Date Issued: September 10, 2019

File: ST-2019-002882

Type: Strata

Civil Resolution Tribunal

Indexed as: Nazeri et al v. The Owners, Strata Plan LMS 1775, 2019 BCCRT 1066

Between:

AREZOU NAZERI and ASHKAN PISHVAEI

ApplicantS

And:

The Owners, Strata Plan LMS 1775

Respondent

AND:

                    AREZOU NAZERI and ASHKAN PISHVAEI

RESPONDENTS BY COUNTERCLAIM

REASONS FOR DECISION
Tribunal Member:	Lynn Scrivener

INTRODUCTION

1.      The applicants, AREZOU NAZERI and ASHKAN PISHVAEI (owners), are joint owners of a strata lot in the respondent strata corporation, The Owners, Strata Plan LMS 1775 (strata). The owners say that the strata has failed to act reasonably with respect to the replacement of windows and patio doors, has failed to comply with its bylaws and the Strata Property Act (SPA), and has failed to manage financial matters appropriately. The owners say they would not have purchased their strata lot had they known about these issues, and that they have incurred losses as a result. The owners ask for orders that the strata comply with the SPA, perform repair work to their strata lot, and pay them $100,000 in damages.

2.      The strata denies that it has acted unreasonably, and says that it has acted in good faith and in compliance with the SPA and the bylaws. It asks that the owners’ claims be dismissed. By counterclaim, the strata asks for an order that the owners reimburse it $2,635.88 for the cost of an engineering report.

3.      The owners are represented by Ms. Nazeri. The strata is represented by a member of the strata council.

JURISDICTION AND PROCEDURE

4.      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.

5.      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.

6.      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.

7.      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.

8.      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.

9.      During the tribunal process, the owners requested that the decision be anonymized. The tribunal’s decisions are made public and parties are identified because the tribunal’s proceedings are considered to be open. Decisions will be anonymized where a vulnerable party is involved or where sensitive information is disclosed, but parties’ names are not otherwise removed. Although invited to do so, the owners did not make submissions about the reasons for their request for anonymization. I have considered the circumstances, and find that it would not be appropriate in this case to replace the parties’ names with initials.

ISSUES

10.   The issues in this dispute are:

a.    whether the owners’ claim about the enclosure of a balcony is statute-barred by the Limitation Act,

b.    whether the strata should be ordered to comply with the SPA’s requirements for disclosure of documents, conflicts of interest, and duty of care of strata council members,

c.    whether the strata should be ordered to perform repairs on the owners’ strata lot,

d.    whether the strata must pay the owners $100,000 in compensation for losses they say they sustained as a result of errors in depreciation reports, and

e.    whether the owners should reimburse the strata for the $2,635.88 for an engineering report.

BACKGROUND & POSITIONS OF THE PARTIES

11.   The strata, which is comprised of 14 strata lots, was built in 1995. Mr. Pishvaei purchased strata lot 11 (also known as suite 301) in 2017. Ms. Nazeri became a joint owner of the strata lot in early 2019.

12.   The exterior walls of the building are comprised of concrete, brick, or stucco. There have been issues with water ingress, and the strata has developed a program for the monitoring, maintenance and repair of the building envelope. The strata has engaged in a number of large remediation projects over the years.

13.   Between 2000 and 2002, a portion of the building’s stucco exterior underwent rain screening work. As the existing windows and patio doors were relatively new, they were not replaced during this process. Part of the exterior of suite 301 was included in this work, and it was one of the strata lots left with its original windows and patio doors.

14.   There was another round of rain screening work in 2015 to 2016. This time, the project focused on the south side of the building and involved the replacement of windows and patio doors, but did not include the owners’ strata lot.

15.   The strata obtained a depreciation report in 2016. This report commented on the expected remaining lifespan of the windows, doors, and various exterior surfaces. The depreciation report contemplated the replacement of all original windows and doors by 2021.

16.   Soon after purchasing the strata lot, Mr. Pishvaei joined the strata council. He served as treasurer, drawing on his professional experience as an accountant.

17.   In December of 2017, moisture testing identified areas of concern on the exterior of the building. An engineering consultant recommended the installation of a new rain screening system and new windows and patio doors on a portion of the building. The strata obtained an updated depreciation report to reflect the need for this work to be completed earlier than anticipated, and began the process for obtaining ownership approval to proceed with the project. The work recommended by the engineering consultant (which was approved and funded by the ownership in a unanimous vote) did not include the replacement of the windows and doors in the ’01 suites.

