Date Issued: February 2, 2017
File: ST-2016-00005
ST-2016-00012
Civil Resolution Tribunal
Indexed as: Michael (Bruce) Woytuik v. The Owners, Strata Plan VIS 5970, 2017 BCCRT 3
BETWEEN:
Michael (Bruce) Woytuik
APPLICANT
AND:
The Owners, Strata Plan VIS 5970
RESPONDENT
| REASONS FOR DECISION |
|
| Tribunal Member: |
Bonnie Elster |
INTRODUCTION
1. The applicant, Mr. Michael (Bruce) Woytuik (Mr. Woytuik) is an owner in the respondent strata corporation. The Owners, Strata Plan VIS 5970 (Strata) is a phased development of bare land strata lots in Campbell River, BC.
2. In 2012, the Strata filed liens on title to 34 bare land strata lots registered to the owner developer, Shades of Green Estates Inc. (SGE). SGE commenced legal action against the Strata to resolve the liens. In 2012, the Strata approved a Settlement Agreement (Settlement Agreement) with SGE. As part of the Settlement Agreement, the Strata passed certain resolutions and adopted specific bylaws.
3. In 2014 and 2015, the strata council approved certain expenditures.
4. Mr. Woytuik claims that the Strata did not properly pass the resolutions and bylaws that were part of the Settlement Agreement and did not properly authorize certain 2014 and 2015 expenditures.
JURISDICTION
5. These are the formal, written reasons of the Civil Resolution Tribunal (Tribunal). The Tribunal has jurisdiction over strata property claims brought under section 3.6 of the Civil Resolution Tribunal Act (CRT Act). The Tribunal’s mandate is to provide dispute resolution services accessibly, quickly, economically, informally and flexibly. In resolving disputes, the Tribunal must apply principles of law and fairness and recognize any relationships between parties to a dispute that will likely continue after the dispute resolution process ends.
6. Under the CRT Act, the Tribunal may accept, as evidence, information it considers relevant, necessary and appropriate, whether or not the information would be admissible in a court of law. The Tribunal may also ask questions of the parties and witnesses and inform itself in any other way it considers appropriate.
7. The Limitation Act applies to a claim made under the CRT Act and, where the Limitation Act refers to a court proceeding, it includes a proceeding of the Tribunal.
ISSUES
8. The issues in this dispute are:
a. Does the Limitation Act apply to any of the claims?
b. Did the Strata, as part of the Settlement Agreement, contravene the Strata Property Act (SPA) when it passed resolutions and adopted bylaws?
c. Did the Strata contravene the SPA and its bylaws when it made the 2014 and 2015 expenditures?
d. Did strata council members breach their standard of care found in the SPA by passing the resolutions, adopting the bylaws or approving the expenditures?
BACKGROUND AND EVIDENCE
The SGM, the Resolutions and the Bylaws
9. SGE filed the first phase of the strata plan in 2006. Phase one consisted of 48 strata lots, phase two had 36 strata lots and phase three had 34 strata lots, for a total of 118 bare land strata lots.
10. In 2006, the bylaws of the Strata were the Schedule of Standard Bylaws and a few bylaws that SGE prepared and filed in the Land Title Office.
11. At a special general meeting in September 2011, the Strata adopted bylaws (the 2011 Bylaws) that dealt with certain repair and maintenance costs as follows:
Lawn and Landscape Maintenance
38. The strata corporation shall be responsible for and pay the cost of mowing, weed control and other required landscaping maintenance of lawn on all bare land strata lots.
Irrigation Maintenance
39. The strata corporation shall be responsible for and pay the cost of maintaining and repairing the water irrigation systems located on the bare land strata lots including all pipes, connections, sprinkler heads and controllers.
Gutter Cleaning
40. The strata corporation shall be responsible for and pay the cost of removing debris from all gutters on the buildings located on the bare land strata lots. Normally this will be done annually during the late fall.
12. The 2011 Bylaws made the Strata responsible for these repair and maintenance costs. This meant all owners had to contribute to the costs of lawn and landscaping maintenance, irrigation maintenance and gutter cleaning. The Strata made no exception for strata lots owned by SGE, even though SGE’s strata lots had no lawns, landscaping or irrigation to maintain and no gutters to clean.
