Date Issued: September 22, 2021
File: ST-2019-005677
Type: Strata
Civil Resolution Tribunal
Indexed as: Section 1 of The Owners, Strata Plan BCS 3495 v. The Owners, Strata Plan BCS 3495, 2021 BCCRT 1020
Section 1 of The Owners, Strata Plan BCS 3495
Applicant
And:
The Owners, Strata Plan BCS 3495 and Section 2 of The Owners, Strata Plan BCS 3495
RespondentS
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REASONS FOR DECISION |
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Tribunal Member: |
J. Garth Cambrey, Vice Chair |
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INTRODUCTION
1. This strata property dispute is about the allocation of expenses within a strata corporation with sections.
2. The applicant, Section 1 of The Owners Strata Plan BCS 3495 (commercial section), is a section under the Strata Property Act (SPA) comprising all 14 non-residential strata lots in the respondent strata corporation, The Owners, Strata Plan BCS 3495 (strata). The other respondent, Section 2 of The Owners, Strata Plan BCS 3495 (residential section) is a section comprising all remaining 628 residential strata lots.
4. The commercial section says to the extent allowable under the Limitation Act (LA), it should be reimbursed for “all over-payments and unjustifiable expenses” made since January 2016 that it should not have contributed to. I find, in essence, the commercial section says the strata has improperly allocated the following categories of expenses (disputed expenses) in contravention of the SPA and bylaws.
a. Sewer expenses
b. Electrical expenses
c. Garage door maintenance expenses
d. Legal expenses
e. Strata management fees
f. Plumbing and Mechanical maintenance expenses
g. Common property repair expenses
h. Parkade cleaning expenses (except visitor parking)
i. Security and enterphone expenses
j. Window cleaning expenses
k. Building Manager expenses
5. The commercial section also alleges it has been treated significantly unfairly because the strata has acted in a way to block the commercial section owners from services for which the commercial section owners pay. Lastly, the commercial section says that the sole non-residential strata lot owner serving on the strata council has been excluded from the strata’s decision-making about strata expenses.
6. The commercial section seeks orders that the strata:
a. reimburse it a total of $136,426.81 based on the alleged improper allocation of expenses,
b. reallocate some expenses currently charged to the commercial section either solely to the residential section or to the strata,
c. stop contravening the SPA and its bylaws about expense allocation,
d. remedy significant unfair actions by allowing commercial section owners to benefit from services the commercial section pays for, and
e. be prohibited from selectively excluding the non-residential strata council member from the strata’s expenses decision-making process.
7. The strata disagrees with the commercial section and says it has not allocated expenses contrary to the SPA or its bylaws, and that some expenses for which the commercial section claim reimbursement are statute-barred (out of time) under the LA. It also says that the commercial section’s allegation of significant unfairness is premature because the strata has not been given the opportunity to consider the commercial section’s allegations, nor has the strata specifically refused to act in the manner requested by the commercial section. The strata asks that the commercial section’s claims be dismissed.
8. The residential section says all of the commercial section claims are properly against the strata and not the residential section. It denies that it has any involvement in the allocation of expenses and says expense allocation is the strata’s obligation. The residential section says it has not acted contrary to the SPA and bylaws, nor significantly unfairly. The residential section also says many, if not all of the commercial section’s claims are statute-barred under the LA. In submissions, the residential section says the parties were in the process of negotiating a cost sharing agreement when the original DN was issued, and more time is required for the parties to properly consider and vote on cost sharing arrangements before any decision is made. I infer that the residential section denies liability for the commercial section’s claims, and seeks additional time to negotiate a cost sharing arrangement with the other parties.
9. All parties are represented by legal counsel. The commercial section is represented by Oscar Miklos. The strata is represented by Maris Holmes. The residential section is represented by Eric Chow.
10. For the reasons that follow, I find the strata must reimburse the commercial section $3,418.06 for partial electrical expenses, plus interest. I decline to address, refuse to resolve or dismiss the commercial section’s remaining claims.
JURISDICTION AND PROCEDURE
11. 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). CRTA section 2 says the CRT’s mandate is to provide dispute resolution services accessibly, quickly, economically, informally, and flexibly. In resolving disputes, the CRT must apply principles of law and fairness, and recognize any relationships between the dispute’s parties that will likely continue after the CRT process has ended.
14. The applicable CRT rules are those that were in place at the time this dispute was commenced.
15. 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.
16. Under CRTA section 61, the CRT may make any order or give any direction in relation to a CRT proceeding it thinks necessary to achieve the objects of the CRT in accordance with its mandate. The CRT may make such an order on its own initiative, on request by a party, or on recommendation by a case manager.
