CRT Roundup—access to records, unauthorized expenditure, chargebacks, significant change in use and appearance of common property, repair and maintenance of common property

CRT Roundup—access to records, unauthorized expenditure, chargebacks, significant change in use and appearance of common property, repair and maintenance of common property

January 25, 2018

BY Kevin Zakreski

This post is part of a monthly series summarizing the Civil Resolution Tribunal’s strata-property decisions. There have been nine new decisions since the last post.

Governance—access to records

Mellor v The Owners, Strata Plan KAS 463, 2018 BCCRT 1, was a dispute “primarily about the owner’s access to strata records under sections 35 and 36 of the Strata Property Act.” As the tribunal noted:

The strata is a 28-unit residential townhouse complex. As with a number of strata property disputes, this dispute reflects the owner’s ongoing dissatisfaction with the strata’s governance for the past several years and the strata’s contrary view that the owner has been unreasonably demanding and harassing.

The tribunal rejected the owner’s claims, finding “that the owner’s requests have exceeded what is reasonable and [I] agree with the strata that they are vexatious in nature.” The tribunal set out a series of examples from the owner’s correspondence, which were intended to show that “the owner’s vexatious requests that were baseless and intended to simply harass and ‘bury council in paper’ [and] do not deserve to be supported in the form of a remedy against the strata for its failure to strictly comply with its SPA obligation to reply to documentation requests.”

The tribunal also made these general comments on access to strata-corporation records:

It is up to the legislature to amend the SPA to expressly limit an owner’s ability to request documents. That said, I find that parties should act reasonably and in good faith. If a party fails to act reasonably in the circumstances, it is possible they may not obtain their desired remedy from the tribunal process. I say this because the spirit of the SPA is to recognize the democratic nature of strata living, with the result that the strata act in the best interests of all owners. Vexatious requests for requests unduly burden the strata, to the detriment of all the other owners. I therefore find that it is implicit in section 36 of the SPA that requests for records must be reasonable. That said, the strata should be extremely cautious in making any determination that an owner is being unreasonable, because if they are incorrect they could be found to be offside section 36 of the SPA and an order could be made against them accordingly.

Governance—strata-council meetings—access to records

McDowell v The Owners, Strata Plan 1875, 2018 BCCRT 11 (PDF), was a dispute “about the governance of the strata and the owner’s access to strata records under sections 35 and 36 of the Strata Property Act (SPA). The owner has requested several orders with respect to past and future governance of the strata.” These requests included requests for the holding of strata-council meetings and hearings involving the owner.

The tribunal described the strata corporation and the nature of the dispute in the following terms:

The strata is a bare land strata complex that comprises 14 strata lots. The strata is self-managed. A small bare land strata usually requires less management than a conventional strata, since the common property is typically restricted to the roads, amenity areas and similar facilities. One would expect the council to meet less frequently and not be inundated with frequent demands to properly govern the strata.

That has not been the case in the present situation. This dispute is about the owner’s ongoing dissatisfaction with the strata’s governance since 2011 and the strata’s contrary view that the owner has been unreasonably demanding and exacting. The owner has made frequent demands on the council members’ time; demands that for the most part I find to be unreasonable and unnecessarily critical.

The tribunal rejected the bulk of the owner’s claims. The tribunal did find that the strata corporation had “in the past contravened the SPA by not holding sufficient council meetings in order to govern the strata per the SPA. I am not surprised due to the conduct of the owner at those meetings.” It ordered the strata corporation to:

hold council meetings when appropriate to ensure the performance of duties of the strata corporation. I order one council meeting per year must be held prior to the convening of an annual general meeting. I make no order with respect to the minimum number of council meetings to be held annually.

With respect to hearings, the tribunal concluded:

A hearing is a right to be heard, not a forum to make demands with respect to governance of the strata invoking discussion and rebuttal.

***

If the owner wishes to dictate governance to the council, the owner has the opportunity to attempt to do that by requisitioning a meeting per section 43 of the SPA. The owner must garner support; essentially he needs himself and the owners of two other strata lots to accomplish having his demands heard at a special general meeting (section 43 of the SPA) or be added as an agenda item to an annual general meeting or a special general meeting (section 46 of the SPA).

I find that a reasonably prudent council would make the same refusal to hold hearings in comparable circumstances. I find that the council has not contravened section 34.1 of the SPA by refusing to hold the hearings requested by the owner . . . .

Finally, the tribunal ruled that the owner is “not entitled to all strata records” and must bring requests for access within the parameters set out in sections 35 and 36 of the act.

