Liquidator, not strata council, must apply to court for confirmation of appointment and vesting of strata property in winding-up: BC Court of Appeal

10 July 2018

By Kevin Zakreski

In The Owners, Strata Plan VR2122 v Bradbury, 2018 BCCA 280, the BC Court of Appeal weighed in on some of the procedural requirements to wind up a strata property under part 16 of the Strata Property Act. The case was an appeal of a decision from late 2017, in which the BC Supreme Court confirmed the winding-up of a strata property “known as the Hampstead, a four-story residential building in Vancouver’s West End, built in 1988.” While the appellants didn’t challenge the supreme-court “judge’s exercise of her discretion in finding the sale to be in the owners’ best interest,” they did put the following four issues before the court on appeal:

  • Did the judge misconstrue the liquidator’s role on a voluntary winding-up and make orders inconsistent with the requirements of the Act?
  • Did the judge err in accepting an interest schedule which included each owner’s share of gross proceeds?
  • Did the judge err in making orders approving the liquidator’s expenditures in advance[?]; and
  • Did the judge err in deeming the liquidator to have good and marketable title?

The bulk of the decision on appeal concerned the first issue. On this issue, the appellants argued that “the Act requires the liquidator to market and sell the property independent of the strata council and owners” [emphasis in original], that the strata council had run afoul of the act by negotiating a “conditional purchase and sale agreement” (PSA) with a real-estate developer, and “that the court in turn had no jurisdiction under the Act to approve the sale to [the developer].”

The court rejected these arguments as being out of touch with the broader context of the new winding-up provisions of the Strata Property Act:

I accept that the interpretation put forward by the appellants is one possible reading of the Act, but I am not convinced that it is the correct one. In my view, the appellants’ interpretation is inconsistent with the context in which voluntary windings-up occur, and does not accord with the legislative intention to provide the court with a meaningful supervisory role in protecting the interests of those opposed to the winding-up of a strata corporation.

But the court did agree with the appellants on a pair of narrower procedural points:

Having said that, I would agree with the appellants that the Act requires the liquidator to apply for approval of his appointment and the vesting order. The liquidator is assuming important responsibilities and should be before the court seeking its approval. The court must be able to determine that the liquidator is qualified and suited to carry out these responsibilities. I see nothing in the Act that would prevent the liquidator from bringing that application at the same time the strata corporation applies for approval of the winding-up resolution, with the preliminary issue of the adequacy of the winding-up resolution necessarily to be determined first.

I would also agree with the appellants that the liquidator is required by the Act to obtain a final three-quarter vote approving the disposition of any property, including the property subject to the PSA, absent which the disposition would be void. That step may appear unwarranted or cumbersome where the owners have already voted by more than 80% to approve the winding-up resolution based on a particular purchase and sale agreement. There is no doubt that in most cases it would be more efficient to have the owners approve a particular offer as part of the winding-up resolution before obtaining court approval of the resolution as the parties did here. But it is not the role of the court to ignore the words of the statute and create a “better” scheme. [emphasis in original]

In the court’s view, requiring compliance with these steps doesn’t necessarily undo the strata corporation’s general approach taken to winding-up:

The appellants contend the court’s approval of the PSA conflicts with s. 282 and the subsequent three-quarter vote by the members to approve the sale. I would not interpret the provisions that way. Although court approval is not required and the Act makes provision for the liquidator to simply obtain the vote of the owners, in my view the strata council’s decision to obtain court approval of the sale to fulfill a condition precedent of the PSA is not inconsistent with the liquidator also obtaining a vote prior to disposition. Court approval does not compel the strata to transfer the property—it is neither an order for sale nor a vesting order, but rather a balancing of the competing interests at stake in a proceeding before it. In that regard it is closely related to the Court’s oversight of the winding-up in furtherance of its obligation under the Act to protect the interests of those opposing the winding-up. That approval does not in my view make the owners’ final vote immediately prior to disposition redundant, especially if the vote is viewed as a final check and opportunity for the owners to reconsider the decision to complete the sale. [emphasis in original]

The court disposed of the other three issues in relatively quick succession, finding:

  • including “additional information [in this case, a column showing each strata lot’s ‘share of the gross proceeds’ of sale] which exceeds the requirements of the Act does not in my view amount to non-compliance” with section 278, which sets out the requirements for an interest schedule;
  • the order in the supreme court didn’t “go so far as to waive the requirements of s. 283” regarding court approval of the liquidator’s final accounts; and
  • it was appropriate for the court to pronounce on the liquidator’s title to the land (“It seems to me there could be no better way to satisfy the Registrar [of Titles] than by providing a court order confirming that the liquidator holds the lands and has the right to transfer good title. That is a matter particularly within the knowledge of the court, given the requirements of the Strata Property Act and the court’s task of vesting the property in the liquidator under s. 279 of the Act.”).

In the result, the court concluded:

the judge erred in appointing the liquidator, vesting the property in him and making orders ancillary to his role when the liquidator had not applied for that relief as required by the Act. In the result, I would allow the appeal in part and set aside paragraphs 3, 4, 5, 6, 7, 11 and 12 [of the supreme-court order attached at appendix A].

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