WA Help with Easement and Property Law Queries

[Lucy Lu Smith]

Hi all

Check this situation out! The developer has absolutely stitched these property owners up with a pretty unworkable deed of easement.

Summary:

1. Green lot owners (benefited landowners) are required by a deed to pay 40% of the management and maintenance of easement areas to a strata company (burdened landowner). Green owners do not dispute the deed.

2. After 4 years, green lot owners discovered discrepancies between the requirements of the deed and the actions of the strata company. There were many errors. The strata company was billing 40% of their entire strata budget including strata management fees, private water consumption for residents and their reserve fund.

3. Green lot owners alerted the strata company to overcharging.

4. Money was credited for water and the reserve fund but no detailed explanation of the calculations for the credit was issued and the remaining errors were not addressed.

5. For 2.5 years the strata company has continued to send invoices. Around 10 green owners have refused to pay.

6. Recently, the strata company lodged claims in the general court for "unpaid strata levies" against 3 green owners.

7. Gates have sat idle at the entrance to the easements for 6 years. The strata company is about to commission them. The strata manager has stated she will only provide information about access through that gates upon payment of invoices sent which now include court and legal costs for a debt that is not yet proven in court.

Background:

The developer divided a large lot into one large strata development (lot 125, later divided into 20 strata lots and common property) and 28 green titled lots. 24 of the green titled lots require access to a rear garage via easements. The easements comprise laneways (3 different easements) and a little park. 2 of the lane easements and the park are over the common property of the strata company. There is a small area of common property (also forms part of the lane) that does not have an easement over it. The lane easements are created by the deposited plan. The lane and the park are also created by a deed. Easement areas as follows:

Easement area K: (common property of the strata company) lane around the park and behind lots 110-119. The burdened landowner is the strata company, benefited landowners are lots 105-119 and 126-135

Easement area R: the park. The burdened landowner is the strata company, benefited landowners are lots 105-119 and 126-135

Easement area A: (private property of green titled lots 126-135 and 105-109) For land on each green lot, the burdened landowner is the lot owner, and the benefited landowners are the strata company as well as the remaining 14 green lot owners.

Easement area S: (private property of strata titled lots 7-17) For land on each strata lot, the burdened landowner is the lot owner, and the benefited landowners are the strata company as well as the remaining 10 strata lot owners.

Easements A and S are created this way to maximise the number of lots created by the subdivision.

The Deed of easement requires benefitted landowners to pay 40% of the cost of management and maintenance of the easement areas.

In 2012, the developers formed the original Council of Owners for the strata company. They oversaw the creation of the strata by-laws and employed a strata manager. The council of owners instructed the strata manager to charge the green lot owners 40% of the entire budget for the strata company. This contravenes the deed in numerous ways. The strata manager was not ever made aware that a deed existed. Green owners dutifully paid invoices sent to them until mid-2016 when they discovered their bills included the private water consumption of the strata residences. This led them to read the deeds of easement and discovery many more discrepancies.

Approx. 20 of the green lot owners wrote to the strata company putting them on notice that they were not complying with the deed. The strata company reluctantly amended invoices 6 months later to remove private water consumption and money invoiced for the reserve fund of the strata company. A credit was issued for this money. An unsatisfactory explanation of the credit calculations was issued and no further information was given upon request. The rest of the deviations from the deed were left and bills resumed as before.

2 years later, approx. 10 green owners persist in refusing to pay the invoices sent on the basis they are in manifest error. The strata company has just lodged 3 claims against green owners in the general court for recovery of "unpaid strata levies".

The easements have had gates at their entrance that have not been operational for 6 years. This year, the strata company have taken action to bring them into operation. They have spent a fair amount extra on a system that allows them to issue individualised fobs that open the gates and a mobile phone can also open the gates. They propose to limit access to 2 fobs per residence and 3 mobile phone numbers.

