Date Issued: August 21, 2019

File: ST-2018-009245

Type: Strata

Civil Resolution Tribunal

Indexed as: Zane v. The Owners, Strata Plan BCS 4476, 2019 BCCRT 991

Between:

Inga Zane

Applicant

And:

The Owners, Strata Plan BCS 4476

Respondent

REASONS FOR DECISION
Tribunal Member:	Kate Campbell

INTRODUCTION

1.      The applicant, Inga Zane (owner) owns a strata lot in the respondent strata corporation, The Owners, Strata Plan BCS 4476 (strata).

2.      The owner says the strata has not met various requirements of the Strata Property Act (SPA) including provisions about depreciation reports, the contingency reserve fund (CRF), meeting minutes, information disclosure, and strata governance.

3.      The owner developer (OD) owns 5 out of the 7 strata lots in the strata. The OD also owns lot 1, which is a freehold lot next to the strata. The owner says the strata has allowed the OD to use the strata’s common property road without financially contributing to it. The owner says the OD and the strata have acted in a conflict of interest, and that the strata has treated her in a significantly unfair manner.

4.      The owner says she paid her strata fees in protest, to be held in trust, but the strata failed to comply.

5.      On the Dispute Notice, the owner sought the following orders:

a.    The strata must govern itself with transparency.

b.    The strata must operate in compliance with the SPA, including conflict of interest provisions.

c.    The strata must take a “proper, fixed rational approach” to strata fees.

d.    The OD must contribute money for its use of common assets.

e.    The OD must act fairly and not discriminate against the owner.

f.     The strata must pay the owner $10,000 in damages.

6.      In her written submissions to the tribunal, the owner set out somewhat different claims, and sought some different remedies than those set out in the Dispute Notice. I address that matter below.

7.      The strata denies all of the owners claims. It says it was not required to hold the owner’s strata fees in trust, and that it is considering whether to waive the requirement for a depreciation report. It also says it is not liable for the owner’s claims against the OD.

8.      The owner is self-represented in this dispute. The strata is represented by BH, a strata council member.

JURISDICTION AND PROCEDURE

9.      These are the formal written reasons of the Civil Resolution Tribunal (tribunal). The tribunal has jurisdiction over strata property claims under section 121 of the Civil Resolution Tribunal Act (CRTA). The tribunal’s mandate is to provide dispute resolution services accessibly, quickly, economically, informally, and flexibly. The tribunal must act fairly and follow the law. It must also recognize any relationships between dispute parties that will likely continue after the tribunal’s process has ended.

10.   The tribunal has discretion to decide the format of the hearing, including in writing, by telephone, videoconferencing, or a combination of these. I am satisfied an oral hearing is not required as I can fairly decide the dispute based on the evidence and submissions provided.

11.   The tribunal may accept as evidence information that it considers relevant, necessary and appropriate, whether or not the information would be admissible in court. The tribunal may also ask the parties and witnesses questions and inform itself in any way it considers appropriate.

12.   Under section 10 of the CRTA, the tribunal must refuse to resolve a claim that it considers to be outside the tribunal’s jurisdiction. A dispute that involves some issues that are outside the tribunal’s jurisdiction may be amended to remove those issues.

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

 

Anonymizing

14.   BH, on behalf of the strata, requests that the parties’ names be anonymized in the published version of this decision. They make this request because of the owner’s allegations in this dispute about the conduct of the strata and the conduct of BH.

15.   I find it is appropriate to use only BH’s initials to identify them, as they are not a named party in this dispute. However, I find that anonymizing the parties’ names is not appropriate in this dispute. By presumption, and consistent with the “open court” principle, tribunal decisions include parties’ names unless specific circumstances, such as protection of a vulnerable person, justify anonymization. I find no such circumstances here.

