BC Supreme Court approves strata corporation’s remediation resolution
January 9, 2017
BY Kevin Zakreski
Section 173 (2) of the Strata Property Act allows a strata corporation to apply to the supreme court for an order relating to “a special levy to raise money for the maintenance or repair of common property or common assets.” There are a couple of conditions that have to be met before the order may be granted:
- the levy must be “necessary to ensure safety or to prevent significant loss or damage, whether physical or otherwise”; and
- a resolution implementing the levy must have been put to a vote, and “the number of votes cast in favour of the resolution is more than 1/2 of the votes cast on the resolution but less than the 3/4 vote required under section 108 (2) (a).”
Section 173 (2) is a relative newcomer to the act. It was enacted in 2009. Nevertheless, it has generated a handful of court decisions. The most recent decision appeared last week.
The Owners, Strata Plan VR 611, 2017 BCSC 14, concerned a strata property located in Vancouver consisting of “54 duplex buildings which comprise 108 residential strata lots with associated common property.” The strata property was developed in two phases, in 1979 and 1980. “Over the years,” the court noted, “the residential buildings and common property have been subject to deterioration. What upgrades and remediation that has occurred has been done on a sporadic and piecemeal basis.”
In 2014, the strata council obtained a building envelope condition assessment, which “generally” commented that “existing vertical structures were in a failing and deteriorated state; the quality of some past remediation work was inferior; and the approach to remediation should not be done on an ad hoc or superficial basis (as had previously occurred) but rather, on a more quality assured approach to repair and renewal.”
Concerns over a previous major project involving the strata property’s plumbing had led to a heightened “concern of the owners with the cost of remediation.” This resulted in the formulation of three “strategies” or options for carrying out the remedial work. Ultimately, even the lowest-cost option failed to attract the support needed from the owners to allow for the passage of a resolution by a 3/4 vote needed to implement the special levy to fund the project.
As a result, the strata corporation applied to the supreme court “pursuant to sections 173(2)(2.1)(3) and (4) of the Strata Property Act, S.B.C. 1998, c. 43 (the ‘SPA’) for an order approving a resolution (the ‘AGM Resolution’) brought before the members of the Strata at its Annual General Meeting (the ‘AGM’) seeking approval of a special levy to raise money for the maintenance and repair of Strata common property pursuant to a remediation report obtained by the Strata Council (the ‘Council’).” The application was opposed by a handful of strata-lot owners, who argued “the AGM Resolution as set out in the petition is not the resolution brought before the AGM; that the AGM Resolution is vague and uncertain; that it would be unfair to impose the financial obligations set out in the AGM Resolution on members; and that there are less onerous financial arrangements which the Council should consider.”
The court rejected the respondents’ arguments. It found that the strata corporation had met the conditions set out in section 173 (2):
I am satisfied from the content and recommendations made by BCBS Strategy C represents a reasonable compromise between remediation work which is necessary and which would prevent further loss and damage to the Strata’s common property and the financial burden on the owners which such remediation work will entail. I am also satisfied that the special levy is necessary to prevent significant loss or damage to the complex pursuant to s. 173(2)(a).
The court did allow that “the remediation work will entail an unfortunate financial burden on many of the owners.” But it concluded that “if the remediation does not proceed strata owners will be faced with even higher assessments (and even further loss in the value of their property) in the future.”
In the result, the court granted the order sought by the strata corporation.