07/05/2019 – Jurisdiction British Columbia
Part 66 published on 01/06/2019
Strata corporation bound by positive covenants in parking facility agreement
The lower Court had held that a covenant to pay towards parking facility costs, contained in a registered agreement that had been executed before creation of the strata corporation, was not binding upon the strata corporation, since this would run contrary to the long-standing law that positive covenants generally “don’t run with the land”. [See Condo Cases Across Canada, Part 57, March 2017.]
The decision was overturned on appeal. The Appeal Court found that the strata corporation had independently agreed to be bound by the registered agreement. The Appeal Court said:
CSPC says a contract established before a party is incorporated (“pre‑incorporation contract”) can be the basis for a new, and identical, contract that binds that party once it is incorporated (“post‑incorporation contract”), where the party shows an intention to be so bound. The critical question is whether: (a) the benefits and burdens of the agreement are contemplated pre‑incorporation, and (b) the benefits and burdens are acted upon exactly as contemplated post-incorporation. This is the test described and applied twice by this Court, in Heinhuis and in Phelps Holdings Ltd. v. Owners Strata Plan VIS 3430, 2010 BCCA 196 (CanLII).
…
In my view, the evidence in this case clearly establishes that it was contemplated that the Strata would enjoy the benefit and discharge the burden of the ASP Agreement before the incorporation of the Strata. The benefit and burden were acted upon by the Strata exactly as contemplated post-incorporation. In the circumstances, the ASP Agreement is binding upon the Strata and its terms are enforceable.
The Owners, Strata Plan LMS 3905 v. Crystal Square Parking Corporation, 2019 BCCA 145