17. Tribunal documents incorrectly show the name of the commercial section as Strata Corporation Section 1 of The Owners, Strata Plan BCS 3495, whereas, based on sections 2 and 195(4) of the SPA, the correct legal name of the commercial section is Section 1 of The Owners, Strata Plan BCS 3495. The same is true for the residential section which shows as Strata Corporation Section 2 of The Owners, Strata Plan BCS 3495 on tribunal documents, whereas the correct legal name is Section 2 of The Owners, Strata Plan BCS 3495. Given the parties operated on the basis that the correct names of the commercial and residential sections were used in their documents and submissions, I have exercised my discretion under section 61 to direct the use of the sections’ correct legal names in these proceedings. Accordingly, I have amended the style of cause above.
18. 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.
Preliminary Matters
DN History and Addition of Residential Section as a Respondent
19. The CRTA and CRT rules permit an applicant to request a DN be amended. The commercial section’s original claims and requested remedies were set out in a DN issued August 27, 2019, that requested total reimbursement of $100,000 for the disputed expenses. That DN was amended on March 25, 2020 to revise the claimed reimbursement amount to $185,000 for the disputed expenses. The DN was again amended on May 5, 2020 to:
a. Provide additional information about the disputed expenses and amend the list of disputed expenses to exclude sewer expenses.
b. amend the claimed reimbursement amount for disputed expenses, excluding sewer expenses, to $136,426.81,
c. add a claim that the disputed expenses, including sewer expenses, be reallocated either to the residential section or to the strata,
d. add a claim that the strata treated the commercial section significantly unfairly under SPA section 164 by breaching the method of allocating the disputed expenses under SPA section 195 and bylaw 6.3,
e. add a requested remedy that the strata be prohibited from selectively excluding the strata council member elected from the commercial section from the decision-making process about the strata’s expenses, and
f. add a requested remedy that the strata allow commercial section owners to benefit from services the commercial section pays for.
20. On July 29, 2020, after reviewing submissions from the commercial section and strata, I issued a preliminary decision ordering that the residential section be added as a respondent to this dispute under CRT rule 1.17. My decision was based on the commercial section’s claims set out in the May 5, 2020 amended DN that appeared to involve the residential section as well as the strata. Also, the commercial section and strata both agreed the residential section should be added as a respondent. An amended DN was issued on July 30, 2020 that included the residential section as a respondent, and identified the residential section’s approved legal representative.
Extension of Time and Character Count for Submissions
21. On March 26, 2021, a CRT vice chair issued a preliminary decision granting the commercial section and strata an extension of 4 weeks to provide written submissions and increased the permitted length of each of their submissions. The requested time extension and submission length was agreed among all parties.
Additional Claims and Remedies not Raised in the July 30, 2020 amended DN
a. Water Expenses
22. The matter of water expenses was addressed in a prior CRT dispute involving section 1 and the strata indexed as Section 1 of The Owners, Strata Plan BCS 3495 et al v. The Owners, Strata Plan BCS 3495, 2019 BCCRT 707 (water dispute). In the water dispute, I considered whether the strata had improperly allocated water expenses contrary to the SPA and found that it did. I ordered the strata to reimburse the commercial section for water expenses, including fines and penalties that were incurred.
23. The commercial section alleges the strata has not complied with my order because the strata has not paid $9,312.73 of the ordered water expenses or related fines and penalties. I find the commercial section’s water expense claim is outside the CRT’s jurisdiction because the CRT does not have authority to enforce its own decisions as set out under Part 6 of the CRTA.
24. For this reason, I refuse to resolve the commercial section’s claim that the strata has failed to comply with my order given under the water dispute.
b. Other Claims and Remedies
25. I find the purpose of a DN is to define the applicant’s issues and provide notice to the respondents of the claims made against them, as well as describe the remedies sought by the applicant. CRT rule 1.17 says that the DN will only be amended after the dispute has entered the CRT decision process (adjudication) where exceptional circumstances apply. Despite having amended the DN several times before this dispute entered adjudication, and being given extra time and extended submissions, the commercial section made further claims and requested additional remedies in its submissions. In particular, I find the commercial section attempts to add the following expense categories to the disputed expenses (additional expenses).
a. Alarm expenses.
b. Landscape expenses
c. Phone expenses
d. Insurance claim expenses,
e. Pool expenses,
f. Loading bay expenses, and
g. “other miscellaneous expenses”.
26. The commercial section also seeks different remedies in its submissions that were not included in the DN. They are expressly set out by the commercial section to be the following orders:
a. That the disputed expenses, except sewer and electrical, and additional expenses be borne entirely by the residential section to “allow for a fairer apportioning of expenses and/or apportioning in accordance with the SPA.”
b. In the alternative, an order that strata, at its own expense, separate the disputed expenses and additional expenses based on the “use and benefit” as between the 2 sections “to allow for a fairer apportioning of such expenses and/or apportioning in accordance with the SPA.”
c. That the common property intended to be for the exclusive use of residential strata lots, or their owners and occupants, be designated as limited common property (LCP).
d. That the sewer and electrical expenses be borne entirely by the strata,
e. That the strata reimburse the commercial section $35,429. 76 for improperly allocated expenses based on the “rough justice” approach used by this tribunal in 901 Fernie Property Developments Ltd. v. The Owners, Strata Plan NES 3363, 2018 BCCRT 750, and
f. That the commercial section be awarded a total monetary amount of $100,046.51 plus an uncalculated amount for sewer expenses from November 1, 2019.
