Date Issued: August 31, 2021

File: ST-2020-007303
ST-2020-009067

Type: Strata

Civil Resolution Tribunal

Indexed as: Dugas v. The Owners, Strata Plan K180, 2021 BCCRT 948

Between:

SYLVIA DUGAS also known as SYLVIE DUGAS

Applicant

And:

The Owners, Strata Plan K180

Respondent

REASONS FOR DECISION
Tribunal Member:	Eric Regehr

INTRODUCTION

1.      These linked disputes are about strata governance and finances. The applicant, Sylvia Dugas also known as Sylvie Dugas, is an owner of a strata lot in the respondent strata corporation, The Owners, Strata Plan K180 (strata).

2.      In dispute ST-2020-007303, Ms. Dugas claims that the owners were not presented with complete and accurate information before the strata’s 2020 annual general meeting (2020 AGM). She asks for an order that the strata hold a special general meeting (SGM) to re-vote on 5 resolutions from the 2020 AGM.

3.      In dispute ST-2020-009067, Ms. Dugas claims that the strata has failed to properly record and report its finances. She asks for an order that the strata hire an auditor to audit its 2020 finances.

4.      The strata says that it provided appropriate information before the 2020 AGM and that it ran the meeting properly. The strata also says that it complied with its financial record keeping and reporting obligations under the Strata Property Act (SPA). It asks that I dismiss Ms. Dugas’s claims.

5.      Ms. Dugas is self-represented. The strata is represented by a strata council member.

6.      For the reasons that follow, I dismiss Ms. Dugas’s claims in both disputes.

JURISDICTION AND PROCEDURE

7.     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.

8.     The CRT has discretion to decide the format of the hearing, including by writing, telephone, videoconferencing, email, or a combination of these. In some respects, both sides to this dispute call into question the credibility, or truthfulness, of the other. However, in the circumstances of this dispute, I find that it is not necessary for me to resolve the credibility issues that the parties raised. I therefore 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 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 CRT considers appropriate.

Procedural Issues

11.   In both disputes, the strata says that Ms. Dugas’s submissions go well beyond the issues she raised in the 2 Dispute Notices. The strata says that it was taken by surprise by new allegations during the submission phase of both disputes, so it had no opportunity to properly respond. In particular, the strata says Ms. Dugas raised new issues about the strata’s financial records and it had no time to have its bookkeeper to prepare a witness statement in response. The strata argues that I should restrict my decision only to those matters raised in the Dispute Notices and refuse to resolve any new allegations that Ms. Dugas raised in submissions.

12.   I do not agree with the strata that Ms. Dugas raised new claims in her submission. I say this because she did not ask for any new orders other than those in the Dispute Notices. Rather, her submissions included new allegations that she says support her claims.

13.   I find that the strata knew from the Dispute Notices that Ms. Dugas took issue with many aspects of the strata’s financial recording and reporting. The purpose of a Dispute Notice is to define the issues between the parties, not to provide detailed arguments. If, as the strata alleges, it was taken by surprise by some of Ms. Dugas’s submissions, it could have requested an extension so that it could provide more evidence, which it did not do.

14.   I considered providing the strata with that opportunity, but as mentioned above, I have dismissed Ms. Dugas’s claims. There is therefore no prejudice to the strata for any lack of opportunity to address Ms. Dugas’s arguments, and no point in the strata providing further evidence or submissions.

15.   The strata also took issue with Ms. Dugas’s reply submissions. It argues that Ms. Dugas went beyond replying to the strata’s submissions and improperly raised new issues. The strata asked for the opportunity to respond. I agree with the strata that Ms. Dugas raised new issues in her reply submissions, but again, given my conclusion, I find that the strata was not prejudiced. So, while I read and considered Ms. Dugas’s reply submissions, I did not ask for the strata’s response to any new issues she raised.

16.   Finally, both parties provided late evidence, mainly relating to events that took place after the parties initially uploaded their evidence. I accepted the late evidence because both parties had the opportunity to comment on it and neither party objected.

