Date Issued: August 31, 2020

File: ST-2020-002287

Type: Strata

Civil Resolution Tribunal

Indexed as: Generalov v. The Owners, Strata Plan BCS 2498, 2020 BCCRT 965

Between:

YURY GENERALOV

Applicant

And:

The Owners, Strata Plan BCS 2498

Respondent

REASONS FOR DECISION
Tribunal Member:	Kate Campbell, Vice Chair

INTRODUCTION

1.      This dispute is about the allocation of elevator maintenance costs in a strata corporation.

2.      The applicant, Yury Generalov, owns a strata lot in the respondent strata corporation, The Owners, Strata Plan BCS 2498 (strata).

3.      The strata is made up of 3 clusters of townhouse-style strata lots and a 29-storey apartment tower. In total, there are 12 townhouses and 202 apartments. Mr. Generalov’s strata lot is a townhouse.

4.      Mr. Generalov says that in its 2020 operating budget, the strata changed the elevator maintenance expenses so that they were shared by all strata lots, including townhouses. He says the elevators service only the apartment tower, and not the townhouses, so this was significantly unfair. He also says this allocation of expenses is contrary to the Strata Property Act (SPA) and strata bylaws.

5.      Mr. Generalov requests an order that the strata charge elevator maintenance expenses to the apartment strata lots only. He also seeks an order that the strata “treat apartment and townhouse owners equally and fairly”, and an order “prohibiting the strata from making any decisions that negatively affect townhouses compared to apartments”. Finally, Mr. Generalov seeks compensation for his time spent dealing with this dispute, and with a previous Civil Resolution Tribunal (CRT) dispute.

6.      The strata denies Mr. Generalov’s claims, and says it has followed the SPA and bylaws.

7.      Mr. Generalov is self-represented in this dispute. The strata is represented by a strata council member.

JURISDICTION AND PROCEDURE

8.      These are the formal written reasons of the 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.

9.      The CRT has discretion to decide the format of the hearing, including in writing, by telephone, videoconference, 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.

10.   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.

11.   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.

ISSUES

12.   The issues in this dispute are:

a.    Must townhouse owners in the strata contribute to elevator expenses?

b.    Has the strata treated townhouse owners, including Mr. Generalov, significantly unfairly? If so, what remedies are appropriate?

c.    Is Mr. Generalov entitled to compensation for his time spent on CRT disputes?

EVIDENCE AND ANALYSIS

13.   I have read all the evidence provided but refer only to evidence I find relevant to provide context for my decision. In a civil proceeding like this one, Mr. Generalov, as applicant, must prove his claims on a balance of probabilities.

14.   Since 2007, when the strata was created, the strata’s bylaws have identified 2 “types” of strata lots in the strata: “apartment” strata lots, and “townhouse” strata lots.

15.   In January 2019, the strata repealed and replaced all of its previous bylaws, except for bylaws about rentals and pets, by filing new bylaws in the Land Title Office (LTO). In February 2020, the strata filed further bylaw amendments at the LTO, but I find these are not relevant to this dispute. The bylaws relevant to this dispute are set out in the January 2019 LTO filing.

16.   Bylaws 2.2 and 2.3 of the January 2019 bylaws set out how each type of strata lot must contribute to the strata’s operating fund, for expenses which relate solely to that type of strata lot. The bylaws state as follows:

2.2 A contribution to the operating fund which relates to and benefits only the Apartment Strata Lots shall be shared only by the owners of Apartment Strata Lots. Each Apartment Strata Lot’s share of such contribution shall be calculated in accordance with the following formula from section 6.4(2) of the Strata Property Regulation:

unit entitlement of an Apartment Strata Lot  x  contribution to operating fund
total unit entitlement of all
Apartment Strata Lots

2.3 A contribution to the operating fund which relates to and benefits only the Townhouse Strata Lots shall be shared only by the owners of the Townhouse Strata Lots. Each Townhouse Strata Lot’s share of such contribution shall be calculated in accordance with the following formula from section 6.4(2) of the Strata Property Regulation:

unit entitlement of a Townhouse Strata Lot  x  contribution to operating fund
total unit entitlement of all
Townhouse Strata Lots

17.   These bylaws cite and are consistent with section 6.4(2) of the Strata Property Regulation (Regulation). Section 6.4(2) says:

For the purposes of section 99 of the Act, but subject to a resolution under section 100 of the Act, if a contribution to the operating fund relates to and benefits only one type of strata lot, and that type is identified as a type of strata lot in the bylaws of the strata corporation, the contribution is shared only by owners of strata lots of that type, and each strata lot's share of that contribution is to be calculated in accordance with the following formula and not in accordance with the formula set out in section 99 (2) of the Act:

unit entitlement of Strata Lot            x   contribution to operating fund
total unit entitlement of all strata lots
of the type to which the contribution relates

