BC Court of Appeal upholds decision not to penalize owner-developer for failing to hold strata corporation’s first AGM

23 September 2016

By Kevin Zakreski

In The Owners, Strata Plan KAS 3549 v 0738039 B.C. Ltd, 2016 BCCA 370, the Court of Appeal for British Columbia affirmed a decision made in chambers in The Owners, Strata Plan KAS 3549 v 0738039 B.C. Ltd, 2015 BCSC 2273. The case involved the interpretation of section 17 of the Strata Property Act. The chambers judge had found that an owner-developer shouldn’t be penalized under that section, despite failing to hold the strata corporation’s first annual general meeting within the time limits set out in the act.

In brief, the case involved “a six unit bare land strata development called Sunridge Estates in the small village of Keremeos.” By virtue of a misinterpretation of the act, the owner-developer failed to call the strata corporation’s first annual general meeting until close to four years after latest date permitted by the statute. The strata corporation argued that, when the act’s penalty provision was applied to this failure, the owner-developer was liable to pay to the strata corporation $201 000. A judge of the BC Supreme Court in chambers dismissed the strata corporation’s application. The strata corporation appealed this decision to the court of appeal.

The court of appeal began by noting that it didn’t “find the chambers judge’s interpretation to be contrary to the intent of the Act.” While the Strata Property Act is intended “to protect purchasers of strata properties,” it is also intended to:

“lay down clear rules for the creation, registration and transfer of strata titles, and for the delineation of the respective rights and responsibilities of those who develop strata plans, and those who purchase or who may subsequently wish to transfer a strata property”: The Owners, Strata Plan NES 97 v. Timberline Developments Ltd., 2011 BCCA 421 (CanLII) at para. 16 [emphasis added by the court of appeal].

The court concluded:

The consequences of calling the first AGM include the creation of a strata council heading the strata corporation, which then has an obligation to budget for and pay the strata corporation’s expenses. This is done by levying fees on the strata units. In this case, as the chambers judge noted, during the period before the first AGM was held the strata developer paid all the strata corporation’s expenses, saving the strata owners from having to do so through a levy. I am not persuaded that the chambers judge’s interpretation harms the remedial nature of s. 17 or diminishes an owner’s ability to bring an end to the developer’s failure to call the first AGM. Moreover, to impose a penalty in this case would be contra bonos mores: it would grant a reward when none is due.

In the end, the court of appeal simply wasn’t “persuaded that the result below is wrong,” and it dismissed the appeal.

Website by: Usable Web Designs