BC Supreme Court orders strata corporation to be wound up
February 26, 2016
BY Kevin Zakreski
In a brief oral judgment handed down last month, the Supreme Court of British Columbia has ordered the winding up of a strata corporation with a liquidator, even though winding up commanded less than unanimous support among the owners.
The Owners, Strata Plan NW422 v Khlybov, 2016 BCSC 285, involved a strata corporation with 21 strata-lot owners. The court briefly set out the basis of the application in two paragraphs:
The petitioners, who are a strata corporation and most owners of the strata corporation, wish to sell the property in which they live and which is the main asset of the strata corporation. This application is brought by a person that they have nominated as a liquidator and who, by this order, will be appointed formally as a liquidator, and I am being asked to endorse all of the various decisions that have been made by the corporation on the way to this application.
The intention is that everything will be sold and the corporation will be wound up. A developer is the intended purchaser, and I am being asked to approve the agreement with them to that effect. The Strata Property Act requires that I be satisfied of a number of things before granting the orders sought. Counsel has taken me through these in great detail, and I am satisfied with respect to them.
One of the things that the Strata Property Act requires is set out in section 277, which spells out that “a resolution to cancel the strata plan and appoint a liquidator must be passed by a unanimous vote at an annual or special general meeting.” In this case, “[o]ut of 21 owners, 20 voted in favour.” So the strata corporation fell short of unanimity by one vote, which necessitated this court application.
Over the past few years, the supreme court has considered two cases involving the winding up of a “common-law condominium” over the objections of dissenting owners, granting the order in one case, and refusing it in the other. Both cases were noteworthy for their fraught, highly contested nature.
In Khlybov, on the other hand, the owner who wasn’t in favour of dissolving the strata corporation also wasn’t actively opposed to it. That owner was indifferent. The owner “did not show up” to the meeting to consider appointing a liquidator and, although the owner was represented by a lawyer in the court proceeding, took “no position” on the proceeding.
Nevertheless, falling one vote short of unanimity required the strata corporation to apply for an order under section 52 of the act. In the face of no active opposition, and upon being satisfied that “the passage of the resolution is in the best interests of the strata corporation and would not unfairly prejudice the dissenting voter or voters,” the court granted the order:
It is important to note that there is nobody opposed to this. I have already noted the one person who takes no position. And similarly, all financial institutions and charge holders are also involved in the negotiating process that has resulted in the order that is before me and the application that is before me and supports the application that is made.
The court’s order also approved the sale of the strata property to a developer and included “a number of terms with respect to what the Land Title Office will require” and “several terms with respect to the protection of the charges of the various financial institutions.”
All and all, the case appeared to proceed remarkably smoothly for a court-ordered dissolution. As the court put it: “It is a great day when nobody opposes. A lot of smiles in the gallery.”