18.   In the meantime, Mr. Pishvaei had developed concerns about the strata’s financial management and procedural matters. He formed the view that there had been overspending on previous projects and that some spending had not been properly approved by the ownership. He requested documentation about the previous rain screening projects. While some documents eventually were provided, not all documentation related to the 2000 – 2002 rain screening project was available. It is not clear whether these documents were not retained by the strata, were not returned by a previous property manager, or simply were misplaced in the intervening years.

19.   Based on the lack of available documentation, Mr. Pishvaei raised concerns about whether the rain screening had been done as documented in the depreciation report. He found what he described as errors in the depreciation reports about the age of the windows and doors and their expected life span. Other members of the strata council did not agree that errors existed. It is apparent that not all members of the strata council agreed about the approach to maintenance and repair projects and whether these projects should be done in the time frames set out in the depreciation report.

20.   The owners advocated vigorously for the replacement of windows and doors in the ’01 suites to be included in the scope of work for the upcoming project. The strata engaged an engineer to assess the windows and doors in the ’01 suites. The engineer’s January 29, 2019 report confirmed that previous rain screening work had been done as described in the depreciation report and “appeared to perform as intended”. The engineer expressed the opinion that the windows and doors in the ’01 suites had reached the end of their useful life. The engineer recommended that the strata plan for the replacement of these doors and windows “as a typical renewal project”. The engineer did not classify the need for replacement as an emergency.

21.   The strata received a quote as to the cost of this additional work. It organized a special general meeting to present options to the ownership about whether or not to include the ’01 windows and doors in the 2019 project or to defer this work until 2020/2021 in accordance with the depreciation report. The evidence shows that dealings between the strata council and the owners became more strained as the differences in opinions about the project’s scope and the management of the strata in general became apparent.

22.   At an April 3, 2019 special general meeting, the ownership approved a ¾ vote resolution to spend up to $20,000 to get specifications for the rain screening and window replacement of the ’01 suites, in preparation for the work to be completed in 2020/2021. The portion of the project previously recommended by the engineering consultant and approved by the ownership proceeded in the spring of 2019.

23.   Documents in evidence indicate that some strata lot owners wished to remove Mr. Pishvaei from the strata council. Mr. Pishvaei resigned from the strata council on April 4, 2019. He said that the strata council was making decisions without consulting him and expressed concern about the council’s ability to manage the strata. In a letter to the owners, he recommended that the strata’s records be monitored and reviewed by a professional accountant.

24.   The owners commenced this dispute in May of 2019. The owners disagree with the decision to defer the replacement of the ’01 windows and doors, and feel that the strata is not managed properly. The owners say that the strata did not comply with the SPA as it did not provide them with copies of documents they requested, certain members of the strata council were in conflicts of interest, and the strata distributed minutes that contained inaccurate information.

25.   The owners also say that the strata failed to take action when it became aware that a previous owner of a strata lot enclosed his or her balcony without permission. They say this was contrary to the bylaws, and resulted in unpaid fees and levies based on an incorrect unit entitlement. The owners state that the strata overspent on repairs in the 2015-2016 project without the approval of the ownership, and suggested that the strata council members do not have the financial qualifications to decide what is in the best interest of the strata.

26.   The owners also say that the January 2019 engineering report shows that major repairs are required to their strata lot in the form of window and door replacement, and they are of the view that the strata deferred these major repairs contrary to the engineer’s opinion. They say this was significantly unfair, as they had a reasonable expectation that their windows and doors would be replaced at the same time as replacements occurred in other strata lots with windows and doors of the same age, without any evidence of severe breakdown or water ingress. They say they would not have voted in favour of the project had they known that their strata lot would be excluded.

27.   The owners say that the depreciation reports were inaccurate as they did not consider that rain screening would be required in conjunction with replacing doors and windows. According to the owners, this result of this error was a significantly underestimated cost for the project and the strata breached section 26 of the SPA by approving the depreciation report. They say that they would not have purchased the strata lot had they known of these expenses. From the time of the purchase of the strata lot to the end of June 2019, the owners say they spent more than $90,000 on mortgage interest, strata maintenance fees, special levies and property taxes. They claim that they have sustained damages of $100,000, including expected future special levies.