Conflict of interest claim

16.   The owner claims that the strata and the OD have disregarded the conflict of interest provision the SPA.

17.   SPA section 31 says that in exercising the powers and performing the duties of the strata corporation, each strata council member must act honestly and in good faith, and must exercise the care, diligence, and skill of a reasonably prudent person in comparable circumstances. SPA section 32 says that a strata council member who has a direct or indirect interest in a contract or transaction with the strata, or a decision before the strata council, that council member must disclose their interest, abstain from voting, and leave the strata council meeting during the discussion and vote.

18.   Both sections 31 and 32 apply to individual strata council members. Neither provision applies to the strata corporation or strata council as a whole. (See Wong et al v. The Owners, Strata Plan EPS 1067, 2019 BCCRT 117.) Since neither the OD nor any individual strata council member was named as a party in this dispute, I make no findings about conflict of interest.

 

Transparency and SPA compliance

19.   The owner seeks orders that the strata “govern itself with full transparency”, and that strata operate in strict compliance with the SPA.

20.   The strata is already required to follow the SPA, which includes provisions about governance, voting, reporting requirements, and document disclosure. The amount of “transparency” required from a strata is set out in these provisions.

21.   I find that ordering the strata to comply with the SPA would serve no useful purpose. The SPA provisions are mandatory, and the strata it is already required follow them. I therefore decline to make the requested orders for compliance and transparency.

Claims not included in Dispute Notice

22.   The strata argues that the owner’s written submissions to the tribunal raise additional claims that were not included in the Dispute Notice, and were not raised during the tribunal facilitation process. The strata submits these claims are an abuse of process, and should be dismissed.

23.   I agree that the applicant’s submissions include several new claims that were not set out in the Dispute Notice. While the CRTA and the tribunal’s rules allow an applicant to request that a Dispute Notice be amended, this did not occur.

24.   While the tribunal’s mandate includes flexibility, I find it is appropriate not to decide the additional claims raised in the owner’s submissions that were not mentioned in the Dispute Notice. The CRTA says that a person must request resolution using the prescribed form, and the tribunal will review the claims before ordering service of the Dispute Notice to the respondent. The CRTA also sets out a mandatory case management phase, in which tribunal staff facilitate resolution by agreement, or alternately, prepare for hearing by an adjudicator. I agree with the strata that by raising new claims after the facilitation phase, the owner effectively bypassed the facilitation process, and did not give notice of all claims to the strata in the required manner.

25.   For these reasons, in this decision I will not address the following claims that were raised in the owner’s submissions but not in the Dispute Notice:

a.    Whether the owner was given proper notice under SPA s. 135 of alleged bylaw violations, and whether imposed bylaw violation fines are valid.

b.    Whether BN should be removed from the strata council.

c.    Whether specific decisions of the strata council or BN are void due to improper meeting minutes.

d.    Whether the $10,000 surplus from the 2018 operating fund should be rolled into the 2019 operating fund, with a corresponding reduction in the CRF.

e.    Whether the 2017 decision to pay a $25,000 damage deposit should be reversed.

f.     Whether the strata provided a false disclosure statement, and whether owner should be reimbursed $2,000 in legal fees incurred to obtain a correct disclosure statement.

g.    The owner’s removal from the strata council, and her right to attend strata council meetings.

26.   The strata requests an order barring the owner from bringing some or all future claims to the tribunal. I find there is no authority in the CRTA or the SPA to issue such an order, and I decline to order it in any event. The tribunal will not typically make proactive orders about things that have not yet occurred. Future claims must be assessed if and when they are filed, based on their nature, content, and underlying facts.

ISSUES

27.   The issues in this dispute are:

a.    Can the tribunal make orders against the OD in this dispute?

b.    Should the tribunal order the strata to disclose documents, and pay a penalty for failure to disclose?

c.    Do the strata council meeting minutes meet SPA requirements, and if not, what remedies are appropriate?

d.    Should the strata retroactively adjust the 2018 CRF contributions?

e.    Should the strata refund a portion of the owner’s 2018 strata fees?

f.     Was the strata required to hold the owner’s strata fees in trust?

g.    Were the strata’s actions toward the owner significantly unfair, and if so, what remedies are appropriate?

h.    Is either party entitled to reimbursement of legal fees?

