Date Issued: September 23, 2021

File: ST-2021-000857

Type: Strata

Civil Resolution Tribunal

Indexed as:  Gaudin v. The Owners, Strata Plan LMS 2140, 2021 BCCRT 1028

Between:

BARRY GAUDIN

Applicant

And:

The Owners, Strata Plan LMS 2140

Respondent

REASONS FOR DECISION
Tribunal Member:	Sherelle Goodwin

INTRODUCTION

1.      The applicant, Barry Gaudin, owns a strata lot in the respondent strata corporation, The Owners, Strata Plan LMS 2140 (strata). He says the strata presented a resolution at the February 2019 annual general meeting (AGM) to transfer special levy surplus funds into the strata’s contingency reserve fund (CRF), which Mr. Gaudin says violates the Strata Property Act (SPA). Mr. Gaudin also says the strata has refused to provide him with requested legal information.

2.      Mr. Gaudin asks the CRT to order the strata to identify who provided legal advice to the strata to propose the resolution, to notify all the owners that the vote approving the transfer was illegal and that this dispute constitutes a lawsuit. Mr. Gaudin also asks the CRT to appoint a trustee, administrator, or forensic auditor to investigate the strata.

3.      The strata denies any wrongdoing. It says the special levy surplus funds were the subject of a prior CRT decision and that Mr. Gaudin’s claims cannot proceed because they are res judicata, meaning “already decided”. The strata also says any legal opinion or advice it received is protected by litigation privilege and so need not be produced to Mr. Gaudin. Finally, the strata says there is no basis to appoint an administrator, trustee, or auditor.

4.      Mr. Gaudin represents himself. The strata is represented by a strata council member.

5.      For the reasons below, I refuse to resolve Mr. Gaudin’s request for an administrator and dismiss Mr. Gaudin’s remaining claims.

JURISDICTION AND PROCEDURE

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

7.      The 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.

8.      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.

9.      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.

10.   Under section 61 of the CRTA, 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.

ISSUES

11.   The issues in this dispute are:

a.    Is this dispute res judicata?

b.    If not, must the strata tell Mr. Gaudin who provided legal advice or tell the owners that the February 2019 AGM resolution violated the SPA?

c.    Must the strata inform the owners of this dispute?

d.    Should I order the strata to appoint a trustee or administrator and forensic auditor?

EVIDENCE AND ANALYSIS

12.   In a civil claim such as this one the applicant, Mr. Gaudin, must prove his claim on a balance of probabilities. I have reviewed all the submissions and weighed the evidence provided by both parties, but only refer to that necessary to explain my decision.

13.   The strata was created in 1995 and consists of 42 residential strata lots.

14.   In 2016 and 2017, the strata imposed special levies for building envelope repairs. The repairs were completed sometime in 2018, leaving a surplus in the special levy fund. At the February 27, 2019 AGM the resolution to pay the special levy surplus into the CRF was approved by a ¾ vote of the owners. None of this is disputed.

15.   Mr. Gaudin disagreed with the resolution. He filed an application for dispute resolution with the CRT (prior dispute) in late 2019. During the facilitation stage of the prior dispute, the strata decided to refund the special levy surplus to the owners. It is unclear whether the money was still in the special levy fund or had already been paid to the CRF. The strata issued cheques to the owners around the end of January 2020. None of this is disputed.

16.   In the June 2, 2020 decision Gaudin v. The Owners, Strata Plan LMS 2140, 2020 BCCRT 607 (2020 decision), a CRT vice-chair determined the strata must return any special levy surplus to the owners, as required by section 108(5) of the Strata Property Act. The vice-chair found the strata had already paid Mr. Gaudin his portion of the surplus, so dismissed his claims and the dispute.

17.   In September 2020 emails between Mr. Gaudin and the strata’s property manager, Mr. Gaudin asked for copies of receipts, invoices and correspondence between the strata and legal counsel referred to in the strata’s December 23, 2019 letter which, I find, refers to the legal counsel retained by the strata to advise on the prior dispute. Mr. Gaudin also asked for the name of legal counsel referred to in the “refund letter”.

18.   I accept the strata’s undisputed explanation that the “refund letter” in evidence was written in January 2020 and distributed to the owners. Although Mr. Gaudin disputes that he received a copy of the letter with his special levy surplus cheque, I find nothing turns on that as he undisputedly now has a copy. The letter says the strata received legal advice that, with a resolution, it could transfer special levy surplus funds to the CRF, rather than return the funds to the owners as set out in the SPA. However, despite the approved resolution, the strata had decided to refund the special levy surplus to the owners.

19.   Mr. Gaudin requested a strata council hearing, which was held on November 3, 2020. In a November 6, 2020 letter, the strata’s lawyer confirmed that Mr. Gaudin had requested a copy of the legal opinion that the strata could transfer money from the special levy fund to the CRF, and any correspondence related to that matter. The lawyer advised the strata did not have a written legal opinion prior to the February 2019 resolution and thus there was nothing to produce. He also said that the legal advice it received after Mr. Gaudin started the prior dispute was privileged and would not be produced.

20.    Mr. Gaudin filed his application for dispute resolution on February 3, 2021.

Res Judicata

21.   The CRT discussed the concept of res judicata in detail in the non-binding but persuasive decision East Barriere Resort Limited et al v. The Owners, Strata Plan KAS1819, 2017 BCCRT 22. Briefly, there are 2 types of res judicata: cause of action estoppel and issue estoppel. Issue estoppel prevents an applicant from raising an issue that has already been finally decided in a prior proceeding between the same parties. Cause of action estoppel prevents an applicant from pursuing a matter that was, or should have been, the subject of a prior proceeding (see Erschbamer v. Wallster, 2013 BCCA 76).

