Date Issued: February 9, 2018

File: ST-2017-002086 and

ST-2017-002096

Type: Strata

Civil Resolution Tribunal

Indexed as: The Owners, Strata Plan NW 2729 v. Haddow et al, 2018 BCCRT 37

Between:

The Owners, Strata Plan NW 2729

Applicant

And:

Pamela Haddow

Respondent

-AND-

Between:

The Owners, Strata Plan NW 2729

Applicant

And:

Irene Christie

Respondent

REASONS FOR DECISION
Tribunal Member:	J. Garth Cambrey, Vice Chair

INTRODUCTION

1.         This decision relates to 2 disputes that I considered together. The applicant in both disputes, The Owners, Strata Plan NW 2729 (strata), is a 36-unit strata corporation located in Mission B.C.  The respondent in dispute ST-2017-002086, Pamela Haddow (Ms. Haddow), owns strata lot 36 in the strata.

2.         The respondent in dispute ST-2017-002096, Irene Christie (Ms. Christie), owns strata lot 33 in the strata.  Ms. Christie is Ms. Haddow’s mother.

3.         I will refer to Ms. Haddow and Ms. Christie collectively as the respondents.

4.         This dispute is about $40 in strata fees the respondents each paid to the strata in March 2015, which the respondents each now say they did not owe.

5.         The strata claims that the respondents have not paid a shortfall in monthly strata fees for the months of January and February 2017 (2017 shortfall). The strata says the 2017 shortfall payment was approved at a February 2017 annual general meeting.  The strata requests orders that the respondents pay the 2017 shortfall and reimburse it for tribunal fees paid.

6.         The $40 figure relates to the claimed shortfall because the respondents submit they were not legally obligated to pay a shortfall for January and February 2015 (2015 shortfall) but which, as noted above, they had paid in March 2015. As such, the respondents each deducted $40 from the amount requested by the strata in 2017. The respondents do not dispute the amount of the 2017 shortfall and that they each owe it to the strata.

7.         The applicant is represented by an authorized strata council member.  The respondents are represented by Ms. Haddow.

8.         For the reasons that follow, I find each of the respondents were not obligated to pay the 2015 shortfall payment of $40 and are each entitled set off that amount plus interest against the 2017 shortfall.

JURISDICTION AND PROCEDURE

9.         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 (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 has ended.

10.      The tribunal has discretion to decide the format of the hearing, including by writing, telephone, videoconferencing, email, or a combination of these. I decided to hear this dispute through written submissions because I find that there are no significant issues of credibility or other reasons that might require an oral hearing.

11.      The tribunal may accept as evidence information that 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.

12.      The applicable tribunal rules are those that were in place at the time this dispute was commenced.

13.      Under section 48.1 of the Act and the tribunal rules, in resolving this dispute the tribunal may order a party to do or stop doing something, pay money or make an order that includes any terms or conditions the tribunal considers appropriate.

ISSUES

14.      The strata and Ms. Haddow reached an agreement on certain issues in dispute ST-2017-002086 prior to this adjudication and those issues are not before me in this decision.

15.      The issues to be decided are whether the respondents were each legally obligated to pay $40.00 in March 2015 for an increase in strata fees relating to January and February, 2015.  If not, are the respondents entitled to set off the amount they each paid in March 2015 against the 2017 shortfall claimed by the strata?

BACKGROUND AND EVIDENCE

16.      Though I have read all of the evidence provided, I refer only to evidence I find relevant to provide context for my decision.

17.      The strata was created in February 1988 and is a self-managed strata corporation comprising 36 residential strata lots.

18.      The strata’s fiscal year end is December 31 and it regularly holds its annual general meeting (AGM) before the end of February of the following year as permitted by the Strata Property Act (SPA). As a result of the AGM’s timing, it is the strata’s practice to retroactively collect any strata fee increase for January and February of the new fiscal year after the AGM has been held.

19.      At its February 11, 2008 AGM, the strata amended its bylaws and filed a complete new set of bylaws at the Land Title Office on March 12, 2008 (2008 Bylaws). Bylaw 1 required owners to pay their strata fees by way of 12 postdated cheques, delivered to a strata council member 2 weeks before January 1 of each calendar year.

