Date Issued: March 16, 2021

File: ST-2020-005243

Type: Strata

 

Civil Resolution Tribunal

Indexed as: Lucas v. The Owners, Strata Plan NW 3147, 2021 BCCRT 290

Between:

JAMES LUCAS

Applicant

And:

The Owners, Strata Plan NW 3147

Respondent

REASONS FOR DECISION
Tribunal Member:	Richard McAndrew

INTRODUCTION

1.      This dispute is about strata fees and a special levy. The applicant, James Lucas owns strata lot 4 (SL4) in the respondent strata corporation, The Owners, Strata Plan NW 3147 (strata). Mr. Lucas says the strata has improperly assessed a special levy to fund the contingency reserve fund (CRF) and the strata has withdrawn excess strata fees of $94.72 per month since November 2019. Mr. Lucas asks for a refund of $757.80 in allegedly overcharged strata fees. Mr. Lucas also asks for an order requiring the strata to refund all fees collected under the special levy to the owners. Mr. Lucas also says the property management company acted improperly.

2.      The strata says the special levy was cancelled and instead, strata fees were increased to fund the CRF. The strata says that the owners’ payments to the cancelled special levy were credited back to the owners’ strata lot accounts and deducted from their strata fee payments.

3.      Mr. Lucas is self-represented. The strata is represented by its council president.

JURISDICTION AND PROCEDURE

4.      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.

5.      The CRT 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.      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.

7.      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.

Allegations against the property management company

8.      Mr. Lucas asks for a demerit citation against the property management company and he alleges that the property management company committed professional misconduct. I refuse to resolve these claims under CRTA section 10(1) because I find that these claims are not within the scope of the CRT’s jurisdiction under section 121 of SPA and the property management company is not a party to this dispute.

ISSUES

9.      The issues in this dispute are:

a.    Must the strata refund the money collected from the May 8, 2019 special levy?

b.    Has the strata improperly assessed a strata fee or special levy against SL4? If so, what is the remedy?

c.    Did the strata treat Mr. Lucas in a significantly unfair manner by charging his strata lot a disproportionate strata fee?

BACKGROUND AND EVIDENCE

10.   In a civil claim such as this, the applicant, Mr. Lucas, must prove his case on the balance of probabilities. While I have read all of the parties’ evidence and submissions, I only refer to what is necessary to explain and give context to my decision.

11.   The strata was created in 1998 and exists under the Strata Property Act (SPA).

12.   On March 23, 2016, Mr. Lucas signed a form authorizing the property management company to deduct SL4’s future strata fees, including retroactive fees, from his bank account. Based on the signed form, I find that Mr. Lucas authorized the strata to withdraw SL4’s strata fees from his bank account. Since there is no evidence before me that Mr. Lucas cancelled this authorization, I find that this authorization continues.

13.   The owners approved a $20,773 special levy by a 3/4 vote at a Special General Meeting (SGM) on May 8, 2019. The special levy’s purpose was to raise funds for the CRF. The SGM minutes included a schedule showing that SL4’s share of the special levy was $1,136.72.

14.   The special levy said a $500 administrative fee would be paid to the property management company from the proceeds. However, the strata says that the $500 administrative fee was not paid.

15.   The strata says the May 8, 2019 special levy was cancelled at the November 13, 2019 Annual General Meeting (AGM). However, the strata does not explain how the owners cancelled it. SPA section 108 says that a special levy must be approved by a 3/4 vote of the owners at an AGM or SGM. However, the SPA does not provide a procedure for cancelling special levies. In the absence of a specific SPA provision, I find that special levies can be cancelled in the same manner that they can be approved. So, I find that the May 8, 2019 special levy could be cancelled by a 3/4 vote of the owners at an AGM or SGM.

16.   There is no evidence before me showing that the special levy was cancelled at the November 2019 AGM. The proposed resolutions sent to the owners in the November 13, 2019 AGM notice package did not include a resolution to cancel the special levy. Further, the November 13, 2019 AGM’s minutes do not show that a motion relating to the special levy was considered. So, I find that the May 8, 2019 special levy was not cancelled.

