CRT Roundup—governance, bylaw enforcement, common property, parking, and access to records

CRT Roundup—governance, bylaw enforcement, common property, parking, and access to records

December 28, 2017

BY Kevin Zakreski

This post is part of a monthly series summarizing the Civil Resolution Tribunal’s strata-property decisions. There have been 11 new decisions since the last post.

Governance—minutes—financial statements—bylaw enforcement—access to records—standard of conduct

Link v The Owners, Strata Plan KAS 828, 2017 BCCRT 128, concerned “a variety of claims about the strata’s alleged historical failures to properly govern as required under the Strata Property Act (SPA). In particular, the applicants say the strata has failed to adequately: prepare financial statements and council meeting minutes, enforce bylaws, register bylaws, manage common property, and respond to requests for information.” The strata property at issue was “a bare land strata plan, with 22 strata lots. The common property roadways create a shallow cul-de-sac, at the west side of the strata property.”

The tribunal didn’t accept the bulk of the applicants’ claims, dismissing claims related to minutes of general meetings and council meetings, bylaw enforcement, reimbursement of legal expenses, unauthorized common-property alteration, access to records, and failing to meet the standard to act honestly and in good faith in carrying out the duties of a council member. The tribunal did find that the strata corporation had failed to comply with the act, the regulations, and its own bylaws in preparing financial statements and “ordered the strata to comply in future.”

The tribunal’s general comments on the purpose of minutes are worthy of note:

I find the purpose of minutes is to inform owners of decisions made and money spent on their behalf. While the minutes must record the council’s decisions, the SPA does not require that the minutes report on the discussions that led to those decisions. . . .

I find the strata was not required to document the discussions in the minutes, though nothing would have been improper if the council had chosen to do so. If owners wish to know the details of the discussions at meetings, they should attend the meeting or send a proxy.

In the result, the tribunal also ordered the strata corporation to “reimburse the applicants $112.50, half the tribunal fees paid.”

Common property—parking stalls

Thölin v The Owners, Strata Plan VR419, 2017 BCCRT 131, was a dispute over allocation of parking stalls:

At the center of the present dispute are two parking stalls that form part of the Strata Corporation’s common property: stalls 12 and 13. Dr. Thölin contends that a special resolution adopted by the Strata Corporation forty years ago continues to allocate to lot 31 the exclusive use of those stalls. The Strata Corporation maintains that the resolution no longer determines who is entitled to use stalls 12 and 13 and advances several arguments in support of that position.

The facts underlying the case were “uncontested” but complex. In simple terms, the strata corporation’ owner-developer passed a special resolution in 1977 that allocated parking stalls by way of grants of exclusive use of common property. The resolution provided that it “shall not be added to, amended or altered save and except by a unanimous resolution of the Strata Corporation.”

Despite this last point, the strata corporation over the years adopted other resolutions and otherwise dealt with parking allocations, without obtaining a unanimous resolution. The applicant owner sought restoration of the two parking stalls allocated to his strata lot under the 1977 resolution.

The tribunal found that the applicant’s claim wasn’t barred by the Limitation Act, because:

it was not until the re-discovery of the 1977 Special Resolution’s existence that Dr. Thölin could have known (or reasonably ought to have known) of the alleged loss of parking stalls 12 and 13. Dr. Thölin would have become aware of the 1977 Special Resolution no later than November 2012, when copies of it were distributed to all owners. Accordingly, Dr. Thölin discovered the present claim in or about November 2012 and therefore (under subsection 30(3) of the Limitation Act) the six-year limitation period established by the former Limitation Act applies to Dr. Thölin’s claim as if the right to bring an action occurred in November 2012. Because Dr. Thölin began his claim for the exclusive use of parking stalls 12 and 13 before November 2018, that portion of his claim is not out of time.

But the tribunal found that the predecessor legislation (the Strata Titles Act) in force at the time of the 1977 special resolution “did not permit strata corporations to make grants of exclusive rights of use that were terminable only by unanimous resolution. Properly interpreted, the STA impliedly intended any grant of an exclusive right of use to be terminable by way of special resolution—which still required a 3/4 vote to carry, but not a unanimous vote.” Subsequent resolutions had effectively terminated this exclusive right.

In the result, all of the applicant’s claims were dismissed.

