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[2015] WASAT 72
General information, not legal advice.
State Administrative Tribunal (WA)
2015-06-24
Original judgment source is linked above.
The applicant sought an order for the respondents to cease renting their lots for purposes of shortstay accommodation. The strata scheme's Bylaw 16 provides that a lot must be used as a 'residence' by the proprietor of the lot, or that 'occupancy rights' may only be granted to 'residential tenants'. The question is whether shortstay accommodation falls within this scope of use.
The applicant said that the lots had to be used for residential purposes and that, according to the ordinary meaning of the word 'residence', shortstay accommodation where persons can book a lot for only a night is not of sufficient permanency to be an authorised use under Bylaw 16.
The respondents said that the use of the words 'residence' and 'residential tenants' do not exclude the lots being used for purposes of shortstay accommodation. The respondents said the relevant bylaw had to be interpreted within the context of the Strata Titles Act 1985 (WA), the relevant bylaws and the ordinary meaning of the word. If that is done, the respondents say, it must be found that shortstay accommodation, regardless of the duration of the stay, is a consistent use under the relevant bylaw because it is a form of 'residence'.
The Tribunal found that since the Strata Titles Act 1985 and Bylaw 16 of the strata scheme do not define 'residence', 'occupancy rights' or 'residential tenants', the ordinary meaning attached to the words within the context of the relevant bylaw should be ascertained. The Tribunal concluded that the lots may only be used for a form of occupancy that is consistent with an intention of permanency, longterm accommodation, or place of abode. The making available of lots for shortstay accommodation where an occupant has no intention to make the lot his or her place of residence is therefore not consistent with Bylaw 16 and is not allowed in this scheme.
Orders were made for the respondents to cease the breaches of the relevant bylaw. The orders were made to take effect on 1 August 2015.
Derring Lane Pty Ltd v Port Phillip Council (No.2) [1999] VSC 269
Federal Commissioner of Taxation v Miller [1946] HCA 23; (1946) 73 CLR 93; 3 AITR 333
Hope and City of Joondalup [2007] WASAT 8
Mackie v Henderson [2011] WASC 197
Marana Holdings Pty Ltd v Commissioner of Taxation [2004] FCAFC 307
Owners of Pearl Beach SurveyStrata Plan 49019 and Heyns [2011] WASAT 66
The Owners of Strata Plan 18449 and City of Joondalup [2006] WASAT 101
Urdd Gobiath Cymru v Commissioner of Customs and Excise [1997] V & DR 273
1 The issue is whether the lots of the respondents may be used for purposes of shortstay accommodation in light of the provisions of Sch 1 Bylaw 16.1 and Sch 1 Bylaw 16.2.1 of the City of Belmont Local Planning Scheme No 15 (LPS 15), which require that lots may only be used as a 'residence' by the proprietor, and otherwise for 'occupancy rights' in respect to 'residential tenants'.
2 The facts of the dispute are not contested and can be summarised as follows.
3 Strata Scheme 55597 (strata scheme) comprises 113 residential apartment dwellings and was created on 14 July 2008. All lots within the strata scheme are residential lots. Bylaw 16 formed part of the management statement that was registered at the same time as the strata plan.
4 The strata scheme is situated within a Mixed Use zone of the City of Belmont (City), which means that within the zone are buildings that may contain commercial and other nonresidential uses in conjunction with residential dwellings in a multiple dwelling (tower) configuration.
5 LPS 15 defines the different type of uses of a lot. The City has changed the use of Lots 17, 14 and 7 (lots) of the respective respondents from 'Multiple Dwelling' to 'Serviced Apartment'. A 'serviced apartment' is defined in Sch 1 of LPS 15 to mean 'an independent living residential unit providing for short stay accommodation'. 'Short stay accommodation' is also defined in Sch 1 of LPS 15 as accommodation 'where occupation by any person is limited to a maximum of three months in any 12 month period'.
6 The change of use of the respective lots took effect on the following dates:
In the case of Lots 14 and 7, the planning approval carries a footnote stating that the approval did not negate the need to obtain other relevant approvals.
