Citation : THE OWNERS OF ROSNEATH FARM - STRATA PLAN 35452 and CLARK [2005] WASAT 14

Strata titles - Appeal from Tribunal - Construction of strata title agreement - Each party not informed of other parties' submissions - Decision on the papers - Appellant's standing - Whether appeal appropriate proceeding - Whether error of law - Whether result would be the same in any event

Strata Titles Act 1985 (WA), s 36

State Administrative Tribunal Act 2004 (WA), s 7, s 32, s 36, s 99A, s 105

First respondent indemnified by Suitors Fund Act 1964 (WA)

The Owners of Rosneath Farm - Strata Plan 35452 and Clark [2005] WASAT 14

Attorney-General for Hong Kong v Shiu [1983] UKPC 2; [1983] 2 A C 629

Freedman v Petty [1981] VicRp 90; [1981] VR 1001

McDade v State Rail Authority (1985) 4 NSWLR 383

Minister for Immigration and Ethnic Affairs v Teoh [1995] HCA 20; (1995) 183 CLR 273

R v Liverpool Corporation; Ex parte Liverpool Taxi Fleet Operators' Association [1972] 2 QB 299

1 TEMPLEMAN J: This is an application for leave to appeal against a decision of the State Administrative Tribunal ("the Tribunal") in relation to the construction of by-laws of a strata company known as "The Owners of Rosneath Farm - Strata Plan 35452", the second respondent.

2 Rosneath Farm is the name given to a strata titled development of land owned originally by Richard Melville Clark, the first respondent. In 1992, Mr Clark entered into an agreement with a company known as Rowell Consulting Services Pty Ltd for the purpose of carrying out a strata title development on his land. The principal of the company was and is Warwick Harold Mitford Rowell, the appellant. The parties envisaged that the development, which was to involve the creation of some 70 strata titled lots, would be carried out in stages over a period of 10 years.

3 For reasons which are not presently relevant, the development has not been completed. To date, 15 lots have been created and sold. However, a substantial area, which it is intended to subdivide into 56 lots, remains in the ownership of Mr Clark. This is Lot 25 which the parties refer to as a "super-lot".

4 In the course of subdividing Rosneath Farm pursuant to the Strata Titles Act 1985 (WA) ("the Act"), a Management Statement was prepared by Mr Rowell on behalf of Rowell Consulting Services Pty Ltd. The Management Statement included by-laws additional to those which, by s 42(2) of the Act were deemed to be the by-laws of the strata company.

5 Section 36 of the Act requires a strata company to establish a sufficient fund for administrative expenses for the control and management of the common property of the development and for various other expenses there specified. The strata company is required to determine from time to time the amounts to be raised for that purpose: and it is to raise the amounts so determined by levying contributions on the proprietors of the strata-titled lots:

"In proportion to the unit entitlements of their respective lots; or where a by-law referred to in section 42B ... is in force, in accordance with that by-law ..."

6 It follows, that where a by-law made under s 42 of the Act deals with the contributions to be levied on the proprietors of the particular development, it may be assumed that such a by-law provides for a different basis of assessment from that which would otherwise apply, pursuant to s 36.

7 By-law 19 in the Rosneath Farm Management Statement provided in its original form:

"Unless varied by a resolution without dissent of the Strata Company [and with the written permission of the Original Proprietor,] calculation of the levies will be based on the unit entitlements for individual lots that have been established by a licensed valuer on 9 October 1997 as contained in the Disclosure Statement."

The words which I have enclosed in square brackets were deleted subsequently by order of the Tribunal in other proceedings. Nothing turns on that deletion for present purposes.

8 It is common ground that the unit entitlements for individual lots were established by Cameron McGregor on 9 October 1997. Mr McGregor was a licensed valuer. He set unit entitlements for each of the 70 lots proposed for the strata title development.