18.   A prior CRT dispute involving the same parties decided some issues about the allocation of expenses and revenue between apartment type and townhouse type strata lots: see Generalov v. The Owners, Strata Plan BCS 2498, 2018 BCCRT 516 (Generalov 1). In Generalov 1, the tribunal member noted that the evidence before her in that dispute established that since at least 2013, only the apartment owners paid for elevator maintenance expenses, which totalled about $20,000 to $25,000 per year. The tribunal member did not make any specific decision or order about elevator expenses in Generalov 1, as it was not a claim raised by either party.

19.   I note that Generalov 1 was written before the strata amended its bylaws. In the prior version of the bylaws, bylaw 30 was similar in effect to subsequent bylaws 2.2 and 2.3. Bylaw 30 said the owners in the 2 separate types of strata lots contributed to the operating fund when expenses relate to and benefit only their type of strata lot, in accordance with the formula in Strata Property Regulation (Regulation) 6.4(2).

20.   The evidence before me in this dispute shows that until sometime before 2016, both townhouse and apartment owners contributed to elevator expenses through their strata fees. From about 2016 to 2019, only apartment owners contributed to elevator expenses. Then, in the 2020 operating budget, the strata again began allocating elevator expenses to both townhouse and apartment owners. This change is documented in the minutes from the strata’s January 15, 2020 annual general meeting (AGM). The minutes show that at the AGM, the ownership voted on a motion from the floor to amend the proposed budget to allocate elevator expenses to apartment owners only. The motion was defeated. The ownership then voted to approve the original budget, as circulated in the AGM notice package, which allocated elevator expenses to all owners.

Must townhouse owners contribute to elevator expenses?

21.   Mr. Generalov argues that he and the other townhouse owners should not have to pay any portion of the expenses for maintaining the elevators, as they only service the apartment tower and do not relate to or benefit the townhouse occupants.

22.   The strata submits that before 2016, when Mr. Generalov became strata council treasurer, both townhouse and apartment owners contributed to elevator expenses, which supports the conclusion that elevator expenses should be shared. I do not agree. I find the fact that Mr. Generalov was previously the treasurer is not determinative, since he was only 1 member of the strata council, and the strata’s operating budgets were approved by the strata ownership. Also, I find the history of contributions to elevator maintenance in this strata are also not determinative of who should pay in future. In this case, there is history of both shared and not shared elevator expenses, during different periods of time. Also, in January 2019, the strata amended its bylaws to add bylaws 2.2 and 2.3, which are similar but not the same as previous bylaw 30. I therefore find that this dispute must be governed by these bylaws.

23.   The strata also argues that because the elevators are shown as common property on the strata plan, all owners must contribute to their maintenance. I do not agree that the strata plan common property designation is determinative. Generally speaking, the strata is responsible for repairing and maintaining common property, such as the elevators, under SPA sections 72 and 91: see The Owners, Strata Plan LMS 1537 v. Alvarez, 2003 BCSC 1085 at paragraph 35. However, these principles are modified by Regulation section 6.4(2) and bylaws 2.2 and 2.3., as summarized above. In particular, bylaw 2.2 says a contribution to the operating fund which relates to and benefits only the apartment strata lots shall be shared only by the apartment owners.

24.   Thus, the question to be determined is whether elevator maintenance is an expense that “relates to and benefits only the Apartment Strata Lots.” For the following reasons, I find that elevator repairs and maintenance are an expense that relates to and benefits only the apartment strata lots. I therefore conclude that the townhouse owners are not required to contribute to elevator expenses.

25.   In Ernst & Twins Ventures (PP) Ltd. v. Strata Plan LMS 3259, 2004 BCCA 597, at paragraph 18, the court said “relates to and benefits only one type of strata lot” means the expense in question relates to or benefits one type of strata lot “exclusively.” Based on the evidence before me, I find that the strata’s elevators benefit the apartment owners exclusively, as contemplated in Ernst.

26.   The strata plan shows that there are 3 buildings which each contain 4 3-storey townhouse strata lots. These townhouse buildings are located in a row on one side of the strata’s land. The apartment tower is located next to the row of townhouse buildings, and contains the 202 apartment strata lots. The elevators are located in the apartment tower. All 4 strata buildings are connected by an underground parkade, and the townhouse owners can access the elevators through the parkade.

27.   Mr. Generalov provided video footage which he says shows that his key fob will not activate the elevators. In contrast, the strata provided a copy of a January 23, 2020 email stating that the fob system had been changed to allow townhouse owners access to the second floor using the elevator. The strata also provided other documents showing that the fobs had been reprogrammed in this manner.