7 All three lots are being used for a purpose that falls within the definition of 'shortstay' as per the planning approval of the City. The bundle of documents dated 6 February 2015, provided to the Tribunal by the applicant, contains various examples of advertisements that have been placed by the respective respondents to attract prospective clients to their lots for purposes of shortstay accommodation. According to the legal representatives of the parties, similar shortstay arrangements are likely to be found in several strata schemes in the metropolitan area.
8 The applicant and the respondents have been at loggerheads for some time about the letting of the lots for shortstay purposes. The applicant says shortstay accommodation is not a permitted use under Bylaw 16, while the respondents say it is a permitted use. A bylaw by which the applicant sought to regulate shortstay accommodation, in a separate proceeding, has been found to be noncompliant with the Strata Titles Act 1985 (WA) (ST Act).
9 The bylaw the subject to the dispute is Bylaw 16, which reads as follows:
16.1 Subject to the Schedule 1 bylaw 16 a proprietor of a residential lot may only use his lot as a residence.
16.2 Notwithstanding bylaw 16.1 a proprietor of a residential lot may:
16.2.1 grant occupancy rights in respect of his lot to residential tenants;
16.2.2.1 the proprietor does not invite customers of the business to visit the lot for the purpose of conducting the business;
16.2.2.2 the conduct of the business from the lot does not breach any local authority bylaw or regulation;
16.2.2.3 the conduct of the business does not cause any inconvenience to the proprietors of other lots;
16.2.2.4 the business does not involve the manufacture storage or vending of goods.
16.3 Notwithstanding bylaw 16.1 the original proprietor of the land may use any lot owned by the original proprietor for the purposes of display to prospective purchasers of that or other lots within the scheme.
16.4 If a proprietor grants occupancy rights in respect of his lot he shall:
16.4.1 promptly provide the council with the full name of each occupier;
16.4.2 give each occupier a copy of the bylaws and the rules (if any) at the commencement of occupation; and
16.4.3 procure that the occupancy agreement contains a provision to the effect that the occupier will comply with the bylaws and the rules and that any breach thereof will constitute a breach of the occupancy agreement which will entitle the proprietor to terminate the occupancy agreement with the occupier.
10 The applicant and the respondents (first to fourth) were legally represented. The fifth and sixth respondents, Mr Dennis Lightfoot and Mrs Deidre Lightfoot, were not legally represented, but Mrs Lightfoot made a written submission and she attended the hearing, although she elected not to take an active part in the proceeding. Since the facts giving rise to the dispute were not contested, no witnesses were called at the hearing. Counsel for the respective parties made written and oral submissions and the Tribunal put questions to counsel.
11 Mr Mark Atkinson, the legal representative of the applicant, contends, in summary, as follows:
12 Mr Pelligra, the legal representative of the first to fourth respondents, contends, in summary, as follows:
13 The facts giving rise to this dispute are not in dispute.
14 The strata scheme comprises 113 residential highrise apartments. The respondents rent their respective lots out for purposes of shortstay accommodation. The lots can be rented on a daytoday basis or for longer periods, but according to LPS 15, shortstay accommodation by any individual client may not exceed three months in any 12 month period.
15 The applicant says the use to which the respondents put their respective lots is not permitted under Bylaw 16 of the strata scheme, while the respondents say it is a permitted use.
16 There are, in essence, three discrete issues to be addressed in order to make a final determination. Those issues are:
The Tribunal will respond to each of these questions separately.
Is it relevant that some or all of the respondents were not aware of Bylaw 16 or the possible restrictions imposed by Bylaw 16 when they acquired the respective lots?
17 The Tribunal's answer to this question is in the negative.
18 It is not contested that Bylaw 16 took effect before the respondents acquired their lots. Although mention was made in earlier correspondence between the parties that some of the respondents may not have been aware of Bylaw 16 or the potential restrictions it imposes, Mr Pelligra did not pursue the argument in his submissions and the Tribunal, in any case, rejects such contention. A proprietor is presumed to familiarise themselves with the bylaws of a strata scheme prior to acquiring a lot. That is, after all, why bylaws are registered and form part of a public record. If there is any question about the meaning or implications of a bylaw, the prospective owner has the opportunity to seek legal or other advice. As has been observed by the Supreme Court, 'it can hardly ever be said that [an original] bylaw creates an injustice' : Mackie v Henderson [2011] WASC 197 at [41].