13. Sometime later, the Strata filed liens for arrears of strata fees against SGE’s 34 undeveloped strata lots. In April 2012, SGE commenced legal action against the Strata to remove the liens.
14. Strata council meeting minutes of April 16, 2012 (April 16, 2012 Minutes) show that SGE gave the Strata a copy of a legal opinion (opinion) that SGE obtained from its own legal counsel. The opinion explains, in detail, the legal issues regarding owner developers in a bare land strata, the calculation of strata fees, the sharing of common expenses and liens. The strata council mailed a copy of the opinion to every owner. The April 16, 2012 Minutes confirm that SGE had already paid the arrears of strata fees to the Strata, so that the Strata would release all liens on SGE’s strata lots, and the strata council had accepted SGE’s payment.
15. SGE insisted that the Strata (1) sign the Settlement Agreement; (2) repeal the 2011 Bylaws; and (3) adopt new bylaws that excluded SGE from paying for the costs of repair and maintenance for lawns, landscaping, irrigation and gutters.
16. In June 2012, a newly elected strata council called a legal committee meeting to discuss hiring a lawyer to represent the Strata in matters with SGE and immediately, the Strata retained legal counsel. The minutes of the legal committee meeting confirm that the Strata had a budget item for legal expenses.
17. The Strata’s lawyer reviewed the Settlement Agreement; redrafted the specific bylaws for approval at a special general meeting; and drafted an additional bylaw regarding waste removal. He advised the strata council that the owners must pass resolutions to repeal the 2011 Bylaws and adopt the replacement bylaws by a ¾ vote.
18. The new bylaws (38, 39, 40 and 41) were as follows:
Lawn and Landscape Maintenance
38. The Strata Corporation shall be responsible for and pay the cost of mowing, weed control and other required landscaping maintenance of lawn on those strata lots having lawns, and contributions to the operating fund or special levies shall be shared by the owners of those strata lots only in accordance with section 6.5 of the Strata Property Act Regulation, B.C. Reg 43/2000, as amended.
Irrigation Maintenance
39. The Strata Corporation shall be responsible for and pay the cost of maintaining and repairing the water irrigation systems (including all pipes, connections, sprinkler heads and controllers) on those strata lots having water irrigation systems and contributions to the operating fund or special levies shall be shared by the owners of those strata lots only in accordance with section 6.5 of the Strata Property Act Regulation, B.C. Reg 43/2000, as amended.
Gutter Cleaning
40. The Strata Corporation shall be responsible for and pay the cost of removing debris from all gutters on those strata lots having buildings with gutters and contributions to the operating fund or special levies shall be shared by the owners of those strata lots only in accordance with section 6.5 of the Strata Property Act Regulation, B.C. Reg 43/2000, as amended.
Waste Removal
41. The Strata Corporation shall be responsible for and shall pay the cost of the waste management contract for those strata lots having buildings with occupancy permits and contributions to the operating fund or special levies shall be shared by the owners of those strata lots only in accordance with section 6.5 of the Strata Property Act Regulation, B.C. Reg 43/2000, as amended.
19. The Strata convened a special general meeting (SGM) for July 12, 2012 to consider the Settlement Agreement, the resolutions and the bylaw amendments. The Notice of the SGM (Notice) explained to the owners why the Strata was holding the SGM and provided all owners with a copy of the Settlement Agreement and the wording of all resolutions and proposed bylaws. The Notice indicated the Strata would hold an information meeting, in the evening, three days prior to the SGM.
20. At the SGM, the owners ratified the Settlement Agreement by a majority vote; repealed the 2011 Bylaws by a ¾ vote; and adopted bylaws 38, 39, 40 and 41 by a ¾ vote. The Strata filed the new bylaws in the Land Title Office.
The 2014 and 2015 Expenditures
21. The Strata made four specific expenditures during 2014 and 2015 that are at issue.
Snow Removal
22. The annual budget for the fiscal year 2013/2014 shows a budget line for the costs of snow removal. In March 2014, the minutes of the strata council meeting refer to a budget over expenditure of
$4,418.00 for the costs of snow removal.
The Lift Station Parts
23. Strata council minutes of April 22, 2014 show the strata council approved an expenditure of an estimated $4,631 (not including shipping and taxes) to purchase a flush valve and spare submersible pump for the common property lift station (lift station parts).