A member of the council of owners of the strata company will have the ability to control which fobs and mobile phones open the gates at all times. Additional fobs will be charged at $100 each. One of the green owners who has had a claim lodged against them has been told by the strata manager that they will not be given any information about the gates until they pay outstanding invoices. The strata manager has also sent that owner an invoice for debt recovery which includes court fees for the claim. Court fees are also listed on the claim.

Matters to consider:

1. Is this a civil matter or a matter for arbitration?

There is an arbitration clause: "all disputes, questions or differences arising between the benefited land proprietor and the burdened land proprietor concerning this deed will be referred to a single arbitrator agreed upon by them."

The green owners have no issue with the deed.

2. Does the commissioning of the gates constitute a restriction of the right of carriageway that is created by the Transfer of Land Act in the creation of the laneway easement? Does a threat to withhold information constitute an unreasonable restriction of the right of carriageway? If so, are the green lot owners entitled to disable the gates?

3. Are the gates an easement cost? What is their purpose? They are proposed to be open from 7am till 7pm making any security benefit limited; the security benefit to the green lots is minimal because they have limited exposure at the rear and the gates do not protect the front of their houses; there has been no forced entry in 6 years - the only theft was through an open door and of a trailer left in the visitors parking bay (contravening the strata by-laws).

4. Is the strata management an easement cost? The strata manager has previously invoiced all lot owners including green lot owners for "strata levies". Green owners who did not pay had interest added to their invoices at 15% "under the strata titles act". The strata manager appears to pay bills for work done in the easement such as gardening and light fixture repair however the council of owners organises any work done.

The strata manager is hostile to green owners and refuses to provide most information requested. She has offered to provide information at a price of $500 in one instance. This past week when a request for information was emailed to her, she referred the owner to "the minutes" of the strata meeting. The only minutes received were those for the AGM and they did not contain the information requested.

The strata manager replied to a 4th request saying the owner obviously "couldn't be bothered" reading the minutes. The information requested was known to the strata manager and could have easily been written out in one sentence. Four email requests later the information was still being withheld without apparent reason.

Thanks for your time and thoughts

 

[Lucy Lu Smith]

The deed of easement is here: Dropbox - deed of easements for K and R.docx

The plan showing easement K, easement R and the common property for the remainder of CP21 is here: Dropbox - DP69865 showing R & K.pdf

 

[Rod]

After a quick read of the deed, if I was a benefited land owner I'd take the matter to arbitration.

1. It is a civil matter, but needs to be referred to arbitration in the first instance.

2. Unlikely. The deed implies security gates (cl 2.6(a)). Information is not part of the deed or easement rights. I can't see green lot owners being allowed to defeat security features.

3. Yes. Umm, gates provide security, or prevent non-lot owners using private property. History of break ins is probably not relevant.

4. Definition of 'easement area costs' includes (a) .... management of the area.

With a seeming lack of goodwill I think arbitration is needed to resolve the issues. Certainly Strata management cannot expect lot owners to carry all costs when the deed clearly says 40%.

 

[Lucy Lu Smith]

Thanks Rod.

2. Should the benefited land owners be obliged to pay for access to the easement? The strata company will issue 2 fobs per lot. Additional fobs will be charged at $100

3. I'll find the relevant section of the transfer of land act that describes easement rights for an easement created by a plan (which ours is). These rights trump any rights or obligations of a deed for the same easement.

4. No argument about management of the easement area, but the cost of the strata manager includes organising and chairing strata agm, preparing and lodging strata tax return, management of strata common property. The strata manager does not engage any tradesmen for repair, maintenance or gardening in the easements - all done by the council of owners. She pays their bills.

At the moment she is refusing to reply to emails from green owners with simple requests for information such as who is the chair of the council of owners. She is also lying about legal advice sought on behalf of the strata company. In other words she is actively working for the strata company and against the interests of the green lot owners.

We argue that it is irrelevant to us that the burdened owner is a strata company. If the burdened owner was an individual we would not be required to pay a share of their accountants fee for tax lodgement nor any other expense they incurred as an entity. Similarly if the burdened owner employed a personal assistant to help with paying bills, managing their affairs, we would not be obliged under the deed to pay a share of their costs.