EVIDENCE AND ANALYSIS

28.   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 must prove their claims on a balance of probabilities.

29.   The strata is bare land strata corporation. Under section 2 of the SPA, the strata was created on July 18, 2012, when the strata plan was filed at the Land Title Office (LTO).

30.   The strata consists of 7 strata lots, of varying shapes and sizes. The strata plan shows that a common property road (road) runs past all the strata lots and connects to the public road at one end.

31.   The strata filed a full set of amended bylaws at the LTO in July 2013. These are the bylaws applicable to this dispute.

Can the tribunal make orders against the OD in this dispute?

32.   The owner seeks an order that the OD must act fairly and not discriminate against her. Since the OD was not named as a respondent in this dispute, I find I have no authority to orders against the OD. I also agree with the strata that it is not directly liable for the OD’s actions.

33.   The owner also seeks an order that the OD contribute financially to the road. The OD owns Lot 1, which a freehold lot next to the strata. Lot 1 is not part of the strata, but the OD has a registered easement allowing it to use the strata’s road. The “terms of instrument” setting out the easement says the OD must repair any damage caused by its use of the road.

34.   The owner says the OD should be ordered to pay ongoing fees to the strata for road maintenance.

35.   Since the OD is not named as a party in this dispute, I find I have no authority to make orders against it. Also, the terms of instrument state that if there is disagreement about the meaning of the terms, that dispute shall be resolved through mediation, through commercial arbitration, or by the BC Supreme Court. For this reason, I find the tribunal has no jurisdiction to decide this claim about road maintenance expenses.

36.   For these reasons, and under section 10 of the CRTA, I therefore refuse to resolve this claim against the OD.

37.   The owner also seeks an order that the OD be fined $380 for failing to pay its initial CRF contribution on time. Even if the OD were named as a party in this dispute, I would not make this order as there is no SPA provision that allows for such a penalty against an owner developer.

Should the tribunal order the strata to disclose documents, and pay a penalty for failure to disclose?

38.   The owner says the strata failed to provide documents she requested. She seeks reimbursement of $500 for “expense and frustration”, plus an order that the strata provide a copy of an email from the strata council treasurer CT to the municipality.

39.   The strata’s obligation to disclose records and documents is set out in sections 35 and 36 of the SPA. These sections set out what records and documents must be prepared and kept by the strata, and how and by whom this information can be obtained. In Kayne v. The Owners Strata Plan LMS 2374, 2007 BCSC 1610, the BC Supreme Court found that a record or document that is not set out in section 35 of the SPA is generally not available to an owner.

40.   The owner’s disclosure requests are summarized in a November 7, 2018 letter to the strata. In that letter, she acknowledged receipt of some annual general meeting (AGM) minutes and a list of strata council members. She requested disclosure of the minutes of all other strata corporation meetings. The owner also requested documents submitted to the strata regarding complaints discussed at a September 19, 2018 emergency meeting of the strata council, including documents noted in the minutes as follows: “the municipality has provided confirmation of the presence of stop work orders and these documents were obtained and reviewed.”

41.   The minutes of the September 19 meeting indicate that all of the agenda items dealt with alleged bylaw violations by the owner.

42.   The strata says that by the time of her November 7, 2018 request, the owner had full confirmation of the municipality’s stop work order, and the municipality’s position on it, as the municipality filed a BC Supreme Court petition to enforce the stop work order in May 2018. It also says it provided copies of all meeting minutes as evidence in this dispute, so the issue is moot.

43.   I find that the strata was obligated to provide meeting minutes within 2 weeks of the owner’s request. The strata has effectively admitted it did not do so, and was therefore in violation of SPA section 36(3). However, I decline to order the $500 sought by the owner, as there is no provision in the SPA allowing for such a penalty.