24. At the annual general meeting, held on May 14, 2014 (the May 2014 AGM), the owners approved the purchase of the lift station parts by a ¾ vote. The evidence shows that the strata council ordered the lift station parts in June 2014. The Strata got delivery and paid for them in October 2014.
Roll-up Screens
25. In August 2014, the strata council did not meet. Council members consulted in person and on the phone and agreed to purchase roll-up screens for the common property picnic shelter. The September 2014 strata council meeting minutes confirm this consultation.
26. The cost of the screens was $447.89. The evidence shows that special pricing, available in August, induced the strata council to move forward to buy and install the screens. There was no vote by the owners to authorize the purchase of the screens.
Underground Water Leaks
27. In May 2015, a leak in underground water lines needed emergency repair. As part of this repair, the contractor dug a hole in a common property roadway. An inspection revealed other vulnerable underground pipes nearby.
28. The strata council authorized the contractor to repair the leaking water lines. Then, the strata council requested him to fill in the hole, while council members consulted with the project engineer. After discussion with the engineer, the strata council ordered the contractor to replace the pipes near to the leaking pipes.
29. On June 24, 2015, after completing the emergency repairs and replacing the additional pipes, the strata council received a report from the engineer. He said that the pipe replacement “went well with it being completed in one day.” He explained the specific soil conditions surrounding these pipes caused them to corrode.
30. Going forward, the engineer outlined three options for the strata council regarding repair and prevention of these types of leaks: (1) wait for pipes to develop leaks; (2) replace all vulnerable pipes in one operation; or (3) do not replace vulnerable pipes now, but try to stop further corrosion by attaching a sacrificial zinc to the copper tubing.
31. The Strata sent a letter, dated July 27, 2015, to all owners regarding the water leaks, the repairs and the strata council’s decisions. This letter explained the engineer’s investigations, findings and explanations about the cause of the leaks. The letter said certain factors were key to their decision to go ahead immediately with the pipe replacement. These factors were: (1) the availability of the contractor; (2) the possibility of paving the road now and then, digging it up again at a later date, when the likelihood of further leaks was high; and (3) the cost savings of doing the pipe replacement simultaneously with the first repair. The letter showed the total costs of $10,470 for the emergency repair and the additional pipe replacement. The letter says the expenditure for pipe replacement came from the contingency reserve fund as an emergency expenditure.
POSITION OF THE PARTIES
32. Mr. Woytuik says that the bylaws adopted by ¾ vote at the SGM changed the method for calculating strata fees, contrary to the SPA and the SPA Regulations. He argues that a change to the method of calculating strata fees requires a unanimous vote.
33. The Strata argues that the bylaws, adopted by ¾ vote at the SGM, did not change the method for calculating strata fees and therefore, the bylaws did not require a unanimous vote.
34. Mr. Woytuik says that the Strata made four specific expenditures in 2014 and 2015, contrary to the SPA and the Strata’s bylaws.
35. The strata council says it followed the SPA and the bylaws when it authorized these expenditures.
36. Mr. Woytuik argues that the strata council breached their duty under the SPA, when the council improperly approved bylaws and made unapproved expenditures.
37. The strata council says it followed the SPA and the SPA Regulations and, therefore, did not breach its duty.
ANALYSIS
Does the Limitation Act apply to any of the issues?
38. The Limitation Act applies to disputes at the Tribunal. A limitation period is a specific time period within which a person may pursue a claim. If the time period expires, the right to bring the claim disappears.
39. The Limitation Act became law on June 1, 2013.
What is the limitation period for claims discovered after June 1, 2013?
40. The Limitation Act allows two years for a person to bring a claim for all SPA claims made after June 1, 2013.
41. Section 6(1) of the Limitation Act states:
Basic limitation period
6(1) a court (tribunal) proceeding in respect of a claim must not be commenced more than 2 years after the day on which the claim is discovered.
42. The two-year limitation period starts to run on the first day that a person discovers a claim.
43. Section 8 of the Limitation Act sets out the rules for how a person discovers a claim. Section 8 of the Limitation Act states:
General discovery rules
8 …a claim is discovered by a person on the first day on which the person knew or reasonably ought to have known all of the following:
(a) that injury, loss or damage had occurred;
(b) that the injury, loss or damage was caused by or contributed to by an act or omission;
(c) that the act or omission was that of the person against whom the claim is or may be made;
(d) that, having regard to the nature of the injury, loss or damage, a court (tribunal) proceeding would be an appropriate means to seek to remedy the injury, loss or damage.[underlining added]
44. The limitation period begins on the first day that a person had knowledge of the matters in the claim or reasonably ought to have known about the claim.
