BC Court of Appeal sets aside fines because strata corporation failed to give owner notice and an opportunity to respond
November 15, 2016
BY Kevin Zakreski
In Terry v The Owners, Strata Plan NW 309, 2016 BCCA 449, the Court of Appeal for British Columbia reversed a decision made earlier this year by a judge of the supreme court in chambers and declared fines imposed on a strata-lot owner for failing to pay strata fees and a special levy to be invalid. In giving its reasons for judgment, the court made some noteworthy comments on interpreting section 135 of the Strata Property Act, which provides (among other things) that a strata corporation may not fine an owner unless the strata corporation has received a complaint about a bylaw contravention, and given the owner the particulars of the complaint, in writing, and a reasonable opportunity to answer the complaint, including a hearing if requested by the owner. The decision also illustrates the importance of good record-keeping, as the strata corporation’s case was largely undone by its “disorganized, incomplete and internally contradictory” records.
In Terry, the appellant and her late mother (Lorraine Terry) purchased (as joint tenants) a strata lot in the strata property at issue in 1989. Lorraine Terry lived alone in the strata lot and, until her death in July 2013, the respondent “strata corporation looked to Lorraine Terry for payment of monthly strata maintenance fees and special levies.”
There was “a long-standing history of disputes” between the parties over failure to pay strata fees and special levies, which dated back to “the early 1990s.” The first phase of this dispute appeared to come to an end in December 2003, when “the strata corporation acknowledged payment of all outstanding amounts owed by Lorraine Terry to that date and released a lien that had been placed on the appellant’s strata lot.”
Nevertheless, the strata corporation’s records continued mistakenly to show “an outstanding balance of $9,067.14.” Then, the strata corporation raised its strata fees and as a result:
Starting in November 2004, Lorraine Terry’s monthly payments were short by $4 a month, and then, starting in November 2005, they were short by $15 a month, which led to an accumulating outstanding balance on her account in addition to the amount incorrectly carried over from December 2003 to January 2004.
Starting in October 2006, the strata corporation began sending “correspondence” demanding payment of the outstanding fees. The judgment notes that between October 2006 and January 2009 five separate letters and statements of account were sent. The first four of these letters were silent on whether the appellant and her mother were in contravention of the strata corporation’s bylaws and whether any of the amounts claimed were for fines. The last letter did “advise the appellant that bylaw 18 of the strata corporation provides for the imposition of fines for late payment of ‘common expenses.’ The letter advises the appellant that, ‘your mother should be well aware of the fact that [for] monthly fees that are not received in accordance with the bylaws, fines, penalties and interest would be added to the outstanding fees.’ ”
A further letter was sent in January 2010. Once again, it made no mention of a bylaw contravention or fines.
Finally, in March 2013,
the strata corporation provided the appellant with a statement of account purporting to show that monthly late fines in the amount of $50 had been imposed on a consistent basis since January 2004. This statement of account conflicts with all earlier statements of account provided to the appellant and Lorraine Terry that are in evidence and which show that no fines had been imposed, save for the imposition of the four 2007 “late penalties” related to the boiler installation. The March 2013 statement of account reports that late fines totaling $7,210 had been imposed beginning in January 2004. It is apparent that at least some of the late fines reflected on this statement of account are attributable to the outstanding amount said to be due and owing as of January 2004 that was, in fact, paid on December 30, 2003.
Throughout this time, the strata corporation “had taken no action to collect the fines.” After her mother’s death, the appellant decided to sell the strata lot. As a sale would be practically impossible with these financial issues outstanding, the appellant commenced this proceeding by applying to the supreme court for “among other things, a declaration that the strata corporation had imposed fines without complying with the requirements of s. 135 of the Act and that those fines were, as a consequence, invalid.”
The chambers judge “declined to set aside the fines but concluded that he was unable to quantify the amount owed. He held that it would be incumbent on the strata corporation to establish the amount owed in a subsequent enforcement action.”
The appellant attacked this finding of validity on appeal, advancing two arguments:
- “First, she asserts that the chambers judge erred in law in interpreting ss. 135(1)(a) and (e) of the Act by holding that a strata corporation can impose a fine against an owner without first giving that owner notice of the particulars of the complaint and a reasonable opportunity to answer it.”
