Date Issued: June 17, 2019

File: ST-2018-005865

Type: Strata

Civil Resolution Tribunal

Indexed as: The Owners, Strata Plan VR 939 v. Longine Properties Ltd., 2019 BCCRT 740

Between:

The Owners, Strata Plan VR 939

Applicant

And:

Longine Properties Ltd.

Respondent

REASONS FOR DECISION
Tribunal Member:	Kate Campbell

INTRODUCTION

1.      The respondent, Longine Properties Ltd (owner) owns 2 residential strata lots in the respondent strata corporation, The Owners, Strata Plan LMS 939 (strata).

2.      The strata says the owner has rented out its strata lots, contrary to the strata’s bylaws. The strata seeks orders that the owner stop renting out the strata lots and give notice to its tenants. The strata also seeks an order that the owner pay fines totalling $52,000.

3.      The owner denies the strata’s claims, and says its strata lots were not rented to any tenants. The owner also says the strata did not follow the proper process for imposing fines.

4.      The strata is represented by a strata council member. The owner is represented by V, who I infer is an employee.

JURISDICTION AND PROCEDURE

5.      These are the formal written reasons of the Civil Resolution Tribunal (tribunal). The tribunal has jurisdiction over strata property claims brought under section 121 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.

6.      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.

7.      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.

8.      Under section 123 of the Act and the tribunal rules, in resolving this dispute the tribunal may make order a party to do or stop doing something, order a party to pay money, order any other terms or conditions the tribunal considers appropriate.

ISSUE

9.      The issue in this dispute is whether the owner rented out its strata lots contrary to the bylaws, and if so, what remedies are appropriate.

EVIDENCE, FINDINGS AND ANALYSIS

10.   I have read all of the evidence provided but refer only to evidence I find relevant to provide context for my decision. In a civil proceeding such as this, the applicant owner must prove their claims on a balance of probabilities.

11.   The owner has not provided evidence or submissions to the tribunal, despite being given an opportunity to do so, and despite being granted deadline extensions.

12.   The strata was created in 1981, under the former Condominium Act, a predecessor to the current Strata Property Act (SPA). The strata consists of 8 residential strata lots, in a 2-storey building.

13.   The owner purchased strata lot 1 (SL1) on April 29, 2016 and strata lot 8 (SL8) on March 15, 2016. The strata says the owner rented out both of these strata lots, contrary to its rental prohibition bylaw.

Rental Bylaws

14.   On September 29, 2000, the strata replaced its previous rental restriction bylaw by filing an amendment with the Land Title Office (LTO). The amended bylaw says the number of strata lots that may be leased is limited to 1. The bylaw also says owners may rent their strata lots temporarily while on holiday, subject to the strata council’s right to rule that a holiday rental has exceeded the “temporary” exception.

 

15.   The strata filed a subsequent amendment with the LTO on October 15, 2003 (registration number #BV422316). That amendment changed the number of strata lots to be leased from 1 to none.

16.   The strata filed another bylaw amendment with the LTO on May 20, 2011. That amendment says the fine for a contravention of bylaw #BV422316 prohibiting rental of a residential strata lot is $500.00 for each contravention, and the frequency of this fine shall be every 14 days.

17.   At a Special General Meeting on June 6, 2016, a 3/4 vote resolution to remove all rental restrictions from the bylaws did not pass. Emails in evidence show that the resolution was put on the agenda at the request of the owner.

Did the owner rent out SL1 or SL8 contrary to the bylaws?

18.   The wording of bylaw #BV422316 refers to “lease” rather than rent. The owner did not raise this distinction, and I find it is not meaningful in the context of this dispute and the bylaw. The strata uses the terms interchangeably, including it its bylaws, and I find that the meaning of the bylaws is to prohibit renting out a strata lot to residential tenants, except temporarily while the strata lot owner is on holiday. The holiday exemption has not been raised in this dispute.

19.   Under section 141(2) of the SPA, a strata corporation may pass a bylaw restricting or prohibiting the rental of residential strata lots, as the strata has done in this case. While in some instances a Rental Disclosure Statement may override a rental prohibition bylaw, there is no suggestion before me that such an exemption applies to the owner’s strata lots. The owner has also not indicated that the hardship exemption or family member exemption provisions set out in Part 8 of the SPA apply.