9 As I have noted above, it is now proposed that there be 71 units, not 70 as envisaged originally. This is a matter which, presumably, renders Mr McGregor's determination invalid to some extent. However, that is not a matter which has been addressed in these proceedings. I therefore proceed on the assumption that Mr McGregor's determination remains operative.

10 Disputes have arisen between Mr Clark and the strata company as to its entitlement to levy contributions in respect of Lot 25. The strata company contends that Mr Clark should contribute on the basis that he owns the 56 "individual lots" which together form Lot 25.

11 Mr Clark accepts, I think, that such an approach might have been appropriate if the contributions were to be levied pursuant to s 36 of the Act. Mr Clark contends, however, that by-law 19 was intended to achieve a different result: namely, that the calculation of the levies was to be based on the unit entitlements of the "individual lots" which had actually been created and sold. On that interpretation, Lot 25 would not be included in the lots brought into account for the purpose of calculating the levies.

The dispute is referred to Strata Titles Referee

12 On 23 September 2004, the strata company made an application to the Strata Titles Referee ("the Referee") in the following terms:

"That Richard Clark, the registered proprietor of Lot 25, pay and continue to pay on or before the due date the levies due on the said lot from and including 11 October 2003, and that he bear any costs incurred."

13 The grounds set out in support of that application were in the following terms:

"In August 2003, Mr Clark repudiated the implicit contracts and the remainder of the contents of the only documents that relieved him of the responsibility of paying levies on the super-lot, Lot 25. He has subsequently refused to withdraw that repudiation, negotiate any other solution, or to attend a dispute resolution meeting as set out in the Management Statement."

14 The jurisdiction formerly exercised by the Referee was exercised by the Tribunal from 1 January 2005, pursuant to s 7 of the State Administrative Tribunal Act 2004 (WA) ("the SAT Act").

15 Subsequently, the application was considered by Mr T J Carey, a Member of the Tribunal. In reasons delivered on 24 February 2005, Mr Carey said he had "considered and determined the application on the basis of the documents received".

16 It is common ground between the parties that the documents to which Mr Carey referred included submissions made by various interested parties. It is also common ground that none of those parties was informed, either by the Referee or by the Tribunal, about submissions made by others. Consequently, none of the interested parties was given an opportunity to comment on opposing submissions.

17 It is not clear whether the Referee or the Tribunal was responsible for this apparent failure of communication. However, it is submitted on behalf of Mr Rowell (and I think, accepted on behalf of Mr Clark) that the consequence was a failure to accord procedural fairness to the parties. I accept that to be so. It follows, that Mr Carey (no doubt unwittingly) determined the matter without giving effect to s 32(1) of the SAT Act which provides that the Tribunal is bound by the rules of natural justice.

18 The application made by the strata company in the terms set out above appears to be a money claim: that is, a claim that Mr Clark pay "the levies due" on Lot 25. However, there was no evidence before the Tribunal that levies had been raised. If they had, as Mr Carey pointed out in [15] of his reasons, the appropriate procedure would be that prescribed by s 36A(4)(c) of the Act: an action in a court of competent jurisdiction for recovery of the debt.

19 However, Mr Carey (very sensibly, in my view) proceeded on the basis that it would be appropriate to determine the underlying dispute: whether the strata company was empowered to levy Mr Clark in relation to Lot 25.

20 In resolving that dispute, Mr Carey took into account eight submissions in support of the application and four in opposition. It is clear from Mr Carey's reference to these submissions that they contained assertions of fact. In other words, Mr Carey had before him extrinsic evidence which he took into account in determining the true construction of by-law 19.

21 Mr Carey's conclusion was adverse to the strata company. He held:

"According to its terms, the by-law limits the allocation of levies to individual lots referred to in the valuation; it does not in my view permit the aggregation of any number of those lots in the manner for which the applicant contends." [Mr Carey's emphasis]

22 Section 105 of the SAT Act entitles "a party to a proceeding" to appeal from a decision of the Tribunal "but only if the court to which the appeal lies gives leave to appeal".