17.   Mr. Lucas says that the strata has improperly withdrawn $94.72 monthly from his bank account since November 2019. Mr. Lucas argues that the strata is attempting to avoid the SPA by improperly charging a ‘one-time payment’ charge, which he says is a hidden special levy. The strata says the owners approved a ‘one-time payment’ of $20,773 proportionately from the strata lot accounts at the November 2019 AGM. I note that the $20,773 ‘one-time payment’ is the same amount as the May 2019 $20,773 special levy.

18.   Although both parties refer to the charge as a ‘one-time payment,’ the SPA only authorizes strata corporations to raise money by strata fees under SPA section 99 or special levies under SPA section 108. So, the strata’s ‘one-time payment’ charge can only be collected if it is a properly approved strata fee or a special levy.

19.   The strata sent Mr. Lucas an information package for the November 13, 2019 AGM which included notice of the AGM, proposed resolutions, a proposed budget and a description of proposed strata fees. The information package showed two proposed budgets. Proposed budget B showed a 32% strata fee increase with total strata fees of $119,314. This included $99,314 for current operating expenses and a $20,000 contribution to the CRF.

20.   I find that this strata fee increase was properly approved by a vote of 3/4 of the owners at the November 13, 2019 AGM. The November 2019 AGM minutes included a schedule showing that SL4’s strata fees increased from $410.68 in the 2018 to 2019 fiscal year to $544.08 in the 2019 to 2020 fiscal year. Based on the November 2019 AGM minutes, I find that SL4’s monthly strata fees were increased to $544.08, effective November 1, 2019.

21.   SL4 has a unit entitlement of 204 out of a total of 3728 unit entitlements for all of the strata lots. Based on these undisputed unit entitlements, I find that SL4’s proportionate monthly share of total strata fees of $119,314 is $544.08. This is consistent with the strata fees charged to Mr. Lucas’ strata lot account from November 2019 to January 2020. So, I find that SL4’s $544.08 monthly strata fees effective on November 1, 2019 was a strata fee increase, not a special levy.

22.   Mr. Lucas says his strata lot was improperly charged higher strata fees than other strata lots with the same unit entitlement. The strata provided a schedule showing the approved strata fees for the fiscal year starting on November 1, 2019. The schedule shows that 9 strata lots with the same unit entitlement as SL4 have the same strata fees, but their monthly fees are lower after deducting a “prepayment.” The schedule shows that SL4’s strata fees owed after the ‘prepayment of monthly fees’ was $544.08 while the other 9 strata lots with the same unit entitlement owed $449.35. This is a difference of $94.73. Mr. Lucas argues that the strata cannot charge his strata lot an additional $94.73.

23.   The strata says that the strata fees are proportional to unit entitlement but other strata lots received a credit to their strata lot accounts from their payments to the allegedly cancelled May 8, 2019 special levy. The strata says that Mr. Lucas’ strata lot account did not receive a credit because he did not pay the special levy.

24.   The strata’s fee schedule also shows that SL4 owed a ‘one-time adjustment’ of $677.48 but, other strata lots with the same unit entitlement, only owed a one-time adjustment of $488.03. This is a difference of $189.45. However, based on my review of SL4’s strata lot account from November 2019 to February 2020, I find that the ‘one-time adjustment’ is a retroactive calculation of SL4’s monthly strata fees back to the new strata fees effective date on November 1, 2019, rather than an additional fee. I note that the BC Supreme court has held that such adjustments are valid in its decision in 625536 B.C. Ltd. v. The Owners, Strata Plan LMS4385, 2018 BCSC 1637.