28.   The strata disputes the owners’ allegations, and submits that it acted in good faith and in compliance with the SPA and the bylaws. The strata denies that it is responsible for any losses claimed by the owners, and says that it is not liable for any errors that may be contained in the depreciation reports. The strata’s position is that the tribunal does not have jurisdiction over section 33 of the SPA and the owners’ claims about conflict of interest. It denies that the minutes contained intentionally false or misleading information, and says that all of its meetings have been administered appropriately. The strata says that the members of its strata council were qualified to be elected.

29.   According to the strata, the ’01 suites were not excluded from the 2019 project, but rather they were never included. The strata submits that the scope of the 2019 project was determined as it was not possible to rain screen only a portion of a continuous wall elevation. Instead, a project must remedy the entire wall, including a “safe termination point”. The strata points out that the January 2019 engineering report recommended replacement of the ’01 windows and doors not as an emergency, but as a scheduled renewal project.

30.   By counterclaim, the strata says that it would not have obtained the engineer’s report in January of 2019 in the ordinary course, but that this expenditure was made as a result of the owners’ behaviour in seeking the replacement of their windows and doors. The strata seeks reimbursement of the associated costs.

ANALYSIS

31.   As a preliminary matter, the owners made submissions about mould remediation work and their view that the strata inappropriately paid for repairs that were the responsibility of the strata lot owners. They also made submissions about the costs associated with the strata’s decision to obtain legal advice in recent years and other items of what they say was “unapproved spending”. They asked for orders that these costs not be borne by the strata. As these claims were not identified in the Dispute Notice, I find they are not properly before me and I cannot address them in the context of this dispute.

Limitation Period

32.   The owners argued that the strata failed to comply with its bylaws as it did not take action against a balcony enclosure that had been erected without approval from the strata or the municipality. It is not entirely clear when the previous strata lot owner enclosed the balcony area. The strata became aware of it at some point in 2009 and, according to meeting minutes, decided not to require its removal at that time. The enclosure has since been removed and will not be re-installed unless the current owner obtains municipal permits and strata approval.

33.   The strata disputes the owners’ position that it incurred expenses as a result of the balcony enclosure and, in any event, says that this portion of the claim was brought outside of the applicable limitation period. The owners did not make submissions about the limitation issue.

34.   The Limitation Act applies to disputes before the tribunal, and places a limit on the time period in which a claim may be brought. If that time period expires, the claim may not be brought, even if it may have been successful. The current Limitation Act became law in British Columbia on June 1, 2013. As the strata became aware of the balcony enclosure in 2009, the limitation period began to run at that time. Accordingly, the previous version of the legislation applies.

35.   The previous Limitation Act contained a 6-year limitation period for this type of dispute. Thus, the limitation period for the balcony enclosure expired in 2015, 6 years after the strata became aware of the issue in 2009. The Dispute Notice was not issued until May 2019, well beyond the expiry of the limitation period. I find that this portion of the owners’ claim is statute barred and I may not address it.

Compliance with the SPA

36.   The SPA contains directions about the types of documents that must be prepared and/or retained by a strata corporation. Section 35(2) of the SPA requires that the strata must retain copies of, among other things, written contracts to which the strata corporation is a party, depreciation reports, and reports respecting repair or maintenance of major items in the strata corporation, including engineer’s reports.

37.   Section 36 of the SPA states that, on receiving a request, a strata corporation must make the records and documents referred to in section 35 available for inspection by, and provide copies of them to, an owner. The strata must comply with such a request within 2 weeks, and may charge a fee for copies of records or documents.

38.   The owners requested documents related to the 2000 – 2002 and 2015 – 2016 rain screening projects. Some of the owners’ requests were for items that are not required to be retained for long periods of time, in accordance with section 4.1 of the Strata Property Regulation. However, other items such as engineering reports, must be retained until the disposal or replacement of the items to which the reports related. The owners did not receive all reports related to the 2000 – 2002 project despite being in the scope of documents that should have been retained. As noted above, for reasons that are not entirely clear, it seems that some of these documents are not available from the strata or its property manager.

