Santai Resort’s Service Contracts Reviewed by NSW Supreme Court

The Santai Resort is an idyllic strata title resort in far northern New South Wales. 

But not everything is quite so relaxed there because the strata corporation was unhappy with the long term service contracts that had been put in place there.  They covered caretaking of the common areas, providing letting management services to lot owners, security services for the strata complex and an agreement with a nearby club to allow owners and their guests to use the club facilities.

So, the Santai manager and the strata corporation ended up in the NSW Supreme Court arguing about the validity of these agreements.

And at the end of the hearing the Court decided as follows.

• The caretaking agreement was fine because it complied with the New South Wales laws covering it.
• The letting services agreement was also fine because it wasn’t a regulated caretaker agreement, the by-law authorising it was within the strata corporation’s power and even though Santai didn’t have the necessary real estate licence when the agreement began that did not make it invalid.
• The security services agreement was not valid because it defined the services so widely that the strata corporation had given away it’s control over common property to someone who was not a strata manager (as the New South Wales laws require).
• The club facilities agreement (and the by-law it relied on) were invalid since getting or providing services outside the strata scheme was not related to the lots, the common property or the relationships between lot owners and the strata corporation.

It’s another important case that clarifies some tricky legal principles as well as resolving more practical matters about how to run strata corporations in New South Wales.

This case reference is Santai v The Owners - Strata Plan No. 77971 [2010] NSWCS 628 decided by the NSW Supreme Court on 17 June 2010 and you can find it here.

I’ve also prepared another Casewatch on this important decision which you can read at my professional website here.

Francesco …