19 The level or scope of knowledge of the respondents in regard to the existence or meaning or implication of Bylaw 16 is not a relevant consideration for the purposes of determining this dispute.
Does the use of the word 'residence' refer to the 'type' of use a lot is put to, or does it refer to the 'intent' with which a lot is occupied?
20 A strong argument is made that the word 'residential' is used principally to distinguish between different types of uses of the lots; for example, residential, commercial or industrial. In terms of this argument, 'residential' denotes a type of use or classification or zoning according to which a lot must be used for purposes of a form of habitation. In this strata scheme, the argument is that a lot must be used for habitable purposes regardless of the length of stay or the intent of the occupant. The use of respective lots of the respondents are therefore consistent with Bylaw 16, since the lots are used for purposes of habitation, the set up and furnishing of the lots are consistent with the lots being a residence, and the intent of an occupant of a lot about the duration of stay is not a relevant consideration. The use of the lots by the respondents is therefore consistent with Bylaw 16.
22 The use of the word 'residence' in Bylaw 16 does not suggest that the applicant has the power to change the use of lots; for example, to commercial or industrial purposes. The strata company may make bylaws pursuant to s 42 of the ST Act, but those bylaws must fall within the framework set by s 42(1) of the Act. The function of zoning or classification of use of lots rests with the City, and that explains, following a request by the respective respondents, why the City had approved a change of use of the respective lots to 'serviced apartment'. The use of the word 'residence' or 'residential tenant' therefore does not, in the assessment of the Tribunal, include any type of habitation.
23 The use of the word 'residence' and 'residential tenant' must be construed within the context of the powers and functions of the applicant. The authorised use of all the lots in the scheme is expressed by Bylaw 16.1, which determines that a proprietor of a lot 'may only use his lot as a residence' and a proprietor may also 'grant occupancy rights in respect of his lot for residential tenants' (Bylaw 16.2). Bylaw 16.2.2 sets out other business that may be conducted from the lot, subject to the conditions set out in the bylaw, and Bylaw 16.4 sets out responsibilities of the proprietor in regard to 'residential tenants'.
24 The use to which lots within the scheme can be put is therefore subject to Bylaw 16; namely, to be occupied as a 'residence' for 'occupancy' by 'residential tenants', and for the 'conduct of business' subject to the restrictions set out in Bylaw 16.2.2.
25 The Tribunal therefore finds that the use of the words 'residence' and 'residential tenants' in Bylaw 16 refers to the intent with which a lot is occupied, rather than to distinguish between any form of residential and other forms of usage such as industrial or commercial. The Tribunal must consider the meaning of 'residence' and 'residential tenancy' to ascertain whether the use of the lots for shortstay accommodation is consistent with Bylaw 16.
What do the words 'residence', 'occupancy rights' and 'residential tenants' impute?
26 It has been pointed out that neither the ST Act nor the Sch 1 bylaws of the strata scheme define what is meant by 'residence', 'occupancy rights' or 'residential tenants'.
27 The principles according to which a bylaw of a strata scheme should be interpreted were set out in the matter of Owners of Pearl Beach SurveyStrata Plan 49019 and Heyns [2011] WASAT 66 at [43]. Mr Pelligra relied on these guidelines and Mr Atkinson indicated that he agrees, in general, with those principles:
The Tribunal will use the following guiding principles to assist it in its construction of Bylaws 16(1) and 16(3):
(a) The foremost principle is that s6 of the ST Act sets out the requirements for a restriction of use to be registered against a strata/survey strata plan. Such a restriction of use may be amended by way of a resolution without dissent (s 6(1a) and s 6(3) of the ST Act), provided that such a resolution refers to the strata plan showing the area of space affected. Where a registered strata/survey strata plan restricts the use of a lot, the lot may not be used in any manner that contravenes the restriction (s 6(2) of the ST Act) ... If the by-law is ambiguous when reading it in the context of a s 6 Use Restriction, then an interpretation should be favoured which gives the bylaw lawful effect. This principle applies equally the interpretation of contracts: see Global Network Services Pty Ltd v Legion Telecall Pty Ltd [2001] NSWCA 279 (by Mason P, a dissenting judgment - but that does not affect the principle stated) referred to in K Lewison, The Interpretation of Contracts (3rd ed, 2004) at para 7.10, and in relation to statutory interpretation: see General Practitioners' Society in Australia v Commonwealth of Australia [1980] HCA 30; (1980) 145 CLR 532 at 562, referred to in DJ Gifford, Statutory Interpretation (1st ed, 1990) at page 69.