25.   Mr. Lucas’ strata lot account shows the following relevant transactions from May 2019 to February 2020:

a.    On May 8, 2019, a special levy of $1,136.72 was charged to SL4.

b.    On November 1, 2019, a $410.68 payment was deducted from Mr. Lucas’ bank account for the November monthly strata fee. Mr. Lucas’ strata lot account showed an outstanding balance of $1,136.72. I infer that this outstanding balance related to the May 8, 2019 special levy.

c.    On November 13, 2019, the strata deducted the special levy charge of $1,136.72 from Mr. Lucas’ strata lot account. Mr. Lucas’ strata lot account showed an outstanding balance of $0.

d.    On November 13, 2010, the strata charged Mr. Lucas’ strata lot $133.40 as a strata fee adjustment for November 2019. I find that this adjustment increased Mr. Lucas’ November 2019 strata lot fees to $544.08, which is consistent with the increase approved at the November 2019 AGM. Mr. Lucas’ strata lot account showed a balance owing of $133.40 on November 1, 2019.

e.    On December 1, 2019, the strata charged Mr. Lucas’ strata lot $544.08 for the December monthly strata fees. Mr. Lucas’ strata lot account showed a balance owing of $677.48 owing on November 1, 2019.

f.     On December 15, 2019, a $488.03 payment was deducted from Mr. Lucas’ bank account for the November monthly strata fee. Mr. Lucas’ strata lot account showed an outstanding balance of $189.45 on December 15, 2019.

g.    On January 1, 2020, the strata charged Mr. Lucas’ strata lot $544.08 for the January monthly strata fees. Mr. Lucas’ strata lot account showed a balance owing of $733.53 owing on January 1, 2020.

h.    On January 1, 2020, a $554.08 payment was deducted from Mr. Lucas’ bank account for the January monthly strata fee. There is no explanation why the strata deducted $554.08 from Mr. Lucas’ bank account instead of the AGM approved monthly strata fees of $544.08. Mr. Lucas’ strata lot account showed an outstanding balance of $179.45 on January 1, 2020.

i.      On January 15, 2020, a $189.45 payment was deducted from Mr. Lucas’ bank account. Mr. Lucas’ strata lot account showed a credit balance of $10.

26.   Based on SL4’s strata lot account records, I find that the strata withdrew strata fees of $544.08 from Mr. Lucas’ bank since November 1, 2019, other than the $554.08 payment in January 2020.

REASONING AND ANALYSIS

Must the strata refund the money collected from the May 8, 2019 special levy?

27.   As discussed above, I find that the special levy was not cancelled even though the strata says that it was. Since a special levy can only be cancelled by the owners, I find that the owners should have an opportunity to vote on the cancellation of the May 8, 2019 special levy. In Foley v. The Owners, Strata Plan VR 387, 2014 BCSC 1333, the BC Supreme Court found that the owners should have an opportunity to exercise their democratic rights under the SPA to approve changes to the community property. Similarly, I find that the owners should have the opportunity to exercise their democratic right here to determine whether they wish to cancel the May 8, 2019 special levy. So, under sections 61 and 123 of the CRTA, I order the strata to conduct an SGM or AGM, following the procedures in its bylaws, including notice of the meeting to all owners, within 90 days of this order, for the purpose of determining whether the owners approve the cancellation of the May 8, 2019 special levy.

28.   Since the special levy is still in effect, I find that strata is not required to refund the special levy proceeds at this time. Further, I find premature to determine if the strata must return the special levy proceeds, rather than credit the proceeds to the owners’ strata lot accounts, if the May 8, 2019 special levy is cancelled at the above ordered AGM or SGM.

Has the strata improperly assessed a strata fee or special levy against SL4?

29.   Mr. Lucas says that the strata cannot charge SL4 strata fees $94.72 higher than other strata lots with the same unit entitlement. SPA section 99 says strata fees must be calculated proportionate to the strata lot’s unit entitlement.

30.   As discussed above, I find that SL4’s proportionate monthly share of the total strata fees of $119,314 in the November 2019 budget is $544.08. I find the $94.72 difference monthly paid by SL4 relates to the special levy cancellation credits which Mr. Lucas did not receive because he did not pay the special levy.

31.   I note that SL4’s share of the May 8, 2019 special levy was $1,136.72 and this amount equals $94.73 per month, for 12 months. This is the same amount that Mr. Lucas’ monthly strata fee payments exceeds the other strata lots with the same unit entitlement. I find that the strata has effectively applied the strata lots’ special levy cancellation credits equally over the year. However, I find that the other owners are still charged the proportionate share of the strata fees. Since the total strata fees assessed to SL4 are proportionate to its unit entitlement, I find that the SL4’s monthly strata fees of $544.08 does not violate SPA section 99.