27. I find the commercial section had several opportunities to identify all of its claims and remedies before the adjudication process started, but did not do so. For this reason, I find there are no exceptional circumstances here that would justify adding new claims or remedies at this late stage in the CRT process. Therefore, I make no findings about the commercial section’s added claims or additional requested remedies because I find these claims and requested remedies are not properly before me.
ISSUES
28. The issues in this dispute are:
a. To what extent, if any, does the LA apply to the claims in this dispute?
b. How must section expenses be allocated?
c. Should some of the common expenses be reallocated and, if so, which expenses, and how should they be reallocated?
d. Is the commercial section entitled to reimbursement of paid expenses and, if so, from whom and in what amount?
e. Has the strata council selectively excluded the non-residential member from decisions about strata expenses?
f. Does the commercial section have standing to claim for significant unfairness?
BACKGROUND
29. In a civil proceeding such as this, the applicant commercial section must prove its claims on a balance of probabilities. I have read all the submissions and evidence provided by the parties, but refer only to information I find relevant to give context for my decision.
30. As mentioned, the strata is a mixed-use strata corporation. It includes underground parking, various amenity areas and 3 high rise towers comprising the residential strata lots.
31. The strata was created in July 2009 and built in 3 phases completed about July 2009, July 2012, and October 2014 respectively. Each phase included 1 residential tower. The 3 towers are commonly referenced as tower 1, tower 2, and tower 3 based on the phase in which they were built. The strata has a total of 642 strata lots.
32. On July 13, 2009, when the strata was created, the owner developer filed bylaw amendments with the Land Title Office (LTO) that replaced the Standard Bylaws and created the commercial and residential sections. Subsequent bylaw amendments have been filed but are not relevant to this dispute. I discuss the relevant bylaws below as necessary.
33. There are 14 non-residential strata lots that form the commercial section. Nine were constructed in phase 1 and 5 were constructed in phase 2. They are all accessible from ground level. There are no non-residential strata lots in phase 3. Based on my review of the Form V information filed with the LTO for all phases, the total unit entitlement for all strata lots is 46,694. The total unit entitlement for the 14 commercial section strata lots is 1,772 (3.8% of the strata) and the total unit entitlement for the 628 residential strata lots is 44,922 (96.2% of the strata).
LCP Designations
34. I have identified the phases in this dispute not only because of the tower references, but also because of issues created with incomplete or invalid LCP designations. The strata plan shows LCP designations for individual residential strata lots, such as patios and balconies. There is no LCP associated with non-residential strata lots shown on the strata plan. On July 24, 2009, prior to the strata’s first annual general meeting, the owner developer designated certain amenity areas in tower 1 as LCP for the residential strata lots in tower 1 (strata lots 10 through 181) under SPA section 8. The effect of these LCP designations was to restrict the use of the tower 1 amenity areas to the tower 1 residential strata lot owners only. The designations also affect expense allocations as I discuss below.
35. The tower 1 LCP designations made by the owner developer were not amended when the second and third phases joined the strata, so the tower 1 amenity areas remain designated to the exclusive use of the tower 1 residential strata lot owners.
36. On March 25, 2011, the strata filed a sketch plan under SPA section 74 to designate a common property garbage and recycling room on the ground floor of tower 1 as LCP for the exclusive use of non-residential strata lots 7, 8 and 9. The filed resolution states that the commercial section strata lots approved the resolution and that the residential strata lots did not vote on the resolution because the resolution was “strictly to do with the commercial section”. I agree with the strata and find the resolution invalid as it was not passed by a ¾ vote of all owners, as required under section 74. It follows that the proposed LCP designations have no force or effect.
37. At a general meeting held June 23, 2015, the strata purportedly passed a resolution to designate the loading bay in tower 1 as LCP for the “commercial section” and the loading bay in tower 3 as LCP for the “residential section” under SPA section 73. The resolution was filed with the LTO on August 27, 2015, purporting to create the intended LCP. However, as the strata correctly notes, the filing is flawed. First, the reference to SPA section 73 is misleading. A reference to SPA section 74 would be more appropriate. Second, by definition, LCP must be designated to specific strata lots, not to a section. Finally, the resolution was filed as a bylaw amendment and not as an LCP designation under section 74. Therefore, I find the August 27, 2015 LTO filing purporting to create LCP invalid and of no force or effect.
38. A further LTO filing was made on November 27, 2018 based on the same June 23, 2015 general meeting. The filing was again made as bylaw amendment and simply contained the strata’s June 23, 2018 annual general meeting notice and minutes that included the loading bay LCP designation resolution and other bylaw amendments. To the extent the filing was intended to correct the loading bay LCP designations filed August 27, 2018, I find it does not.