Governance—finances—unauthorized expenditure—legal fees

The Owners, Strata Plan VR 942 v Thompson, 2018 BCCRT 4 concerned “a contested expenditure on legal fees for advice provided at an Annual General Meeting (AGM)”:

The Owners, Strata Plan VR 942 (strata) says that [the respondent strata-lot owner and council member] spent $3,668 in legal fees using strata corporation funds without approval.

[The owner] says the $3,668 was spent in good faith, on agreement by a majority of 2011 strata council members, for legal services needed to prevent significant loss to the building.

The tribunal found that this case turned on application of section 98 (3) of the Strata Property Act. In its view, the legal fees constituted a valid unauthorized expenditure:

In Lum v. Strata Plan VR 519, 2001 BCSC 493 the court held that a strata council has a duty to have the strata properly represented in legal proceedings concerning it. While some owners may oppose legal proceedings, or oppose obtaining legal advice for the strata, this does not alter the strata’s obligation to arrange for representation.

Here, the strata council and the strata generally had fallen into dysfunction. While there were not formal legal proceedings, there were repair and maintenance issues that were not being addressed, and the strata had a reduced ability to make necessary decisions because of disagreements between its owners. The decision in Lum supports the analysis that a strata council may decide to obtain legal advice for the strata in these circumstances.

A majority of the members of the strata council decided that advice from a strata property lawyer at the 2011 AGM was necessary to try to return the strata to an adequate level of function. This step was in the best interests of the strata.

***

I find that, in these circumstances, legal advice was reasonably required in the best interests of the strata. It was appropriate for the strata council to retain a lawyer to appear at the AGM to address repair and maintenance obligations and to answer questions from owners.

In the result, the tribunal dismissed the claim against the owner and ordered:

In the future, strata and its council will abide by the terms of the SPA and the bylaws. Strata council ought to convene meetings in accordance with the bylaws, and communicate the minutes of such meetings in a timely way to all owners.

Governance—bylaws—enforcement—fines and chargebacks

In The Owners, Strata Plan NWS 3429 v Lawrence, 2018 BCCRT 3, the applicant strata corporation asked the tribunal for orders that the respondent strata-lot owner pay “an outstanding special levy, a NSF charge, a fine related to the owner’s kayak storage, and a charge for fencing.” The strata corporation’s claim met with mixed success.

The owner didn’t dispute liability for the special levy and the NSF charge, and the tribunal ordered payment of the amounts due on the special levy. But the strata corporation’s lack of “a bylaw that allows the strata to charge an owner for an NSF charge” led the tribunal to dismiss this claim.

The tribunal found that the strata corporation had validly fined the owner for breach of a bylaw regarding storage of a kayak on her deck, but it reduced the amount of the fine from $400 to $200.

Finally, the tribunal dismissed a claim to charge back amounts expended on repairs to a fence surrounding the owner’s deck, for the following reasons:

The burden of proof is on the applicant strata, on a balance of probabilities. Given the evidence before me, I find I cannot conclude the owner agreed to pay the $250 claimed for the fencing work. The strata’s bylaw 11 states the strata must repair and maintain common property and limited common property fencing. As such, it is unclear to me on what basis the owner could be responsible for any fencing adjacent to her strata lot given her patio is limited common property and the area around her patio is common property. Further, based on the evidence before me there was no special levy assessed for this expense and there is no relevant charge-back bylaw. Accordingly, there is no valid basis for the strata to seek a charge-back against the owner for this $250. I dismiss the strata’s claim for $250 for the fencing work around the owner’s strata lot.

Insurance—deductible—chargeback—water damage

Gauthier v The Owners, Strata Plan LMS 2768, 2018 BCCRT 6, concerned a claim “about whether an owner is responsible for reimbursing the strata corporation an insurance deductible it paid.” The case involved a water leak, which caused damage to the two strata lots immediately below that of the claimant owner’s.

The tribunal found that the case was governed by section 158 (2) of the Strata Property Act and the respondent strata corporation’s bylaws. On the latter point, the tribunal noted that the relevant bylaw

uses the same language as a bylaw which was considered by the court in the case Strata Plan LMS 2446 v. Morrison, 2011 BCPC 519. The court found that the wording in the bylaw must be read as a whole. Including the words “negligence” and “carelessness” means that the strata must prove the owner was actually negligent in order for the owner to be liable for the strata’s expense.

In this case, the strata corporation wasn’t able to show that the owner had acted negligently:

The strata relies entirely on the insurance adjuster’s comments that she and the contractor had looked at and ruled out other sources (including all exterior sources) for the water leak. The difficulty is that there is very little evidence of what steps the adjuster and contractor took in their investigation. The evidence is uncontroverted that the attic was not inspected as a potential source. . . .

***

It is not enough for the strata to state that other sources were ruled out, without providing an explanation as to how that conclusion was reached. The owner is entitled to know, and the strata is obligated to prove, why other potential sources for the leak are not reasonable.