The deed stipulates a requirement to pay 40% of easement area costs. What is an easement area cost? We would argue certainly not a strata manager. Gardening, road repair, electricity, water - yes. Cost of hiring a venue to hold the AGM of a strata company - no. The strata manager charges the strata company for a 44 lot strata company. There are only 20 strata lots.

 

[Rod]

2. Two fobs/property seems reasonable. It is not that lot owners are being charged for access, they are paying for security.

3. OK. Keep in mind the two may not clash and can be complementary.

4. Management costs can include hiring venue and AGM, though your liability is limited to 40%.

 

[Lucy Lu Smith]

2. There is no arguable security issue at all. The gates do not infer a security benefit to the green lots, only to the strata lots. Paying for security at my own home of my own choosing is entirely different to paying for someone else's security.

3. The two do clash with respect to guaranteed right of carriageway

4. It is not an AGM for the easement area but for the owner of the burdened lot.

 

[Rod]

2. The issue of whether a security issue exists is something for each lot owner to decide. My partner and I disagree regularly on security issues. I know she would say a security issue exists and want the gates, whereas I agree with you.

3. No, because gates by themselves are not determinative. All the facts need to be looked at before deciding if gates would substantially interfere with your rights.

4. I understand, however the AGM must cover all issues around the easement controlled and managed by the strata manager as well as all other issues solely unrelated to the easement. A simple reading of the deed seems to suggest you pay 40% of management costs which would include the AGM. If I was arguing for the other side I'd feel confident on this point. It does not matter the AGM is for the burdened lot. What matters is the AGM covers issues around the easement. If the AGM never ever deals with easement issues then I might change my opinion.

 

[Lucy Lu Smith]

Thanks, Rod

2. Yep, got it. In 6 years, without the gates, there has not been a single home invasion or even attempt. The strata company have not sought the advice of a security professional. They have not even put signs next to the entrance saying "private property, keep out". I get that this open to interpretation and that the strata company does have a right to do as they wish with their land so long as it doesn't interfere with the easement (though I'd argue it does)

3. What they have done however, is threaten to lock me out if owners pay their massively incorrect invoices. The gate devices are specific to owners such that access can easily be denied at any time. Given the history of 2 years of what I would consider fraud (they have admitted some errors but continued to send invoices without remedying them), increasingly obstructive behaviour and threats to lock owners out, I wonder if their is a good argument that the gates unreasonably infringe on the enjoyment of the easement? Owners are entitled to "full liberty" which I'm not sure this situation provides.

The strata company actually lodged a claim in the courts seeking payment from one owner but have abandoned the claim because their lawyer advised them they don't have a case. Given the track record of disregarding their obligations under law, including a threat to break the law (lock owners out), they are demonstrating they cannot be reasonably trusted to properly ensure green owners rights if a gate is installed.

4. I think you're taking into account that the owner is a strata company. If the owner was a family, and decided to go out for dinner and say that was a "meeting" to discuss the easement management, would this be an acceptable easement area cost?

 

[Lucy Lu Smith]

Sorry and just to add a further point:

4. which is to distinguish the difference between managing the easement area vs managing the easement. I argue managing the easement = billing, holding agms etc but managing the easement area = arranging the lawnmower man and paying him. It's not reasonable to expect a benefited land owner to pay for the management of a burdened lot owners management of an easement or to contribute to the costs associated with the running of their financial affairs.

 

[Rod]

I will point out the deed gives the burdened lot owner the right to suspend or terminate the easement if the benefited lot owner fails to fulfil their obligations (cl 2.5-2.7). Failing to pay is a breach of an obligation.

Now I suspect you are correct when you say you are being overcharged, and this is based solely on your posts, so the issue is how to fix it. The deed acknowledges disagreements can happen and says arbitration is to be used (cl 9). You should consider going to arbitration.