlawful basis. I accepted Ms Lee's suggestion at this point (which Ms Logiudice supported) that the interim order should be directed to all proprietors of lots in the scheme on the basis that its potential effect was limited to those owners with a mind to engage in that activity. It would not, for example, affect the interests of the owners of lots who are not respondents, two of whom have supported the application. I should say, however, that before final orders are made against individual lot proprietors, I would need to be satisfied by evidence of the involvement of any such proprietor in unlawful letting.

28 This leaves the application on an interim basis for order 3, which in the course of the hearing I indicated I was not prepared to grant. I could find no evidence to substantiate Ms Lee's assertion of a disregard of the strata company's obligations in the knowledge of the alleged unlawful leasing. In terms of s 82(2), I was not satisfied that there existed any urgent circumstance for the making of an interim order against the strata company. After advising her of my finding in this regard, Ms Lee, on instructions, indicated that the applicant was content with an order that the strata company serve a copy of the interim order on all the proprietors and such an order was made.

29 Finally, I return to the matter of the indication by counsel for the applicant that the usual undertaking as to damages would be provided. I had anticipated that this would be done in the conventional way by the filing of a written undertaking signed by the applicant to the effect that he would abide by any order the Tribunal may make as to damages if the Tribunal is of the opinion that any respondent has sustained any loss by reason of the interim order which the applicant ought to pay. It does not appear such an undertaking has been filed, which has exposed an omission from the order of 11 March 2005 of any reference to the applicant's undertaking with his counsel indicated would be forthcoming.

30 I therefore make the order referred to below.

31 Order 2 in the Tribunal's order dated 11 March 2005 be amended pursuant to s 83(1)(b) State Administrative Tribunal Act 2004 by inserting at its commencement the following words:

32 "On the applicant through his counsel providing the usual undertaking as to damages."

I certify that this and the preceding nine pages comprise the reasons for decision of the Tribunal.

______________________

T Carey

Member