Common property—definition—responsibility to repair and maintain—rooftop gardens and property located thereon

Warren v The Owners, Strata Plan VIS 6261, 2017 BCCRT 139, was “a dispute over whether certain exterior portions of a townhouse strata property, including irrigation, hose bibs and heat pumps, are common property that must be maintained by the strata corporation at its expense.” The strata property was “made up of four apartment-style buildings and one building of five attached townhouses.” The townhouses “each have a rooftop deck, separated and marked by landscaping features.”

The tribunal found the property and building systems identified by the applicant to be common property. The irrigation system and the heat pump, specifically, were common property because they were integrated parts of a system. The tribunal also found that the strata corporation is responsible to maintain this common property under section 72 of the Strata Property Act.

But the tribunal didn’t conclude that the strata corporation had breached its obligation to repair:

The strata council can consider various approaches to repair and maintenance, and the financial and practical impact each has on the owners and the strata’s budget. The strata is not an insurer obligated to fulfil an owner’s demand for maintenance, and is entitled to consider whether and how maintenance will be done.

The strata has to balance the competing interests of individual owners against the interests of the strata owners as a whole. Sometimes this will mean prioritizing certain maintenance needs before others, or choosing a lower standard of repair or maintenance in order for financial or practical reasons. Some individual owners may be unhappy with the strata’s choices, but that does not mean the strata breached its duties.

***

The owner’s complaints about maintenance largely pertain to the appearance of the townhouse areas and preventative maintenance.

***

The strata has pointed out that the apartment buildings have required urgent maintenance and deficiency repair work, which has taken a lot of their time and resources. The need to repair leaks in one area of one building may properly be prioritized over superficial maintenance that has been long-outstanding elsewhere in the strata.

***

I agree with the strata that the owner does not have the right to demand certain maintenance as a priority or impose deadlines for her requests to be fulfilled.

The tribunal also declined to order that strata-council members undergo training in their responsibilities, noting that while such training “could generally assist a strata council, whether it is a reasonable expense and use of the council member’s time is questionable and best left to the discretion of the strata council members.”

Common property—exclusive possession—storage room

In The Owners, Strata Plan VR2062 v Novosad, 2017 BCCRT 143, the applicant strata corporation asked the tribunal “to order the respondents to vacate a storage room which, although designated on the strata plan as common property, is currently occupied by them to the exclusion of other owners.”

The strata property was “a townhouse development comprised of 9 strata lots in two buildings.” The parties didn’t contest that “the storage room that is the subject of this claim has, at all times, been designated on the strata plan as common property.” A proposed resolution to designate it as limited common property failed to pass.

The respondents argued that:

it was the intention of the owner developer that SL 3 would have use of the storage room because it did not have a basement. The respondents say that this intention is confirmed by the fact that prior owners have had exclusive use. The respondents’ position is that there was a grant from the owner developer to the original owner pursuant to section 117 (f) of the Condominium Act. Since 1988 there has been exclusive and open use of the storage room by successive owners of SL 3. The respondents say that acquiescence by the strata in this exclusive use amounts to agreement that the use continue. The respondents acknowledge that the current strata council is entitled to give notice to terminate the use, but say that notice must be reasonable and the only notice that would be reasonable in the circumstances is that the use terminate when the owner sells SL 3.

The tribunal rejected these arguments. There was no evidence of a grant, which “requires that there be a positive action or decision taken by the strata corporation, not just acquiescence to an existing state of affairs.” Further, there was no evidence of “any right of short term exclusive use of the storage room under section 76 of the SPA.”

Finally, the tribunal didn’t find the strata corporation’s actions to be significantly unfair:

I find that there is no evidence that this decision requiring that the respondents give up the exclusive possession they have enjoyed works any hardship. It may be inconvenient for the respondents, but that, in my view, does not amount to unfairness. The owner had the ability to ascertain the ownership of the storage room at the time of purchase and for unknown reason did not do so. Any expectation the owner may have had that the storage room was limited common property for the exclusive use of SL 3 was because of a failure to ascertain the correct facts that were readily available in the Land Title Office. Since then the respondents have had a benefit to which they have no legal entitlement. . . .

There is no obligation on the strata to provide a reason or an intended use for the storage room. The fact is that it is common property and as such it is appropriate for the strata council on behalf of the owners to make decisions as to how that common property will be used.

