BC Court of Appeal allows beneficial owner to challenge strata-corporation bylaws and votes
December 9, 2016
BY Kevin Zakreski
In The Owners, Strata Plan NW 499 v Louis, 2016 BCCA 494, the Court of Appeal for British Columbia considered an appeal from a decision of BC Supreme Court judge in chambers (Strata Plan NW 499 v Kirk, 2015 BCSC 1487). The appeal court dismissed arguments that numerous sections of the Strata Property Act should be struck down under the Canadian Charter of Rights and Freedoms and dismissed a cross-appeal from the strata corporation. The court did allow one aspect of the appellant’s appeal, which entailed seeking declarations under section 163 of the Strata Property Act that certain strata-corporation bylaws and votes taken at general meetings were invalid. In the court’s view, the fact that the appellant wasn’t the registered owner of a strata lot in the strata property shouldn’t prevent the appellant from seeking a remedy under this section of the act.
Facts and issues
Louis concerned “a 17-unit strata development in White Rock.” The appellant “inherited a part interest” in a strata lot in the respondent strata corporation in 1999. Since that time, the strata lot has been the appellant’s “primary residence,” and “he has taken sole responsibility for paying strata fees and assessments, and for keeping the mortgage in good standing.” Nevertheless, “[l]egal title to the unit is held by the executrix of his mother’s estate and by his brother as tenants in common.” That said, the court noted that “[i]t is common ground that the appellant has a beneficial interest in the unit.”
In January 2011, “the executrix appointed the appellant to be her general proxy under s. 56 of the Strata Property Act.” This appointment kicked off a dispute with the strata council, which refused to recognize the proxy and the appellant’s attempt to cast votes at strata-corporation general meetings on the strength of it. The executrix affirmed the proxy and asked the strata council to direct all notices and minutes of meetings to the appellant at the strata lot. The strata council refused to comply with this direction, and ultimately decided to stop sending notices to the executrix or the appellant.
The appellant responded to this dispute and another dispute over the handling of his cheques by refusing to pay strata fees. This led to the strata corporation filing a lien on the strata lot under section 116 of the act. Some time later, it sought to enforce this lien by filing “a petition under s. 117, seeking judgment and an order that the unit be sold.”
“The appellant filed a response to the petition,” as the court noted, “setting out ten purported defences, including arguments that portions of the Strata Property Act violate the Canadian Charter of Rights and Freedoms.” The petition came on before a chambers judge, who made the following rulings:
The judge declined to grant most of the relief sought in the appellant’s application for a declaration that the bylaws and the votes at general meetings were invalid. His primary reason for doing so appears to have been that no provision of the statute gave the appellant standing to seek such declarations. He did, however, make certain orders in the appellant’s petition proceeding. In particular, he granted an order that the strata corporation give notice of general meetings and copies of minutes to the owner of the appellant’s unit, and that they recognize the appellant’s authorization to act as the owner’s proxy.
On appeal, the following issues were before the court:
- “The appellant appeals from the denial of Charter remedies and from the rejection of certain of his defences in the strata corporation’s application.”
- “He also appeals from the denial of declaratory relief in his own petition.”
- “The strata corporation has filed a cross-appeal limited to the issue of whether the judge erred in staying its petition for judgment and for sale of the unit.”
The stay of the strata corporation’s petition turned on the failure to obtain a resolution passed by a 3/4 vote authorizing the proceeding. By the time the appeal was heard, the strata corporation had obtained the resolution, so the stay of proceedings was no longer in place.
Nevertheless, the strata corporation wished to have a ruling on its cross-appeal, “because the chambers judge’s decision conflicts with an earlier British Columbia Supreme Court decision (The Owners, Strata Plan VR1008 v Oldaker, 2004 BCSC 63 (CanLII)), leaving the law in an unsettled state.”
In argument, an earlier court of appeal decision (Strata Plan LMS 307 v Krusoczki, 2006 BCCA 154) was cited to the court. This decision “approved Oldaker, finding that s. 171(2) does not apply to a s. 117 application.”
