Date Issued: July 26, 2018

File: ST-2017-002657

Type: Strata

Civil Resolution Tribunal

Indexed as: Farrell v. The Owners, Strata Plan K 414, 2018 BCCRT 382

Between:

Stacy Farrell

Applicant

And:

The Owners, Strata Plan K 414

Respondent

 

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

INTRODUCTION

1.        The applicant, Stacy Farrell, co-owns a strata lot in the respondent strata corporation, The Owners, Strata Plan K 414 (strata).

2.        This dispute involves the validity of the strata’s annual general meeting (AGM) held May 21, 2017 (May 2017 AGM).

3.        The owner says the strata did not conduct the May 2017 AGM in accordance with the Strata Property Act (SPA) due to an incomplete notice package and improper voting procedure. She seeks orders that the AGM be declared “null and void” and that a new AGM be conducted.

4.        In its Dispute Response, the strata agreed the May 2017 AGM was held contrary to the SPA but it now denies the owner’s allegations. It asks that the owner’s claims be dismissed.

5.        The owner is self-represented. The strata is represented by a strata council member.

6.        For the reasons that follow, I order the strata to conduct a new AGM and immediately refund any money collected from individual owners after the May 2017 AGM for what I consider to be special levies relating to a new survey and roof replacement.

JURISDICTION AND PROCEDURE

7.        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.

8.        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.

9.        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.

10.     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.

11.     Under section 61 of the Act, the tribunal may make any order or give any direction in relation to a tribunal proceeding it thinks necessary to achieve the objects of the tribunal in accordance with its mandate. In particular, the tribunal may make such an order on its own initiative, on request by a party, or on recommendation by a case manager (also known as a tribunal facilitator). Tribunal documents incorrectly show the name of the respondent as The Owners, Strata Plan, KAS 414, whereas, based on section 2 of the SPA, the correct legal name of the strata is The Owners, Strata Plan K 414. Given the parties operated on the basis that the correct name of the strata was as used in their documents and submissions, I have exercised my discretion under section 61 to direct the use of the strata’s correct legal name in these proceedings. Accordingly, I have amended the style of cause above.

ISSUES

12.     The issues in this dispute are:

a.      Was the strata’s May 2017 AGM conducted contrary to the SPA? If so, what is an appropriate remedy?

b.      Is the owner entitled to reimbursement of $225.00 for tribunal fees?

BACKGROUND, EVIDENCE AND ANALYSIS

13.     I have read all of the submissions and evidence provided but refer only to information I find relevant to provide context for my decision.

14.     In a civil proceeding such as this, the owner must prove their claims on a balance of probabilities.

15.     The strata is a 9-unit residential strata corporation located in Sicamous, B.C.

16.     The relevant bylaws of the strata are the Standard Bylaws under the SPA, together with amendments filed on June 20, 2002.

17.     On July 8, 2002, the strata filed a plan designating limited common property (LCP) for strata lots 1 through 8, inclusive. A copy of the LCP designation plan was not provided in evidence and it is unclear if the LCP designations relate to parking stalls.

18.     On May 1, 2017, the strata council treasurer sent an email to all strata owners enclosing financial statements “for the upcoming AGM.”  A copy of the attachment was not provided in evidence and is not contested. The email also states the “proposed budget is forthcoming.” In its submissions, the strata admits the budget was handed out at the May 2017 AGM, as had been done historically.

19.     On May 2, 2017, the strata council secretary sent an email to all strata owners stating the May 2017 AGM would be “held on Sunday, May 21, 2017 at 10:00 a.m. Let me know if there are any additional items you would like added to the Agenda outside of the normal course of business. Minutes for 2016 will follow shortly.”  It is undisputed that the email contained no attachments.

20.     On May 18, 2017, the strata council secretary sent an email to all strata owners attaching the draft minutes of the 2016 AGM and a file entitled “PARKING DISCUSSION SUMMARY.” The email also stated “only one new request has been submitted …for a new survey” and that the agenda will be “sent out tonight.” The final meeting agenda was provided in evidence, which the strata concedes was emailed to owners on May 18, 2017. The agenda did not include any proposed ¾ vote resolutions.

