Date of Original Decision: June 17, 2020

Date of Amended Decision: June 18, 2020[i]

File: ST-2019-005260

Type: Strata

Civil Resolution Tribunal

Indexed as: The Owners, Strata Plan LMS 2385 v. Field, 2020 BCCRT 673

Between:

The Owners, Strata Plan LMS 2385

Applicant

And:

ROY FIELD

Respondent

AMENDED REASONS FOR DECISION
Tribunal Member:	Julie K. Gibson

INTRODUCTION

1.      This dispute arises from reimbursement of common expenses to a strata council member.

2.      The applicant strata corporation The Owners, Strata Plan LMS 2385 (strata) says the respondent strata lot owner Roy Field should refund it for reimbursement payments made to him when he was a strata council member. The strata says Mr. Field either wrongfully or fraudulently submitted some receipts or was reimbursed for unauthorized purchases.

3.      The strata seeks an order for Mr. Field to pay it back for:

a.    $564.48 for the purchase of “no parking” signs,

b.    a further $564.48 paid for the “no parking” sign purchase that had already been reimbursed in the previous fiscal year,

c.    $110.26 for ice salt purchases in November 2017, where Mr. Field was allegedly reimbursed twice for only one set of expenses,

d.    $147.40 for mileage reimbursement the strata says it did not authorize,

e.    $317.49 reimbursed in error for various purchases the strata says were unauthorized,

f.     $750 reimbursed for 6 landscaping invoices the strata says were “fraudulently manufactured” and not authorized, and

g.    $50 for what the strata describes as a “fraudulently manufactured receipt” for roofing work done on Mr. Field’s residence, and

h.    $225 in CRT fees.

4.      Mr. Field says the reimbursements were all valid and for strata council-approved expenses. He asks that I dismiss the dispute.

5.      The strata is represented by strata council member LW. The respondent is self-represented.

 

JURISDICTION AND PROCEDURE

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

7.      The tribunal has discretion to decide the format of the hearing, including by writing, telephone, videoconferencing, email, or a combination of these. In some respects, this dispute amounts to a scenario where both sides call into question the credibility of the other. Credibility of witnesses, particularly where there is conflict, cannot be determined solely by the test of whose personal demeanour in a courtroom or tribunal proceeding appears to be the most truthful. In the circumstances of this dispute, I find that I am properly able to assess and weigh the evidence and submissions before me.

8.      Further, bearing in mind the tribunal’s mandate that includes proportionality and a speedy resolution of disputes, I find that an oral hearing is not necessary. In Yas v. Pope, 2018 BCSC 282 at paragraphs 32 to 38, the court recognized that oral hearings are not necessarily required where credibility is in issue. I decided to hear this dispute through written submissions.

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

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

Are the strata’s claims within the CRT’s jurisdiction?

11.   The preliminary issue is whether the CRT’s jurisdiction includes a strata’s claim against a strata council member for breach of fiduciary duty or failure to exercise their duties in an honest and good faith manner and with reasonable diligence, as required by section 31 of the Strata Property Act (SPA). For the reasons given below I find it does.

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

13.   In submissions, the strata describes its claims as involving strata council member remuneration under section 34, delegation of strata council powers and duties, and spending restrictions under the SPA.

14.   Section 34 of the SPA provides that any “remuneration” to be paid to a strata council member for the exercise of their strata council powers or duties must be approved in advance either in the budget, bylaws or by a ¾ resolution passed at an annual general meeting (AGM) or special general meeting (SGM).

15.   “Remuneration” is not defined in the CRTA. The Merriam-Webster dictionary defines remuneration as paying for a service by way of compensation. Based on that definition, I find that reimbursing a strata council member for common expenses incurred in the course of their duties is not remuneration. Reimbursement is limited to the amount spent by the council member on a given product. For example, Mr. Field may be reimbursed for the price he paid for a bag of ice salt, but not more. None of the reimbursement money is paid for Mr. Field’s service in performing his strata council duties. My finding is consistent with the Vice Chair’s non-binding but instructive analysis in Hoover v. The Owners, Strata Plan KAS 1984 at paragraph 43. In Hoover, the CRT held that remuneration under section 34 was different than paying strata council members for completing repairs and maintenance.