39. In summary, the only LCP designations within the strata are those to individual residential strata lots about balconies and patios, and the designation of tower 1 amenity areas to the residential strata lots in tower 1 (strata lots 10-181) filed by the owner developer.
EVIDENCE AND ANALYSIS
40. My approach in deciding this dispute will be to first determine if, or to what extent, the LA applies to the claims before me. I will then discuss how the SPA and strata bylaws apply to the allocation of section expenses and determine if the disputed expenses have been improperly allocated. If they have, I will address how the misallocation of expenses must be remedied. Finally, I will address the commercial section’s claims that the strata intentionally excluded the non-residential strata council member from its expense decisions and its claim of significant unfairness.
To what extent, if any, does the LA apply to the claims in this dispute?
41. Under section 13 of the CRTA, the LA applies to the CRT as if it were a court. The current LA came into force on June 1, 2013. The LA sets out limitation periods, which are periods within which a person may bring a claim. If the limitation period expires, the right to bring the claim ends, even if the claim would have been successful.
42. The LA defines a claim as “a claim to remedy an injury, loss or damage that occurred as a result of an act or omission”. The limitation period only applies to claims, as defined.
43. I find only the commercial section’s claim for reimbursement of expenses is covered by the LA, because that is the only claim for financial loss or damage. I find the LA does not apply to the commercial section’s remaining claims because those claims do not fall under the LA definition of a claim.
44. Section 6 of the LA says of the basic limitation period is 2 years, and that a claim may not be commenced more than 2 years after it is discovered.
45. Section 8 of the LA says that, except for special situations referred to in sections 9 to 11 that do not apply here, a claim is discovered by a person on the first day on which the person knew or reasonably ought to have known all of the following:
a. that injury, loss or damage had occurred;
b. that the injury, loss or damage was caused by or contributed to by an act or omission;
c. that the act or omission was that of the person against whom the claim is or may be made;
d. that, having regard to the nature of the injury, loss or damage, a court proceeding would be an appropriate means to seek remedy for the injury, loss or damage.
46. The commercial section agrees its claims are subject to the LA but does not say when it discovered its reimbursement claim. The respondents say the commercial section discovered its reimbursement claim by August 27, 2019, the date the original DN was issued. I agree, and I find the discovery date of the strata’s reimbursement claim is August 27, 2019 at the latest.
47. Therefore, I find the commercial section is out of time to claim any expense reimbursement relating to a period prior to August 27, 2017, 2 years prior to the date the original DN was issued.
How must section expenses be allocated?
48. The allocation of section expenses is expressly set out in SPA section 195, which states (my emphasis):
Subject to section 100 and the regulations, expenses of the strata corporation that relate solely to the strata lots in a section are shared by the owners of the strata lots in each section on the basis of unit entitlement.
49. Section 195 does not allow for expenses to be split based on use or benefit. Rather, expenses must be split based on unit entitlement, unless a SPA section 100 unanimous resolution to provide a different calculation method has been properly passed, which is not the case here.
50. Part 11 of the Strata Property Regulation (regulation) provides further details and formulae about calculating specific strata fees within a section. Regulation 11.2(1) says that if a contribution to the operating fund relates to and benefits only limited common property for the exclusive use of strata lots in a section, the contribution is shared only by owners of the strata lots entitled to use the limited common property. However, as I have found, there is no LCP designated to all strata lots in a section, so I find regulation 11.2(1) does not apply to this dispute.
51. The SPA is silent on expenses that do not relate solely to strata lots of only 1 section of a strata corporation. In the water dispute, I considered the use of the word “solely” in section 195 to mean “to the exclusion of all else”, finding that if an expense does not relate solely to a section, it must be a strata corporation expense. I reached the same conclusion in Section 2 of The Owners, Strata Plan EPS1945 v. The Owners, Strata Plan EPS1945, 2021 BCCRT 472 at paragraph 46. The strata also cites Yang v. The Owners, LMS 4084, 2010 BCSC 453, in which the court effectively reached the same conclusion.
52. I turn now to the strata’s bylaws that address section expenses. They are:
Bylaw 1.5: says that each of the sections must repair and maintain LCP “appurtenant to such section”, but only with respect to repairs and maintenance that typically occurs at least once per year.
Bylaw 3.1: requires the strata corporation to repair and maintain common property (consistent with SPA section 72).
Bylaw 6.3: sets out how common expenses are to be apportioned between the residential and commercial sections. It says, subject to bylaw 6.5 (which relates to LCP expenses), common expenses attributable to either separate section will be allocated to the strata lots in that section and common expenses that are not attributable to either separate section will be allocated to all strata lots in the strata.
Bylaw 6.4: sets out specific allocations of common expenses stating “without limiting the generality of bylaw 6.3 and unless otherwise determined by the executives of each of the Residential Section and Commercial Section acting reasonably” that include:
i. Expenses relating to areas designated as limited common property (LCP) for each separate section will be allocated to the strata lots in the section,
ii. Expenses relating to the exterior of the building will be allocated to all strata lots in the strata, and
iii. Expenses relating to the underground parking facility will be apportioned between the 2 sections based on the respective number of parking stalls allocated as LCP for each section.