ISSUES

17.   The issues in this dispute are:

a.    Should I order the strata to hold an SGM to revote on 5 resolutions from the 2020 AGM?

b.    Should I order that the strata be audited?

BACKGROUND

18.  In a civil claim such as this, Ms. Dugas as the applicant must prove her case on a balance of probabilities.

19.  Before turning to the substance of my decision, I note as a general point that Ms. Dugas raises many issues in her evidence and submissions in both disputes that I find are not relevant to the 2 specific orders she requests. With that, while I have read all the parties’ evidence and submissions, I only refer to what is necessary to explain and give context to my decision. This means that I will not address in detail any of Ms. Dugas’s allegations that are unrelated to the 5 resolutions from the 2020 AGM or the strata’s 2020 finances.

20.  The strata is a bare land strata with 94 strata lots. There is a golf course and lodge on common property, which the strata operates as a business. This means that the strata’s finances are more complicated than those of a typical strata corporation.

EVIDENCE AND ANALYSIS

Should I order the strata to hold an SGM to revote on 5 resolutions from the 2020 AGM?

21.  The strata’s 2020 AGM was initially scheduled for April 2020 but the strata cancelled it due to the emerging COVID-19 pandemic. The strata held an SGM in June 2020 for the sole purpose of approving a budget for 2020. The strata eventually rescheduled the AGM for September 20, 2020.

22.  As mentioned above, Ms. Dugas wants an order that the strata hold an SGM to revote on 5 resolutions from the 2020 AGM, which were numbered as Resolutions #4, #7, #8, #9 and #10. These 5 resolutions each proposed a set of amendments to the strata’s bylaws. The strata’s most recent bylaws at that time were filed in the Land Title Office (LTO) in October 2019. I will address each resolution in turn, and then address Ms. Dugas’s more general arguments.

23.  Resolution #4 was to amend bylaw 28(1), which provided that the strata’s AGM would occur in March or April of each year. Resolution #4 would allow the strata to postpone the AGM if there was a “catastrophic event”. The resolution also amended bylaw 31(1)(f), which was about the process for approving general meeting minutes. The resolution passed with 47 in favour and 5 opposed.

24.  Ms. Dugas argues that neither the existing nor the proposed version of bylaw 28(1) complied with section 40(2) of the SPA, which requires the strata to hold an AGM within 2 months of the end of its fiscal year end, which at the time was December 31. I agree. However, the strata acknowledged this issue and proposed a resolution at an SGM in December 2020 to move its fiscal year end to February 28. The resolution passed. The strata says that this issue is moot and I mostly agree. It is true that by moving the fiscal year end to February 28, the strata fixed its ongoing issue of having its AGM more than 2 months after the end of its fiscal year end. However, there is no provision in the SPA that would permit a strata corporation to postpone its AGM beyond 2 months after its fiscal year end for any reason, including a “catastrophic event”. So, it is questionable whether this part the bylaw is enforceable. That said, I find this potential issue to be relatively minor since in the normal course, the strata will now hold its AGM on time. By definition, a catastrophic event is unlikely to occur. So, I do not find this issue to be significant enough to justify a revote on Resolution #4.

25.  Resolution #7 made several changes to the bylaws addressing the duties of owners, tenants, occupants, and visitors. I find it unnecessary to set out most of the changes in detail. The resolution passed with 47 in favour and 11 opposed.

26.  One of the amendments removed bylaw 3(2)(b), which required the strata to repair and maintain a maintenance shop and cottage sewer systems, which are undisputedly common property. Ms. Dugas says that this change contravened section 149(1) and (4) and 150 of the SPA, which set out the strata’s obligations about insurance. I disagree that removing this bylaw had any practical effect. The strata must insure all common property regardless of whether there is a bylaw requiring the strata to repair and maintain any specific common property.