16.   I find that the strata’s submissions about strata council powers and duties and spending restrictions address the mechanisms for authorized reimbursement. However, the essence of the strata’s claims is that Mr. Field engaged in wrongful or fraudulent conduct and breached his fiduciary duty to the owners. I find that the strata’s claims are for breaches of section 31 of the SPA.

17.   Section 31 requires a council member to act honestly and in good faith with a view to the best interests of the strata and to exercise the care, diligence and skill of a reasonably prudent person in comparable circumstances.

18.   SPA section 32 applies to claims involving a strata council member conflict of interest. I find that the strata’s claims do not engage section 32 because the claims are for common expenses that Mr. Field administered in his strata council role.  Mr. Field did not have a separate personal interest in the underlying contract or transaction.  I make this finding even as it pertains to the $50 claim for the Carlson Roofing invoice, because although the loose siding being addressed was allegedly on the exterior of Mr. Field’s strata lot, it was on the building exterior and therefore the strata’s maintenance responsibility.  In addition, the strata council minutes show that Mr. Field left the meetings when the reimbursement issued was discussed.

19.   This is important because remedies for a section 32 claim are contained in section 33, which is expressly outside the CRT’s jurisdiction as set out in CRTA section 122(1)(a). Such claims must be dealt with by the Supreme Court: Dockside Brewing Co. Ltd. v. Strata Plan LMS 3837, 2007 BCCA 183 at paragraph 59.

20.   The Court in Dockside wrote that “…section 33 provides remedies for breaches of sections 31 and 32”. I interpret this to mean that where strata council member conduct breaches both sections 31 and 32, a section 33 remedy is available. Dockside does not mean that a claim for a breach of section 31 only would give rise to a section 33 remedy. Based on the language in section 33(1), section 33 remedies apply only where a strata council member fails to comply with section 32. Section 33 does not provide remedies for section 31 claims.

21.   Section 121 (1)(a) of the CRTA gives the CRT jurisdiction over SPA claims about the interpretation and application of the SPA, or its regulations, bylaws or rules. SPA section 31 is not excluded from the CRT’s jurisdiction under CRTA section 122, so claims about the interpretation and application of section 31 fall within the CRT’s jurisdiction.

22.   In Kornylo v. The Owners, Strata Plan VR 2628, 2019 BCCRT 1215, the CRT followed the binding court decision in The Owners, Strata Plan LMS 3259 v. Sze Hang Holdings Inc., 2016 BCSC 32, to find that a strata lot owner cannot sue a strata council member for a SPA section 31 breach. The claims in Kornylo and Sze Hang were brought by strata lot owners.  A strata council member’s duties under section 31 of the SPA are owed to the strata, not to individual strata lot owners: Sze Hang, paragraph 267.  This dispute is different from Sze Hang and Kornylo because the applicant is the strata.  I find that the strata can bring a section 31 breach claim against a strata council member. 

23.   For these reasons, I find that the CRT has jurisdiction over the strata’s claims against Mr. Field.

ISSUE

24.   The issue in this dispute is whether Mr. Field breached the SPA section 31 such that he must repay some or all of the claimed expense reimbursements to the strata.

EVIDENCE AND ANALYSIS

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

26.   The applicable bylaws (Bylaws) are those filed at the Land Title Office (LTO) on October 26, 2016, subject to subsequent amendments that are not relevant to this dispute.

27.   Bylaw 25 provide that strata council may delegate its spending powers or duties if it does so by resolution that delegates the authority to make an expenditure for a specific amount for a specific purpose and sets a maximum amount that may be spent.

