Real property - Strata titles - common property - repair and replacement of ceilings.

Strata Titles Act 1985

2 The Applicant is Kathryn Ann Norris as the proprietor of Lot 10 on Strata Plan 5141 ("the Strata Plan").

3 The Strata Plan was registered on 4 July 1977 pursuant to the Strata Titles Act 1966 ("the 1966 Act").

4 In 1985, the 1966 Act was repealed and replaced by the Strata Titles Act 1985 ("the 1985 Act") which continues to be the relevant Act.

5 In these Reasons, unless otherwise specified, all references to sections and Schedules are, respectively, references to sections of and Schedules to the 1985 Act.

6 The parcel is a 10-lot single-storey brick and tile residential development, situated at and known as 185 Peninsula Road, Maylands.

7 The Strata Plan records that the address for services of notice on the Strata Company as C/- Torrens Real Estate, PO Box 515, Morley WA 6062, although the correspondence on the file indicates that Torrens Real Estate no longer has any involvement with the Strata Company.

8 If there is a new address for service of notices on the Strata Company, the Registrar of Titles should be notified as soon as possible and the amended address recorded on the Strata Plan.

9 As no changes of by-laws are recorded on the Strata Plan, the by-laws of the Strata Company which were, originally, the "standard" by-laws in the Schedule to the 1966 Act, are now, pursuant to s 42(2) and the transitional provisions in Sch 3, the "standard" by-laws in Sch 1 and 2.

11 The Applicant has sought an Order in the following terms:

"That the resolution claimed to have been passed at the special meeting of the Helen Court Strata Company (Strata Plan 5141) held on 4 October 2003 stating 'to keep it equitable the final cost of ceiling repair to Unit 9 (re fixing and painting) to be set at the current nett present value of ceiling repairs to all units Invoice date 24/09/03. All Units are to be levied at that price for ceiling repairs. Those Units that have repaired their own, are given a credit to the same value. This results in a zero cost to owners who have done their own' be set aside and that Helen Court Strata Company be ordered to repair and reinstate the ceiling and insulation of Unit 10 and that the Helen Court Strata Company meet all associated costs of the repair and reinstatement of the ceiling and insulation. The work is to be completed within 30 days of the decision of the referee."

12 The Applicant advises that no prior notice or agenda item was circulated indicating that a special levy would be discussed at the Strata Company's 4 October 2003 meeting.

13 Her understanding was that a special levy had to be passed by way of a resolution without dissent and that, through a proxy and through subsequent written notice, she has recorded her dissent.

14 The Applicant states

"By levying my unit for the full cost of repairs and not levying other units who claim to have done their repairs, regardless of the date those repairs were carried out, I am paying for repairs that were carried out to other units before I was an owner. By not verifying and quality controlling the repairs, the units claiming to have done ceiling repairs may still need work done later. The special levy does not appear to solve the problem for any future repair.

Owners who carried out their own repairs were mistaken. It is their responsibility to ascertain their rights and the Strata Company's responsibility to maintain common property. The special levy applied retrospectively is not a fair way of redressing their mistake in that it penalises me for their error."

15 She advises that when she purchased her Lot 10 in January 2000, she did not have a building inspection made, on the basis that the Strata Company was responsible for the structure.

16 She claims that while some lots only needed to have ceilings reattached to the joists, the ceiling of Lot 10 needed to be replaced and that

"It appears from the written quote and discussions with the tradesmen that the cost of repairing my unit will be in excess of the special levy of $1 500. This seems to be discriminatory since the ceiling is common property and everyone should contribute equally.

The levy was refunded to owners who said they had done ceiling repairs but without receipts there is no evidence that refunds were given against proven expenditure.

The Strata Company should meet the cost of replacing the insulation since its removal was part of consequential damage of having to replace ceiling and is not claimable on insurance ..."

17 The Applicant has provided a copy of a quote from All States Gyprock relating to the works requested by the Applicant. The works cover the supply of a "skip" bin, plastic for protection, the removal of ceilings and cornices to kitchen, lounge, dining room, master bedroom, office and laundry, the removal of rubbish, the supply and installation of new gyprock and cornices, and the supply and installation of insulation and other items, for a total estimated cost of $2 982.98.