In the result, the tribunal ordered that “within 14 days of this decision, the respondents vacate and give exclusive possession of the storage room to the strata.”

Governance—finances—expenditure from operating fund and contingency reserve fund—duties of strata-council members—fencing

Perry v The Owners Strata Plan LMS 180, 2017 BCCRT 135, was a dispute about “whether a strata corporation’s council (council) acted properly when it withdrew funds from the strata’s contingency reserve fund (CRF) and the operating fund to pay for fence construction to repair and add to the fencing around the strata’s outside boundary.” The strata property at issue was “is a 24 strata lot development located in Maple Ridge,” with its 24 strata lots “grouped in two separate blocks of buildings each containing 12 strata lots.” For some unknown reason, “the original development had several gaps in the complex’s perimeter fencing.”

The applicant owners argued that a project to replace these gaps was begun without prior authorization from the owners and at a meeting in which the majority of strata-council members were in conflicts of interest. The respondent strata corporation denied, arguing that “the work was planned and contracted for on a lawful basis, either due to council’s reasonable belief that the fencing gaps must be closed in to ensure safety or prevent significant loss or damage and/or because it is obligated to repair and maintain common property of the strata.”

The tribunal found that the evidence provided, among other things, that:

• “the 2016 fencing cost $22,680. Of this sum, $13,180 was paid from the CRF, and $9,500 from the operating fund”; and
• there was no 3/4-vote resolution authorizing the expenditure from the contingency reserve fund.

The tribunal found that the expenditure couldn’t be justified as responding to an emergency: “the expenditure was prudent, but not urgent. I conclude that there was no reasonable basis for council to think that the work must be done on an emergency basis.” Further, council members had failed to meet their statutory standard of conduct: “[c]ouncil’s actions have the appearance of seeking to do indirectly what some council members . . . had tried to do directly” at an earlier extraordinary general meeting. And some of them acted while in a conflict of interest: “all but two of the July meeting council members derived a benefit directly to his or her own strata lot.”

In the result, the tribunal ordered, among other things, that the amounts spent on the project be restored by way of a special levy. The tribunal declined to order the fencing to be removed, saying that “[t]o take down the fence and restore the grounds would be wasteful of scarce strata resources already spent on a comparatively prudent strata improvement.”

Governance—access to records

The dispute in Hamilton v The Owners, Strata Plan NWS 1018, 2017 BCCRT 141, was “about the owner’s access to records held by the strata and its property manager.”

The applicant was a co-owner of a strata lot in the respondent strata corporation, which was described as “a residential complex located in Surrey and is comprised of 11 buildings, with a total of 186 strata lots.”

The owner wanted access to a large number of records because “she wanted to do her own financial audit of the strata”:

The owner’s requests for records stem from her concern that the strata council since 2012 has been dominated by 2 owners holding over 51% of votes, given the proxies they held at general meetings.

The owner also had concerns about the strata corporation’s dealings with “a company owned by one of the strata council [members] to provide many services and maintenance contracts.”

The strata corporation argued that “the owner has been unreasonably demanding and suspicious.”

The tribunal gave detailed consideration to the owner’s requests for access and the respondent strata corporation’s claims for expenses and made the following orders:

The parties should act reasonably with respect to requests for documentation. In particular, the owner should make requests in good faith and only as necessary, and the strata must provide all of the required documents as requested, within the 2-week timeframe set out in the SPA.

The strata must mail documents the owner reasonably requests and which the strata is required to provide, if the owner requests mailing. In that instance the strata is entitled to charge the owner the associated mailing expense in addition to the copying charge allowed under the SPA Regulation.

Without limiting the generality of sections 35 and 36 of the SPA, the strata must provide the owner, on her request, with copies of the following records, within the time periods identified for retention in the SPA Regulation:

• General meeting minutes
• Credit card statements
• A list of assignment of voting rights
• Cancelled cheques, paid by the strata or by Premier [the strata manager] on behalf of the strata.
• Correspondence between the strata and Premier, including emails.
• Written contracts, including insurance contracts and informal written agreements such as with Mr. Surgrim or his business and with Ceridian.