Law re: Common Expenses

28.   The strata is obliged to repair and maintain common property (CP) and common assets. The funds needed for this repair and maintenance are called “common expenses”: SPA section 1(1).

29.   In part, this dispute is about how the SPA and bylaws permit a strata to authorize and administer payment for common expenses. Below, I refer to content from the Continuing Legal Education Society of British Columbia’s BC Strata Property Practice Manual to explain the requirements for common expenses authorization.

30.   The SPA allows the strata to raise common expenses funds through the operating fund, contingency reserve fund (CRF) or through a special levy.

31.   The operating fund may be used for common expenses that usually occur either once a year or more often. Strata fees are used to create the operating fund, which is then used to pay routine expenses. Generally, the strata should have a budget that shows itemized planned expenses from the operating fund, although the strata may overspend for a particular line item as long as the overall budget is not overspent: see section 6.6(1)(C) of the Strata Property Regulation.

32.   Operating fund expenses for repairs and maintenance must be approved either by:

a.    a ¾ vote resolution at an AGM or SGM,

b.    as a line item in the budget,

c.    under SPA section 98(2) if the expenditure is below the maximum threshold for unapproved expenditures,

d.    under SPA section 98(3) if reasonable grounds exist to believe that an immediate expenditure is needed to ensure safety or prevent significant loss or damage; or

e.    under section 104(3) if the owners have not approved a new budget and therefore continue to use the previous budget until a new one is approved.

33.   The CRF is used to pay for common expenses that usually occur less than once a year. The CRF is funded using strata fees and funds raised through special levies (SPA, section 108).

34.   In order to expend funds from the CRF for repairs and maintenance, a strata must have a ¾ vote resolution passed at an AGM or SGM (SPA, section 96), or there must be reasonable grounds to believe that an immediate expenditure is needed to ensure safety or prevent significant loss or damage (SPA, section 98(3)).

35.   For an unauthorized CRF or operating fund expense, section 98(2) provides that if an expenditure has not been approved in the budget or at an AGM or SGM, the expenditure may be made out of the operating fund if the expenditure, together with all the other unapproved expenditures made the same fiscal year, is less than the amount set out in the bylaws.  In this strata, Bylaw 26.4 provides that total unapproved expenditures must no exceed 5% of the total operating fund.

Strata Council Member Duty of Care

36.   Under the SPA section 26, strata council exercises the powers and performs the duties of the strata corporation.

37.   Under the SPA section 31 Mr. Field, in his role as strata council member, was required to act honestly and in good faith with a view to the best interests of the strata. Mr. Field was required to exercise the care, diligence and skill of a reasonably prudent person in comparable circumstances when attending to common expenses and applying to the strata for reimbursement of those expenses. The standard is one of reasonableness, not perfection.

38.   Bylaw 27.1 provides that a strata council member who acts honestly and in good faith is not personally liable for anything done or omitted in the exercise or intended exercise of any performance of their strata council member duties.

39.   I will now analyze whether Mr. Field met the section 31 duty of care in respect of the various claimed amounts.

Must Mr. Field repay the $564.48 he paid for parking signs, which the strata reimbursed to him?

40.   On December 11, 2017, Mr. Field purchased parking lot signs from ACE Signs for $564.48, as shown in invoice 17026. The signs were 6 reading
“Visitor Parking Only” and 12 reading “No Parking Fire Lane”.

41.   On January 3, 2018, the strata paid Mr. Field $1,037.50 (cheque 23). The reimbursed expenses in cheque 23 include the $564.48 for the parking sign expenditure.

42.   The strata now says Mr. Field was not authorized to buy the parking signs. That is, the expenditure out of the CRF was not approved by a ¾ vote resolution at an AGM or SGM for this less than once per year common expense. I find the parking sign expenditure was also not necessary for safety or to prevent significant loss or damage (SPA section 98(3)).