39.   It does not appear that the owners’ requests for documents were addressed in the time frame set out in the SPA. This may be due, at least in part, to the owners’ decisions to not take opportunities to inspect documents offered to them. In any event, the evidence suggests that they now have been provided with all available documentation. The owners’ suggestion that there must be more or better documentation is not supported by the evidence. While I do not find it necessary to make an order about document production, I would point out that the strata must comply with future requests for documents within 2 weeks, in accordance the SPA.

40.   The owners made submissions about the competence and qualifications of the strata council members, and their conduct regarding minutes and the administration of meetings. Section 31 of the SPA requires that members of a strata council must act honestly and in good faith. I infer that the owners’ position is that the council members are not meeting the necessary standard of care for their positions. As the individual members of the strata council are not parties to this dispute, I decline to make an order about the possibility of a breach of the duty of care contemplated by section 31 of the SPA. I acknowledge the owners’ suggestion that an accountant should oversee the strata’s business. While the strata may choose to engage an accountant to assist in its administration, there is nothing in the SPA that would require it to do so.

41.   Section 32 of the SPA sets out the steps that must be taken by strata council members in the event of a conflict of interest. This responsibility lies with the individual strata council members, not the strata itself. The owners alleges conflicts of interest on the part of some strata council members. As above, as none of these individuals are parties to this dispute, I decline to make an order about the possibility of them not complying with section 32. Further, any claims about a breach of section 32 must be brought before the British Columbia Supreme Court under section 33 of the SPA (see Dockside Brewing Co. Ltd. v. Strata Plan LMS 3837, 2007 BCCA 183 at paragraph 59).

42.   The owners seek an order that the strata comply with the SPA. I find that it is not necessary to make such an order. All strata corporations in the province are required to comply with the SPA, and I am not satisfied that an order to that effect would have significant meaning. It will be open to the owners or any other strata lot owners to request specific remedies from the tribunal or from the courts for any future concerns about breaches of the SPA.

Strata’s Decisions about Windows and Doors in the ’01 Suites

43.   Bylaw 8 sets out the strata’s repair and maintenance responsibilities for common assets, common property (CP) that has not been designated as limited common property (LCP), and certain items of LCP. This bylaw states that the strata is responsible for the exterior of the building, and balconies, doors, windows, and skylights on the exterior of the building or that front on CP.

44.   The owners’ position is that it was significantly unfair to them that the strata did not include the replacement of the windows and doors in the ’01 suites in the scope of the 2019 project.

45.   Section 123 of the CRTA contains language similar to section 164 of the SPA, which allows a tribunal member to make an order to remedy a significantly unfair act by a strata corporation. A “significantly unfair” act encompasses oppressive conduct and unfairly prejudicial conduct or resolutions. The latter has been interpreted to mean conduct that is unjust and inequitable (see, for example, Strata Plan VR1767 (Owners) v. Seven Estate Ltd., 2002 BCSC 381).

46.   The test for significant unfairness was summarized by a tribunal vice chair in A.P. v. The Owners, Strata Plan ABC, 2017 BCCRT 94, with reference to Dollan v. The Owners, Strata Plan BCS 1589, 2012 BCCA 44: what is or was the expectation of the affected owner or tenant? Was that expectation on the part of the owner or tenant objectively reasonable? If so, was that expectation violated by an action that was significantly unfair?

47.    The fact that the windows and patio doors in other strata lots have been replaced before the end of their useful life appears to have created an expectation for the owners that their windows and doors would be replaced in a similar time frame. For the reasons that follow, I find that this expectation was not objectively reasonable.

48.   The strata has a history of approaching the rain screening and window and door replacement in stages. The strata’s past practice indicates that it relies on expert opinion about moisture ingress (described as “danger” areas on the engineering reports) in determining the scope of each remediation project. This appears to be motivated, at least in part, by the desire to build up the contingency reserve fund so as to reduce the financial burden on the ownership. According to the documentation before me, at least 2 strata lot owners had difficulty in providing their share of funds for recent special levies and there is a sensitivity to these financial constraints.

49.   Although the engineer’s view was that the windows and doors in the ’01 suites had reached the end of their useful life, the report clearly stated that the recommended work was not an emergency and should be planned for as a “scheduled renewal project”. The engineer did not specify a time frame for the work, but did note that there was no indication of water ingress in the windows and doors, and that the rain screening in the area was performing as intended.

