No Licence over a Courtyard, Water Meter, or the Tap
Dropulich & Ors v McHarg & Ors [2008] VSC 238
Quick Read
This Victorian Supreme Court decision about a small courtyard and a water meter and tap in a small St Kilda strata building was about the validity of a common property licence to one strata owner. The primary issue involved the procedures the strata corporation followed to grant [and later ratify] the licence by a series of strata corporation actions and strata meetings. There was a second issue about the implied rights of strata owners to access common property. After reviewing the history, the Victorian Supreme Court decided that the strata building had failed to properly approve and sign the licence and that it was not effectively ratified retrospectively either. So, it’s a timeless reminder that Victorian [at least] strata buildings must strictly follow requirements about the required decisions, signing documents, and disclosures for ratification.
Implications
The 2001 Regulations (Subdivision (Body Corporate) Regulations 2001) permit strata buildings to lease or licence common property by special resolution.
The 2001 Regulations (Subdivision (Body Corporate) Regulations 2001) prevents strata buildings from signing licences with their seals if that is not also specifically approved.
Retrospective approval of earlier licences needs the fully informed consent of strata owners.
Full Report & Case Details
This court decision was made by singe judge in the Victorian Supreme Court.
A dispute arose between 2 strata lot owners [and as a consequence the strata corporation] about whether or not there was a valid licence agreement for one of the strata owners to exclusively use a small courtyard and a water meter and tap in it at a St Kilda strata building.
One of the ground floor strata lots [owned by McHarg] was surrounded by a fenced common property courtyard with a water meter and tap contained in it. Over a long time, the strata corporation had apparently given the previous strata owner an exclusive licence over that courtyard area. But, when the strata lot changed ownership in 2003, it took the strata corporation some time and a few attempts to give [or try to give] the new strata owner the licence over a series of actions to sign documents and at strata meetings during 2006.
The history is messy, so it i worth chronicling as follows.
In 1983 the strata building by-laws were changed to add a by-law that permitted the strata corporation to give any lot occupier the enjoyment and use of part or parts of the common property by a licence agreement.
In 2003 the ground floor lot was sold.
By the end of 2003, issues started to develop between the strata lot owners about access to the courtyard to get to the water meter and tap.
By 2005 the issues had developed into a serious dispute involving legal threats and legal actions where one strata lot owner wanted the strata corporation to sign a licence agreement and the other wanted unfettered access to the courtyard.
On 31 May 2006, the strata manager signed a licence agreement over the courtyard for 99 years commencing on 16 May 2003.
On 17 October 2006 the strata corporation decided by special resolution under a postal vote to ratify [retrospectively approve] the licence agreement signed on 31 May 2006 in the following terms:
‘Members of the body corporate resolve by special resolution to the ratification of the Licence Agreement executed by the Body Corporate on 31.5.06 and to Lolita Elaina McHarg and Vollene McHarg in respect of Courtyard 1.’
Keywords
#VIC #VICSupreme #licence #specialresolution #2008 #SBCR2001 #r218(1) #r311(3) #OCA2006 #s12 #s14