45. Knowledge means the person claiming (a) knew that a injury, loss or damage occurred; (b) knew the loss, injury or damage was caused by an act (or failure to act); (c) knows who did the act (or who failed to act); and (d) knows that a tribunal proceeding is an appropriate means to seek a remedy for the loss, injury or damage.
46. In Tender Choice Foods Inc. v. Versacold Logistics Canada, 2013 ONSC 80, (“Tender Choice”), the Ontario Supreme Court [at para. 56] reviewed Ontario legislation with almost identical wording to section 8 of the Limitation Act. In Tender Choice, the court said that the limitation period commences when the person making the claim learns the underlying material facts or when the person ought to have discovered those facts by the exercise of reasonable diligence.
What is the limitation period for claims discovered before June 1, 2013?
47. Section 30 of the Limitation Act addresses pre-existing claims. A pre-existing claim is a claim based on an act (or omission) that took place before June 1, 2013 and where the person claiming did not start a court proceeding with respect to that claim.
48. Therefore, if a person discovered a claim before June 1, 2013, the two-year time period in the Limitation Act does not apply. As a pre-existing claim, the limitation period in the previous legislation applies. Under previous legislation, the limitation period for most SPA claims was six years.
49. The six-year time period starts to run on the first day that the person making the pre-existing claim discovers the claim by applying the discovery rules in section 8 of the Limitation Act.
The SGM, the Resolutions and the Bylaws
50. Mr. Woytuik discovered his claim regarding the SGM, the resolutions and the bylaws before June 1, 2013. Therefore, a limitation period of six years applies to this claim.
51. As part of the Tribunal’s online intake process, Mr. Woytuik stated that he had not commenced any court or arbitration proceedings with respect to his claims.
52. The evidence shows that Mr. Woytuik knew about this claim in 2012. He began this dispute on July 15, 2016.
53. As of July 15, 2016, the date Mr. Woytuik began this dispute, the six-year limitation period had not expired, regardless of the first day in 2012 that Mr. Woytuik discovered his claim.
54. I find Mr. Woytuik’s claim with regard to the SGM, the resolutions and the bylaws is a pre-existing claim under the Limitation Act and is not out of time.
Snow Removal and the Lift Station Parts
55. I find that Mr. Woytuik’s claims regarding (1) the snow removal and (2) the lift stations parts are out of time for the following reasons.
Snow Removal
56. Mr. Woytuik claims that the Strata spent money on snow removal contrary to the SPA. Strata council minutes of March 20, 2014 refer to over expenditures on snow removal costs.
57. The Strata made the snow removal expenditures after June 1, 2013. Therefore, a limitation period of two years applies to this claim.
58. The strata council must inform owners of the minutes of strata council meetings within two weeks of the meeting. (Bylaw 19, Schedule of Standard Bylaws)
59. The minutes of council meetings are records of a strata corporation. (SPA, section 35)
60. A notice or record that a strata corporation is required to give to a person is “conclusively deemed to have been given” four days after it is left with an adult occupant of the strata lot, put under the door, mailed, put through the mail slot or in the mail box, faxed or emailed. (SPA, section 61(3))
61. The Strata is conclusively deemed to have given Mr. Woytuik a copy of the March 20, 2014 strata council meeting minutes on or before April 7, 2014, two weeks and 4 days after the March 20, 2014 council meeting.
62. Mr. Woytuik knew or reasonably ought to have known the material facts of the Strata’s expenditure on snow removal when the Strata gave him a copy of the March 20, 2014 strata council minutes on or before April 7, 2014.
63. The two-year limitation period expired on April 7, 2016.
64. Mr. Woytuik started his claim for unauthorized snow removal costs on July 15, 2016.
65. I find the claim regarding the snow removal expenditures is out of time.
The Lift Station Parts
66. Mr. Woytuik claims that the Strata did not properly authorize the purchase of the lift station parts.
67. The April 22, 2014 strata council minutes show council members voted to approve the purchase of the lift station parts and also provide details of the cost.
68. Mr. Woytuik discovered his claim about the lift station parts after June 1, 2013. Therefore, a limitation period of two years applies to this claim.