44.   I there dismiss the owner’s claim for a penalty for late disclosure.

45.   The owner seeks disclosure of an email (or email chain) from CT to the municipality about the stop work order. I find that this email, if it exists, is a document captured by SPA section 35. As CT was the strata council treasurer, I infer that he was emailing the municipality about the owner’s strata lot in that capacity. I note that the strata provided no contrary evidence on this point, to establish that the email was sent in CT’s personal capacity. Rather, I find that the email was “correspondence sent or received by the strata corporation and council”.

46.   I therefore order the strata to provide, within 30 days of this decision, copies of all emails sent by strata council members to the Bowen Island Municipality about the construction and stop work order on the owner’s strata lot. The strata must also provide copies of any responses received from the municipality. I find that this correspondence is captured by SPA section 35, and is disclosable under section 36.

47.   I note the strata’s objection that this remedy was not raised in the Dispute Notice. However, the Dispute Notice included a claim that the strata “Failed to comply with request for information.” For that reason, I find the strata had sufficient notice of the claim (which was clarified in the owner’s submissions), and an opportunity to respond to it in written submissions.

48.   The owner’s document disclosure claim is therefore allowed in part.

Do the strata council meeting minutes meet SPA requirements, and if not, what remedies are appropriate?

49.   The owner says that some or all of the strata’s meeting minutes are false or misleading. She seeks an order that all strata council meetings must be “minuted with reference to terms of issues if they form part of a resolution understanding.”

50.   SPA section 35(1)(a) requires that the strata prepare minutes of all strata council meetings, “including the results of any votes”.

51.   I find that the strata council minutes comply with SPA requirements. In Kayne, the court said in paragraph 8 that the SPA requires that minutes must include the results of any votes, but may or may not report in detail the discussions leading to those decisions. This finding was confirmed more recently by the BC Supreme Court in Yang v. Re/Max Commercial Realty Associates (482258 BC Ltd.), 2016 BCSC 2147, at paragraph 133.

52.   Thus, the only requirement in the SPA is that the minutes include the results of any votes. While it may be good practice for the strata to include more detail, it is not mandatory.

53.   While the owner says that some of the meeting minutes are false, I find that she has not provided sufficient evidence to establish this claim.

54.   For these reasons, I dismiss the owner’s claims about meeting minutes.

Should the strata retroactively adjust the 2018 CRF contributions?

55.   The parties agree, and the evidence confirms, that the OD did not contribute to the CRF at the time of the first conveyance of a strata lot in the strata, as required under SPA section 12. The parties agree that the OD’s contribution should have been $1,850, based on the formula set out in section 12.

56.   The strata says the OD’s failure to contribute to the CRF was unintentional. A March 9, 2018 email from the strata’s treasurer (who is the OD’s son) indicates that the CRF issue had been raised a recent strata meeting by the owner’s spouse, and that “they looked into it.” The email confirms that the $1,850 had since been paid by the OD.

57.   The owner argues that the OD should pay a penalty of $500, or alternatively $380 in interest, for this failure to contribute to the CRF. As previously stated, since the OD is not a named party, I cannot make orders against it. Also, there is no provision in the SPA that allows for such a penalty.

58.   The owner also seeks an order that the strata adjust the 2018 budget, to reduce the CRF contributions by $1,850 plus $380 in related interest. I decline to issue this order. The 2018 fiscal year is over, so I find there is no practical purpose in a retroactive adjustment. The strata owners have passed a new budget for 2019, and were aware of the OD’s late-arriving $1,850 contribution to the CRF when they did so.

59.   The owner is understandably frustrated that the OD’s failure to properly contribute to the CRF resulted in the strata lot owners contributing more than the required minimum to the CRF until 2018. This occurred because the CRF was below the minimum threshold set out in Strata Property Regulation (Regulation) 6.1. I find that this was corrected after the OD paid the $1,850. At that time, the owners knew that the CRF was higher than the required minimum. As a result, the owners can take that into account in assessing future CRF contributions. I also note there is no maximum restriction on CRF contributions where the actual amount is greater than 25% of the operating expenses under Regulation 6.1(b). I therefore conclude that there is no need for retroactive changes. I dismiss the owner’s claim.