20.      At its February 2, 2015 AGM, the strata amended bylaw 1 by adding, among other things, the manner in which the postdated cheques and shortfall payments for strata fees would be addressed (2015 Bylaws). The amended bylaws were filed at the Land Title Office on March 26, 2015. The relevant additions to bylaw 1 were as follows:

a.      Ten (10) cheques dated March 01 through two December 01 of the current year.

b.      Two (2) cheques dated January 01 and February 01 for the following year. As the strata fees, including any increases for the January 01 and February 01. Of the following year will not be calculated until after the AGM of the following year, the amounts on the two (2) cheques will be made out for the same amount as the current year.

c.      Following the AGM of the current year, Strata owners will be advised prior to February 15 of Strata fees and any increases for the current year, accordingly cheques made out for that amount, plus any shortfall to cover the January and February period of the current year. An owner may, if they wish, submit one (1) cheque for Strata fees for the total amount of the twelve (12) month period, including any outstanding monies due for the current January February periods.

21.      It is undisputed that $40 cheques from each of the respondents representing 2015 shortfall payments were deposited into the strata’s bank account on or about March 2, 2015.

22.      Strata fees relating to the months of January and February 2016 are not at issue in these disputes. 

23.      The strata’s February 13, 2017 AGM notice includes a proposed 2017 budget with 3 payment options. The minutes of that meeting show the approved budget included an increase in monthly strata fees to $221.00 per month, a $45.00 per month increase per strata lot, which is undisputed.

24.      February 13, 2017 AGM minutes also contain notification and instructions relating to the increase in strata fees. The instructions state that the deadline for giving the 2017 monthly cheques to the strata is February 24, 2017 and that the cheques are to be written for March 1, 2017 through to and including February 1, 2018. The instructions further state that the March 1, 2017 cheque will be $311.00 which covers the monthly strata fee of $221.00 plus the “shortfall of $45.00 per month ($90.00) for January and February [2]017.”

25.      The evidence indicates that the respondents first attempted to pay $50.00 each for the 2017 shortfall. Based on the respondents’ submission, they arrived at $50.00 for the 2017 shortfall by deducting the 2015 shortfall of $40.00 from the $90.00 the strata requested for the 2017 shortfall.  As noted above, the respondents say they were not legally obligated to pay the 2015 shortfall.

26.      It is undisputed that the respondents made other attempts to pay, by cheque and cash, the amount they thought they owed the strata after deducting the 2015 shortfall they had already paid. The strata refused to accept payment of any alternate amounts by returning the respondents’ cheques and refusing payment by cash.

POSITION OF THE PARTIES

27.      The strata says that Ms. Haddow and Ms. Christie each owe $90.00 for the 2017 shortfall and request I order the respondents to pay that amount plus $350 for tribunal fees paid.

28.      The respondents say they did not owe the 2015 shortfall because the 2015 Bylaws were not filed until March 26, 2015. The respondents say that they paid the 2015 shortfall out of courtesy, and have rescinded that courtesy.

29.      The respondents do not dispute they each owe the 2017 shortfall of $90.00.

ANALYSIS

Were the respondents legally obligated to each pay $40.00 for the 2015 shortfall?

30.      For the reasons that follow, I find the respondents were not legally obligated to pay the 2015 shortfall.

31.      Under section 40(2) of the SPA, the strata must hold an AGM no later than two months after its fiscal year end. As earlier stated, the strata’s fiscal year end is December 31. Therefore the strata may, and in fact does, hold its AGM prior to the end of February of the following year. Although permitted by the SPA, applying the legislation in these circumstances is difficult.

32.      My analysis that follows applies only in the circumstances where a strata corporation holds its AGM within the 2 month period following its fiscal year end.

33.      In order to determine if the respondents were legally obligated to pay the 2015 shortfall, I find I must first consider when strata fees relating to a new budget commence, if strata fees can be charged retroactively, and the wording of the strata’s bylaws.

When do strata fees relating to a new budget commence?

34.      Under section 103(1) of the SPA, the strata must prepare a budget for the coming fiscal year for approval at each AGM. Section 103(2) says the proposed budget must be distributed with the AGM notice.  It is readily apparent that the phrase “for the coming fiscal year” can easily be applied to an upcoming budget when a strata corporation holds its AGM before its fiscal year end. However, the phrase is confusing when applied to a budget that is passed after the fiscal year end of the strata corporation, as is the case here.

35.      One interpretation of section 103(1) would indicate that a budget approved after the fiscal year end would not take effect until the next fiscal year.  However, such an interpretation would mean that the strata corporation would be without a budget every second year. That interpretation is not consistent with the requirements of the SPA that a strata corporation consider a budget at each AGM. I find the phrase “for the coming fiscal year” in section 103(1) should be interpreted as “for each fiscal year”.  My conclusion is supported by section 104(1) of the SPA which requires a strata corporation to call a special general meeting to approve a budget if the budget is not approved at the AGM.