43.   However, the strata council reimbursed Mr. Field for the parking sign expense, suggesting that the purchase was made at its direction. The strata provided an undated handwritten list of Mr. Field’s receipts for common expenses including the parking sign expenditure (List). On the List, there is a note reading “Approval of Invoices – Payable to Roy Fields”. Beneath the note are the signatures of three strata council members. Based on this, I find that strata council was aware that Mr. Fields would be purchasing parking signs, and strata council members approved the reimbursement to Mr. Field.  I find that the approval was effectively a retroactive Bylaw 25 delegation.

44.   I therefore find that Mr. Field did not fall below the standard expected of him as a council member under section 31 of the SPA in requesting reimbursement for the $564.48 for parking signs. I find that it was reasonable, if incorrect, for Mr. Field to assume that authorization by strata council was enough.

Must Mr. Field repay the strata a separate $564.48 paid for the “no parking” sign purchase that had already been reimbursed in the previous fiscal year?

45.   On February 28, 2018, the strata paid Mr. Field a further $1,518.97 via cheque 35. The strata’s general ledger record does not explain the specifics for the reimbursement. Cheque 35 has a memo listing that reads only “Various receipts reimbursed”.

46.   The strata says that Mr. Field submitted the ACE Signs invoice in December 2017 for reimbursement, then submitted a duplicate of the same receipt for reimbursement later that it paid again on February 28, 2018. The strata says the second receipt submitted did not include the invoice but was a credit card receipt showing payment of the invoice.

47.   The strata points again to List. I find that this undated document only proves that Mr. Field requested reimbursement for the sign expense, and that strata council members approved the reimbursement request. The document does not prove that Mr. Field was reimbursed twice for the same amount.

48.   While the strata submits that Mr. Field was reimbursed another $564.48 in the February 28, 2018 reimbursement cheque, it did not prove this was so. The strata did not produce a record showing that Mr. Field requested payment again for the $564.48, nor do the strata’s records explain what the $1,518.97 was for. I cannot tell if the February 28, 2018 payment included the $564.48 again. Since the burden of proof is on the strata, I find that the strata did not prove that there was a second $564.48 payment to Mr. Field for the signage.

Must Mr. Field repay the strata $110.26 for ice salt purchases in November 2017, where Mr. Field was allegedly reimbursed twice for only one set of expenses?

49.   The strata says Mr. Field was reimbursed for $110.26 for ice salt purchases in November 2017, even though Mr. Field incurred the expense only once. The strata seeks reimbursement of $110.26 for the alleged second payment.

50.   The strata says that Mr. Field bought ice salt online from Lowes on November 22, 2017. Order summaries from that date show purchases of 16 bags of ice salt for $88.30 and then another purchase of the same amount also for $88.30.

51.   On November 24, 2017, Mr. Field returned 20 bags of ice salt in two separate transactions, for a credit of $110.38

52.   On November 25, 2017, Mr. Field purchased 20 bags of ice salt for a total cost of $110.26.

53.   On January 8, 2018, the strata reimbursed Mr. Field $1,037.50 via cheque 23, which included $176.60 for ice salt. I find this was reimbursement for the November 22, 2017 ice salt purchases.

54.   On February 28, 2018, the strata reimbursed Mr. Field $1,518.97 for “various receipts” via cheque 35. The strata claims this included $110.26 for ice salt that should not have been reimbursed to Mr. Field.

55.   Mr. Field says he bought ice salt twice, as shown on the receipts. I find that although he purchased ice salt twice, he also returned some of the ice salt on November 24, 2017 and used that credit to pay for more ice salt.

56.     Therefore, I find that Mr. Field breached his section 31 SPA duties by accepting reimbursement twice when the second ice purchased was covered by a return credit. I find that Mr. Field must repay the $110.26 for the second ice salt purchase, because otherwise he would be keeping strata funds that were not used for a common expense.

Must Mr. Field repay the strata $147.40 for mileage reimbursement the strata says it did not authorize?