- “In the alternative, she asserts that the chambers judge erred by concluding that the evidence before him established that the strata corporation had complied with the requirements of ss. 135(1)(a) and (e) of the Act before imposing the fines. I take the second complaint to be an assertion by the appellant that the chambers judge committed palpable and overriding error in concluding on the facts before him that the strata corporation had complied with the applicable provisions of the Act. The appellant’s submission on this second point rests on an assertion that the chambers judge misunderstood the evidence on the question of when notice was given and reached a conclusion the evidence is not reasonably capable of supporting.” [emphasis in original]
Before tackling the appellant’s arguments, the court made the following general comments about the purpose and scope of section 135:
Section 135 of the Act sets out the procedure a strata corporation must comply with before imposing a fine for contravention of a bylaw. The provision is not complex and its requirements are straightforward. A fine must not be imposed unless the strata corporation has received a complaint about the alleged contravention of a bylaw and given the owner or tenant written particulars of the complaint with a reasonable opportunity to be heard in response, including a hearing if one is requested. The Act does not specify the form in which notice of the particulars of complaint must be given, nor does it define what constitutes a reasonable opportunity to answer the complaint.
In my view, an owner or tenant who may be subject to a fine must be given notice that the strata corporation is contemplating the imposition of a fine for the alleged contravention of an identified bylaw or rule, and particulars sufficient to call to the attention of the owner or tenant the contravention at issue. In addition, the owner or tenant must be given a reasonable opportunity to answer the complaint. What constitutes a reasonable opportunity to be heard in response is a case-specific inquiry that must take account of the nature of the alleged contravention, the context in which the violation is said to have occurred, and the time that might reasonably be required to gather information or evidence needed to answer it.
“Applying this framework to the circumstances of the case,” the court was unable to accept the appellant’s first argument. In the court’s view, the chambers judge
properly framed the issue as being whether the strata corporation gave proper notice to the appellant and Lorraine Terry of the complaints and an opportunity to be heard before imposing the fines. I am not satisfied from anything the chambers judge said that he considered it to be open to a strata corporation to impose a fine upon an owner for a bylaw contravention without first giving the owner written particulars of the complaint and a reasonable opportunity to be heard in response.
But the appellant’s second argument met with success. Here, the court concluded that there was no evidence that the strata corporation had fulfilled its obligations under section 135:
I can find nothing in the materials before the chambers judge supporting a reasonable conclusion that the appellant or Lorraine Terry were given notice of the sort required by s. 135(1) before the strata corporation began imposing fines in January 2004. The correspondence in October and December of 2006 and in March and August of 2008 does not particularize the alleged contravention beyond making the erroneous assertion that the appellant and Lorraine Terry were indebted to the strata corporation for unpaid monthly maintenance fees predating January 2004. That correspondence fails to call the attention of the appellant and Lorraine Terry to an allegation by the strata corporation that the bylaws of the corporation were being contravened as a consequence of the failure of Lorraine Terry to pay the increase in monthly maintenance fees that came into effect in November 2014 and again in November 2015. In addition, the strata corporation failed to give the appellant or Lorraine Terry any notice that it was contemplating the imposition of a fine for non-payment of monthly strata fees, let alone any opportunity to be heard in response to the alleged contravention.
The January 2009 letter merits separate consideration on the question of whether it, standing alone, constitutes compliance with the procedural requirements of s. 135(1). In my respectful view, it does not. First, the letter speaks only to a past state of affairs and to fines that had been imposed as of that date. Those fines were imposed in the absence of any evidence that the strata corporation had complied with s. 135(1). It is evident from the language used by the strata corporation in the January 2009 letter that it did not consider compliance with s. 135(1) to be a condition precedent to the imposition of a fine on an owner. As noted earlier, the strata corporation simply advised the appellant that her mother “should be well aware of the fact” that fines would be imposed for default in the remission of the full amount owed in monthly maintenance fees. It should also be remembered that the strata corporation was continuing to operate on the assumption that late fines could properly be assessed for overdue amounts paid in full in December 2003. Most importantly, this correspondence does not give the appellant fair notice that the strata corporation was contemplating the imposition of future fines for any ongoing contravention of a bylaw. I take the same view with respect to the January 2010 letter.
The court was at pains to note that the strata corporation’s records led directly to this conclusion:
Although I have come to the conclusion that the chambers judge erred in his understanding of the evidence on these points, I wish to add that he did not receive from the strata corporation the assistance he was entitled to in the presentation of the evidence on this petition. The chambers judge referred to the documents filed by the strata corporation as a “document dump.” It is an apt description. The accounts and correspondence filed by the strata corporation in response to the petition are disorganized, incomplete and internally contradictory. That the chambers judge misunderstood the evidence on the question of whether the strata corporation had complied with the procedural requirements of s. 135(1) before imposing fines is rooted in the manner in which the strata corporation presented its case.
In the result, the court decided to “allow the appeal and declare all of the fines imposed by the strata corporation on the appellant’s strata lot to be invalid. To give effect to these reasons, I would vary the order of the chambers judge by adding the following term: (1) All fines imposed in relation to the appellant’s strata lot are invalid and shall be set aside.”