Should the strata refund a portion of the owner’s 2018 strata fees?

60.   The owner submits that her 2018 strata fees should be reduced for the following reasons:

a.    The CRF contributions were not adjusted to account for the OD’s failure to make its initial contribution.

b.    The CRF is excessive.

c.    The strata has no depreciation report.

d.    The strata’s operating budget is excessive.

61.   Based on the evidence, I find that the owner’s 2018 strata fees were calculated correctly, based on the strata’s budget and her unit entitlement, as required under the SPA. The strata’s budgets for 2018 and 2019 were approved by the owners at AGMs. The fact that the owner disagrees with those budgets does not justify a fee rebate.

62.   I note that part of the owner’s concern about the strata’s operating budget is that she believes the strata has created a legal fund to finance litigation against her. However, I note that under SPA sections 167(2) and 189.4, an owner who sues the strata corporation is not required to contribute to the expense of defending that suit. This means that the strata must ensure that the owner’s strata fees are not used to pay for any of its expenses in this dispute.

 

Depreciation Report

63.   The strata admits it did not either obtain a depreciation report or obtain the necessary waiver until the February 27, 2019 AGM, where the owners passed a ¾ vote resolution to waive the depreciation report.

64.   While this delay was a breach of the SPA, I find the breach was cured by the February 2019 vote. Also, I find that the failure to obtain or waive a depreciation report does not justify a refund of the owner’s strata fees. I dismiss this claim.

Was the strata required to hold the owner’s strata fees in trust?

65.   In September 2018, the strata requested that the owner pay outstanding strata fees. In a September 18, 2018 email, the owner replied that she would pay her strata fees, but the funds were to be held in trust under section 114 of the SPA (apparently because of her objections to the strata’s budget). She wrote that she would provide the strata with notice of a tribunal claim against the strata.

66.   The owner provided a cheque to the strata dated September 18, 2018. The memo line says, “paid in protest”.

67.   Section 114(1)(b)(ii) of the SPA says that if there is a dispute over whether an owner or tenant owes money to a strata corporation, the owner may pay the disputed amount in trust if an initiating notice has been given under section 6 of the CRTA. In this case, the owner filed her dispute with the tribunal on December 16, 2018, and the initiating notice (Dispute Notice) was issued on December 27, 2018. The owner’s payment, which she says should have been held in trust under section 114, was made on September 18, 2018.

68.   Since there was no initiating notice issued until 3 months after the owner made the payment, I find the strata was not required to hold the cheque in trust under SPA s. 114.

69.   In paragraph 28 of her “brief” to the tribunal, the owner wrote that filing her tribunal application was contingent upon her receiving certified documents from the strata, which she did not receive. I do not accept this submission. The tribunal does not require any document production at the time of filing a dispute.

70.   For all of these reasons, I find the strata was not required to hold the owner’s September 2018 payment in trust. I dismiss this claim.

71.   As noted above, I will not address the owner’s claim that some strata council decisions are void due to improper minutes, as the owner did not raise this claim until after the tribunal facilitation phase was complete.

Were the strata’s actions toward the owner significantly unfair, and if so, what remedies are appropriate?

72.   The owner says that the OD’s failure to pay the $1,850 CRF contribution on time was significantly unfair to her.

73.   SPA section 164 and CRTA section 123(2) set out the tribunal’s authority to order a remedy for a significantly unfair action by a “strata corporation, the council or a person who holds 50% or more of the votes.” Since the OD was not named as a party, I make no finding about whether the OD was significantly unfair to the owner.