57.   The List details the following expenses for September to December 2017, which were signed as approved for reimbursement by three strata council members:

a.    $25.17 for concrete for parking signs (Home Depot);

b.    $14.02 screws and washers for sign posts (Home Depot);

c.    $6.65 screws for sign posts (Home Depot);

d.    $27.41 post caps for sign posts (Lowes);

e.    $230.27 posts and straps for signs (Pioneer);

f.     $564.48 No Parking Signs (Ace Signs);

g.    $22.09 ice patrol sale (Lowes);

h.    $88.17 ice patrol salt (Lowes);

i.      $293.01 salt spreader (Amazon);

j.      $44.17 gas for snow blower (Safeway);

k.    $25.65 gas for leaf blower;

l.      $30.48 gas to pick up lights

m.   $147.40 gas for meeting with Adriane in Vancouver.

58.   On February 7, 2018, Mr. Field applied to be reimbursed for $147.40, for driving 119 kilometres from Chilliwack to Richmond, at 2018 Government of Canada mileage rates of $0.55 per kilometre. In a handwritten note Mr. Field explained that this was “gas for meeting with Adriane in Vancouver” in February 2018. Mr. Field’s uncontested evidence is that this expense related to a meeting between a council member, the property manager and a lawyer about strata bylaws.

59.   On February 26, 2018, the strata reimbursed Mr. Field $147.40 for “mileage/gas for Vancouver meeting”. I find that this reimbursement was approved by strata council, according to their signatures on the List.  Again, this appears to have the effect of a retroactive Bylaw 25 approval.

60.   It appears that the $147.40 was a less than once a year expense that should have been paid out of the CRF. The expenditure was not authorized by a ¾ resolution, nor was it a safety or emergency expense. However, that is a strata issue. I find that the strata has not proven that Mr. Field breached section 31 of the SPA or was otherwise wrongly reimbursed for this expense.

Must Mr. Field reimburse the strata $317.49 for various purchases the strata says were unauthorized?

61.   The strata submits that Mr. Field must repay it $317.49 for expenditures for fuel, ink cartridges, motor oil, lightbulbs, service for the strata lawn mower, other maintenance supplies and a meal with a lawyer.

62.   The receipts filed in evidence prove that Mr. Field made these purchases. I also find Mr. Field’s explanations of using these items for strata business are plausible and I accept his evidence. Mr. Field says the meal with a lawyer was for strata business that took place on January 31, 2018. The strata did not contest that Mr. Field was on strata business at the meal.

63.   I again find that these were expenses that Mr. Field made for strata business or strata repair and maintenance, and not for personal use. I find that the strata has not proven that Mr. Field was wrongly reimbursed for these items.

Must Mr. Field reimburse the strata $750 for landscaping invoices it says were “fraudulently manufactured” and “not authorized”?

64.   On each of July 11 and 25, 2017 and September 29, 2017, CJ Services invoiced the strata $150 for landscaping/mowing.

65.   On each of August 8 and 22 and September 12, 2017 CJ Services invoiced the strata $100 for landscaping and weeding.

66.   These invoices total $750.

67.   The strata submits that these invoices were manufactured by Mr. Field, and not obtained from CJ Services. 

68.   Mr. Field says that he hired CJ Services to do strata landscaping, who completed the work.  Mr. Field says he paid CJ Services and requested an invoice but was told their “printer was broken.”  Mr. Field says it was “suggested” to print the invoice to “ensure continuity.”  I am not clear if Mr. Field is submitting that either CJ Services or the strata council suggested he print the invoice.  Mr. Field says he told all owners at an AGM that he had “printed” the invoices on behalf of the landscaper. Neither party filed AGM minutes for me to review.

69.    I find that the CJ Services invoices were prepared by Mr. Field, not CJ Services.  I make this finding because Mr. Field admits he also “printed” an invoice for a $50 roofing trim expense (item 7 below) and that invoice is identical to the CJ Services invoices in style, font and layout

70.   On September 29, 2017 Mr. Field emailed strata council asking to be reimbursed for the CJ Services landscaping expenses.  The email contains a handwritten note that says the $750.00 was “approved” and lists the names of three strata council members.  I find that this approval was provided when the strata council members understood that the invoices came from CJ Services.