69. Mr. Woytuik wrote a letter to the strata council. He told the council that said the owners must decide about the purchase of the lift station parts at the forthcoming annual general meeting in May 2014.
70. Bylaw 19 requires the strata council to inform the owners of the minutes of council meetings within two weeks of the meeting. The minutes of council meetings are records of a strata corporation. A record of a strata corporation that is required to be given to a person is conclusively deemed to be given to a person 4 days after it is left with an adult occupant, put under the door, mailed, put through the mail slot or in the mail box, faxed or emailed. (SPA, section 61(3))
71. The Strata is conclusively deemed to have given the strata council minutes of April 22, 2014 to Mr. Woytuik on or before May 11, 2014, within two weeks of the meeting, plus 4 days for delivery.
72. Mr. Woytuik told the strata council to bring the purchase of the lift station parts to the owners at the May 2014 AGM.
73. I find that the first day that Mr. Woytuik knew or reasonably ought to have known about the material facts in his claim regarding the lift station parts was on or before May 11, 2014.
74. Mr. Woytuik started his claim regarding the lift station parts on July 15, 2016. The two-year limitation period expired on May 11, 2016.
75. Mr. Woytuik’s claim that Strata did not properly authorized the purchase of the lift station parts is out of time.
Did the Strata contravene the SPA when it passed resolutions and adopted bylaws in connection with the Settlement Agreement?
76. A strata corporation must calculate strata fees using the formula in section 99 of the SPA. The calculation is based on unit entitlement. Section 99 of the SPA states that it is “subject to section 100”. This means if a strata corporation wants to use a basis, other than unit entitlement, it must first pass a resolution by unanimous vote. (SPA, section 100)
77. The Strata never passed a resolution under section 100 of the SPA. Therefore, the Strata must calculate strata fees based on unit entitlement. (SPA, section 99) Section 99 calculates strata fees, based on unit entitlement as follows:
| unit entitlement of a strata lot |
X |
total contribution |
| total unit entitlement of all strata lots |
|
|
78. Section 72(3) of the SPA allows a strata corporation to pass a bylaw that makes the strata corporation responsible for the repair and maintenance of specified portions of strata lots.
79. SPA Regulation 6.5 says where a strata corporation adopts a bylaw under section 72(3) of the SPA and takes responsibility for the repair and maintenance of specified portions of some, but not all strata lots, then a contribution to the operating fund (or a special levy) in respect of that specific repair and maintenance is shared only by the owners of the strata lots that benefit from that specific repair and maintenance. Each strata lot’s share of the contribution is:
| unit entitlement of a strata lot |
X |
contribution to operating fund |
| total unit entitlement of all strata lots to which the contribution relates |
|
(or special levy) |
80. Bylaws 38, 39, 40 and 41 make the Strata responsible for the repair and maintenance of specified portions of strata lots. (SPA, section 72(3))
81. SPA Regulation 6.5 permits the Strata to apply these repair and maintenance expenses of specified portions of a strata lot only to those strata lots that benefit from the repair and maintenance, such as strata lots with lawns, landscaping, irrigation, gutters and waste.
82. The bylaws, adopted at the SGM, excluded SGE from contributing to the expenses of lawn, landscaping and irrigation maintenance, gutter cleaning and waste removal because SGE’s 34 strata lots had no buildings, lawns or landscaping.
83. The 2011 Bylaws required every strata lot to contribute to these expenses. SPA Regulation 6.5 provides an exemption for SGE from contributing to the repair and maintenance expenses because these expenditures did not benefit SGE’s strata lots.
84. Mr. Woytuik claims that the wording of SPA Regulation 6.5 requires a unanimous vote. He says:
Regulation 6.5 states ‘For the purposes of section 99 of the Act, but subject to a resolution under section 100 or 108(2)(b) of the Act …’. This means that Regulation 6.5 requires a resolution under section 100 or 108 to be enacted and valid. Section 100 requires a unanimous vote to use one or more different formulas. I believe that the intent of the legislators was very clear… . Once the strata has transitioned to Strata Council control and responsibility, unanimity is required to change the arrangement. [Underlining added]
85. Section 100 of the SPA states:
Change to basis for calculation of contribution
100 At an annual or special general meeting … the strata corporation may, by a resolution passed by a unanimous vote, agree to use one or more different formulas for the calculation of a strata lot’s share of the contribution to the operating fund and contingency reserve fund.
