BC Supreme Court upholds enhanced charges for defined support services in strata property catering to seniors
January 25, 2016
BY Kevin Zakreski
In its recently released decision in The Owners, Strata Plan VIS4686 v Craig, 2016 BCSC 90, the BC Supreme Court examines the intersection of strata-property rules on common expenses and for-profit supportive housing for older adults. The court granted the petitioner strata corporation a declaration under section 171 (1) (a) of the Strata Property Act, affirming the validity of its bylaws relating to a detailed set of support services, even though there were some concerns about how the strata corporation implemented and administered its charges to strata-lot owners for those services.
Facts and issues
The strata property at issue in the case was a “a four-level condominium building known as the ‘Camelot,’ ” located in the James Bay neighbourhood of Victoria, comprising “35 strata lots: 34 residential lots and one commercial lot.” The strata property wasn’t an assisted-living residence as defined in the Community Care and Assisted Living Act. The court described the nature of the strata property in the following terms:
From the outset, the developer’s intention was to establish the Camelot as a for-profit “Care-a-Minium” (an obvious play on the word “condominium”). That is, the Strata would contract with a third party to provide defined support services to all of the Camelot’s residents. The Strata would pay that third party for the services and then allocate the expense to all of the residential strata lot owners as an additional fee beyond their regular strata fees.
The strata corporation’s bylaws contained two provisions obliging it to retain a third-party provider for the support services and requiring owners to pay for those services—or, as the court put it:
In the result, the Strata was obliged to retain a support services company to provide meals, housekeeping, laundry, and 24 hour onsite staffing for the benefit of the residential strata lot owners. Additionally, no person could own or occupy a strata lot unless its owner paid for these support services.
From occupancy in the late 1990s to 2012, contracts for the support services and annual increases in fees were approved by the strata council. After July 2012, fee increases were dealt with by strata-lot owners at the annual general meeting. Nevertheless, the strata corporation retained a practice of severing the support-service fees from strata fees. “Instead of allocating the support services fees according to unit entitlement pursuant to the Strata Property Act,” the court noted as well, “the Strata has been allocating them to each residential strata lot owner on a flat-fee basis, dependent upon the number of residents in each unit.”
Two strata-lot owners objected to the support-service fees. Ultimately, the strata corporation’s practices were ratified by a resolution passed at a special general meeting. The two owners continued to object to the fees. So the strata corporation commenced this proceeding, seeking a declaration as to the validity and enforceability of the its bylaws relating to the support-service fees. The two objecting owners were named as respondents in the proceeding.
The court defined four issues arising from the strata corporation’s petition.
- Does the Strata have the authority to charge support services fees?
- Is Bylaw 116(i) ultra vires the Strata Property Act?
- Are the expenses associated with the support services “common expenses”?
- Are the support services fees unfair and oppressive?
Does the Strata have the authority to charge support services fees?
This issue engaged section 38 of the act, which “authorizes strata corporations to enter into contracts that relate to its powers and duties under its bylaws and the Act.” The respondents argued that the lack of a direct contractual relationship between themselves and the support-service provider tainted the contract. The court rejected this argument, holding that the fact that the respondents were “not signatories to [the] agreement” was of “no consequence.”
Is Bylaw 116(i) ultra vires the Strata Property Act?
This issue led the court to consider section 119, which sets out the “general parameters” of strata-corporation bylaws, and section 121, which sets out when bylaws are unenforceable. The respondents argued that the bylaws at issue didn’t relate to common property, common assets, or the use of a strata lot and that they unduly restricted “a residential strata lot owner’s free use of their lot, including their ability sell or encumber it.”
The court rejected these arguments, concluding that
In my opinion, the Strata had the statutory authority, pursuant to s. 119 of the Strata Property Act, to enact Bylaw 116(i). The bylaw addresses services that the residents of the Camelot can freely use as they see fit. These services, in my view, do form part of the use and enjoyment of the strata lots and common property.
Are the expenses associated with the support services “common expenses”?
The respondents argued that “for the support services fees to be common expenses, they would have to be established and managed by the Strata and authorized and assessed in accordance with the Strata Property Act.” The court noted the procedural and other irregularities that had grown up around the fees. Nevertheless, it concluded that they should still be considered “common expenses”:
The petitioner admits that the support services fees have been allocated on a flat-fee basis and not a unit entitlement basis as required by the Strata Property Act. The petitioner maintains that notwithstanding this apparent deficiency, the nature and character of the fees as legitimate common expenses remain unchanged. I agree.
In my opinion, the support services the Strata provides to all of the Camelot’s residents form an essential and integral part of its distinctive nature as a supportive living “Care-a-Minium” residence for senior citizens. The services are an amenity that has been a part of life at the Camelot since its inception. I agree with the submission of Nova Homes that while the provision of the support services in question may not be a feature of many other condominium communities, conceptually it is comparable to other types of common amenities or services typically found in residential strata buildings such as gyms, pools and guest suites.
Are the support services fees unfair and oppressive?
Curiously, this issue wasn’t considered in relation to section 164 of the act, apparently because the respondents didn’t seek relief under this statutory power to remedy unfair acts. Instead, the court dealt with the issue by dismissing the respondents’ concerns about perceived conflicts of interest and emphasizing the reasonable expectations of the respondents and other owners.
In the result, the strata corporation was granted the declaration it sought. The court summed up its reasons for making this order in favour of the strata corporation by again emphasizing that the reasonable expectations of the majority of owners should override irregularities under the act:
From its inception, the Camelot was designed and marketed to be more than just a condominium complex. It was to be a supportive living residence for older members of the community. The fact that the Strata was obliged to provide support services to its members and that in return the members would have to pay for these services, above and beyond their regular strata fees, is clear in all of the documentation relating to the Camelot. In the case of Ms. Craig and Mr. Garry, I am satisfied they were aware of this distinct facet of the Camelot when they acquired their respective strata lots.
In my opinion, the Strata had the capacity and authority to enact Bylaw 116(i) and to enter into a contract for the provision of support services to its members. The bylaw is not ultra vires the Strata Property Act, notwithstanding the irregularities relating to the determination, management and collection of the support services fees. Moreover and in any event, I find the irregularities do not alter the fundamental nature of the expenses in question. In my view, they are “common expense” as that term is used in Strata Property Act. Finally, I reject the Respondents’ contention that the support services fees are oppressive and unfair. The fact of the matter is a strong majority of the individual owners (i.e., 10 of the 12) support the status quo and the position of the Petitioners. I have taken that to mean these senior citizens who call the Camelot home, want and expect the Strata to continue providing them with the support services they have grown accustomed to, and they are prepared to continue paying for these common expenses.