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#18985
PRE-INCORPORATION but DISCLOSURED Delta Rise rooftop LEASE beats FIDUCIARY & P.C.R.- B.C.. 2019/07/27 12:21  
This as usual is NOT legal advice.

What is arguably a sort of Surrey B.C. rooftop "companion piece" to the Crystal parking facility outcome so far from B.C.'s Court of Appeal ( https://ontario.cafcor.org/index.php?option=com_fireboard&Itemid=46&func=view&id=18662&catid=11 ), has just been issued.

Like the recent Crystal parking appeal decision, it again supports what is arguably a "sweetheart deal" platformed BEFORE the creation of the strata/condo corporation itself.

But here the developer's pre-incorporation Rooftop Lease is on firmer ground in hurdling over the P.C.R Positive Covenant Rule. ( As to enforceability claims between property transferees, that venerable English-derived Rule precludes - from running with legal title - the BURDEN but NOT THE BENEFIT of a promise on title requiring the promise-maker / subsequent assignee owners to expend bucks or labour or both.).

The judgment also rejects the strata owners' separate breach of fiduciary duty claim.

Both B.C. decisions whack strata buyers for whatever diligence standard they applied ( or ignored ) before buying their units pre-incorporation.

Pre-purchase did the disputant owners or their legal reviewers look closely enough at the developer's pre-purchase disclosuring documents about this 37 storey Surrey B.C. strata project ? But maybe the rooftop was no big deal ?

Here a “buyer-disclosured” notice of intended pre-incorporation ROOFTOP TELECOM LEASE survives fiduciary violation challenge & P.C.R. the venerable Positive Covenant Rule.

1 - That's despite an arguably critical SPA Strata Property Act violation in failure to table at first post-incorporation General Owners Meeting. ( Excerpted from judgment : “ . . . [33] . . I accept that there was non-compliance with s. 20 of the SPA in that the rooftop lease was not placed before the strata council at the first annual general meeting of EPS 4044.

However, I do not find that the failure was a breach of fiduciary duty.

The minutes of the first annual general meeting reflect that no contracts were tabled, including either the parking lot lease or the rooftop lease.

The failure to table these contracts was an irregularity that may have contributed to the uncertainty about the status of the rooftop lease, in the sense that the strata council was not given the opportunity to immediately ratify it.

However, this irregularity did not amount to a breach of the owner-developer’s fiduciary duty or otherwise render the rooftop lease invalid. . . ." - unquote )

2 - But as a "Lease" instead of alleged "mere covenant to run with title", there's a loophole.

Leases are among the Ontario & B.C. modernly-accepted exceptions to - & in England pre-dating by centuries - the P.C.R. Positive Covenant Rule most definitively articulated by the landmark 1885 English & Welsh decision Austerberry v. Corporation of Oldham (29 Ch. D. 750) & other venerable building blocks like 1834's Keppell v Bailey ( ChD 29 Jan 1834. )

Judge incidentally notes that unlike ACTUAL CROSS-TRADE OF BENEFITS occurring elsewhere - eg at the litigated Crystal shared parking & Jameson parkade benefits actually being enjoyed & paid, this Delta Rise rooftop lease ( or leaseback ) to developer’s subsidiary is NOT a benefit being enjoyed & paid for by the challengers. The rooftop installations now upheld, do not even exist yet. So there's no clear argument for some sorta mystic acquiescence nor unjust enrichment, or not yet.

NOR are either the Delta Rise strata corp nor strata owners even privy nor assignees to the held-binding pre-incorporation LEASE requiring access to the common area rooftop.

3 - Bottom line : Ruled fully enough priorly-disclosured to all initial Delta Rise strata buyers, the strata developer’s totally one sided pre-incorporation LEASE has thus survived ( first round ) summary trial in BC Supreme Court.

For a mere $ 10 nominal between the developer & subsidiary , the duration of term granted by the here-upheld LEASE will be the ENTIRE LIFESPAN of the strata corporation itself ! Hope they don't have plans for much of a green roof.

But also beating the fiduciary hurdle, an injunction thus is issued to order strata corp. & strata owners – both being totally outside privity of the LEASE DOCUMENT - to supply consents without which rooftop telecom installations have so far been blocked by civil authorities . ( In the whacky Building Scheme universe, we may hear this sorta stuff as "easements by necessity" demanded even decades after a developer has skipped along . . . )

4 - The developer’s priorly-disclosured rooftop LEASE is accompanied by an undetailed but priorly disclosured PARKING LOT LEASE ominously not yet at issue here.

Imagine what the parking deal might turn out to be like !

5 - One hopes that the rooftop installations will be separately metered & paid by future telecom corporate users. Access through common elements apparently will occur but on what terms ? what notice to site management if any ? Will they also have unlimited access to utility vaults ? .

Possibly left without any control of the roof, who will be the premise "occupier" if there's injury or weather damage ? How easy will it be for the strata corp to get consents for roof integrity / leaks etc ?

Ultimately who will clean up the rooftop site if becomes technologically obsolete ? And regardless of indemnity will they even be findable in a couple of decades ?

Are these among "other reasons" ( ? ) for this litigation ( besides merely the telecom approvers being concerned about opposition by 37 stories of strata owners / building co-owners down below ) ?

One hopes these were addressed in a practical way. . . .

Marshall Mountain Telecom Ltd. v The Owners, Strata Plan EPS 4044, 2019 BCSC 1180 issued July 23/19 http://canlii.ca/t/j1m23
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