I find that the strata has not proven the owner was negligent and that his negligence caused the water damage to other strata lots, and so it cannot charge the owner the cost of the strata’s insurance deductible. I order that the strata cancel the $10,000 chargeback from the owner’s strata account.

Common property—significant change in use or appearance—landscaping and fence

In Kazakoff v The Owners, Strata Plan KAS 880, 2018 BCCRT 12, the applicant owner claimed that the respondent strata corporation made “landscaping alterations” to units 1, 4, 28, and 43 and that the strata corporation “removed a wooden dividing fence and altered the concrete patio extension on the common property adjacent to [the owner’s] unit 5 but has not removed or altered other similar alterations adjacent to other units within the strata complex.” The owner asked for “orders that the strata council members reimburse the strata the cost of the landscaping alterations made and restore the common property patio extension and dividing fence adjacent to unit 5.” The strata property at issue “comprises 48 residential townhouse strata lots located in Kelowna, B.C., built in two phases and fully completed in approximately 1993.”

The tribunal cited the criteria listed in Foley v The Owners, Strata Plan VR 387, 2014 BCSC 1333 at para 19, for the application of section 71 of the act. It found that:

the strata’s alterations to the common property adjacent to units 1 and 5 were significant. However, I find the alterations made to the common property adjacent to units 4, 28 and 43 were not significant.

Based on my review of the photographs of alterations adjacent to units 1, 4, and 5, the alterations made adjacent to unit 1 differ dramatically from the other alterations at issue. This is because the unit 1 alterations were extensive and highly visible to all residents and the general public, given the alterations were made at the main entrance to the complex.

The tribunal also considered the method of paying for the landscaping alterations. It found that:

such expenses are capital in nature and must be made from the CRF (or by special levy) with the proper approval by the owners.

To the extent the strata says that section 72 of the SPA somehow gives it authority to alter common property, I cannot agree. The duty to repair and maintain common property has been extensively addressed by the courts and the tribunal and there is no evidence to suggest the landscaped areas in question here were in a state of disrepair or not being properly maintained. Again, there is no suggestion there was any urgency to the repairs.

In summary, I find the strata’s alterations to common property adjacent to units 1 and 5 were significant and required a 3/4 vote of the strata to be passed. Although I have found the alterations completed to common property adjacent to units 4, 28 and 43 were not significant changes, I find the costs for all the alterations completed were not properly approved from the operating fund given the expenses were not consistent with fund as required under section 97(a) of the SPA. The expenses should have been paid from the CRF or by special levy, both of which require the passing of a 3/4 vote resolution.

Finally, the tribunal considered the appropriate remedy:

With respect to the alterations completed at units 4, 28 and 43, I find that the strata must allow the strata owners to consider a ¾ vote resolution authorizing the expense for this work from the CRF, by special levy or a combination of both.  The strata must include a separate 3/4 vote resolution on the agenda of the general meeting set out above to consider funding the expenses of the alterations completed at units 4, 28 and 43, from the CRF, by special levy or a combination of both. If the resolution passes, these claims will be resolved. If the resolution fails, the strata would have effectively completed the alterations without proper funding authority. In such case, I order the strata to reinstate the common property adjacent to units 4, 28 and 43 to its condition prior to the alterations being completed within 60 days of the date of the general meeting. The cost of reinstating the common property must be at the expense of the strata including the applicant owner.

With respect to the owner’s unit 5, the tribunal ordered that the strata corporation:

must reinstate the common property dividing fence and patio extension adjacent to unit 5. In his submission, the owner was willing to accept concrete paving stones being used for his patio extension but expected the completed patio to be the same size as it was before the poured concrete patio extension was removed. I therefore find that strata must extend the existing concrete paving stone patio extension to include 2 additional rows of paving stones of equal size, quality texture and colour to those already installed by the strata.

Common property—repair and maintenance—water-stop valve

In Beach v The Owners, Strata Plan KAS 722, 2018 BCCRT 2, the applicant strata-lot owners sought “to be reimbursed by the respondent strata corporation for expenses they incurred in repairs to a water stop valve.” The strata property at issue:

is a bare land strata. Each strata owner has a stand alone residence located on a strata lot. While the strata lots themselves share common borders with neighbouring strata lots, the buildings constructed on the strata lots do not share any floors, walls or ceilings.

The water to each residence is supplied by a pipe located in each strata lot, which connects to a main pipe located under a common property road which runs through the strata development. Within each strata lot is a water stop valve. The valve controls the flow of water from the central common water main into the water pipe which serves the strata lot. The water stop valve for each strata lot is located entirely within the boundaries of the individual strata lot it serves.