As a result, the court concluded:
the decision in Krusoczki removes any rationale for deciding the cross-appeal. The cross-appeal is moot, and the legal issue is not in need of clarification. It is apparent that the chambers judge’s order was per incuriam, and that the law is not unsettled.
The Charter claim
The appellant claimed that “ss. 28(3), 53(2), 99(1), 116, 117 and 173.1 of the Strata Property Act are unconstitutional.” The chambers judge rejected this claim “on the basis that the Charter does not apply to strata corporations.”
The court of appeal agreed that “the actions of strata corporations are not, themselves, subject to Charter scrutiny.” But it agreed with the appellant that “the statutory provisions are subject to Charter scrutiny.”
Nevertheless, the court of appeal also rejected the appellant’s claim, making the following comments:
The arguments presented by the appellant in support of his contention that the impugned provisions violate the Charter are unsustainable. The Charter does not require entities such as strata corporations to be democratic institutions. Sections 3–5 of the Charter establish democratic rights, but they apply only to elections to the House of Commons and to legislatures.
The legislature is, of course, able to require that strata corporations operate on democratic principles. To a very large extent it has done that. To the extent that the Strata Property Act departs from democratic principles, however, it does not offend the Charter.
While the principle of rule of law does require that parties have the ability to have their rights adjudicated by impartial bodies, the constitutional protection of the principle is not absolute. In any event, the principle is not offended by the impugned provisions of the Strata Property Act. Nothing in those provisions ousts the jurisdiction of courts to ultimately determine the validity of a lien or the amount owing for strata fees.
Finally, the appellant’s contention that the statute should create exceptions to the duty of owners to pay strata fees where a strata corporation has failed to fulfil duties under the statute is not a sustainable constitutional argument. Nothing in the Charter requires the legislature to sanction a self-help remedy for aggrieved owners of strata units. I note that the Strata Property Act provides owners the ability to compel strata corporations to fulfil their duties. The appellant has presented no argument to suggest that such rights fall short of any constitutional norms.
The claim for declaratory relief
The court of appeal characterized the chambers judge’s ruling on this aspect of the petition as follows:
The appellant’s petition sought a declaration that the strata corporation’s deliberate failure to give notice to the executrix and its refusal to recognize him as her proxy vitiated all votes at general meetings after 2010, including votes to elect (and, presumably, acclamations of) strata council members. While the judge granted some relief within the appellant’s petition proceeding, he dismissed the claim for such declaratory relief.
The court of appeal reversed this aspect of the chamber judge’s decision, finding scope for the appellant’s claim in section 163 of the act:
In my view, the appellant’s claim for declarations fell squarely within s. 163. I note that s. 163(2) does not limit the scope of s. 163(1). Section 163(2) merely pre-empts any argument that an owner is precluded from suing the strata corporation because such a suit would amount to an owner suing him or herself. Nothing in s. 163(2) suggests that only owners may sue a strata corporation. [emphasis in original]
But the court of appeal also put the following gloss on its conclusion:
I caution that in overturning aspects of the chamber’s judge’s order, I should not be taken as suggesting that the appellant will ultimately succeed in his claim. The right to bring a claim does not mean that it will be successful. I note, in particular, that the granting of a declaration is a discretionary remedy. The court is entitled among other things, to take into consideration such matters as delay and acquiescence, as well as myriad other factors in exercising discretion.
In the result, the court of appeal “dismiss[ed] the appellant’s appeal in the strata corporation’s action, noting that his defences based on the invalidity of votes at general meetings and the invalidity of strata council elections have not yet been adjudicated upon,” dismissed the cross-appeal, and “allow[ed] the appellant’s appeal from the dismissal of his claims for declarations that the votes and bylaws of the strata corporation since 2010 are invalid. The claim must be remitted to the Supreme Court for further consideration.”