Bylaw 6.5: says that expenses attributable to LCP, which would not have been expended if the area had not been designated as LCP, will be borne equally by the owners of the strata lots entitled to use LCP.
Bylaw 12.1: says that certain common areas and facilities are intended to be for the use of residential strata lot owners and occupants as may be identified as LCP under section 74 of the SPA or designated for exclusive use under section 76 of the SPA, and not for use by non-residential owners or occupants. The bylaw further states that all costs associated with these areas are for the residential section.
53. The parties disagree on the validity of some of the bylaws listed above. To be a valid bylaw under SPA section 121, the bylaws must not contravene the SPA or regulation. Based on my review, I also find that some of the bylaws do not apply to this dispute. My interpretation of the relevant bylaws follows.
54. Bylaw 1.5 says that each of the sections must repair and maintain LCP “appurtenant to such section”, but only with respect to repairs and maintenance that typically occurs at least once per year. If an LCP expense typically occur less often than once per year, the expense is a strata responsibility. I interpret the phrase “appurtenant to such section” as meaning designated to the section. However, LCP is defined under SPA section 1(1) to mean “common property designated for the exclusive use of the owners of one or more strata lots”. That means that in order for a section to be responsible for repair and maintenance of LCP, the LCP must be designated to the exclusive use of the owners of all the strata lots in the section. As I have discussed above, there is no LCP that meets this criteria. Therefore, I find bylaw 1.5 does not currently apply to the strata or this dispute.
55. In the water dispute, I briefly discussed bylaws 6.3 and 6.4 relating to cost allocations. I found that bylaw 6.3 generally reflects the requirements of the SPA and that bylaw 6.4 was contrary to the SPA because it purports to allocate expenses using a formula different from that permitted under the SPA. I would add that my conclusion about bylaw 6.3 was in relation in common expenses allocated to a section under bylaws 6.3(1) and (2). This is supported by the court’s decision in Norenger Development (Canada) Inc. v Strata Plan NW 3271, 2018 BCSC 1690 at paragraph 60, where the Court found that SPA section 72 only limits the obligations that a strata can impose on “an owner”, not on a section. In other words, common expenses can be allocated to a section but not to an owner. Therefore, although not applicable to this dispute, I find that bylaw 6.3(3) that purports to permit common property expenses to be allocated to 1 particular strata lot, is contrary to section 72 and unenforceable.
56. As for bylaw 6.5, I find it does not apply to this dispute because there are no LCP designations to all strata lots of a section.
57. I find bylaw 12.1 is contrary to the SPA and therefore unenforceable with respect to intended LCP designations. I find bylaw 12.1 purports to allocate expenses to “certain common areas and facilities” contrary to filed LCP designations and contrary to SPA section 72 that requires common property expenses to be paid by all strata lots. First, the reference to “certain common areas and facilities” is vague and unclear. Second, as I have mentioned, the tower 1 amenity areas are designated LCP for strata lots 10 through 181. To require the allocation of expenses to all strata lots within the residential section without the corresponding LCP designations is contrary to the SPA. I do not agree with the commercial section that bylaw 12.1 creates a positive obligation for the strata to vote on resolutions to designate LCP. Rather, I agree with the strata that the bylaw attempts to create LCP without the need to pass a ¾ vote as required under SPA sections 73 and 74, or deem certain LCP designations have been duly passed. Both options are contrary to the SPA. Bylaw 12.1 also refers to designations of short term use of common property under SPA section 76. However, based on the evidence before me, there are no such designations.
58. Finally, in reply submissions, the commercial section says the strata “purposefully and unfairly stopped the designation of LCP” by failing to sign an amended Form P, citing a reference in the July 2012 strata council meeting minutes to this effect. It says the amended Form P would have “clearly delineated which Phase 2 common areas and facilities were intended to be for the exclusive use” of the residential strata lots as contemplated by Bylaw 12. A Form P is a declaration by an owner developer about phased construction of a strata corporation under SPA sections 221 and 222. The Form P sets out particulars of each phase including estimated dates construction will commence and complete. Based on my review of the SPA and Form P in the regulation, a Form P does not address LCP designations nor is it (or an amended Form P) required to be signed by a strata corporation. For these reasons, I disagree with the commercial section’s allegation the strata somehow impeded LCP designations intended by the owner developer.
59. With this expense framework in place, I now turn to the question of whether the disputed expenses have been improperly allocated.
Should some of the common expenses be reallocated and, if so, which expenses, and how should they be reallocated?
60. In order for the commercial section to be entitled to reimbursement of any disputed expenses, it must first prove the expense has been improperly allocated. For the reasons that follow, I find the commercial section has not proved the disputed expenses have been allocated contrary to the SPA or the strata’s bylaws.