20.   The strata says individuals were living or live in SL1 and SL8. The owner says it did not rent out either strata lot. I find that the evidence before me establishes that the owner did rent out the strata lots, contrary to the bylaws.

21.   The strata provided an affidavit from a strata council member, J, who lives in the strata lot next door to SL8. J says she heard someone moving into SL8 on July 6, 2016, and later heard noises inside SL8 indicating occupancy. J says she emailed B, the owner’s representative at that time, asking him who was living in SL8. She provided a copy of the email exchange. In his reply, B wrote that the occupants were company staff, staying there temporarily.

22.   J also says she saw furniture being moved out of SL8 on September 21, 2016, and that she heard the sound of someone living in SL8 on February 27, 2018.

23.   Another strata council member, T, said in an affidavit that she saw an occupant in SL1 on August 21, 2016. The strata provided a few photos in evidence, including a photo of the alleged occupant of SL1.

24.   These statements from J and T do not conclusively prove that the strata lots were occupied. However, I find the owner’s representative has admitted at least intermittent occupancy. For example, an August 16, 2016 letter from the owner’s lawyer said that SL1 and SL8 were occupied by “employees or affiliates of Longine.”

25.   On October 23, 2018, the strata council held a hearing, at the owner’s request, on the issue of the owner’s alleged rental bylaw violations. The owner had been given written notice on September 10, 2018 of the strata council’s intention to issue fines. The hearing minutes document that the owner’s representative said at the hearing that the persons occupying the owner’s “units” were “employees and/or close family of the company, who sometimes came from abroad for short periods of time to help run the company”. The representative said these individuals were not paying rent, and therefore the rental restriction bylaw was not contravened.

26.   After the hearing, the strata sent a letter saying it did not accept the owners’ arguments, and that it would begin imposing fines for rentals contrary to the bylaws. The October 26, 2018 letter said that council had heard the rationale about employees occupying the strata lots since July 2016, but the owner had provided no new information regarding the situation.

27.   The owner’s representative replied by letter on November 5, 2018. The representative disputed the strata council’s decision, but did not contest the accuracy of the minutes.

28.   In this dispute, the applicant strata bears the burden of proving its claim that the owner rented SL1 and SL8 contrary to the bylaws. I find the strata has met that burden, based on the evidence provided by the strata. In addition to the statements of N and T, the strata provided photos and names of individuals who appeared to be living in the strata lots at various times.

29.   Also, I find that the owner has admitted occupancy of the strata lots, and has failed to produce any evidence to support its continued assertions that the occupants are employees or affiliates of the owner. It was open to the owner to provide payroll records or other documents to prove its defence, but it has not done so. The owner could also have provided records to show when these alleged employees were there, and when they were not, to establish that the occupancies were not continuous. This would also support the owner’s assertion that these occupancies were not rentals. The owner has not done so.

30.   As previously stated, the owner does not bear the burden of proof in this dispute. However, I find the strata presented significant evidence which supports the conclusion that the strata lots were occupied much of the time by people other than the registered directors of the corporate respondent. For example, the strata provided a copy of a website search showing that 1 occupant was an employee of a local health authority. I find it unlikely that this individual was also employed by the owner. Given that the owner would have access to documents proving employment by the occupants, I make an adverse inference based on the fact that no such records were provided. I also note that it would be almost impossible for the strata to obtain conclusive proof of rentals, such as tenancy agreements.

31.   In an April 4, 2016 email to a strata council member, owner representative B wrote that the owner’s intention was to rent the strata lots out. B asked for permission to rent out the strata lots, which the strata council denied. Similarly, in an August 16, 2016 letter, the owner’s lawyer wrote that the owner had an expectation when it bought the strata lots that rentals would be permitted. I find that this stated intention to rent out the strata lots, combined with the other evidence before me, supports the conclusion that the occupants were renters. Based on these factors, and the adverse inference against the owner, I therefore conclude that SL1 and SL8 were occupied, and that the occupants were renters, contrary to bylaw #BV422316.

32.   I will now address what remedies are appropriate.

Order to Stop Rentals

33.   The strata requests that I order the owner to immediately stop renting out SL1 and SL8 contrary to the bylaws. I agree that such a remedy is appropriate in the circumstances, and order that the owner must stop renting out SL1 and SL8 within 10 days of this decision. Any resulting costs such as rent refunds must be borne solely by the owner.