18 The meeting referred to by the Applicant was not a "special meeting", but appears to have been the Strata Company's 2003 Annual General Meeting ("the 2003 AGM"). The meeting was called for and commenced on 14 September 2003 and, by a vote of the meeting, was adjourned until 4 October 2003, to complete the business of the meeting.

19 The proprietors of 5 lots have opposed the application. No proprietors have supported it.

20 Some of those opposing the application have referred to works carried out by them within and adjacent to their lots without an awareness that the Strata Company could be liable to meet some or all of those costs but that, in any event, a considerable amount of works has been, and continue to be, carried out by some lot proprietors, for the benefit of all. Examples given are the cleaning of gutters, the laying of paths, pruning, repairs to retaining walls and reticulation installations.

21 The proprietor of Lot 8 advises that the Applicant, without making any enquiries as to the nature or standard of the existing ceilings and without reference to the Strata Company, installed very heavy insulation materials into the ceiling cavity above Lot 10 and that about two years later the ceilings were obviously affected by the weight of that insulation. He states that

"The lounge/dining/kitchen ceiling area was severely bellied by the weight. It had to be slowly jacked up to approximately level ..."

22 The ceilings are, apparently, still propped up.

23 Another proprietor opposing the application has stated that, even though the notice calling the 2003 AGM referred only to

without specifically referring to ceiling repairs, the proxy document signed by the Applicant, and used by her proxy at the meeting, specifically referred to ceiling repairs.

24 The same proprietor contends that the decision on the repair cost does not require a resolution without dissent and that in any event, the Applicant was in arrears with her levies at the time of the meeting.

25 I have been provided with a copy of a report dated 13 May 2004 from P & Dmac Constructions Pty Ltd, Wall and Ceiling contractors, following on an inspection of ceilings in Lots 2, 5, 6, 7, 9 and 10.

26 In relation to Lot 10, the report states

"This is original ceiling and has blow-in insulation. Min living area is too far gone to be repaired and will have to be pulled down and replaced. This is urgent. Bedrooms 1 and 2 are both off joists 50 - 75mm but if work is carried out promptly they will be salvageable. Laundry ceiling shows signs of damp and an extractor fan needs to be installed. Cornice around manhole needs repairing".

27 That report summarises these points as follows:

"This ceiling needs attention A.S.A.P. It is quite dangerous. The blow in insulation would need to be removed for repairs to occur. ...

There have been repairs to several units and all but unit 10 is OK for now. ...

My estimate of $3 500 - $4 000 would cover removal of insulation and ceiling to living area (of Lot 10), replace old ceiling with 10mm gyprock and 75mm cornice, repair sagging ceilings to bedroom 1 and 2 and repair laundry ceiling after fan has been installed..."

28 In accordance with the definition of "lot" in ss 3(1) and (2), each lot within the scheme is a cubic space only, having as its boundaries the upper surface of the floors, the inner surfaces of the perimeter walls and the under surfaces of the ceilings of the part of the building in which it is situated.

29 Everything else, including the floors, perimeter walls, ceilings, the roof cavity above the ceilings, the roofs, and all external areas and the air space above the buildings and the external areas, are common property.

30 Section 35(1)(c) imposes an obligation on the Strata Company to

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

(c) keep in good and serviceable repair, properly maintain and, where necessary, renew and replace -

(i) the common property, including the fittings, fixtures and lifts used in connection with the common property; and

(ii) any personal property vested in the strata company,

and to do so whether damage or deterioration arises from fair wear and tear, inherent defect or any other cause".

31 Section 36(1) makes it obligatory for the Strata Company to establish and maintain an administrative fund

"... that is sufficient in the opinion of the company for the control and management of the common property, for the payment of any premiums of insurance and the discharge of any other obligation of the strata company".

32 Section 36(1b) and (c) require the Strata Company to determine from time to time the amounts to be raised for those purposes and to raise those amounts by levying contributions on the lot proprietors in proportion to the unit entitlements of their respective lots.

33 Section 36(2) gives the Strata Company the option to establish a second fund as a reserve fund

"... for the purpose of accumulating funds to meet contingent expenses, other than those of a routine nature, and other major expenses of the strata company likely to arise in the future".

34 Despite the Applicant's belief to the contrary, only an ordinary resolution is required in relation to determining budgets and deciding on the contributions to be levied on lot proprietors.