I also order the strata to provide the owner, for the current fiscal year and the last fiscal year, the following: all invoices from Mr. Surgrim and/or his business, the names of the strata’s contractors and employees, and copies of council meeting minutes that reflect council’s decision to approve contracts involving Mr. Surgim or his business.

For the balance of the owner’s request for future access to all of the strata’s documents, I dismiss those claims. I order the strata to reimburse the owner $225 in tribunal fees, within 30 days of the date of this decision.

I dismiss the strata’s request for reimbursement of $4,646.25 in expenses. As provided by section 167 of the SPA, I order the strata to ensure that no part of the strata’s expenses with respect to defending this dispute are allocated to the owner.

Governance—bylaws—enforcement—nuisance—noise—rooftop fan

Fox v The Owners, Strata Plan KAS 1911, 2017 BCCRT 137, concerned a claim by the applicant strata-lot owner that the respondent strata corporation “has failed to enforce its bylaws in response to repeated complaints of excessive and unreasonable noise in SL 44 caused by an exhaust fan operated by the occupant of a ground floor commercial strata lot (ground floor strata lot) that includes the operation of a restaurant.” The applicant sought orders for the respondent to enforce its bylaws and for general and punitive damages.

The tribunal found that the strata corporation and its contractor had taken appropriate steps to investigate the noise complaints. Ultimately, the fan was replaced. The strata corporation’s decision not to fine the ground-floor owner responsible for the fan was also found to be reasonable:

The strata’s approach was not to impose fines but to give the owner of the ground floor unit time to fix the noise problem with the fan unit. I find that the strata’s use of the enforcement options in section 129 of the SPA was reasonable in the circumstances.

Perhaps it could have done more and utilized section 133 of the SPA and taken control of the replacement of the fan unit and charge the costs back to the owner of the ground floor unit. However there is no basis for me to second guess the strata’s decision not to do this in light of the evidence that both the strata and the owner of the ground floor unit had engaged contractors to investigate the noise and repair the noise problem. When that did not work the strata permitted the owner of the ground floor unit to install an auxiliary exhaust fan in the kitchen so that it could shut the fan unit off when the kitchen was not in operation. At the same time the owner took steps to replace the fan unit.

It is unfortunate that it took as long as it did for the owner of the ground floor unit to identify the replacement of the fan unit as the best way to address the noise problem and to then replace the fan unit. However the fan unit has now been replaced and according to the strata’s technician the new fan unit is running quietly.

The tribunal found there was no evidence to support the awarding of general damages, the delay in resolving the noise issue wasn’t sufficient to support an aware of damages for loss of use and enjoyment, and there was no basis in this case to award punitive damages.

Bylaws—repair and maintenance—damage to common property—chargeback—fire-system speaker

In The Owners, Strata Plan BCS 1419 v Zhao, 2017 BCCRT 138, the applicant strata corporation argued that “the owner is responsible the cost of investigating and fixing a broken fire system speaker and two bypassed fire system speakers in the owner’s unit. The owner says she is not responsible for paying that expense.”

The parties agreed in argument that the speakers were common property. The strata corporation’s bylaws provided “an owner will be responsible for paying the expenses paid by the strata for any repair, replacement or maintenance of common property necessary because of that owner’s ‘act, omission, negligence or carelessness.’ ” As the tribunal noted, this 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 order to prove negligence, the strata must prove:

• It was owed a duty of care by the other person;
• A breach of the duty by the owner not meeting the standard of care; and,
• Damage or loss was caused by that person not meeting the standard.

While the strata corporation was able to prove the first two items, it couldn’t prove the third:

I find that the strata has not provided the necessary evidence for a finding that the owner must have tampered with the speakers or failed to prevent someone in her unit from tampering with the speakers.

In the result, the tribunal ordered “the strata to remove and cancel the $1,389.05 chargeback from the owner’s account,”

Tribunal procedure—decision made without participation of party—noncompliance with act, regulations, or rules (1)

In Johnston v The Owners, Strata Plan LMS 67, 2017 BCCRT 124, the tribunal made its final decision “without the participation of the respondent [strata corporation], due to the respondent’s non-compliance with the tribunal’s directions as required.”