23 By s 105(2) the appeal can only be brought on a question of law.

24 In the present case, the application is brought to the Supreme Court because the decision was made by a tribunal member who was not a judicial member.

25 The grounds on which leave to appeal is sought may be paraphrased as:

1. Mr Carey erred by denying the applicant procedural fairness; and

2. Mr Carey erred in the construction he placed on by-law 19.

26 The appellant contends that if leave is given and the appeal allowed, the appropriate course would be to remit the matter to the Tribunal for further consideration in accordance with the law.

27 Mr Clark opposes the grant of leave on a number of grounds. I deal with each in turn.

Mr Rowell has no standing to prosecute an appeal

28 The proceedings before the Tribunal involved only two parties: the strata company as applicant and Mr Clark as respondent. However, the appeal has been instituted by Mr Rowell.

29 In those circumstances, it is submitted on behalf of Mr Clark that Mr Rowell has no standing as an appellant.

30 I do not accept that submission. As I have noted above, s 105 of the SAT Act entitles "a party to a proceeding" to appeal (subject to leave). By s 3 of the SAT Act, "party" has the meaning given to that term in s 36: and by s 36, the term "party" includes "a person intervening in the proceeding".

31 As appears from [27] of Mr Carey's reasons, Mr Rowell made a submission to the Tribunal on the invitation of the Referee in response to a notice sent to "interested parties". That being so, I consider that Mr Rowell was "a person intervening in the proceedings" within the meaning of s 36 of the SAT Act. He was, therefore, "a party": and he is entitled to institute the appeal.

32 The essence of the submission made on behalf of Mr Clark is that Mr Rowell should proceed by way of a writ of certiorari to quash the Tribunal's decision if he wishes to complain that the Tribunal failed to afford him procedural fairness. It is submitted that the appeal procedure under s 105 of the SAT Act is available only when a question of law arises from the relevant decision itself. That being so, it is submitted, at least the complaint about a failure on the part of the Tribunal to afford procedural fairness to Mr Rowell falls outside the scope of s 105.

33 Against that, it is submitted on behalf of Mr Rowell, that the question whether the decision is affected by jurisdictional error is a question of law which falls within s 105.

34 I accept that submission. While the contrary is arguable, I consider that in a climate in which courts are being encouraged to simplify and streamline their procedures, it would be undesirable to require a party to a proceeding before the Tribunal who wanted to raise a natural justice question, to elect whether to proceed by prerogative writ or s 105. This is, I think, a particularly important consideration given that many of the parties engaged in proceedings before the Tribunal act in person and could not be expected to understand the subtleties of prerogative writ procedures (even if they were aware of the existence of such procedures).

35 Further, the Court exercising the appellate jurisdiction pursuant to s 105 of the SAT Act has wide powers pursuant to s 105(9) which include those available under the prerogative writ procedures.

36 For these reasons, I conclude that the appeal is competent.

37 It is submitted on behalf of Mr Clark that even if all those who had made submissions to the Tribunal had been given an opportunity to respond to opposing submissions, the result would have been no different.

38 In essence, the submission proceeds on the basis that by-law 19 is unambiguous and may be construed without resort to extrinsic evidence.

39 In my view, there are two answers to that proposition. First, I do not accept that by-law 19 is unambiguous. In my view, it is not clear whether the term "individual lots" is intended to mean lots proposed in the original plan, or lots created from time to time in the implementation of that plan over a period of years. In any event, it seems to me that at least some extrinsic evidence is required in order to understand the background to the dispute and the circumstances in which Lot 25 came to be regarded as a separate lot.

40 If I am correct in my view that by-law 19 is ambiguous, then it was appropriate for Mr Carey to have regard to extrinsic evidence in its construction. And if that is so, the failure of the Tribunal to afford procedural fairness to interested parties had the consequence that Mr Carey did not receive evidence which he might properly have taken into account. Indeed, it might have been inappropriate to deal with the matter on the papers, as Mr Carey did.

