QUEENSLAND -V- THE WORLD - Tasmania
Author: Col Myers
Date: October,2010

This is the third last article in a series of articles that looks at the ability of developers to establish management rights in the various states of Australia , as well as New Zealand .

In previous articles, I have identified Queensland as the leading management rights state with over 2,350 management rights complexes compared with NSW with no more than 200, Victoria 25, ACT 5 and South Australia 10.

This article will look at restrictions on developers setting up management rights in Tasmania , where it is estimated that there are no more than 5 management rights complexes currently established.

Restrictions relating to Developers

·          An interesting provision of the Strata Titles Act 1998 (Strata Act) states that the Supreme Court may, on application of an interested party, grant a mandatory injunction requiring the developer under a Community Development Scheme to complete the scheme in accordance with the terms of the scheme.  The following are regarded as “interested persons”:

(a)          an owner or prospective owner of a lot;

(b)          a body corporate for the Community Development Scheme;

(c)          a body corporate for a scheme within the Community Development Scheme; and

(d)          the council for the relevant area.

·          The Act states that a developer under a Community Development Scheme warrants to any person who purchases a lot or a proposed lot in the scheme that the development will be carried out in accordance with the scheme.  The section also states that the aforesaid warranty is enforceable in the same way as a contractual warranty and cannot be limited or excluded by contract.  Without limiting the damages that may be recovered for breach of statutory warranty, the owner of a lot may recover damages for the loss of a reasonably expected capital appreciation of the lot that would have resulted from completion of the development in accordance with the terms of the scheme.

This part of the legislation seems to be unique to Tasmania.

·          The developer must call and hold the first annual general meeting of the body corporate:-

(a)          within 3 months after the registration of the strata plan; or

(b)          on the sale of at least one-half of the lots contained in the plan,

whichever is the earlier.

By-Laws

·          A by-law may impose a minimum term (not exceeding 6 months) for the letting of lots.  In other words, a by-law can prohibit short term or serviced apartment letting.

·          A by-law is void if:-

(a)      it is unreasonable, or

(b)   if adversely or unfairly discriminates against any owner or occupier of a lot; or

(c)   it adversely affects the health, welfare or safety of any person, or

(d)   it is inconsistent with the provisions of a scheme.

·          Interesting, a body corporate can, by ordinary resolution, make, amend or rescind a by-law giving the owner of a lot exclusive rights to the use and enjoyment of, or any other special rights in relation to, the common property or any part of the common property. 

·          Also, an exclusive use by-law lapses 5 years after it was made unless confirmed in the previous period of 5 years by ordinary resolution of the body corporate and, if not confirmed by ordinary resolution of the body corporate within the previous 5 years, lapses at the expiration of 5 years from its last confirmation.  However, this provision does not apply to an exclusive use by-law that is expressed to be of permanent effect.

Terms Of Agreements

·          There is no provision in the Act limiting the term of caretaking or letting contracts.  Caretakers and on-site Letting Agents are not recognised under the Act.

·          However, the Act provides for orders for terminating contracts for services to the body corporate as follows:-

(1)   If, on application for relief, the Recorder is satisfied that an agreement for the provision of services to the body corporate –

        (a)      is unfair to owners of 25% or more of the lots; or

        (b)      is for an excessively long term –

        the Recorder may make an order terminating or shortening the term of the agreement.

(2)   An order under the above Section may also require a party to the agreement pay a specified amount to the other party for the purposes of adjusting the rights of the parties in consequence of the termination or shortening of the term of the agreement.

The Ability to Top up Agreements

·          As there is no term limitation currently applying under the Act, a Caretaking and Letting agreement can be topped up by way of variation.

Financiers Rights

·          There is nothing in the Act that compels a body corporate to enter into a financier’s deed.  Consequently, a body corporate can reject outright any request by a financier of a caretaker or Letting Agent to enter into such a deed.

Legislation Relating to use of Proxies by Developers and Caretakers when Entering into or Extending Agreements

·          There is no restriction in the legislation relating to either developers or caretakers/letting agents.