The underlying dispute was “about bylaw fines assessed against the owner’s strata lot relating to his tenant and funds withdrawn from the owner’s bank account.” After filing a response, the respondent strata corporation “failed to participate in the case management phase as required by sections 25 and 32 of the [Civil Resolution Tribunal] Act and tribunal rules 94 to 96 [PDF], despite multiple attempts by the facilitator to contact the respondent’s representative requesting a reply.”

Although “[t]he tribunal’s rules are silent on how it should address non-compliance issues,” the tribunal considered the following factors in “exercising its discretion”:

• whether an issue raised by the claim or dispute is of importance to persons other than the parties to the dispute;
• the stage in the facilitation process at which the non-compliance occurs;
• the nature and extent of the non-compliance;
• the relative prejudice to the parties of the tribunal’s order addressing the non-compliance; and
• the effect of the non-compliance on the tribunal’s resources and mandate.

In coming to its decision in this case, the tribunal noted that it “put significant weight on the following factors”:

• persons other than the parties to this dispute are not affected by it;
• the extent of the non-compliance is significant;
• the applicant is not prejudiced if an order is made; and
• the tribunal’s resources should be conserved.

In the result, the tribunal ordered “the strata, within 30 days of the date of this decision”:

• refund the owner the amount of $400.00 for the unauthorized withdrawal of funds from the owner’s bank account;
• refund the owner the amount of $45 for the banking fee (NSF) charged to the owner for insufficient funds; and
• remove the $100.00 parking bylaw fine from the owner’s strata lot account.

Tribunal procedure—decision made without participation of party—noncompliance with act, regulations, or rules (2)

The underlying dispute in The Owners, Strata Plan BCS 1352 v Wall, 2017 BCCRT 129, concerned “the owner’s rental of his strata lot contrary to the strata’s bylaws. The strata asks that I order the owner to comply with the strata’s rental prohibition bylaw and pay outstanding bylaw fines of $1,250.” After filing a response in the proceeding, the respondent strata-lot owner declined to participate further, ultimately selling the strata lot.

The tribunal concluded “[i]n weighing all of the factors, I find the applicant’s dispute should be heard without the participation of the respondent. In deciding to hear the applicant’s dispute I have put significant weight on the following factors:

• persons other than the parties to this dispute are not affected by it;
• the extent of the non-compliance being significant;
• the applicant is not prejudiced if an order is made; and
• the tribunal’s resources should be conserved.

The tribunal observed that:

the owner was required to pay outstanding bylaw fines in order to obtain a Form F from the strata to allow the conveyance of the owner’s strata lot. No evidence has been provided to suggest payment of the fines was made into trust under section 114 of the SPA pending the outcome of this dispute. I find there is nothing preventing the strata from retaining the funds it has received.

In the result, the tribunal ordered “the strata’s claim for payment of outstanding bylaw fines against the owner is resolved and that the strata may retain the money it has received in that respect.”

Tribunal jurisdiction—former strata-lot owner

The underlying dispute in Kervin v The Owners, Strata Plan LMS 3011, 2017 BCCRT 146, involved “the strata’s enforcement of a vicious dog bylaw.” But “[t]he sole issue in this decision is whether the tribunal has jurisdiction to resolve this dispute given the applicant has sold her strata lot.”

The applicant had commenced her tribunal application while still an owner. But during the proceedings, she had sold her strata lot.

The tribunal noted:

given the legislation is silent on the issue of a change in ownership during the tribunal process, I find the tribunal has discretion to resolve the dispute under section 61 of the [Civil Resolution Tribunal] Act and tribunal rule 119(c) [PDF]. I find the tribunal may dismiss, refuse to resolve, or continue to hear the dispute. The main difference between dismissing a dispute and refusing to resolve it is that a dismissal is a final decision of the tribunal which may not subsequently be brought back before the tribunal or another legally binding process. In refusing to resolve a dispute, the parties are not restricted from raising the dispute in another legally binding process or bringing the dispute back to the tribunal if circumstances change.

The tribunal dismissed the applicant’s claim, stressing following factors in exercising its discretion:

• The parties do not agree the tribunal should resolve the dispute;
• Persons other than the parties are not affected by my conclusion;
• Dispute resolution services of the tribunal were early in facilitation at the time the applicant sold her strata lot;
• The applicant is not prejudiced if the dispute is dismissed;
• The respondent is prejudiced if I refuse to resolve the dispute;
• The tribunal’s resources should be conserved.