36.      Further, under section 104(2) of the SPA, if a fiscal year to which a budget relates ends before a new budget is approved, the owners must, until the new budget is approved, continue to pay the same monthly strata fees they were required to pay under the previous budget. I interpret this to mean that strata fees collected for the months prior to the passing of a new budget must be calculated under the prior year’s budget. Bearing this in mind, a plain reading of section 104(2) would indicate the new strata fees would not start until the month after the new budget was approved given strata fees must continue to be paid based on the previous budget. I accept that interpretation. As such, I find that in the case where the fiscal year to which a budget relates ends before a new budget is approved, strata fees relating to a new budget are not owing until the first day of the month following the AGM.

Can strata fees be charged retroactively?

37.      Under section 92 of the SPA, owners must contribute to the strata’s common expenses through strata fees.  Section 92 does not set out when strata fees are to be paid.

38.      Section 99 of the SPA sets out how the strata must calculate strata fees but does not say when strata fees must be paid. Despite the inference in section 104(2) to monthly strata fees, there is no requirement in the SPA that strata fees must be paid in monthly installments. I find the frequency of strata fee payments must properly be set out in the bylaws. Section 107 supports this conclusion in that it refers to “a bylaw that establishes a schedule for the payment of strata fees”. In further support, Standard Bylaw 1 says that “an owner must pay strata fees on or before the first day of the month to which the strata fees relate.”

39.      I also find that, provided strata fee payments are calculated in accordance with section 99 of the SPA, there is no requirement that strata fees be paid in equal installments.  In other words, strata fees for one month may be for a different amount than other months as long as they are calculated by unit entitlement or some other method approved by unanimous vote.

40.      The SPA is silent as to whether a strata corporation may charge strata fees retroactively for months that have already passed.  Also, I am not aware of any court decision that has squarely considered if retroactive strata fees can be charged under the SPA.

41.      In particular, in Owners, Strata Plan KAS 3267 v. Smith, 2011 BCSC 387 the Supreme Court had facts before it that a retroactive assessment of strata fees had been passed by the strata corporation.  However, the court did not consider whether retroactive strata fees are permissible under the SPA as it found (at paragraph 23) the resolution retroactively charging strata fees did not apply in the circumstances. I am unable to identify any other case law on point.

42.      However, there are some sections of the SPA that indicate the legislation did not intend that strata fees to be collected retroactively, as it would not be practical to do so.

43.      Sections 59 and 115 of the SPA both require a strata corporation to provide certain information, that includes the amount of strata fees and if any strata fees are outstanding, within 1 week of a request from an owner or purchaser. Information under section 59 must be provided in a prescribed Form B – Information Certificate. Under section 59(5), the information disclosed is binding on the strata corporation and under section 59(6) application must be made to the Supreme Court of British Columbia regarding an inaccurate certificate.

44.      Information requested under section 115 must be provided in a prescribed Form F- Certificate of Payment, which is generally required to permit the sale of a strata lot.

45.      If retroactive strata fee charges were permitted, the strata fee information disclosed in the prescribed forms (B and F) could cause the forms to be inaccurate when a new budget is approved. In particular, strata fee information disclosed in a Form B would be inaccurate but would remain binding on the strata corporation and only correctable by the Supreme Court.  Further, it would not be possible for a strata corporation to collect retroactive strata fees if a strata lot sold during the period between the end of the fiscal year and the date the new budget commenced.

46.      To illustrate my point, I provide the following hypothetical example.  A strata corporation has a fiscal year of December 31 and holds its AGM at the end of February of the following year, within the required 2 months. An owner sells their strata lot on February 15 before the AGM approving the new budget is held. The strata fees for the owner’s strata lot under the old budget are $100 and under the proposed new budget will be $125.  The owner has paid strata fees of $100 per month for January and February as required under section 104(2) and obtains a Form F that states there is no money owing to the strata corporation.  Prior to the sale, the purchaser of the strata lot obtains a Form B which states the strata fees for the strata lot are $100 and that there are no monies owing to the strata corporation by the seller. The strata lot is sold prior the AGM and the new budget is approved making the strata fees for the strata lot $125 per month. How can the strata corporation collect increased retroactive strata fees of the strata lot for the months of January and February? The seller paid the $100 per month and has a Form F that says they do not owe strata fees.  The purchaser has a Form B that says the strata fees at the time of the sale were $100 which the purchaser is able to rely on.  Therefore, in that simple example, the strata could not collect any increase in strata fees retroactively for months of January and February.