86. The basis for the formula in section 99 is unit entitlement. Using something other than unit entitlement to calculate contributions to strata fees (and special levies) changes the formula. If a strata corporation wants to use something other than unit entitlement to calculate strata fees and therefore, change the formula, it must pass a resolution by a unanimous vote. In The Owners, Strata Plan LMS 1537 v. Alvarez, 2003 BCSC 1085 [at para. 55], the BC Supreme Court said:
Absent an agreement under s. 100 of the SPA, those contributions are to be allocated to all strata lots in accordance with their unit entitlements . . . unless:
(i) . . ., an alternative “fair division” has been approved by a unanimous vote of
the strata lot owners”
[cited with approval by the BC Court of Appeal by Justice Levine in Coupal v.
The Owners, Strata Plan LMS 2503, 2004 BCCA 532 [at para. 34]
In other words, a resolution, passed under section 100 of the SPA, must provide an “alternative fair division” other than unit entitlement. Both section 99 of the SPA and SPA Regulation 6.5 use unit entitlement as the basis to calculate contributions.
87. In Liverant v. The Owners, Strata Plan VIS 5996, (“Liverant”) 2010 BCSC 286, [at para. 26], the BC Supreme Court, said:
. . . s. 100, … permits the adoption of a formula for dividing expenses different from the one based strictly on unit entitlement that is set out in s. 99.
88. In Liverant, the BC Supreme Court confirmed that unit entitlement is the basis for the formula for dividing expenses and section 100 of the SPA permits a strata corporation to use a basis other than unit entitlement.
89. The Strata used unit entitlement, as required in section 99 of the SPA and SPA Regulation 6.5, to calculate contributions to strata fees. There was no change to the basis for calculating strata fees.
90. The Strata approved the Settlement Agreement by a majority vote. The Strata approved the resolutions to repeal the 2011 Bylaws and adopt the new bylaws by a ¾ vote, as required by the SPA.
91. I find the Strata complied with the SPA when they passed resolutions to repeal and adopt bylaws by
¾ vote at the SGM.
Did the strata council make expenditures in 2014 and 2015 that contravened the SPA and the strata’s bylaws?
92. A strata corporation must maintain two types of funds to meet its common expenses: an operating fund and a contingency reserve fund (CRF).
93. Operating expenses are expenses that usually occur at least once per year. (SPA, section 92(a))
94. A strata corporation may only spend money from the operating fund, if the expense meets the definition of an operating fund expense and the expense has been authorized in the budget for the fiscal year, or the owners first approve the operating fund expenditure by a ¾ vote at a general meeting. (SPA, section 97)
95. There are a few exceptions. One important exception is an emergency. However, an emergency expenditure from the operating fund must be an operating expense and the strata corporation must have reasonable grounds to believe that an immediate expenditure is necessary to ensure safety or prevent significant loss or damage. The emergency expenditure must not exceed the minimum amount to meet the emergency. (SPA, sections 98(3) and 98(5))
96. If an expense is not an operating expense, it is a CRF expense. A CRF expense is an expense that usually occurs less often than once a year or does not usually occur. (SPA, section 92(b)) Expenditures from the CRF require approval by a ¾ vote at a general meeting (SPA, section 96), unless there is an emergency. (SPA, section 98(3)
Roll-up Screens
97. I find the purchase of the roll-up screens was not an operating expense for the following reasons.
98. Section 97(b) of the SPA states, in part, that the strata corporation must not spend money from the operating fund unless the expenditure fits the definition of an operating expense. An operating expense usually occurs once a year or more often than once a year. A CRF expense usually occurs less often than once per year or does not usually occur.
99. Mr. Woytuik submits that the purchase of the roll-up screens was a CRF expense and requires a ¾ vote at a general meeting.
100. He claims that the minutes of the strata council meeting of September 16, 2014 gave retroactive approval to the purchase of the roll-up screens.
101. The strata council says they did not meet in August. Therefore, a “consensus was obtained by personal consultation and phone conversations and the action was reported in the September minutes.” The Strata submits there was no retroactive approval.
