Understanding Strata Companies, Strata Disputes and the State Administrative Tribunal

With the rising number of apartment blocks in Western Australia, strata-titled accommodation is becoming an increasingly popular form of ownership. Unfortunately, the complexity of strata title and the varying interests of lot owners can result in disputes over a variety of matters. The principal source of legislation that governs how strata companies operate and how issues are resolved is the Strata Titles Act 1985 (Strata Act). Most commonly, if issues cannot be resolved by agreement, they will be referred to the State Administrative Tribunal (Tribunal).

The first part of this article will look briefly at what a strata company is and who the relevant stakeholders are. The second part of this article will deal with the type of disputes usually referred to the Tribunal. The third part of this article will look at the general procedures of the Tribunal in dealing with disputes of these types.

What is a Strata Company?

Pursuant to section 14 of the Strata Act, a strata company comes into existence upon the registration of a strata titles scheme. The strata company is a separate legal entity similar to other companies that exist in Australia and can, subject to restrictions and obligations in the Strata Act, contract directly with third parties, borrow money, sue, and be sued in its own name.

As a strata company is not a person, it needs people to make decisions on its behalf. This can be:

  1. The council which is made up of lot owners elected at a general meeting of the strata company who can perform certain functions of the strata company and are somewhat similar to the board of directors of a company.
  2. The lot owners being the holder of each lot in the strata scheme from time to time and are somewhat similar to the shareholders of a company. Lot owners can also make decisions on behalf of a strata company via approving a resolution of the strata company. Lot owners also own a share of the common property.
  3. The strata managing agent who is authorised to perform certain functions under the Strata Act and who holds delegated authority from the strata council or lot owners to make certain decisions on behalf of the strata company.

Type of Strata Disputes

The Strata Act specifies a range of common issues which can be resolved by the Tribunal. These are detailed in the table below:

The IssueThe Remedy
A lot owner’s liability for the costs incurred by the strata company is determined by its share of unit entitlements (being effectively the proportion of its ownership). Accordingly, if a lot has an unfair amount of unit entitlements attaching to a lot, it may seek to have the unit entitlements amended.Pursuant to section 38 of the Strata Act, an application can be made to amend the schedule of unit entitlements if it is determined that the current schedule of unit entitlements is, in excess of 5%, disproportionate to the capital value of each of the lots relative to the whole of the strata scheme.  
A lot owner or occupier is required to comply with the by-laws of the strata company. If a lot owner or occupier breaches the by-laws, then a strata company can take action against the lot owner or occupier.Pursuant to section 47 of the Strata Act, a strata company may, in addition to giving written notice, apply to the Tribunal for an order enforcing scheme by-laws if the contravention has had serious adverse consequences, if the person has contravened the particular by-law on more than three occasions or if the person has been given written notice and contravened that notice.   The Tribunal may order that a penalty be paid to the strata company or require that the person take certain action or refrain from taking certain action to prevent further contraventions.  
A lot owner is often needed by the strata company to consent or vote on something the strata company requires (i.e. an act requiring a unanimous resolution) but the lot owner is not able to be found or lacks mental capacity.Pursuant to section 85 of the Strata Act, a strata company or interested person can make an application for the Tribunal to dispense with the requirement for the owner to vote or consent to a particular matter.
In order to make a structural alteration to a lot, an owner must seek prior approval via a resolution without dissent and the strata company or another lot owner may refuse the application on certain grounds.Pursuant to section 90 of the Strata Act, an owner of a lot may seek an order for the Tribunal approving the structural alteration whether or not the necessary approval has been sought or if there has been a valid refusal.  
Lot owners may be required by an authority, such as the Local Government or the Tribunal, to carry out certain works but may refuse or neglect to do so.Section 94 allows the strata company to carry out the necessary work itself and recover the costs of doing so in a court of competent jurisdiction  
Strata companies must ensure that certain insurances are taken out, including insurance for the reinstatement of the building and public liability. In certain circumstances, insurers will not be willing to provide insurance  Pursuant to section 97, a strata company may apply to the Tribunal seeking an order that it be exempt from certain insurance requirements.
Disputes can also arise with respect to:   the validity of by-laws;   the failure to perform a function under the Strata Act or by-laws;   the validity of a resolution or decision made by the strata company;   the appointment or election of council members; and   any other matter arising under the Strata Act.  These disputes are governed generally by Part 13 of the Strata Act and the Tribunal may make any order it considers appropriate to resolve the dispute, including:   the amendment of by-laws or other scheme documents;   an order for work to be undertaken, including reinstatement of structural elements;   an order removing or appointing specified persons to the council; and   an order requiring the strata company to take specified action or refrain from taking action.    

What is the Tribunal?

The Tribunal is created by the State Administrative Tribunal Act 2004 (SAT Act) and largely obtains its jurisdiction from enabling acts which in the case of strata title disputes is the Strata Act. Pursuant to section 9 of the SAT Act, the Tribunal’s objectives are:

  1. Achieving the resolution of questions, complaints or disputes fairly and according to the substantial merits of the case.
  2. Acting as speedily and with as little formality and technicality as is practicable, and to minimise the costs to the parties.

Pursuant to section 32 of the SAT Act, the Tribunal is generally not bound by the rules of evidence or procedures of the court.

Generally speaking, pursuant to section 87 of the SAT Act, the Tribunal is a no-costs jurisdiction which means that it is expected that each party will bear their own costs. Further, pursuant to section 39 of the SAT Act, the parties are not entitled to be legally represented unless the Tribunal agrees to a party or parties being represented.

Accordingly, the Tribunal attempts to create a more accessible and informal environment for the resolution of the disputes.

Even so, it is still extremely important that any potential applicant or respondent ensures they are aware of their rights and obligations and ensures they advance or defend their case as best as possible.

If you need any assistance with any kind of strata dispute, please contact us to talk with our team.