21.     The May 2017 AGM proceeded with all strata lots represented. The owner was present at the meeting. The draft meeting minutes provided show that there were no comments about proof of notice of the meeting when the president confirmed “Notice of Meeting was emailed to all owners on May 2, 2017.”

22.     Among other things, the draft May 2017 AGM minutes show resolutions were unanimously passed for:

a.      A $3,500 “cash call” by unit entitlement to have the new survey completed,

b.      A “cash call” by unit entitlement to re-shingle all buildings “as per quote to be agreed upon, and two colour samples to be voted on…”

23.     The minutes also show a vote was passed that each strata lot has 2 designated parking spots to be designated by the strata council as per the SPA.

24.     At the owner’s request, a strata council hearing was scheduled by conference call on June 18, 2017 to discuss the owner’s concerns, which are the subject matter of this dispute. The strata says the hearing was cancelled because the owner advised they were applying for dispute resolution with this tribunal.

25.     The Dispute Notice was issued on June 19, 2017.

26.     On June 23, 2017, the strata council secretary emailed all strata owners to advise that, subject to the hearing request received from the owner as I have earlier noted, the strata, after receiving professional and legal advice, would be calling a special general meeting (SGM) “to re-address all Agenda items from the [May] 2017 AGM, including a re-vote on all items.” The email also stated the SGM notice package would be mailed within the next 2 weeks.

27.     The SGM notice package was not sent because the strata says it received the Dispute Notice on June 23, 2017, within hours of the council secretary issuing the June 23, 2017 email.

Was the strata’s May 2017 AGM conducted contrary to the SPA? If so, what is an appropriate remedy?

28.     Section 45 of the SPA sets out the general meeting noticed procedures and requirements of the strata.

29.     Section 45(1) of the SPA requires at least 2 weeks’ notice be given to every owner, and in certain circumstances that do not apply here, every mortgagee and tenant. Section 45(3) and (4) states that notice of the meeting must include a description of the matters to be voted on at the meeting, which I interpret could be considered an agenda or the written order of business required under the strata’s bylaw 28. The notice must also include the proposed wording of any ¾ vote resolutions together with the budget and financial statements referenced in section 103 of the SPA.

30.     Section 103 of the SPA states the budget must be distributed with the AGM notice and must be accompanied by a financial statement consistent with Strata Property Regulation (regulation) 6.6 and 6.7.

31.     I interpret section 45 of the SPA to mean providing notice and the notice contents are 2 different things. Both the requirements of providing notice (section 45(1)) and what must be included with the notice (section 45(3)) are not discretionary and can be waived by persons entitled to receive notice under section 45(2) of the SPA, which is not the case here.

32.     There is limited case law regarding notice requirements and I could not locate any case law that is directly on point.

33.     In 453881 BC Ltd. v. The Owners, Strata Plan LMS508 (1994), 41 R.P.R. (2d) 318, 1994 CanLll 1412 (B.C.S.C.) the court considered whether a bylaw amendment, that was not included in a general meeting notice under the Condominium Act, which had similar requirements to section 45(3) of the SPA, was enforceable and found it was not, stating:

To accept something other than strict compliance with the requirement under the Act for specifying, with the meeting notice… would be to allow the circumstances of each case to determine its outcome and to set a precedent which would open the way in other instances for argument, dissension and litigation which could be avoided readily by scrupulous attention to the simple requirements of the definition.

34.     In The Owners, Strata Plan NW 971 v. Daniels, 2009 BCSC 1235, the court addressed the procedure followed by a strata corporation to reconsider a failed ¾ vote for a special levy at an adjourned meeting. Ms. Daniels relied on sections 45 and 47 of the SPA in her argument that the adjourned meeting was improperly held. The court acknowledged that a reasonable attempt to give notice of the adjourned meeting under section 45 of the SPA was not made by the strata but distinguished 453881 BC Ltd. on the basis the facts in 453881 BC Ltd. involved the authority of the strata and not the procedural requirements of the legislation.