102. The September 16, 2014 minutes do not mention a vote regarding the screens. There is no evidence of retroactive approval. The September 16, 2014 minutes refer to the purchase of the roll- up screens, the cost and the fact that the money came from the Miscellaneous Maintenance Account.
103. The strata council approved the purchase of the roll-up screens from the operating fund. This purchase does not meet the definition of an operating fund expense because it is not an expense that occurs at least once per year.
104. I find the Strata did not properly authorize the purchase of the roll-up screens because it was a CRF expense that required a ¾ vote at a general meeting. (SPA, section 96)
Underground Water Leaks
105. I find that the pipe replacement work was not an emergency, as defined in section 98(3) of the SPA for the following reasons.
106. The Strata says it replaced the pipes on an emergency basis in May 2015. An expense is an emergency expense, if the strata council reasonably believes that the expenditure is immediately necessary to ensure safety or prevent significant loss or damage. The damage may be physical or otherwise. (SPA, section 98(3))
107. The Strata discovered water leaks in underground copper piping because water had come up to the surface. The council said this was the first time for dealing with such an issue.
108. While repairing these leaks, the strata council carried out pipe replacement work in the same area. The strata council relied on the advice of an engineer that oversaw the water leak repairs. The strata council approved the additional work because the contractor was available, the excavation equipment was in place and the roadway was already dug up for the emergency repairs.
109. The engineer advised the strata council that soil conditions surrounding the pipes caused the leaks and that other pipes near the leaking pipes were vulnerable.
110. The strata council wanted to save money by doing the pipe replacement work at the same time as the emergency repairs. The strata council authorized the work and then, informed the owners in writing.
111. The power to spend money from the operating fund or contingency reserve fund in an emergency is limited by section 98(5) of the SPA. An emergency expenditure must not exceed the minimum amount needed to ensure safety or prevent significant loss or damage.
112. The strata council wrote to the owners on July 27, 2015. In the letter, the strata council described the pipe replacement as “prudent.” The letter said that a possible failure of these pipes might happen “sooner than later.” The strata council added that re-excavating the hole after paving would “waste money”. Their letter refers to sections 98(3) and 98(5) of the SPA and calls the pipe replacement an emergency.
113. While the strata council followed the advice of an engineer, saved money for the Strata and informed the owners of the pipe replacement, I find no evidence that the pipe replacement was itself an emergency. There were no reasonable grounds to believe that an immediate expenditure was necessary.
114. The pipe replacement was not an operating expense because it was not an expense that usually occurs once per year or more often than once per year. (SPA, section 92)
115. The pipe replacement was a CRF expense because it was an expense that does not usually occur once per year or more often than once per year. The SPA obligates the Strata to convene a general meeting and obtain a ¾ vote to approve the pipe replacement expenditure. (SPA, sections 92 and
96) Section 98(5) limits emergency spending to the minimum amount needed to ensure safety or prevent significant loss or damage.
116. I find the Strata contravened section 98 of the SPA when it approved the expense for the pipe replacement.
Did council members breach the standard of care in section 31 of the SPA?
117. For the reasons that follow, I find no breach of section 31 of the SPA in connection with the resolutions and the bylaws, presented at the SGM, and no breach of section 31 of SPA in connection with the expenditures for the lift station parts and the underground pipe replacement.
118. Section 31 of the SPA states:
Council member’s standard of care
31 In exercising the powers and performing the duties of the strata corporation, each council member must
(a) act honestly and in good faith with a view to the best interests of the strata corporation, and
(b) exercise the care, diligence and skill of a reasonably prudent person in comparable circumstances.
119. In Peoples Department Stores Inc. (Trustee of) v. Wise, 2004 SCC 68, (“Peoples”) the Supreme Court of Canada discussed the meaning of the phrase “standard of care” found in legislation with identical wording to section 31 of the SPA, except the court refers to ‘corporation’ instead of “strata corporation.”
120. In Peoples, the court found that a standard of care is the duty to act honestly and in good faith. This means that the individuals who are entrusted to manage the assets and pursue (strata) corporation goals, must respect the trust and confidence placed in them. They must avoid conflicts of interest and not abuse their position in order to obtain personal benefit; they must maintain the confidentiality of information they acquire; they must serve the corporation “selflessly, honestly and loyally”.
121. Section 31(b) of the SPA requires a strata council member to exercise the care, diligence and skill of a reasonably prudent person in comparable circumstances. This means that strata council members will not be in breach of their standard of care, if they act prudently and on a reasonably informed basis.