Bylaw Violation Fines

34.   In its Dispute Notice, the strata requested orders that the owner pay $14,500 in fines relating to the rental of SL1, and $24,000 in fines for SL8. Later, in its submissions, the owner requested fines of $21,000 for SL1 and $31,000 for SL8. This is because the fines continued to accrue for ongoing violations beyond the time the Dispute Notice was issued on August 10, 2018.

35.   I decline to order more than was requested in the Dispute Notice. As reasoned in paragraph 60 of The Owners, Strata Plan VR 484 v. Lawetz, 2017 BCCRT 59, once the tribunal proceeding was commenced, the issue of whether there had been a bylaw violation was a matter for the tribunal to decide. The vice chair therefore declined to order fines beyond the date of the Dispute Notice.

36.   While the reasoning in that decision is not binding on me, I find it persuasive and rely on it. I therefore conclude that the strata’s claim for outstanding fines is capped at the amount set out in the Dispute Notice.

37.   On the Dispute Response Form, the owner said the strata failed to give written notice of the fines. I agree in part, for the reasons set out below.

38.   There is correspondence between the parties from 2016 about alleged rentals. Around July 11, 2016, the strata attempted to fine the owner for rental bylaw violations. Those fines were reversed later in July 2016, for reasons that are not clear from the evidence before me. The strata lot account ledgers each show zero balances after that.

39.   I will consider the fines against each strata lot separately, as the facts are somewhat different.

Fines Against SL1

40.   On September 15, 2016, the strata’s lawyer wrote a letter stating that there had been a complaint of leasing the strata lot, contrary to the bylaws. The lawyer provided a copy of the rental bylaw, and said the strata was considering whether to impose a fine of $500. The owner was offered an opportunity for a hearing before the strata council, but none was requested.

41.   On October 11, 2016, the strata’s lawyer wrote again and said the strata council had decided that SL1 was being leased. The letter said the owner would immediately be fined $500, and that fine would be imposed every 14 days if the contravention continued.

42.   The ledgers show that the strata began to impose fines of $500 every 14 days for SL1 starting on October 12, 2016.

43.   I note that both of the notification letters were sent to the owner’s lawyer, rather than directly to the owner. However, the strata’s lawyer acknowledged receipt, and so I find effective notice was given for the purposes of SPA section 135.

44.   The requirements on a strata corporation for imposing fines against an owner are set out in section 135 of the SPA: receiving a complaint, and giving the owner particulars of the complaint and an opportunity to answer it, including at a hearing if requested. I find these requirements were met in this case. While the first letter did not mention continuing fines, I find that this was corrected by the second letter, which did contain that warning. The power to impose continuing fines for rental violations is set out in the bylaws, and SPA s. 135(3) says that as long as the requirements of section 135(1) are met initially, continuing fines can be imposed without further notice.

45.   The strata’s lawyer sent another letter on January 16, 2017 demanding payment of the fines, and an end to rentals in SL1. The strata’s ledgers show that the outstanding fine balance for SL1 on August 10, 2018, when the tribunal Dispute Notice was issued, was $24,000. I therefore order the owner to pay $24,000 in fines for rental violations in SL1.

46.   The strata is entitled to pre-judgment interest on this amount, under the Court Order Interest Act (COIA). I find this interest is payable from the date of the strata’s payment demand letter on January 16, 2017. This equals $691.27.

47.   I note that as I have not made a decision on SL1 rental fines after August 10, 2018, the parties are not barred from filing a separate dispute on that issue.

Fines Against SL8

48.   On September 15, 2016, the strata’s lawyer wrote a letter stating that there had been a complaint of leasing SL8, contrary to the bylaws. The rental bylaw was provided, and the letter said the strata was considering whether to impose a fine of $500. The owner was offered an opportunity for a hearing before the strata council, but none was requested.

49.   The SL8 strata lot account shows a single $500 fine on September 16, 2016. I find this fine was not legitimate, as the strata’s warning letter only said that a fine was being considered, and not that a decision to fine had been made. There is no letter prior to September 16, 2016 stating that a final decision to impose the fine had been made. I therefore find the strata is not entitled to payment of the September 16, 2016 fine. Some other fines imposed in this period were reversed, based on agreement between the parties. Since no payment is sought, I make no findings about those.