27.  Ms. Dugas also points out that Resolution #7 contains a typo, which she argues added confusion about the amendments being proposed. The strata admits that the resolution misidentified a bylaw being amended as bylaw 4(18) instead of 4(17)(e). The strata says this can be easily fixed at a future general meeting. I note that bylaw 4(17)(e) is about access to the strata’s lodge while bylaw 4(18) prohibits smoking. The bylaw amendment was about access to the lodge. With that context, I find it highly unlikely that an owner reading the resolution would have been confused by this typo.

28.  Resolution #8 made a number of changes to the bylaws about RVs. The resolution failed with 27 in favour and 29 opposed. Ms. Dugas argues that Resolution #8 was too confusing to understand and referenced bylaws that do not exist. Since the 2020 AGM, the strata has proposed several other bylaw amendments about RVs. The owners eventually approved a bylaw amendment on this issue in 2021. I therefore find that revoting on a failed resolution when the owners have since agreed on an alternative bylaw would serve no purpose, even if it was confusing or poorly drafted.

29.  Resolution #9 made changes to the bylaws about rentals and short-term accommodations. The resolution passed with 58 in favour and 1 opposed. Ms. Dugas points out that the initial resolution referred to a bylaw that does not exist. However, at the 2020 AGM an owner proposed an amendment to the resolution to correct the error, which the owners approved before voting. So, I find that nothing turns on the initial typo.

30.  Resolution #10 amended several bylaws about governance. It included a bylaw that the strata council must elect a president, vice-president, and treasurer. The resolution passed with 58 in favour and 1 opposed.

31.  Ms. Dugas argues that this bylaw amendment contravenes bylaw 13(1) of the Schedule of Standard Bylaws, which requires a strata corporation to have a secretary. Section 120 of the SPA says that the Standard Bylaws only apply to the extent that a strata corporation has not filed different bylaws in the LTO. As the strata points out, as long as a bylaw does not contravene the SPA, Strata Property Regulation (SPR), or another enactment, a strata corporation is free to adopt bylaws that are different from the Standard Bylaws. There is nothing in the SPA or SPR that says what officers a strata council must have. So, I find that this bylaw amendment does not contravene the SPA.

32.  I turn then to Ms. Dugas’s general arguments about the 5 resolutions. Each of the resolutions included multiple bylaw amendments that the strata combined into a single resolution, and thus a single vote. For example, Resolution #7 covered 8 substantive changes to the bylaws. Ms. Dugas argues that the strata presented “a mishmash of unrelated bylaw amendments covering complex changes clustered into one yes/no vote”. She says that by lumping together many changes, the strata denied the owners the right to fully participate in the AGM.

33.  The strata says that it tried to group amendments together by subject matter to avoid having the owners vote on dozens of individual amendments, some of which were very minor.

34.  I find nothing wrong with the strata’s approach. I find that each of the resolutions included amendments about the same issues. Given the number of minor housekeeping changes, I find that this was a sensible approach. Most importantly, if there were any owners who wanted to approve only some of the proposed amendments in any resolution, they had the opportunity to propose splitting the resolution up into multiple parts. There is no evidence that any owner suggested this, including Ms. Dugas. I find that there was nothing procedurally unfair about the way the resolutions were presented or voted on.

35.  As for Ms. Dugas’s point that the resolutions were confusing, I agree that some amendments required cross-referencing the proposed bylaw amendment with the existing bylaws to fully understand the nature of the proposed change. Ms. Dugas says that the strata should have provided a table clearly explaining the changes. While this may have been helpful, I find that with some effort an owner would have understood the amendments the strata proposed. There is no evidence from any owners that they did not understand the resolutions.

36.  Ms. Dugas also says that the strata’s use of the word “section” to describe bylaws was inaccurate. She says that the bylaws do not have “sections”. While it is true that the strata’s bylaws do not use the word “sections” to describe the numbered bylaws, I find that there is no ambiguity about what the resolutions mean when they refer to sections. Again, there is no evidence that any owner was confused by this.