41 Secondly, if, contrary to my view, by-law 19 is unambiguous, it must follow that Mr Carey erred in taking any extrinsic evidence into account in determining its true construction.

42 On any view, therefore, the result must be regarded as unsatisfactory.

43 In these circumstances, I think the appropriate course is to set aside the decision of the Tribunal and remit the matter to the Tribunal for reconsideration pursuant to s 105(9)(a) and s 105(9)(c) of the SAT Act.

44 In accordance with s 105(10) I direct that the Tribunal reconsidering the matter should not be constituted by Mr Carey. I wish to emphasise that this direction is not intended to be a criticism of Mr Carey. Nor is it intended to suggest that if Mr Carey was to reconsider the matter, he would not do so appropriately. Indeed, it is clear from the materials before me, that Mr Rowell requested Mr Carey to reconsider his decision. Mr Carey was, of course, unable to do so, the application having been determined.

45 In the circumstances of this case, it may seem odd that the strata company is joined in these proceedings as a respondent when it might have been expected to be the appellant. At the hearing of the appeal, a Mr Richard Rowell sought to appear on behalf of the strata company. This is not permissible: a corporation may appear only by a legal practitioner. However, in the course of my discussion with Mr Richard Rowell, he told me that the company could not appeal because it was controlled by Mr Cark (presumably, as the owner of 56 of the 70 or 71 proposed lots) who would not permit such a course.

46 In these circumstances, it is not clear to me how the strata company came to make its original application to the Referee. There must also be questions about the ability of the strata company to pass resolutions for raising levies against Mr Clark.

47 Indeed, Mr Richard Rowell candidly informed me that if the strata company members had been as knowledgeable about the Act in 2004, when they lodged their application to the Referee, as they are now, they might have proceeded differently.

48 I mention these matters in order to make plain that although I have concluded that the matter should be remitted to the Tribunal, it is not incumbent on either Mr Rowell or the strata company to pursue the matter.

49 It is not for me to advise the parties. However, it is clearly in the interests of all concerned to have the contributions issue resolved and it seems to me that s 99A of the Act might provide a more appropriate basis for achieving that result.

50 At the conclusion of the hearing, when I reserved my decision, I proposed to make provisional orders as to costs on the basis that any party who objected to my proposal would be entitled to be heard further.

51 I consider that because the appeal has been successful, the costs should follow the event. On the basis set out above, I therefore order that the first respondent, Mr Clark, pay the costs of the appellant, Mr Rowell. The costs are to be taxed if not agreed. The strata company, not being legally represented, has not incurred any costs.

52 In all the circumstances of this case, I think it would be appropriate to grant Mr Clark an indemnity certificate for his costs pursuant to s 10 of the Suitors' Fund Act 1964 (WA). Such a certificate may be granted in respect of a successful appeal to the Supreme Court, from a decision of "a court" on a question of law. The term "court" is defined to include the Small Claims Tribunal. That being so, the definition is, I think, apt to include the Tribunal.

53 I can grant a certificate only if an application is made. However, if Mr Clark wishes to make such an application, a letter to that effect from his solicitor to my Associate would be sufficient.

3. The decision of the State Administrative Tribunal in The Owners of Rosneath Farm - Strata Plan 35452 and Clark [2005] WASAT 14 is set aside.

4. The application is remitted to the State Administrative Tribunal for reconsideration.

5. The Tribunal reconsidering the matter is not to be constituted by Mr T J Carey.

6. The first respondent is to pay the appellant's costs of the application and appeal, to be taxed if not agreed.

7. Subject to an application made within 7 days by the first respondent, his costs of the appeal may be made the subject of an indemnity certificate pursuant to s 10(1) of the Suitor's Fund Act 1964 (WA).