35.     Finally, in Strata Plan NW 499 v. Kirk, 2015 BCSC 1487, the court takes a strict view of the notice requirements stating at paragraph 76:

Section 47 exempts the Strata from giving notice under s. 45 only if an owner has given a written waiver of a right to notice. Section 47 preserves the validity of votes taken at meetings where proper notice of has not been given on condition the strata has “made a reasonable attempt to give notice in accordance with that section.” [Emphasis in original]

36.     I will first address the matter of providing notice under section 45(1) of the SPA.

37.     Section 61 of the SPA sets out how notice, including an AGM notice, must be given by the strata, which may be by email if the owner has given an email address for the purpose of receiving the notice. It is unclear if the strata owners had provided the strata with email addresses consistent with section 61(1)(vii), but that is not contested here. It is established law that the general meeting notice period is effectively 20 days when considering sections 45(1) and 61(3) of the SPA and section 25 of the Interpretation Act.

38.     That the May 2017 AGM notice was emailed to all strata owners only 19 days in advance does not necessarily invalidate the meeting. Section 47 of the SPA “illustrates and recognises that a strata may at times err in procedure so long as the strata ‘made a reasonable attempt to give notice’.” (See Daniels at paragraph 41)

39.     The draft May 2017 AGM minutes show that all 9 strata lot owners, including the applicant, were present in person at the meeting and did not object to proof of notice of the meeting being accepted. For these reasons, I find that all owners, including the applicant, received notice of the meeting and believed that notice was given in accordance with timeline set out in the SPA, despite the fact that the notice period was 1 day short of the required 20 days. I find the strata made a reasonable attempt to provide notice within the requirements of section 45(1) of the SPA. Therefore, section 47 of the SPA applies and I find the meeting was not invalidated due to lack of notice.

40.     Turning now to the May 2017 AGM notice contents, the notice did not include a description of the matters to be voted on (agenda), the proposed budget, or the financial statements. In summary, the financial statements were provided separately from the proposed budget and the May 2017 AGM notice and 1 day before the notice. The agenda was emailed 3 days before the May 2017 AGM and the budget was handed out to the owners present at the May 2017 AGM.

41.     I find it would be reasonable for owners attending the AGM to expect that regular general meeting business items, such as establishing quorum, electing a chair, approving the agenda and previous minutes, receiving reports from the strata council, reporting on the strata’s insurance, and electing a new strata council would be discussed. That the council secretary, in her email of May 1, 2017 that gave notice of the May 2017 AGM, requested that owners provide her with agenda items “outside of the normal course of business” supports such an expectation. It could be interpreted that the secretary’s email was confirmation that that the agenda for the May 2017 AGM was that set out in bylaw 28, even though the agenda was not included with the notice. There is no evidence to suggest any owner complained that the May 2017 AGM notice was deficient prior to the meeting or even at the meeting. Further support is found in the draft May 2017 AGM minutes that show the agenda was unanimously approved. For these reasons, I find the strata made a reasonable attempt to provide the agenda for the meeting.

42.     That the financial statements did not accompany the budget and were distributed in a separate email in advance of the May 2017 AGM notice is not sufficient reason for me to conclude a reasonable attempt was not made to provide financial statements in accordance with section 45(4) of the SPA. I find the purpose of providing financial statements is to provide the strata owners with information on the strata’s current financial status. There is no requirement for the strata owners to accept or vote on the financial statements at an AGM, only that they be provided, and in this case, they were provided within the required timelines for the May 2017 AGM.

43.     Having found the strata made a reasonable attempt to provide owners with the agenda, and noting the agenda included unfinished business from the 2016 AGM, I accept that, to the extend the agenda items included discussion items and majority vote resolutions that do not require advance written notice under section 45 of the SPA, the votes shown in the draft May 2017 AGM minutes are valid. I find the only item that falls into this category is the parking assignments, but only if such assignments do not involve changing LCP designations. If the parking stall designations do involve changing LCP designations, ¾ vote resolutions are required as discussed below.

44.     Nothing in this decision restricts an owner from contesting the accuracy of the draft May 2017 AGM minutes.

45.     I turn now to the matters I find are problematic for the strata, which are those matters that require input from the strata owners by way of a vote and for which advance information is required. Namely, adopting a budget, changing LCP parking stalls (if such LCP designations exist), waiving the requirement to obtain a depreciation report, and raising money to obtain a new survey and to complete roof replacement.