(b) The meaning of By-laws 16(1) and (3) should be gained from their context and language. The bylaws should therefore be interpreted so as to be given their grammatical and ordinary meaning (Codelfa Construction Pty Ltd v State Land Rail Authority (NSW) (1982) 149 CLR 337), unless an interpretation leads to some absurdity, repugnance, ambiguity or inconsistency with other bylaws or the Use Restriction (Clark v The Owners of Rosneath Farm Strata Plan 35452 and Ors [2007] WASAT 85, at [47])[.]
(c) The Bylaws 16(1) and (3) and the Use Restriction must not be considered in isolation from each other or from the other bylaws in the Strata Scheme. The construction of Bylaws 16(1) and (3) the Use Restriction takes place in an holistic, integrated manner against the backdrop of all the bylaws of the Strata Scheme so as to allow the respective Bylaws to have full meaning and practical effect. The Strata Plan and Use Restriction noted thereon, forms an integral part of the Scheme and the Bylaws that regulate it.
(d) Bylaws 16(1) and (3) and the Use Restriction should be interpreted objectively by what meaning they would convey to a reasonable person. Members of the public rely on the registered bylaws and use restrictions on the strata plan, if any, to gain insight into the rights and responsibilities of proprietors, residents and visitors in a strata scheme. Section 68 of the Transfer of Land Act 1893 (WA) provides that a strata title is taken subject to any encumbrances registered against it on the certificate of title. The registered bylaws, including the strata plan and s 6 ST Act use restriction thereon, are lawful encumbrances registered against the title and any proprietor is therefore deemed to have knowledge thereof.
(e) Caution should be exercised before taking into account extrinsic material or surrounding circumstances when constructing Bylaws 16(1) and (3) and the Use Restriction since members of the public may not have access to such extrinsic material to enable them to discern the proper meaning of the By-laws. The intent of Parliament to require registration of a bylaw and the benefit of the certainty and clarity that registration of bylaws bring, may be eroded if the Tribunal too readily relies on extrinsic material for the interpretation of a bylaw or a use restriction on a strata plan. The Tribunal may, however, give consideration to extrinsic material if it is necessary to clarify the meaning and intent of a bylaw or use restriction in circumstances where the bylaws or use restrictions are ambiguous, vague, confusing or contradictory. It was accepted in Rowell v Clark & Anor [2006] WASC 159 (Tempelman J at [39] and [40]) that the Tribunal may have regard to extrinsic evidence when interpreting an ambiguous bylaw.
[f] Although the Tribunal is not a court and its procedures are more informal than what is expected in court proceedings, it must adhere to general accepted principles when constructing statutes and contracts, for example, evidence should not be permitted which contradicts or varies the written agreement or in this case, a bylaw or use restriction (Rosneath at [42]).
[g] The statutory context within which the Tribunal operates provides that the Tribunal is not bound by the rules of evidence (s 32(2) SAT Act) but that it must adhere to the rules of natural justice (s 32(1) SAT Act). The Tribunal must determine the matter on the substantial merits without regard to technicalities and legal forms (s 32(2) SAT Act); and the Tribunal may inform itself on any matter as it sees it (s 32(4) SAT Act).
28 Both parties referred the Tribunal to authorities that support their respective propositions. Unfortunately, none of those authorities are directly on point as far as this dispute pursuant to the ST Act is concerned. In essence, the parties support the general principles established by authoritie namely, that:
29 Although the rules of interpretation allow, in certain circumstances, for parliamentary debates to be considered, neither of the parties relied on such debates and the Tribunal could also not, in its own research, find any reference in the second reading speeches of the ST Act that would assist in resolving this dispute.
30 There are two main sources that may provide guidance as to the meaning of the words 'residence' and 'residential tenant'; namely, decisions of other courts (albeit not pursuant to the ST Act) and dictionaries.
31 The respondents refer to the matter of Marana Holdings Pty Ltd v Commissioner of Taxation [2004] FCAFC 307 (Marana Holdings) in which the court considered the meaning of 'residence'. The court made extensive references to dictionaries in which the word 'residence' is defined. The court summarises the common denominator between the different definitional approaches as follows, at [26]:
Clearly, both 'reside' and 'residence' have the connotation of permanent, or at least longterm commitment to dwelling in a particular place[.]