61. Each section and the strata have the ability to pass annual budgets under SPA section 194(2)(b). The commercial section’s claim about improper allocation of expenses contains two arguments. First, the commercial section says its budget contains expenses that are allocated only to the commercial section that should be allocated to the strata. Given these expenses are currently part of the commercial section’s budget, I will refer to them as commercial section expenses. Second, the commercial section says there are expenses in the strata’s budget that are attributable only to the residential section. Given these expenses are part of the strata’s budget, I will refer to them as common expenses.
Commercial Section Expenses
62. The commercial section says sewer and electrical expenses should be the responsibility of the strata. The commercial section says the strata has unfairly benefitted from the current allocation of these expenses because it does not pay for them. The commercial section argues these expenses are similar to the water expenses I addressed in the water dispute and, for the same reasons, must be strata corporation expenses.
63. The commercial section says the sewer expenses are currently allocated only to the commercial section, while the strata says sewer expenses are paid by the strata. The residential section says this part of the commercial section’s claim does not include the residential section.
64. I can find no evidence to support the commercial section’s claim that it paid sewer charges after August 17, 2017. In particular, the commercial section financial statements provided in evidence do not show any water and sewer charges were paid, except for a period leading up to January 2018, which show an expense of about $9,775 categorized as “water and sewer”. It is not possible to determine from the evidence if the January 2018 charges were for water or sewer or both. I also note this expense was before I issued my decision on the water dispute and any water charges could possibly have been corrected with the water decision. Finally, unlike in the water dispute, there are no expert reports or correspondence from the City of Coquitlam about how the waste pipes are plumbed or how the sewer charges are calculated. I find the commercial section has not proved the sewer expenses are improperly allocated and I dismiss this part of the commercial section’s claim.
65. As for the electrical expenses, the commercial section’s argument is restricted to electrical charges for signage. The commercial section says it pays charges associated with 2 electrical meters (5955088 and 5160226) that includes the cost of illuminating a sign containing the common name of the strata, which it says is a residential section sign. The residential section disagrees the sign benefits only the residential section and says the commercial section also benefits from the branding associated with the sign. Either way, it cannot be said that the electrical meters monitor electricity solely for the commercial section. I find the commercial section paid this hydro account based on the commercial section’s financial statements provided in evidence.
66. According to the hydro bills in evidence, these 2 meters are billed under the same account number, 7375017. This is supported by an invoice dated in 2019 from VSI Electrical Contractors Ltd. (VSI) that says VSI found the wiring of 1 residential sign and 6 commercial signs were on the same circuit. I do not agree with the commercial section that VSI stated the signs could not be separated because VSI clearly states “a new circuit from the electrical room to the mentioned sign is required to have the common sign separated from the other commercial signs”.
67. Further, correspondence received by the commercial section between 2016 and 2019 from Shanai Enterprise Inc. (Shanai), which I infer is another electrical contractor, confirms the sign wiring noted in VSI’s 2019 invoice. Shanai also says the commercial section is receiving a transformer discount, which shows on the hydro invoices provided in evidence under the same account number, 7375017. The correspondence notes a third electrical meter, but I find the commercial section’s claim does not include charges from the third meter. Rather, I find the commercial section’s arguments relate entirely to the electrical cost for the signage. The strata notes there appears to be conflicting information in Shanai’s correspondence about which meter is wired to the signs. While I agree there appears to be some conflict about the areas the meters cover, I find on a balance of probabilities, the 2 electrical meters include expenses for more than the commercial signs and are therefore not solely related to the commercial section.
68. Except for the correspondence from VSI and Shanai noted above, there is no other evidence that link the electricity charged to the commercial section to any particular part of the building or to any specific equipment. Other hydro invoices in evidence show charges for different electrical meters but it is unclear what electrical consumption is captured by those meters.
69. I find the hydro bills in evidence under account 7375017 are a strata expense. Accordingly, I order future bills to be reallocated to the strata effective immediately, for as long as the signs remain wired to the meters discussed above. However, I do not find this to be sufficient reason to order all electrical expenses currently charged to the commercial section reallocated as requested by the commercial section. I address reimbursement of past electrical expenses for account 7375017 below.
Common Expenses
a. Garage door maintenance expenses
b. Residential section legal expenses
d. Plumbing and Mechanical maintenance expenses
e. Common property repair expenses
f. Parkade cleaning expenses (except visitor parking)
g. Security and enterphone expenses
h. Window cleaning expenses
i. Building Manager expenses
71. In essence, the commercial section argues the disputed expenses solely benefit the residential section, or if not, are easily separable between the sections, are intended to be for the exclusive use of the residential section under bylaw 12 and should be apportioned as set out in bylaw 6.3. The commercial section also says these expenses must be “allocated exclusively, or primarily, to the residential section” because the commercial section does not benefit from them.