Strata Council, the SGM, the Resolutions and the Bylaws
122. Strata council members responded quickly and diligently when they received a copy of the opinion. Reading the opinion, the strata council learned that SPA Regulation 6.5 permitted the Strata to apportion the costs of landscape maintenance, irrigation maintenance and gutter cleaning only to those strata lots that benefitted from those services. The strata council distributed the opinion to all owners and, with money in the budget for legal costs, sought legal advice from a lawyer whose practice was mainly strata law. The Strata’s lawyer worked with SGE’s lawyer to draft the Settlement Agreement, the resolutions and the bylaws that would be presented to the owners at the SGM.
123. The strata council distributed all pertinent information with the Notice and held an information meeting, prior to the SGM, to answer the owners’ questions.
124. At the SGM, the owners voted on the resolutions and bylaws by a ¾ vote in accordance with the SPA.
125. The evidence shows the strata council acted in the best interests of the owners and exercised the care and skill of reasonably prudent persons in comparable circumstances.
126. I find no evidence that members of the strata council deliberately ignored their duty under the SPA and favoured themselves or acted dishonestly.
The 2014 and 2015 Expenditures
127. In authorizing the 2014 and 2015 expenditures for the lift station parts and the pipe replacement, there is no evidence that the strata council’s actions were not honest and in the best interests of all of the owners. Council members are not required to be perfect. The strata council’s duty is to do the greatest good for the greatest number of owners and exercise the care and skill of a reasonably prudent person.
CONCLUSIONS
Strata Council, the SGM, the Resolutions and the Bylaws
128. There is no evidence that the strata calculated strata fees on the basis of anything other than unit entitlement. Section 99 of the SPA and SPA Regulation 6.5 both specify unit entitlement as the formula to calculate contributions to strata fees. If the unit entitlement of some, but not all strata lots, is used in the calculation of shared expenses, the basis for the formula is still unit entitlement, regardless of how many strata lots are included.
129. The Strata adopted new bylaws by ¾ vote, in keeping with the SPA. A unanimous resolution was not required in these circumstances.
130. I find that the Strata did not contravene the SPA when it passed the resolutions and adopted the new bylaws and the strata council did not breach its standard of care under section 31 of the SPA.
131. Mr. Woytuik submits that if the CRT does not support his claim there was a change to the calculation of strata fees, then there is no need to consider his request that the CRT take certain actions. Therefore, I will not consider his list of actions.
The 2014 and 2015 Expenditures
132. I find that the strata council did not follow the SPA with regard to the roll-up screens. The purchase of the screens did not meet the definition of an operating fund expense. The screens were a CRF expenditure. Under the SPA, owners must approve an expenditure from the CRF by ¾ vote at a general meeting.
133. I find that the strata council did not follow the SPA with regard to the pipe replacement. It was not an emergency. It was a CRF expense. To spend money from the CRF, the SPA requires approval by ¾ vote at a general meeting.
134. Although, calling a general meeting takes time and, possibly, there may be extra costs due to delays, the SPA requires the Strata to take these steps.
135. The strata council’s motivation with respect to the screens was to save money.
136. The strata council’s motivation with respect to the pipe replacement was to get the work completed in a cost-effective and timely manner. Their decision to move forward was based on professional advice and was time sensitive in that all the elements of the project, the contractor, the equipment and the fact that the roadway was already dug up, meant cost savings to the Strata.
137. While the strata council did not follow the SPA, I do not find fault with its effort to do the greatest good for the greatest number and exercise the care, diligence and skill of reasonably prudent persons in similar circumstances.
138. The evidence shows council members had a keen awareness of their responsibilities under the SPA and took those responsibilities very seriously.
ORDERS
139. I order the Strata not to contravene sections 96 and 98 of the SPA.
140. Since Mr. Woytuik was not completely successful, I order the Strata to reimburse Mr. Woytuik 50% of the all fees paid by Mr. Woytuik to the CRT in this dispute.
141. In an action between an owner and a strata corporation, the owner “is not liable to contribute to legal costs that a court or arbitrator requires the strata corporation to pay.” (SPA, section 169(1)) Accordingly, Mr. Woytuik is not required to contribute any funds to this reimbursement.
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| Bonnie Elster, Tribunal Member |