Saskatchewan court finds strata owner in arrears of “contributions” not entitled to vote
June 7, 2017
BY Kevin Zakreski
Section 53 (2) of BC’s Strata Property Act governs when a strata-lot owner who owes money to the strata corporation may lose the right to exercise the strata lot’s vote. That vote may be lost if the following apply:
- the strata corporation has a bylaw providing that the owner’s right to vote will be lost if
- the strata corporation is “entitled to register a lien against that strata lot under section 116 (1)” and
- the vote is not on a matter requiring an 80% vote or a unanimous vote.
According to section 116 (1) of the act, a strata corporation may register a lien against a strata lot “if the owner fails to pay the strata corporation any of the following with respect to that strata lot”:
- strata fees;
- a special levy;
- a reimbursement of the cost of work referred to in section 85;
- the strata lot’s share of a judgment against the strata corporation.
Section 112 adds a further procedural consideration:
Before the strata corporation registers a lien against an owner’s strata lot under section 116, the strata corporation must give the owner at least 2 weeks’ written notice demanding payment and indicating that a lien may be registered if payment is not made within that 2 week period.
British Columbia’s approach to this question isn’t the only way to address loss of voting rights when money is owing to a strata corporation. Saskatchewan’s legislation provides an interesting contrast to British Columbia’s.
Goertz v Owners Condominium Plan No 98SA12401, 2017 SKQB 135, a recent decision of Saskatchewan Court of Queen’s Bench, shows a court wrestling with the equivalent legislation in that province.
In Goertz, the applicant owned 11 condominium units in the respondent condominium corporation. The applicant rented some of these condominium units to tenants. He refused to comply with a bylaw requiring “security deposits equivalent to one month’s rent be assessed on all rented units” and refused to pay fines levied in connection with damage to common property caused by the applicant’s tenants. In turn, the condominium corporation restricted the applicant’s right to vote in accordance with section 41 of The Condominium Property Act, 1993 (PDF):
(5) A corporation may pass bylaws respecting an owner’s right to vote where any contributions payable with respect to the owner’s unit are in arrears, including:
(a) restricting the owner’s right to vote or prohibiting the owner from voting; or
(b) allowing the owner to vote.
(6) If a corporation has not passed a bylaw respecting the matters set out in subsection (5), subsections (8) to (11) apply to the corporation and its owners.
(7) If a corporation has passed a bylaw respecting the matters set out in subsection (5), subsections (8) to (11) do not apply to the corporation and its owners.
(8) An owner is not entitled to vote at a meeting if any contributions payable with respect to the owner’s unit have been in arrears for 30 days or more at the time of the meeting, unless the subject-matter of the vote is one that requires a unanimous resolution pursuant to this Act.
(9) An owner who is not entitled to vote pursuant to subsection (8) may vote if the corporation receives payment of the arrears with respect to the owner’s unit in a manner satisfactory to the board before the meeting is held or at the meeting immediately before the vote.
(10) At least 10 days before a meeting of the owners, the corporation shall give written notice to any owner whose contributions are in arrears, or may be in arrears, for 30 days or more at the time of the meeting.
(11) The notice required pursuant to subsection (10) must include a statement that the owner will not be entitled to vote at the meeting if the arrears are not paid in full in a manner satisfactory to the board before the meeting is held or at the meeting immediately before the vote.
Unlike BC’s section 53 (2), Saskatchewan’s provision doesn’t turn on entitlement to register a lien, which is limited to four listed debts (which don’t extend to the security deposits and fines at issue in Goertz). Instead, Saskatchewan’s provision simply refers to being “in arrears for 30 days or more” with respect to “contributions payable.”
Interpretation of this word, contributions, was what the court characterized as the “central issue” of the Goertz case:
The justification advanced by Goertz for refusal to pay what the [condominium corporation] claims is owing, is his position that under the Act and bylaws his financial obligations to the [condominium corporation] are limited to assessments for common expense fund and the reserve fund. He argues that the March 13, 2016 amendment to the bylaws stating that:
“Contribution” means an amount payable by an owner in respect of a unit that the Corporation may charge to The Owner by the Act or these Bylaws.
is ultra vires the statutory requirement and definition as provided in the Act.
The court rejected this argument, finding that Saskatchewan’s legislation compelled a broader understanding of the word:
Condominium corporations of necessity must look to their owners to cover all costs of operating the corporation. Most of that is covered by assessment of a common expense fund and reserve fund levies. However, if an owner or occupant of a unit causes damage to the common property of the condominium corporation, the cost of repairing that damage should by any common sense approach to the matter be for the account of the owner of the unit. It would be manifestly unfair to the other owners for the condominium corporation to simply proceed to repair the damage using common expense funds without looking to the responsible owner for indemnification. Such indebtedness is not a common expense, but it is an expense that the responsible owner is obliged to contribute.
Damages caused to the corporation or its property can have significant financial and operating consequences to a condominium corporation. It would, in my opinion, be illogical to conclude that the legislature intended that it was only arrears of common expense fund and reserve fund assessments (often referred to as “condo fees”) that triggered the loss of entitlement to vote. An owner’s debt obligation to the condominium corporation for damage caused has the potential to be significant.
I am satisfied that the legislative intent in s. 41 was to give condominium corporations the right to, indeed the direction to deny voting rights until all indebtedness of an owner in respect of a unit was paid. It is significant that s. 41(9) speaks of payment of arrears with respect to the owner’s unit “in a manner satisfactory to the board” before entitlement to vote is restored. The legislative intent to give the board the power to decide is express.
In the result, the court dismissed the applicant’s application for relief, with costs to the condominium corporation.