72. Both the strata and residential section maintain that the disputed expenses are properly allocated. They say the commercial section’s claims are too broad and do not include sufficient detail to permit them to understand the claims, and that the commercial section has failed to prove its claims.
73. I agree with the respondents and I find the commercial section has not proved its claim on a balance of probabilities for the following reasons.
74. As I have mentioned, SPA section 195 does not permit an expense to be allocated to a section unless the expense solely relates to the section. One of the commercial section’s arguments is that even if the dispute expense is not solely related to the residential section, “it is easily separable and should be borne by the residential section and commercial section as separate expenses”. I find such an allocation is in direct contravention of SPA section 195 and I dismiss the commercial section’s argument.
75. The commercial section also argues that if the disputed expense relates to common areas and facilities which are intended to be used for the exclusive use of the residential section, then the strata has contravened bylaw 12 by failing to designate such common areas and facilities as LCP for all the residential strata lots. I have already found that bylaw 12 is unenforceable for the reasons stated above. To the extent the commercial section relies on the intentions of the owner developer as set out in the disclosure statement, I find such intentions are not binding on the strata. The strata is bound by the legislation and its own bylaws and rules as I have set out above. If an owner developer fails to follow through with its stated intention in a disclosure statement, the strata is not responsible for the owner developer’s inaction.
76. I turn now to the specific disputed expenses. The commercial section provided extensive submissions and evidence in the form of financial statements and general ledger information, sample invoices, spreadsheet information, and a witness statement related to the disputed expenses. I find this information insufficient to support the commercial section’s claim that the disputed expenses have been misallocated, such that a disputed expense category relates solely to the strata or residential section. I say this because for the most part, the commercial section’s claims are simply assertions. Except as noted below, I find additional documentary information, such as contracts or work descriptions is generally needed to determine if a specific disputed expense has been improperly allocated. Further the strata and residential section contest the commercial section’s claims and provided witness statements contrary to the commercial section’s witness statement. Overall, I find the commercial section has not proven its claim that any of the remaining disputed expenses are improperly allocated. I will, however, briefly review the remaining disputed expenses.
Garage doors and gates
77. The commercial section acknowledges there 4 exterior-facing garage doors or gates that to do not form part of its claim. The commercial section claims the interior garage doors or gates solely benefit the residential section. The number and location of the interior gates is unclear. The strata plan shows that all parking areas are common property. Based on this, the strata says the doors or gates are common property. While that may be true, the doors and gates could also be common assets of the strata, which are also the strata’s responsibility. Either way, the commercial section must prove the gates solely benefit the residential section and it has not done so. Sample invoices were provided by the commercial section for this part of its claim along with a statement from the non-residential strata council member. From the evidence, it is not possible to determine with any certainty which garage doors or gates were repaired. The repairs could be to either interior or exterior doors or gates. Although some invoices are directed to the residential section, it is unclear if these were paid by the strata. Also, the commercial section’s witness statement has no supporting evidence as is only the opinion of the council member. I cannot conclude from the sample invoices that all expenses relating to the garage doors or gates have been misallocated. I also cannot determine that the sample invoices were improperly charged to the strata.
Other repair and maintenance expenses
78. I find the same reasoning for garage doors or gates applies to plumbing and mechanical expenses, common property repair expenses, parkade cleaning expenses, and window cleaning expenses. That is, the sample invoices do not confirm the entire expense was misallocated or detail who paid the invoice.
Legal expenses
79. The strata says that 2 of the legal invoices provided in evidence were inadvertently uploaded to the CRT portal by the strata’s property manager and relate to different CRT dispute involving the strata and commercial section. The strata claims privilege over these invoices stating privilege is not lost if the strata does not deliberately and knowingly waive it, which is says it did not do. The residential section did not address this matter. As I understand it, the commercial section says that privilege was waived given the documents were provided to the non-residential strata council member. I find I do not have to decide the matter of privilege because I have not relied on the contested invoices.
80. The commercial section says legal expenses incurred by the strata and allocated to its budget should be allocated entirely to the residential section and provided sample invoices as evidence. However, there is no supporting evidence that the sample invoices were paid by the strata. Even if there was, that does not mean all legal expenses should be paid by the residential section.
Strata management expenses
81. The evidence shows there are separate contracts for strata management services in place for each of the sections and the strata. It is clear the strata contracts and pays for management services. Therefore, I find the expense must be a strata expense. That the commercial section has contracted directly with its own management company and pays fees for those services does not mean it does not need to pay its proportionate share of strata’s management fees. Even if a coding error of a specific invoice may have occurred in 2018 remains outstanding, as suggested by the commercial section, that does not mean no strata management expenses relate to the commercial section. Coding mistakes can be made, and individual invoices can later be corrected that do not affect the overall expense category.
Security and enterphone expenses
82. The commercial section says the security services provided by the strata and the enterphone system are used by and benefit only the residential section. The strata says it retains a security company that patrols the common property including the parking garage and building perimeter. It says both of these areas include property used by the commercial section. This appears to be accepted in the witness statement provided by the non-residential strata lot owner, which states the security guards predominately patrol the common property and deal with residential complaints. Predominately does not mean solely.