28.   I find whether or not the fobs now work in the elevator does not prove whether the elevators relate to and benefit the townhouse strata lots. The fact that the townhouse owners could ride the elevators between the first and second floors does not establish that the elevators “relate to or benefit” the townhouse strata lots.

29.   There is no evidence before me indicating that any townhouse owners requested elevator access or fob reprogramming. The strata says it is possible that townhouse owners other than Mr. Generalov may use the elevators more than he does, but did not provide any proof of this. There is also no explanation before me for why the townhouse owners would use the elevators, or what benefit this would provide. Mr. Generalov says going to the second floor of the apartment tower by elevator does not serve any useful purpose for townhouse residents. Based on the evidence before me, I agree.

30.   Mr. Generalov provided photos showing that townhouse residents can access the apartment tower either through the parkade level, or outdoors through the apartment tower’s lobby door on the first floor. He says the elevators access only apartments and parking, and do not access the townhouses. I find this is consistent with what is shown on the strata plan. Based on this evidence, I accept that there is no purpose or benefit for the townhouse owners in accessing or using the elevators.

31.   For these reasons, I conclude that the elevator expenses relate to and benefit only apartment type strata lots. Therefore, based on bylaw 2.2 and Regulation section 6.4(2), only the apartment type strata lots must contribute to those expenses. Since the allocation of elevator maintenance expenses in the 2020 operating budget was contrary to the strata’s bylaws, I find the strata must reimburse townhouse owners for that expense, retroactive to the date the change in expense allocation came into effect.

Significant Unfairness

32.   Mr. Generalov argues that the strata has acted in bad faith, and has treated him and the other townhouse owners in a significantly unfair manner. He argues that the strata failed to consult townhouse owners about the change in the allocation of elevator expenses, and “concealed” its decision to change the budget. He also argues that in general, because apartment owners outnumber townhouse owners, apartment owners control vote outcomes at council meetings and AGMs and make unfair decisions that benefit apartment owners.

33.   As remedy, Mr. Generalov asks the CRT to order the strata to treat townhouse and apartment owners equally and fairly, and to prohibit any decisions that negatively affect townhouse owners compared to apartment owners. He suggests a requirement that any future decisions affecting townhouses must be approved by a majority of townhouse owners.

34.   I dismiss Mr. Generalov’s claims, for the following reasons.

35.   First, I find Mr. Generalov has no standing to make a claim of bad faith against the strata.

36.   SPA section 31 says strata council members must act honestly and in good faith, with a view to the best interests of the strata, and exercise the care, diligence, and skill of a reasonably prudent person in comparable circumstances. In The Owners, Strata Plan LMS 3259 v. Sze Hang Holding Inc., 2016 BCSC 32 at paragraph 267, the BC Supreme Court (BCSC) found that the duties of strata council members under SPA section 31 are owed to the strata corporation, and not to individual strata lot owners. This means that a strata lot owner cannot be successful in a claim against a strata corporation for duties owed by its strata council members under section 31. I therefore find Mr. Generalov, as a strata lot owner, cannot succeed in a claim about section 31. I therefore dismiss his claim about bad faith.

37.   Second, I find Mr. Generalov has not met the test to establish significant unfairness by the strata.

38.   Under CRTA section 123(2), the CRT may make an order directed at the strata corporation, the council or a person who holds 50% or more of the votes, if the order is necessary to prevent or remedy a significantly unfair action, decision or exercise of voting rights. This is similar to the BC Supreme Court’s power under SPA section 164.

39.   The BC Court of Appeal considered the language of section 164 of the SPA in Dollan v. The Owners, Strata Plan BCS 1589, 2012 BCCA 44. The test established in Dollan was restated by the BCSC in The Owners, Strata Plan LMS 1721 v. Watson, 2018 BCSC 164 at paragraph 28:

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

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

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

40.   In other cases, such as Radcliffe v. The Owners, Strata Plan KAS1436, 2015 BCCA 448, courts have held that the sole question to be determined is whether the disputed action was significantly unfair, such as defined in Chan v. Strata Plan VR 151, 2010 B.C.J. No. 2425, meaning oppressive, or unfairly prejudicial, burdensome, harsh, wrongful, lacking in probity or unfair dealing, or done in bad faith.