32.   Further, I note that none of strata lots are entitled to the special levy cancellation credits at this time since the May 8, 2019 special levy has not been cancelled. If the special levy is not cancelled at the AGM or SGM discussed above, the strata will need to reverse the special levy cancellation credits to the owners’ strata lot accounts.

Did the strata treat Mr. Lucas in a significantly unfair manner by charging his strata lot a disproportionate strata fee?

33.   I find that Mr. Lucas’ claims also raise the issue of whether the strata has treated him significantly unfairly. The CRT has jurisdiction to determine claims of significant unfairness under section 123(2) of the CRTA (formerly section 48.1(2)(The Owners, Strata Plan LMS 1721 v. Watson, 2018 BCSC 164).

34.   The courts and the CRT have considered the meaning of “significantly unfair” and have largely followed the interpretation adopted by the BC Court of Appeal (BCCA) in Reid v. Strata Plan LMS 2503, 2003 BCCA 128. In Reid, the court said that actions are “significantly unfair” when they are burdensome, harsh, wrongful, lacking in probity or fair dealing, done in bad faith, unjust or inequitable.

35.   In Dollan v. The Owners, Strata Plan BCS 1589, 2012 BCCA 44, the BCCA established an expectation test, restated in Watson at paragraph 28 as follows:

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?

36.   In Kunzler v The Owners, Strata Plan EPS 1433, 2020 BCSC 576, the BC Supreme Court said that consideration of an owner’s expectations is not always necessary when determining significant unfairness. The court found the “reasonable expectation” test from Dollan may make sense when a strata council is exercising its discretionary authority, but found in a situation where it could result in an order that a bylaw does not apply to a particular owner, it would be unreasonable to apply the “reasonable expectation test”. The court said this would create a “grandfathering regime”, which is not contemplated in the SPA except for restrictions on pets, age and the rental of strata lots. In circumstances involving an owner being exempt from a bylaw, the court found the appropriate test is whether the disputed action falls within the definition of significant unfairness as described in Reid.

37.   Following Kunzler, I find the proper test of significant unfairness about the strata fees assessed against SL4 is the test from Reid.

38.   Based on my findings above that the November 2019 strata fee increase was properly passed and SL4’s strata fees are proportionate to its unit entitlement, I cannot conclude the strata acted significantly unfairly or was otherwise unjust to Mr. Lucas by applying credits for alleged special levy overpayments to other strata lots on a monthly basis. Further, I do not find it unfair to Mr. Lucas to divide these credits into 1/12 monthly amounts rather than deduct the credits at one time, especially since these credits were not applicable to his strata lot account.

39.   Although I find it significant that Mr. Lucas is being treated differently than the other owners, I do not find that the strata is acting in bad faith or in an unjust fashion. I reach that conclusion because I find that the only reason Mr. Lucas is not receiving the same strata lot account credits as the other owners is because Mr. Lucas did not pay the special levy. So, there are no overpayments to credit to his strata lot account. For the above reasons, I find that the strata has not treated Mr. Lucas in a significantly unfair manner.

CRT FEES AND EXPENSES

40.   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. I see no reason in this case not to follow that general rule. Since Mr. Lucas was generally unsuccessful, I find that he is not entitled to reimbursement of his CRT fees. The strata has not requested reimbursement of CRT fees or dispute-related expenses.

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

ORDERS

42.   I order the strata to conduct an SGM or AGM, following the procedures in its bylaws, including notice of the meeting to all owners, within 90 days of this order, for the purpose of determining whether the owners approve the cancellation of the May 8, 2019 special levy.

43.   I dismiss all other claims.

44.   I refuse to refuse to resolve Mr. Lucas’ claims against the property management company.

45.   Under section 57 of the CRTA, a validated copy of the CRT’s order can be enforced through the British Columbia Supreme Court. Under section 58 of the CRTA, the order can be enforced through the British Columbia Provincial Court 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.