Some Resort Service Agreements Survive, & Others Don’t

Santai v The Owners - Strata Plan No. 77971 [2010] NSWCS 628

GoStrata’s CaseWatch is a short, sharp and easy-to-understand review of important and interesting Court and Tribunal decisions affecting Australian strata title stakeholders.

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Quick Read

In 2010 NSW Supreme Court decision is about 4 long-term agreements in a northern New South Wales resort complex strata building covering caretaking, letting, security and club services outside the strata scheme that the strata building was trying to cancel as invalid because of strata laws and real estate licensing provisions.  The issues involved the validity of strata by-laws authorising the agreements, the validity of the agreements themselves, and whether the dispute should have gone to the specialist strata Tribunal rather than the Supreme Court. After reviewing the agreements and applicable laws, two of the agreements [for caretaking and letting] survived but the security agreement didn’t as it covered services that only a licensed strata manager could provide and the club services agreement couldn’t be made because the authorising by-law was invalid. It better defines what are and aren’t valid agreements and reminds us that strata by-laws aren’t always valid and that the details in agreements matter.

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Implications

The key implications of this strata case are as follows.

• It continues a series of NSW decisions defining what is and isn’t a caretaking agreement under the new 1997 strata law definitions.

• Caretakers are not caretakers for all purposes, only those related to the services covered by section 40B of the Strata Schemes Management Act 1996 so looking at their agreement matters.

• The status of letting services agreements is better defined and, effectively, free of most strata law controls.

• The scope of the services in strata agreements will be the most important way to define what kind of agreement they are and what strata and licensing law controls apply.