41.   Under either test, I find Mr. Generalov has not proven that the strata’s actions were significantly unfair.

42.   About the change in the operating budget about elevator expenses, and setting aside the fact the proposed changes were contrary to the bylaws, I find the strata had no particular duty under the SPA or bylaws to consult the townhouse owners about the change before putting the 2020 budget in the AGM notice package. Therefore, I find Mr. Generalov’s expectation that townhouse owners be consulted was not objectively reasonable. Also, Mr. Generalov says the only way he discovered the change was through a “line-by-line” reading of the proposed budget. I find that any expectation that the change be highlighted was also not objectively reasonable. The SPA and Regulation contain provisions which set out what must be included in an operating budged. SPA sections 45(4) and 103 say the budget must be circulated in advance of each AGM, as part of the AGM notice package. There is no requirement that changes to the budget be particularly highlighted or annotated. As the parties agree that the budget was circulated in the notice package, and there is no suggestion that the strata breached the SPA or Regulation provisions about budget preparation, I find the strata’s lack of consultation with owners in relation to the 2020 budget was not significantly unfair.

43.   As for the fact that the majority of apartment owners are able to outvote minority townhouse owners, I find that is, in itself, not significantly unfair. This problem is common in strata corporations, and has been specifically considered by the courts. For example, in Oldaker v. The Owners, Strata Plan VR 1008, 2010 BCSC 776, the BC Supreme Court stated that majority rule is a requirement for the efficacy of a strata corporation:

...for better or worse the majority of owners make the rules. For better or worse the minority of owners are to abide by those rules. ...

Not remarkably the views of disparate groups within a strata corporation are often strongly held. The force of these convictions can lead to internal friction, to competing camps within the strata corporation and to paralysis of the corporation. The ongoing efficacy of the strata corporation requires that the views of the majority be respected.

44.   Thus, the fact that a minority group of owners is likely to be outvoted does not justify court (or tribunal) intervention in strata decision-making. Also, I find that some of the orders requested by Mr. Generalov, such as prohibiting decisions that negatively affect townhouse owners compared to apartment owners, or mandatory approval of some decisions by townhouse owners, are inconsistent with the SPA. The SPA sets out specific provisions about how voting occurs in a strata corporation, and how votes are allocated among owners. I find it would be inconsistent with the SPA, and inconsistent with binding BC Supreme Court decisions such as Oldaker, to make the orders Mr. Generalov seeks.

45.   For these reasons, I find Mr. Generalov has not established significant unfairness by the strata. I therefore dismiss this claim.

Compensation for Time Spent on Dispute

46.   Mr. Generalov requests an unspecified amount of compensation for his time spent on this dispute, and on the dispute addressed in Generalov 1.

47.   I find I have no jurisdiction to order compensation for Mr. Generalov’s time spent on Generalov 1. The tribunal member addressed reimbursement of dispute-related expenses in Generalov 1, and noted in paragraph 86 that Mr. Generalov did not claim any. I find it is not open to Mr. Generalov to claim the expenses about the 2018 dispute retroactively as part of this dispute. I therefore dismiss this claim.

48.   I also dismiss Mr. Generalov’s claim for compensation for his time spent on this dispute. CRT rule 9.5(5) says that except in extraordinary circumstances, the CRT will not order one party to pay another party compensation for time spent dealing with a CRT proceeding. I find there are no such extraordinary circumstances in this case. Although the parties had a related similar dispute, it was not about identical issues, and Generalov 1 did not include any specific findings or orders about the allocation of elevator maintenance costs. Although Mr. Generalov may be frustrated with the strata’s actions, I find that the dispute is a fairly typical one about budget allocations in a strata corporation.

49.   For these reasons, and based on CRT rule 9.5(5), I dismiss Mr. Generalov’s claim for compensation for his time.

CRT FEES AND EXPENSES

50.   Mr. Generalov was partially successful in this dispute. Therefore, in accordance with the CRTA and the CRT’s rules I find he is entitled to reimbursement of half his CRT fees, or $112.50. While Mr. Generalov requested dispute-related expenses, he did not provide particulars or evidence of any expenses incurred. I have addressed his claim about time spent on the dispute above. The strata did not claim dispute-related expenses. I therefore order none.

51.   The strata must comply with section 189.4 of the SPA, which includes not charging dispute-related expenses to Mr. Generalov.

ORDERS

52.   I order the following:

a.    Only the apartment type strata lots will contribute to operating fund expenses for elevator maintenance, based on the formula in bylaw 2.2.

 

b.    The strata must, within 60 days of this decision, reimburse townhouse owners for their contributions to elevator maintenance in 2020. The reimbursement will be retroactive to the date the change in elevator expense allocation came into effect.

c.    Within 60 days of this dispute, the strata must reimburse Mr. Generalov $112.50 for CRT fees.

53.   Mr. Generalov is entitled to post-judgment interest under the Court Order Interest Act, as applicable.

54.   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 a 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.