50.   On April 26, 2017, the strata’s lawyer wrote a letter stating that while the previous renters had moved out in late September 2016, new individuals were observed moving in to SL8 in February 2017. The lawyer said this constituted a bylaw breach, and the strata was again considering levying a fine. Bylaw copies were attached, and the owner was offered the opportunity for a strata council hearing.

51.   In May 26, 2017 letter, the strata’s lawyer wrote that the strata had decided to begin imposing fines. The ledger shows continuing biweekly fines of $500 starting on June 1, 2017, until the ledger entries end on February 14, 2019.

52.   A new lawyer for the strata wrote to the owner on September 10, 2018, stating that the strata had received a complaint that the owner had “commenced renting” SL8, and that a tenant appeared to have moved in around July 1, 2018. The letter asked the owner to respond, and said that if council determined there had been a bylaw breach, “it may commence fines against you”.

53.   I find that these statements in the September 10, 2018 letter are effectively an admission that the owner was not renting out ST8 prior to July 1, 2018, and that council had not determined whether he was in breach of the bylaws prior to that.

54.   I would appear that the SL8 occupant moved out sometime after the fines were imposed in June 2017. However, the strata provided no evidence or explanation for the apparent contradiction between the September 10, 2018 letter saying no bylaw violation determination had been reached, and the fact that the strata was imposing continuous fines for the same bylaw breach throughout this same period. It may be that the strata’s new lawyer was unaware of the ongoing fines. In any event, and in the absence of contrary evidence, I find that these statements in the September 10, 2018 letter about possibly commencing fines and determining whether there was a bylaw violation are effectively admissions by the strata that it cannot prove bylaw violations before September 10, 2018. This is consistent with the fact that the strata provided no indication of when the alleged June 2017 breaches ended.

 

55.   The September 10, 2018 letter said the owner had 21 days to provide a written answer to the bylaw violation complaint, or to request a hearing. The owner requested a hearing, which was held on October 23, 2018. The hearing minutes indicate that the strata council heard submissions from the owner’s representative, and subsequently agreed to begin imposing fines for the SL8 rentals. The strata wrote an October 26, 2018 letter to the owner setting out this decision, including the decision to “commence fining”.

56.   Based on all of this correspondence, I find the strata is not entitled to payment of any fines for SL8 rental violations prior to October 26, 2018. I order the strata to remove any fines from before October 26, 2018 from the SL8 strata lot account.

57.   As previously explained, I also decline to order fines beyond the date of the Dispute Notice, which is August 10, 2018. Since that date is earlier than the strata’s decision to commence fines on October 28, 2018, I decline to order any fines relating to SL8.

58.   As I have not made a decision on SL8 rental fines after August 10, 2018, the parties are not barred from filing a separate dispute on that issue.

TRIBUNAL FEES AND EXPENSES

59.   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. As the strata was partially successful in this dispute, I find that the owner must reimburse half of the strata’s tribunal fees, which equals $112.50.

60.   The strata requested $9.45 for the cost of serving the Dispute Notice on the owner. I find this reasonable in the circumstances, and order reimbursement of $9.45.

61.   The strata also requested reimbursement of legal fees, in the amount of its actual legal costs. Tribunal rule 9.4 says the tribunal will only order payment of legal fees in extraordinary circumstances. This is consistent with section 20 of the Act, which sets out a general rule that parties are to represent themselves in tribunal proceedings. I do not find that extraordinary circumstances exist in this case, and therefore do not order payment of legal fees.

DECISION AND ORDERS

62.   I order that within 14 days of this decision, the owner stop renting out SL1 and SL8. Any resulting costs must be borne solely by the owner.

63.   I order that within 60 days of this decision, the owner pay the strata a total of $24,813.22, broken down as follows:

a.    $24,000.00 for bylaw violation fines regarding SL1,

b.    $691.27 in prejudgment interest under the COIA, and

c.    $121.95 for tribunal fees and dispute-related expenses.

64.   The strata is also entitled to post-judgment interest under the COIA.

65.   The strata’s remaining claims are dismissed.

66.   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 123.1 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.

67.   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 123.1 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.