The tribunal’s decision turned on whether the water-stop valve was common property. It found that the water-stop valve wasn’t common property because it was “located entirely within the applicants’ strata lot” and wasn’t “available for the enjoyment of another strata lot or the common property.”

In the result, the applicants’ claim was dismissed.

Common property—alteration—doorbell and security camera

Parnell v The Owners, Strata Plan VR 2451, 2018 BCCRT 7, was a dispute “about whether the owner should be permitted to keep security cameras and doorbells mounted in a common property hallway next to his entry doors.” The dispute took place in a strata property that the tribunal described as follows:

The strata is located in Whistler, BC. It is a mixed-use 4-storey complex with 50 residential units and a ground floor commercial strata lot that the strata owns and rents to a vacation rental business. The applicable zoning permits various residential uses, including short-term rental and tourist accommodations. The owners’ strata lots are primarily used as vacation or vacation rental properties. Owners have the option of renting through an agency, or, directly to the public as the owner chooses to do.

The strata corporation’s bylaws restricted an owner from altering common property without the consent of the strata corporation. The tribunal rejected the owner’s argument that the installation of security cameras and a doorbell on common property didn’t amount to an alteration:

I am not persuaded that the doorbell cameras and the surveillance cameras are not “alterations.” First, the court in Hall adopted the following definition ([the tribunal’s] bold emphasis added): “An addition builds on or supplements what is already there. An alteration can add to or subtract from what is already there.”

The doorbell cameras and surveillance camera are of an entirely different character than the common hallway ceiling joist or drywall wall. In that sense, the equipment does not “build on or supplement what is already there.” Rather, they are things that add to what is already there. Thus, I find they are “alterations” within the meaning of bylaw 7, bearing in mind the equipment is mounted to the common property ceiling and wall. As such, the owner’s surveillance equipment required the strata’s written approval, under bylaw 7. [emphasis in original]

Privacy concerns and the strata corporation’s obligations under the Personal Information Protection Act also were key considerations for the tribunal:

The strata further submits that it is governed by the Personal Information Protection Act (PIPA) that provides strict guidelines for surveillance (see sections 1, 6, and 10). The strata submits that it must have a bylaw authorizing the installation of surveillance equipment and disclose its existence and purpose to those affected by it. There must be a written policy about the equipment’s use. The strata submits that it cannot authorize someone else, such as the owner, to do something that it could not do itself, namely install the surveillance equipment without proper notice and consent. I agree with the strata. The common property hallway is for the strata to manage and maintain, and under the SPA it is the strata council that is charged with acting in the best interest of all owners. Further, the strata is bound by PIPA. Put another way, that the owner is not bound by PIPA is irrelevant, because the camera is in a common property hallway managed by the strata, which is subject to PIPA.

In the result, the tribunal dismissed the owner’s claim.

Tribunal jurisdiction and procedure—preliminary decision—suspending proceeding

In Booth v The Owners, Strata Plan NW2575, 2017 BCCRT 61, the tribunal was asked to “exercise its discretion to suspend this tribunal proceeding pending a Supreme Court of British Columbia (court) application for judicial review by the respondent” strata corporation. It had applied to judicially review the tribunal’s previous preliminary decision to decline its request for a representative.

The tribunal began its consideration of the “narrow issue” by setting out “the test for whether to suspend a proceeding pending an appeal of an interlocutory decision” established by RJR-MacDonald Inc v Canada (Attorney General), [1994] 1 SCR 311 at 334:

• Is there a serious issue to be determined?
• Will the party applying for the suspension suffer irreparable harm if the relief is not granted?
• Does the balance of convenience, taking into account the public interest, favour the granting of the relief?

The tribunal also noted a general rule called the prematurity doctrine, which holds that:

preliminary, or interlocutory decisions, such as the tribunal’s preliminary decision not to permit a representative, are not subject to judicial review. This rule applies unless the judicial review relates to either the tribunal’s jurisdiction, or to the impartiality of the tribunal member, neither of which is in issue in this case.

While the tribunal answered yes to the first question, it found that the strata corporation “has not established that it will suffer irreparable harm, should the tribunal decline to suspend the tribunal proceeding,” and that balance of convenience favoured the applicant strata-lot owners. On the latter point, the tribunal noted:

On balance, I find that the public interest lies in the tribunal’s discharge of its legislative mandate to provide dispute resolution services in a manner that is, “accessible, speedy, economical, informal and flexible.” Declining the strata’s request to suspend the tribunal proceedings will allow the owners’ dispute to be resolved in a manner that is most consistent with the tribunal’s mandate.

In the result, the tribunal ordered “that the strata’s request that the tribunal proceeding be suspended pending the judicial review application is refused.”