47.      As a result, I conclude that retroactive strata fees are contrary to the intent of the SPA. 

The strata’s bylaws

48.      I turn now to the wording of the strata bylaws. 

49.      The respondents say that the 2008 Bylaws were in force at the time of the February 2015 AGM and were not replaced by the 2015 Bylaws until March 26, 2015. For that reason, the respondents say they were not obligated to pay the 2015 shortfall as the 2008 bylaws did not address it. 

50.      I agree with the respondents that the 2015 bylaws were not in force on February 11, 2005 when the new budget was passed and the 2008 bylaws were in force at that time.

51.      Bylaw 1 of the 2008 Bylaws requires owners to pay their strata fees by monthly post-dated cheques.

52.      Based on my earlier conclusion that a new budget starts the first of the month following its approval and that the strata’s bylaws require strata fees to be paid monthly, I find that strata fees for January and February 2015 had already been paid by the respondents when the new budget was passed. 

53.      The 2008 Bylaws do not address shortfall payments.  Given the strata specifically identifies its shortfall payments as being strata fees relating to the prior months of January and February, I find the shortfall payments charged by the strata are akin to retroactive strata fee payments, which I have found to be contrary to the intent of the SPA.

54.      Based on my review of the SPA and the strata’s 2008 bylaws set out above, I find the respondents were not legally obligated to pay the 2015 shortfall.

55.      Given I have found the 2008 bylaws to be relevant to this dispute, I have not considered the 2015 bylaws and make no comment as to whether the 2015 bylaws are contrary to the SPA.

56.      Nothing in this decision restricts the strata from setting out in its bylaws how it will collect strata fees to meet its budgeted expenses provided such bylaws are not contrary to the SPA, do not require retroactive strata fee payments, and are calculated in accordance with section 99 of the SPA.

57.      In summary, I conclude that where a new budget is approved by a strata corporation after its fiscal year end, strata fees relating to the new budget start on the first day of the month following approval of the budget.  The bylaws of a strata corporation should address the frequency of strata fee payments and if the payments are equal, but may not require retroactive payment of strata fees. 

Are the respondents entitled to set off the amount they each paid in March 2015 against the 2017 shortfall?

58.      As noted earlier, it is undisputed that the respondents each paid the 2015 shortfall of $40.00 to the strata on approximately March 2, 2015.  Given I have found the respondents were not legally obligated to pay that amount, the respondents effectively each overpaid strata fees by $40.00. 

59.      The Court Order Interest Act applies to the tribunal and the respondents are each entitled to pre-judgment interest from the date the cause of action arose until the date of this order.  I find the cause of action arose on March 1, 2017, the date the date the respondents attempted to pay their March 1, 2017 strata fees. I calculate pre-judgment interest to be $0.29.

60.      Therefore, I find that the respondents are each entitled to set off $40.29 against the $90.00 2017 shortfall they agree they owe the strata.  I order each of the respondents pay the net amount of $49.71 to the strata.

DECISION AND ORDERS

61.      I order that each of the respondents, within 30 days of the date of this order, issue a cheque to the strata in the amount of $49.71 as full and final payment of the 2017 shortfall claimed by the strata.

62.      Under section 49 of the Act, and the tribunal rules, the tribunal will generally order an unsuccessful party to reimburse a successful party for tribunal fees and reasonable dispute-related expenses. I see no reason in this case to deviate from the general rule. The respondents have been the successful parties in these disputes but did not pay any tribunal fees or claim any expenses.  Accordingly, I make no order with respect to tribunal fees or dispute-related expenses.

63.      Under section 189.4(b) of the SPA, an owner who brings a tribunal claim against the strata corporation is not required to contribute to the expenses of bringing that claim. I order the strata to ensure that no part of the strata’s expenses with respect to this claim are allocated to the respondents.

64.      Under section 57 of the Act, a party can enforce this final tribunal decision by filing, in the Supreme Court of British Columbia, a validated copy of the order which is attached to this decision. The order can only be filed if, among other things, the time for an appeal under section 56.5(3) of the Act has expired and leave to appeal has not been sought or consented to. Once filed, a tribunal order has the same force and effect as an order of the Supreme Court of British Columbia.

65.      Orders for financial compensation or the return of personal property can also be enforced through the Provincial Court of British Columbia. However, the principal amount or the value of the personal property must be within the Provincial Court of British Columbia’s monetary limit for claims under the Small Claims Act (currently $35,000). Under section 58 of the Act, the Applicant can enforce this final decision by filing in the Provincial Court of British Columbia a validated copy of the order which is attached to this decision.  The order can only be filed if, among other things, the time for an appeal under section 56.5(3) of the Act has expired and leave to appeal has not been sought or consented to. Once filed, a tribunal order has the same force and effect as an order of the Provincial Court of British Columbia.