37.  I therefore find that the resolutions were not misleading or too confusing for the owners to reasonably understand and vote on.

38.  Several owners voted by proxy at the 2020 AGM. Ms. Dugas argues that the proxy form was “vague and not representative of the complex issues” raised in the resolutions. The proxy form provided space for the owner to indicate whether to vote yes, no, or abstain on each resolution. The proxy form did not provide any detail about any of the resolutions. However, I find nothing turns on this. As the strata points out, the SPA does not set out any requirements for how proxy forms must present resolutions. Most importantly, the strata provided the owners with the proxy form in the AGM package, which included a copy of the proposed resolutions. Therefore, any owner using the proxy form only needed to look elsewhere in the package to read the resolutions they were voting on. I therefore find that the proxy form adequately identified the proposed amendments.

39.  Ms. Dugas raises other issues about the strata’s financial disclosure before the 2020 AGM, the running of the 2020 AGM, the strata’s rules, and the strata’s governance both before and after the 2020 AGM. She does not explain how these issues relate to the 5 specific resolutions at issue in this dispute. I find that these issues are not relevant to the requested remedy, so I decline to address them.

40.  In conclusion, I see no reason to order the strata to hold an SGM to revote on the 5 resolutions. I dismiss Ms. Dugas’s claim about this issue.

Should I order that the strata be audited?

41.  On November 3, 2020, Ms. Dugas inspected the strata’s financial records at the strata’s office. She says that as part of this review, she reconciled some of the strata’s general ledger. She became convinced that the strata was not properly recording or managing its finances. She says that the strata’s financial records are inaccurate, incomplete, and do not accord with generally accepted accounting principles (often called GAAP). She therefore says that the strata needs to be audited to help it “determine how to use processes, systems, and controls” to produce accurate financial statements.

42.  The strata argues that it has a bookkeeper on staff and hires an accountant to review its accounts annually. It says that it goes above and beyond the SPA’s requirements.

43.  As in her first dispute, Ms. Dugas makes several arguments that I find are unrelated to the order she asks for. I find that the purpose of an audit, generally speaking, would be to ensure that the strata’s financial statements accurately reflect the strata’s actual financial position. An audit would not address the strata’s compliance with the SPA, SPR or its bylaws. An audit would not address the merits of the strata’s long-term financial plan or second guess the owners’ decision to approve the strata’s budgets. An audit would not assess whether the strata could better run its business operations. I therefore find that these issues are irrelevant to whether the strata should have its 2020 finances audited, and I will make no comment about them.

44.   Ms. Dugas’s submissions about the strata’s finances are extremely detailed. She explains that her professional background is in finance, so I accept that she has experience analyzing financial records and financial statements. As mentioned above, the strata’s finances are more complicated than those of a typical strata corporation since it owns and runs a business, which earns the strata profits that it puts towards common expenses to reduce strata fees.

45.   I have reviewed Ms. Dugas’s submissions carefully, and I conclude that the question of whether the strata’s financial records accurately reflect the strata’s financial position or otherwise comply with GAAP is beyond the knowledge and expertise of an ordinary person. This means that Ms. Dugas must provide expert evidence to prove that the strata’s financial records are deficient (Bergen v. Guliker, 2015 BCCA 283). While Ms. Dugas has professional experience in finance, the CRT’s rules require an expert witness to be impartial. This is because the role of an expert is to help the CRT understand technical or specialized subject matter, not to help a party win their dispute. This means that a party cannot be an expert witness.

46.   I note that Ms. Dugas provided documents published by accounting firms and the federal government about GAAP for not-for-profit organizations. However, I find that these background documents are no substitute for expert evidence about the strata’s financial records. Therefore, without expert evidence, I find that Ms. Dugas has not proven that the strata’s financial records do not comply with GAAP or are otherwise inaccurate or incomplete, as she alleges.