46.     Which the exception of the proposed budget, I find all other remaining votes required the passing of a ¾ vote for which the proposed wording was not contained in the May 2017 AGM notice. A change in use of LCP designations, if that is what the parking stall designations include, requires 2 ¾ votes to be passed under section 75 and 74 of the SPA;  a ¾ vote to remove the LCP designation under section 75 and a ¾ vote to re-designate LCP under section 74.

47.     Section 94(3)(a) of the SPA and regulation 6.2 state a deprecation report is mandatory unless the strata waives the requirement by a ¾ vote at a general meeting. The draft May 2017 AGM minutes state the depreciation report was “tabled” which is entirely different than a ¾ vote.

48.     I find that the manner in which funds were raised by “cash call” to be contrary to the SPA. Specifically, I find the cash calls to be special levies under section 108 of the SPA, which require specific things to be included in proposed ¾ vote resolutions. Given the proposed wording of the ¾ vote resolutions for the special levies to raise funds for a new survey and roof replacement were not included with the May 2017 AGM notice, I find the strata did not comply with section 108(3) of the SPA and was therefore in contravention of section 45(3) of the SPA.  

49.     I find that handing out the proposed budget at the beginning of the May 2017 AGM does not constitute reasonable notice under section 45(4) of the SPA. The purpose of section 45(4) is to give strata owners the opportunity to review the proposed budget in advance of the meeting. The procedure followed by the strata for the May 2017 AGM did not give the strata owners that opportunity.

50.     For these reasons, I find voting at the May 2017 AGM was improperly conducted in relation to adopting a budget, changing the LCP parking stalls designations  (if such LCP designations exist), waiving the requirement to obtain a depreciation report, and raising money to obtain a new survey and to complete roof replacement. If parking stall designations do not involve changes in LCP, then I find the vote on parking stall designations stands.

51.     My orders are set out below.

52.     Nothing in this decision restricts the strata from holding its new AGM in conjunction with its AGM due in 2018 if the 2018 AGM has not yet been held.

53.     The strata may wish to seek professional assistance through any membership it holds with a strata association on how to properly call and conduct a general meeting and raise funds by special levy.

Is the owner entitled to reimbursement of $225 for tribunal fees?

54.     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. Given the owner was the successful party, I find they are entitled to reimbursement of $225 for tribunal fees and I so order. They did not claim dispute-related expenses.

ORDERS

55.     I order the strata, within 30 days of the date of this decision:

a.     to hold a new AGM to properly consider those items that were not properly considered at its May 2017 AGM as set out below. The strata must provide proper notice of the AGM under section 45 of the SPA. With the notice of AGM, the strata must include:

                       i.       an agenda together with a proposed budget consistent with section 103 of the SPA for the applicable fiscal year; and,

                      ii.       the proposed wording of the following ¾ vote resolutions:

1.        approving any changes in LCP parking stalls required under sections 74 and 75 of the SPA, if applicable,

2.        waiving the requirement for a depreciation report under section 94(3) of the SPA,

3.        raising funds by special levy for a new survey consistent with section 108(3) of the SPA, and

4.        raising funds by special levy for the re-roofing project consistent with section 108(3) of the SPA.

b.      If an alternate budget is passed at the new AGM, the strata must, within 30 days of the date the new AGM is held, reconcile strata fees and issue a refund or credit to those owners who have overpaid. The strata may enforce its bylaws for collection of strata fees from any owner who has underpaid their strata fees after giving such owners reasonable notice to pay any outstanding strata fees.

c.      If the strata has collected any money for the new survey or roof repair after the May 2017 AGM, I order the strata to immediately refund all money collected from individual owners in the same proportion as it was collected.

d.      Within 30 days of the date of this decision, to reimburse the owner $225 for tribunal fees.

56.     The owner is entitled to post-judgement interest under the Court Order Interest Act.

57.     Under section 189.4 of the SPA, an owner who brings a tribunal claim against the strata corporation is not required to contribute to the expenses the strata corporation incurs in defending that claim or in any monetary order issued against it. I order that the strata ensure that no expenses incurred by it in defending the owner’s dispute be allocated to the applicant owner.

58.     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.