35 I believe that there has been a reserve fund for some time.

36 If, as the Applicant appears to concede, the Applicant owed money to the Strata Company at the time of the 2003 AGM, then neither she nor any proxy appointed by her was entitled to vote or to be counted in the quorum for the meeting. Section 3D and Sch 1, by-law 14(6) would have allowed her or her proxy to be included in a quorum for and to vote on a resolution without dissent or in any case where a unanimous resolution was necessary, but neither of those types of resolution were under consideration at the time of the voting.

37 In relation to the ceilings of Lot 10, talking into account the age of the buildings, and taking into account the report made by P & Dmac Constructions Pty Ltd on the condition of the ceilings in six of the lots, it appears to me that the Strata Company is aware of and has a responsibility to repair, and where necessary, replace any ceilings that have deteriorated.

38 Even if on a mistaken view, in respect of the liability to meet the costs involved, or, with knowledge of the Strata Company's obligations, but on a voluntary basis, some lot proprietors have carried out repair and replacement works on common property items at their own cost, rather than impose the cost on the Strata Company. While I agree with the Applicant that any amounts that might be proposed to be credited to those proprietors for those works may be very difficult to determine accurately, perhaps an attempt could be made to seek a mutually satisfactory result.

39 However, the Applicant's use of the ceiling space for the installation of insulating material without the prior approval of the Strata Company, whether by way of a licence or an exclusive use by-law (see s 42(8)) was an unauthorised use of common property and, although the ceilings have been installed for many years, it appears to be a reasonable assumption that the weight of the insulation has contributed to or accelerated the need for repair or replacement of the ceilings of Lot 10. This view is supported by the Applicant's statement that in some lots the ceilings could be restored by simply re-attaching them to the joists above them.

40 On the basis of the P & Dmac Constructions Pty Ltd's report, the Strata Company must, in relation to the Applicant's Lot 10, meet the cost of repairs to the ceiling of bedrooms 1 and 2, the laundry (including the cornice around the manhole) and the replacement of the ceiling of the "living area".

41 However, I consider that the Strata Company should not be responsible for the payment of any repair costs arising from the installation of insulation in the ceiling above Lot 10 unless it was installed by her, or a predecessor in title to her lot 10, with the prior approval of the Strata Company. If the ceilings are replaced, the Applicant would not be entitled to install new insulation without the Strata Company's approval. While the Orders that I propose to make will involve the Strata Company in some expense, perhaps necessitating the urgent raising of a special levy from all proprietors (including the Applicant), all members of the Strata Company could be at the risk of a substantial damages claim should a person be injured as the result of a ceiling collapse.

42 As the reports provided to me indicate that steam damage is likely to recur in the laundry area, I recommend to the Strata Company that it meet the cost of installing the recommended ceiling fan in order to minimise steam damage to any new laundry ceiling.

43 On the basis that s 81(2a) allows me to express an order in terms other than sought, so long as my order does not differ in substance from the order sought, my Order is that

"If the insulation in the ceiling on lot 10 on Strata Plan 5141 was installed without the prior written consent of 'The Owners of 185 Peninsula Rd Maylands - Strata Plan 5141' ("the Strata Company"),the Strata Company must, by 20 September 2004:

(a) request P & Dmac Constructions Pty Ltd("Dmac") of 33 Lilacdale Road Innaloo to revise its report and cost estimate of 30 May 2004, by separating the cost of any necessary removal of the insulation from the ceiling cavity above the said Lot 10 from the cost of replacing the ceiling above the living area and the laundry in the said Lot 10 and re-fixing the existing ceilings above bedrooms 1 and 2 of the said Lot 10; and

(b) within 14 days of receipt of the said revised cost estimates and upon the delivery by the proprietor of the said Lot 10 to the Strata Company of a written undertaking by that proprietor to pay to Dmac the costs involved in the said removal of the insulation, whichever later occurs, instruct Dmac , at the cost of the Strata Company in respect of the balance of the said works, to carry out the works specified in that company's report of 30 May 2004 as soon as possible,

but, if the said insulation was installed with the prior written consent of the Strata Company without the proprietor of the said Lot 10 undertaking to meet the cost of the removal thereof, the Strata Company must, by 20 September 2004, instruct Dmac to carry out the works the subject of the said estimate of 30 May 2004, at the Strata Company's cost, as soon as possible.

DATED 7 SEPTEMBER 2004

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RJ KRONBERGER

STRATA TITLES REFEREE