74.   It could be argued that the strata’s failure to notice or enforce the OD’s missed CRF contribution until 2018 was significantly unfair. The leading case that sets out the test for significant unfairness under section 164 of the SPA is Dollan v. The Owners, Strata Plan BCS 1589, 2012 BCCA 44. The BC Supreme Court confirmed that the same test applies under section 123(2) of the Act in The Owners, Strata Plan BCS 1721 v. Watson, 2017 BCSC 763. The test is:

a. What is or was the expectation of the affected owner?

b. Was that expectation on the part of the owner objectively reasonable?

c. If so, was that expectation violated by an action that was significantly unfair?

22. Under the third part of the test, the courts have described actions that are “significantly unfair” as being burdensome, harsh, wrongful, lacking in probity or fair dealing, done in bad faith, unjust or inequitable. See Reid v. Strata Plan LMS 2503, 2003 BCCA 128.

75.   I find that the strata council’s failure to pursue the OD’s missing CRF contribution was not significantly unfair to the owner. There is no evidence before me that the OD’s failure to pay was purposeful rather than inadvertent, or that the strata council was aware of the payment obligation. This is supported by the fact that almost immediately after the matter was raised by the owner’s spouse, the OD paid the $1,850. Thus, I find the evidence does not establish that the strata council’s actions regarding the CRF payment were wrongful or unjust. I find the strata acted reasonably by looking into the matter once it was raised and obtaining the missing payment.

76.   I therefore dismiss this claim, and conclude that the strata’s actions regarding the OD’s CRF payment were not significantly unfair to the owner.

77.   I note that elsewhere in her submissions, the owner raised other allegations of significant unfairness. However, I find that these claims are not before me, for the various reasons set out in the initial paragraphs of this decision.

Is either party entitled to reimbursement of legal fees?

78.   I find that neither party is entitled to reimbursement of legal fees. The tribunal’s rules state that that except in extraordinary cases, the tribunal will not order payment of legal fees in strata disputes.

79.   I find that there are no such extraordinary circumstances in this dispute. The strata argues that legal fee reimbursement is justified in part because of the owner’s allegations of misconduct and dishonesty against the strata council and BH. While the owner made such allegations, I find these are not extraordinary in the general context of litigation. I also note that BH is not a party to this dispute.

80.   I have also considered whether the owner’s late-raised claims justify reimbursement of any legal fees. I acknowledge that the strata reasonably had to reply to all these claims. However, section 20 of the CRTA sets out a general rule that parties must represent themselves in tribunal proceedings. For that reason, and in the specific circumstances of this dispute, I find it would be unreasonable to impose a costs penalty on the unrepresented owner for her failure to raise her claims at the appropriate time.

TRIBUNAL FEES AND EXPENSES

81.   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. The owner had limited success in this dispute. I find that in the circumstances, it is reasonable to order the strata to reimburse 25% of the owner’s tribunal fees, which equals $56.24.

82.   The strata corporation must comply with section 189.4 of the SPA, which includes not charging dispute-related expenses against the owner.

ORDERS

83.   I order that within 30 days of this decision:

a.    The strata must provide the owner with copies of all emails sent by strata council members to the Bowen Island Municipality about the construction and stop work order on the owner’s strata lot. The strata must also provide copies of any responses received from the municipality. The strata must bear the costs of any copying, or may provide the documents by email.

b.    The strata must reimburse the owner $56.25 for tribunal fees.

84.   I dismiss the owner’s remaining claims.

85.   Under section 57 of the CRTA, a party can enforce this final tribunal decision by filing a validated copy of the attached order in the Supreme Court of British Columbia (BCSC). The order can only be filed if, among other things, the time for an appeal under section 123.1 of the CRTA 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 a BCSC order.

86.   Orders for financial compensation or the return of personal property can also be enforced through the Provincial Court of British Columbia (BCPC). However, the principal amount or the value of the personal property must be within the BCPC’s monetary limit for claims under the Small Claims Act (currently $35,000). Under section 58 of the CRTA, the owner can enforce this final decision by filing a validated copy of the attached order in the BCPC. The order can only be filed if, among other things, the time for an appeal under section 123.1 of the CRTA 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 a BCPC order.