71.   On October 13, 2017, the strata paid Mr. Field $750 via cheque 14, as reimbursement for payments to CJ Services.

72.   I find that Mr. Field fell below the reasonable standard for a strata council member in the circumstances by creating invoices when he could not acquire them from the tradespersons that he hired.  It is not necessary for me to determine whether Mr. Field’s actions constitute a fraud.  His explanation was that CJ Services had a broken

printer.  Whether or not I accept that evidence, I find that a reasonable standard for a strata council member requires that, when a tradesperson is retained, an invoice and receipt are obtained from the tradesperson directly, to provide proof of payment and qualify for reimbursement of the common expense.

73.   Because the strata has proven that Mr. Field prepared the CJ Services invoices and he did not provide independent evidence that he paid CJ Services (such as through an e-transfer record or receipt) or that CJ Services did landscaping work for the strata (such as through a statement from CJ Services), I find that Mr. Field breached his duties under the SPA section 31 and must repay $750 to the strata.

Must Mr. Field reimburse the strata $50 for a Carlson Roofing service to remove loose trim from a strata building roof?

74.   Similarly, Mr. Field admits that he “printed” a Carlson Roofing invoice for $50, which he paid in cash for them to remove a loose price of trim from the outside of his strata lot. Because this loose trim was on building’s exterior, I find having it removed was a common expense and not personal to Mr. Field.

75.   The Carlson Roofing receipt is dated December 1, 2017 and shows that it was paid. Because it is identical in font and layout to the invoices for the CJ Services (item 6 above) and because Mr. Field admits “printing” it, I find that Mr. Field also created the Carlson Roofing receipt instead of obtaining a proper receipt from the service provider.

76.   The strata then reimbursed Mr. Field the $50 as part of cheque 23.

77.   I find that Mr. Field fell below the standard required by the SPA section 31 in his strata council duties by creating an invoice rather than obtaining it from the service provider. Because Mr. Field referred to but did not provide photographs of the trim that needed removal, or a proper receipt to prove that he paid CJ Roofing, I find that the evidence does not support that the strata received a service for the $50 Mr. Field says he paid in cash. 

 

78.   Therefore, I order Mr. Field to reimburse the strata $50.

CRT FEES, EXPENSES AND INTEREST

79.   Under section 49 of the CRTA, and the CRT rules, the CRT will generally order an unsuccessful party to reimburse a successful party for CRT fees and reasonable dispute-related expenses. Because the strata was partly successful in its claims, I order Mr. Field to reimburse the strata for 50% of its tribunal fees, being $112.50. The strata did not claim dispute-related expenses.

80.   The Court Order Interest Act (COIA) applies to the CRT. The strata is entitled to pre-judgement interest on the $910.26 from October 13, 2017, the date of the landscaping invoice, to the date of this decision. This equals $39.48.

81.   The strata must comply with section 189.4 of the SPA, which includes not charging dispute-related expenses against Mr. Field.

ORDERS

82.   Within 30 days of the date of this order, I order Mr. Field to pay the strata a total of $1,062.20, broken down as follows:

a.    $910.26 as repayment for the landscaping, roofing and ice salt common expense reimbursements,

b.    $39.44 in pre-judgment interest under the Court Order Interest Act, and

c.    $112.50 in CRT fees.

83.    The strata is entitled to post-judgment interest, as applicable.

84.   Under sections 57 and 58 of the CRTA, a validated copy of the CRT’s order can be enforced through the Supreme Court of British Columbia. The order can also be enforced by the Provincial Court of British Columbia if it is an order for financial compensation or return of personal property under $35,000. Once filed, a CRT order

has the same force and effect as an order of the court that it is filed in.