32 The Court in Marana Holdings then considered various English and Australian authorities where content had to be given to the word 'residence'. The respondents rely in particular on the court's reference to the English case of Urdd Gobiath Cymru v Commissioner of Customs and Excise [1997] V & DR 273 (Urdd Gobiath Cymru) in which the English court observed that although 'a residence' implies a building with a 'significant degree of permanence of occupation', the word 'loses that clear meaning when used as an adjective'. In the English case of Urdd Gobiath Cymru the court concluded that 'in ordinary English "residential accommodation" merely signifies lodging, sleeping or overnight accommodation. It does not suggest the need for such accommodation to be of any fixed or minimum period'.
33 The court in Marana Holdings did not endorse this interpretation. In fact, the court specifically distinguished the use of the words 'residential accommodation' in Australia to the use of the words under English law by saying the following, at [51]:
It may be that the expression 'residential accommodation' is sometimes used to describe shortterm accommodation in an hotel or a motel. We are not sure that any such usage is as common in Australia as the Court of Appeal in Owen v Elliott [(1990) 1 CH 786] considered it to be in England. We would have thought that such accommodation is more often described as 'temporary accommodation', 'holiday accommodation' or perhaps 'hotel accommodation' or 'motel accommodation'.
34 The reliance of the respondents on the Marana Holdings decision as being in support of its contention-namely, that 'residence' and 'residential accommodation' includes shortstay accommodation without any intention to longterm residence or permanency or making it a place of abode is not accepted by the Tribunal.
35 An overview of D Hay (ed), Words and Phrases Legally Defined (4th ed, 2007) (Words and Phrases) and dictionaries shows that the word 'residence' consistently has common denominators of permanency, longterm, place of abode and place of address. These words all signify an intention to reside for an extended period of time at a specific location which, albeit not necessarily permanent, makes the place a home, a place with a fixed address or a longterm place of accommodation. In essence, the word 'residential' does not have a fixed meaning as far as duration of time is concerned, but it has a consistent meaning of intent to stay for an extended period of time.
36 It is therefore feasible that a person, after one day at a location, may be regarded as having made the place his or her 'residence' because of their intent to stay, while another person with no intent to remain permanently or for the longterm, even after multiple days or weeks may not be regarded as a 'resident' for the purposes of Bylaw 16.
37 This interpretation of the Tribunal is consistent with definitional approaches found in dictionaries and in cases. For example:
The decisions referred to above and the dictionary meanings of the word 'residence' have the following in common:
38 The Tribunal is of the view that the use of the words 'residence' and 'residential tenants' in Bylaw 16 excludes the use of the lots in the strata scheme for purposes of shortstay accommodation. This finding is based on the following reasons:
In short, there is a thread that runs through the strata scheme that gives meaning and content to the words 'residence', 'occupancy rights' and 'residential tenant'. The thread is that:
A short-stay occupant demonstrates none of these intentions.
39 In conclusion, for the reasons set out above, the use of the lots the subject of this proceeding for purposes of shortstay accommodation is not authorised under Bylaw 16. Orders are made for the respondents to cease allowing the respective lots to be utilised for an unauthorised purpose. The orders will take effect on 1 August 2015, thereby allowing the respondents to conclude their shortstay advertising and other arrangements.
40 The applicant sought orders for the Tribunal to declare that s 95(1) of the SAT Act applies so as to establish a basis for further action, should the respondents fail to comply with the orders of the Tribunal. The Tribunal is not of the view that such a declaration is justified, since the respondents have put up an arguable case and have not indicated through their behaviour that they might refuse to comply with orders of the Tribunal.
41 The applicant also sought an order, pursuant to s 81(10) of the ST Act, that these orders will not cease to have effect or force upon the expiration of the period of two years that next succeeds the making of the order. This is a reasonable request to ensure certainty in the scheme and to prevent a repeat of the practice of shortstay letting and the Tribunal will therefore make such an order.
I certify that this and the preceding [41] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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(1946) 73 CLR 93
(1980) 145 CLR 532
(1982) 149 CLR 337