47.   The strata argues that the SPA and SPR do not require a strata to follow any particular format for financial reporting as long as the strata shows money received and spent: Kayne v. Strata Plan LMS 2374, 2007 BCSC 1610. It also argues that the CRT has typically been “lenient” with strata corporations in cases where owners ask for audits, referring to Sleeman et al v. The Owners, Strata Plan VR 2027, 2019 BCCRT 1162 and Roberts v. The Owners, Strata Plan LMS 1901, 2020 BCCRT 1387. These decisions are not binding on me, and in any event, I do not interpret them as showing “leniency”. Rather, I find that these disputes reflect the fact that an order for an audit is an extraordinary remedy. Audits are expensive and administratively cumbersome. According to the strata’s executive administrator, they called 3 accounting firms for quotes for an audit. Two provided written quotes, which ranged from $15,000 to $25,000.

48.   With that, I find that unless there are credible allegations about missing money, such as through fraud or carelessness, the decision to undergo an audit is best left to the owners. There are no such allegations here. Rather, Ms. Dugas is unhappy with the strata council’s, bookkeeper’s, and accountant’s work quality. It is well-established that the CRT will not interfere with the democratic governance of a strata corporation unless it is absolutely necessary: Foley v. The Owners, Strata Plan VR 387, 2017 BCSC 1333. I find that Ms. Dugas has not proven that an audit is necessary.

49.   I note that when Ms. Dugas raised similar concerns about the strata’s financial reporting and long-term financial plan in advance of the 2021 AGM and urged owners to vote against the budget. The budget passed with 58 owners in favour and 3 opposed. This suggests that the majority of owners are content with both the substance and presentation of the strata’s finances.

50.   That said, section 46 of the SPA says that if 20% of the owners by written demand ask that a resolution be added to the agenda of a general meeting, the strata must do so. I find that this is the best way for Ms. Dugas to seek an audit of the strata’s finances.

51.   With that, I find that there is no basis in the evidence to order the strata to audit its 2020 finances. I dismiss Ms. Dugas’s claim.

TRIBUNAL FEES AND EXPENSES

52.  Under section 49 of the CRTA and CRT rules, the CRT will generally order an unsuccessful party to reimburse a successful party for CRT fees and reasonable dispute-related expenses. Ms. Dugas was unsuccessful, so I dismiss her claim for CRT fees. She did not claim any dispute-related expenses.

53.  The strata claims $906.25 for bookkeeping and accounting expenses. The strata says that it incurred these expenses because it had to have its bookkeeper and accountant at a meeting with Ms. Dugas in November 2020 to address her concerns with the strata’s finances. The strata says that the parties attended this meeting to address concerns Ms. Dugas raised in the first CRT dispute. Ms. Dugas filed the second CRT dispute shortly after this meeting. Ms. Dugas says that these expenses are the strata’s administrative expenses, and she should not have to pay for them.

54.  CRT rule 9.5(2)(c) says that the CRT may order an unsuccessful party to reimburse a successful party for any reasonable expenses directly related to the CRT process. I find that the accountant and bookkeeper’s attendance at the meeting with Ms. Dugas was directly related to the first CRT dispute. Given the detailed and technical nature of Ms. Dugas’s allegations, I find that it was reasonable for the strata to have its bookkeeper and accountant in attendance. The strata provided invoices to prove the amounts claimed were specifically about the CRT disputes and not part of the strata’s ongoing bookkeeping and accounting costs. I find the amounts claimed are reasonable. With that, I order Ms. Dugas to pay the strata $906.25 for the strata’s dispute-related expenses.

55.   The strata must comply with the provisions in section 189.4 of the SPA, which includes not charging any dispute-related expenses against Ms. Dugas other than the $906.25 I have ordered.

DECISION AND ORDERS

56.   I dismiss Ms. Dugas’s claims.

57.   Within 30 days of the date of this order, I order Ms. Dugas to pay the strata $906.25 in dispute-related expenses.

58.   The strata is also entitled to post judgement interest under the Court Order Interest Act.

59.   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.