83. As for the enterphone system, the strata and residential section say it is required to gain access to the building at various locations, including the parking garage, which is used by the commercial section strata lots. The commercial section does not dispute this, so I find the enterphone system expenses are a strata expense.
Building manager expenses
84. As with the strata management expenses, the commercial section employs its own building manager and says the strata’s building manager only performs services for the residential section. I do not agree. Although it is unclear if the building manager contract before me is current, based on the job description of the strata’s building manager provided in evidence, the duties and responsibilities of the strata building manager are to the strata not the residential section. They include managing staff, overseeing contractors, reporting bylaw infractions, and managing the strata’s facilities and equipment, which are common to all strata lots. That the commercial section decided to retain its own building manager does not mean it is relieved from contributing to the strata’s building manager expenses.
85. For all of these reasons, except for the limited hydro expenses noted above, I find the commercial section has not proved its claim that the disputed expenses are improperly allocated.
Is the commercial section entitled to reimbursement of paid expenses and, if so, from whom and in what amount?
86. I have found the electrical expenses under hydro account 7375017 are a strata expense but were paid by the commercial section. I have also found that the commercial section is entitled to reimbursement of such expenses from August 17, 2017 under the provisions of the LA.
87. Based on my review of the hydro bills and general ledger information in evidence, I find the total amount paid by the commercial section for account 7375017 from August 27, 2017 to August 27, 2019 equals $3,418.06. If the hydro bill had been properly paid by the strata, the commercial section would have paid its proportionate share or this amount, based on unit entitlement. I find the amount paid by the commercial section would have been 3.8% of the total (1,772 / 44,922) or $129.89, so I have deducted this amount form the total paid by the commercial section. I find the strata is responsible to reimburse the commercial section $3,288.18 ($3,418.06 - $129.89) and order the strata pay this amount to the commercial section.
Has the strata council selectively excluded the non-residential member from decisions about strata expenses?
88. The witness statement of the non-residential strata council member and the commercial section’s submissions assert the non-residential strata council member was excluded from strata expense decisions. However, there is no evidence to support this. In particular, I have reviewed the strata council meeting minutes provided at which the non-residential council member was present and did not identify any discussion on this subject. I dismiss the commercial section’s claim about selectively excluding the council member from decisions about strata expenses.
Does the commercial section have standing to claim for significant unfairness?
89. The commercial section claims the strata acted in a significantly unfair manner against it, contrary to SPA section 164. Only the BC Supreme Court (BCSC) has jurisdiction to remedy significantly unfair actions or threatened action under SPA section 164. See Time Share Section of The Owners, Strata Plan N 50 v. Residential Section of The Owners, Strata Plan N 50, 2021 BCSC 486 (N50) at paragraph 113. However, the BCSC has found the CRT does have jurisdiction to remedy significantly unfair actions or decisions under CRTA section 121(1)(e),(f), and (g), which mirror the language used in SPA section 164. See The Owners, Strata Plan LMS 1721 v. Watson, 2018 BCSC 164 and N50 at paragraph 17. Subsections (e) and (f) apply here and state the CRT has jurisdiction over a claim in respect of the SPA concerning (my emphasis):
(e) an action or threatened action by a strata corporation, including the council, in relation to an owner or tenant;
(f) a decision of a strata corporation, including the council, in relation to an owner or tenant;
90. Notably, the CRT’s jurisdiction does not include decisions in relation to a section.
91. Therefore, as I noted in the water dispute at paragraph 46, I find the CRT’s jurisdiction with respect to significant unfairness applies only to actions or decisions made by a strata corporation (or section) in relation to an owner or tenant, and not in relation to a section. I find the court’s decision in N50 supports this conclusion.
92. As a result, I dismiss the commercial section’s claim that it has been treated significantly unfairly.
CRT FEES, EXPENSES AND INTEREST
93. 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 not to follow this general rule. I find the respondents were the most successful parties in this dispute. However, they did not pay CRT fees or claim dispute-related fees, so I order none.
94. The Court Order Interest Act (COIA) applies to the CRT. The commercial section is entitled to prejudgement interest on the hydro expenses from August 27, 2017, the date of discovery under the LA, to the date of this decision. I calculate this to be $135.86.
ORDERS
95. I refuse to resolve the commercial sections claims about enforcement of a previous CRT order because I find the claim is outside the CRT’s jurisdiction.
96. Within 15 days of the date of this decision, I order the strata to pay the commercial section at total of $3,424.04 broken down as follows:
a. $3,288.18 for reimbursement of hydro expenses, and
b. $135.86 in prejudgement interest under the COIA.
97. The commercial section is entitled to post judgement interest under the COIA as applicable.
98. I dismiss the remaining claims of the commercial section.
99. 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.
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J. Garth Cambrey, Vice Chair |