50.   The fact that other strata lots had their windows and doors replaced earlier is not, in my view, determinative of the need to replace the windows and doors in the ’01 elevation. Based on the lack of water ingress and “danger” on the portion of the building exterior on which the ’01 windows and doors are located, I find that it was reasonable for the strata to decide to defer the work for a short period. I do not find that there was any indication of preferential treatment of some strata lot owners to the detriment of the owners.

51.   I acknowledge the owners’ concern that the quoted prices for the work may not hold, and the strata may incur higher expenses when the work is completed as expected in 2020-2021. However, the possibility of higher expenses is speculative. Further, I find the risk of structural damage associated with a delay is not supported by the evidence.

52.   While the owners may disagree with the decision, I find that it was not significantly unfair that the windows and doors of the same age were replaced in other strata lots but not their own. I dismiss this portion of the owners’ claim.

Owners’ Claim for Damages

53.   The owners claim damages on the basis that they would not have purchased the strata lot had they known that additional rain screening would be required when replacing windows and exterior doors, resulting in higher costs than those estimated in the depreciation report. They claim $100,000 in mortgage interest, strata fees, special levies, property taxes and expected future special levies.

54.   The owners did not provide evidence to support any expenditures or losses. As the amount of alleged damages has not been established, I dismiss this aspect of the claim.

55.   Even if the owners had proven the amount of their claimed damages, I would not have granted them the order they seek. The owners have not proven that they sustained any losses as the result of an alleged error in the depreciation report or any lack of knowledge about the building’s exterior. The depreciation reports revealed ongoing management of building envelope issues, and detailed the need for future work, including the replacement of windows and patio doors. Even if the cost estimates were inaccurate, I am satisfied that the depreciation report revealed the need for significant future work.

56.   In addition, the evidence suggests that the owners had information about the extent of the rain screening, original windows and patio door from another source. Mr. Pishvaei stated in a December 3, 2018 email message that his real estate agent had advised him at the time of his purchase that the patio door and the windows had not been upgraded and the full exterior of the strata lot had not been rain screened.

57.   I find that the owners have not established their claimed damages, and I dismiss this aspect of their claim.

Cost of Engineering Report

58.   In its counterclaim, the strata seeks reimbursement of the cost of the January 29, 2019 engineering report. The strata’s Dispute Notice identifies the amount of the report as $2,635.88, while Dubas Engineering Inc.’s invoice shows a charge of $2,139.78, inclusive of taxes and disbursements. The discrepancy appears to be an error. Given my conclusion, I find that nothing turns on this.

59.   The strata voted to approve the expenditure for an engineering assessment and report to address the owners’ concerns about rain screening and whether the work had been completed, and their insistence that their windows and doors be replaced immediately. The strata says that there was no need to obtain this report, but that the owners engaged in “extreme behaviour” and the strata was concerned that their “disruptive behaviour would continue” if the matter was not addressed. The owners deny that their behaviour was extreme, and reiterate their position that their windows and doors should have been replaced.

60.   As discussed above, bylaw 8 provides that the exterior of the building and doors and windows on the exterior of the building are the strata’s responsibility to repair and maintain. I find that the assessment of the ’01 suites’ windows and doors falls within the strata’s scope of responsibility. Whether or not the decision to obtain the engineer’s report was influenced by the owners’ behaviour does not alter that conclusion. This is particularly so as the report was not confined to the owners’ strata lot alone.

61.   The repair and maintenance of the windows and patio doors, and any assessment of these items, are the responsibility of the strata and the costs should not be borne by individual strata lot members. I dismiss the strata’s counterclaim.

TRIBUNAL FEES AND EXPENSES

62.   Under section 49 of the CRTA, and the tribunal rules, the tribunal generally will order an unsuccessful party to reimburse a successful party for tribunal fees and reasonable dispute-related expenses. As the parties have been unsuccessful in their claim and counterclaim, I dismiss their claims for reimbursement of tribunal fees.

63.   The owners and the strata claimed for reimbursement of legal fees. The owners did not specify an amount, and the strata claimed $2,539.78. Rule 9.4(3) states that the tribunal will not order one party to pay to another party any fees charged by a lawyer or other representative unless there are extraordinary circumstances which would make such an order appropriate. I find that the circumstances of this dispute are not extraordinary, and I dismiss the parties’ claims for reimbursement of legal fees.

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

ORDERS

65.   I dismiss the owners’ claims.

66.   I dismiss the strata’s counterclaim and this dispute.