22.   Cause of action estoppel requires parties to raise all issues rising from a certain set of facts in one proceeding. If there is more than one potential remedy based on the same facts, the party must ask for all remedies in the same proceeding (see Carr v. Cheng, Dorset College Inc., 2007 BCSC 1693).

23.   Mr. Gaudin asks for an order that the strata notify all owners that the 2019 resolution about the special levy surplus violated the SPA. I find the issue of whether the resolution violated the SPA was squarely decided in the 2020 Decision. I find this is a new remedy which Mr. Gaudin could have raised in the prior dispute with due diligence. It is undisputed that the 2020 Decision was a final decision and that the parties named in that decision and this dispute are identical. So, I find cause of action estoppel prevents Mr. Gaudin from now bringing this claim and I dismiss it.

24.   The strata also says Mr. Gaudin’s request for the lawyer’s name who advised the strata on the resolution is also res judicata. I disagree. I find this claim is not about the legality of the resolution, but rather a claim for record or information production, based on sections 35 and 36 of the SPA and with reference to the common law of privilege. I find Mr. Gaudin’s entitlement to records or information was not decided in the 2020 Decision, and I also find it is not a new remedy based on the same set of facts in the prior dispute. As explained below, I find this claim does not arise from the same cause of action as that in the prior dispute, as explained below.

25.   A cause of action is the factual situation which entitles one to a court or tribunal remedy (see Cliffs Over Maple Bay (Re), 2011 BCCA 180). An applicant cannot relitigate issues simply by arguing different legal bases around the same factual situation (see Tuokko v. Skulstad, 2016 BCSC 2200). However, different causes of action may have one or may material facts in common (see Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44).

26.   To be successful in this claim, Mr. Gaudin must prove the records or information he seeks exist, that the strata has refused to provide it, and that he is legally entitled to it. He need not prove the resolution was proposed, or voted on, or that the special levy fund had a surplus, which were material facts in the prior dispute. So, I find the factual matrix considered in the 2020 Decision different than that to be proven here. On balance, I find Mr. Gaudin’s request for the lawyer’s name is not res judicata, and I will consider it below.

Access to Records and Information

27.   Section 35(2)(h) of the SPA requires the strata to permanently retain the decision from any arbitration, court, or tribunal proceeding in which the strata was a party, and any legal opinions retained by the strata. Subsection 35(2)(k) requires the strata to retain copies of all correspondence sent or received by the strata and council for at least 2 years. SPA section 36 says the strata must provide copies of these records to an owner when requested to do so.

28.   As noted, in 2020 Mr. Gaudin asked the strata to provide its records related to legal advice it received surrounding the prior dispute. As Mr. Gaudin did not ask for those records or raise that issue in this dispute, I will not consider it here.

29.   In this dispute, Mr. Gaudin asks that the strata be “directed to identify who gave legal advice” to the strata to propose the special levy surplus resolution. I find that information is not a record the strata is required to keep under the SPA, unless it is part of strata correspondence or a legal opinion the strata received.

30.   The strata told Mr. Gaudin, in the November 6, 2020 lawyer’s letter, that it did not receive any legal opinion prior to the February 2019 AGM about the proposed special levy resolution, and so there was no opinion to produce. While I accept the January 2020 refund letter said the strata obtained legal advice, I do not find that necessarily means the strata received a written legal opinion, or correspondence containing legal advice. Given the November 6, 2020 letter, I find the strata did not receive any written opinion or written legal advice. So, I find there is no opinion or correspondence for the strata to produce to Mr. Gaudin.

31.   For the above reasons, I find Mr. Gaudin is not entitled to know who gave legal advice to the strata about the special levy surplus resolution, prior to the 2019 AGM. So, I dismiss this claim.

Notice of Lawsuit

32.   Section 167 of the SPA requires the strata to inform the owners as soon as feasible, if it is sued, which includes a CRT dispute. I find the strata notified all owners of this dispute by including it in the March 4, 2021 strata council meeting minutes. The strata also submitted a May 9, 2021 email to all owners summarizing Mr. Gaudin’s claims. So, I find the strata has complied with SPA section 167.

33.   As the owners have been advised of this dispute, I decline to order the strata to notify all owners that this dispute constitutes a lawsuit, as requested by Mr. Gaudin.

 

Trustee, Administrator, and Forensic Auditor

34.   Mr. Gaudin asks that a trustee or administrator and forensic auditor be appointed to investigate the strata’s financial and regulatory processes.

35.   Section 174 of the SPA allows the BC Supreme Court to appoint an administrator to exercise the powers and perform the duties of a strata. Section 122(1)(i) of the CRTA specifically excludes SPA section 174 from the CRT’s jurisdiction. Section 10 of the CRTA says the CRT must refuse to resolve a claim that is outside of the CRT’s jurisdiction. For this reason, I refuse to resolve Mr. Gaudin’s request for a court appointed administrator or trustee, which I find to be the same thing.

36.   I turn to Mr. Gaudin’s request for a forensic auditor. I find he offers 2 bases for his request. First, Mr. Gaudin accuses the strata of trying to misappropriate funds and perpetrate a fraud on the owners, by attempting to have them approve paying the special levy surplus funds into the CRF. To the extent that Mr. Gaudin argues the strata’s actions in dealing with the special levy surplus support the appointment of a forensic auditor, I find such an argument is res judicata. This is because I find it is a remedy that Mr. Gaudin could have, but did not, seek in the prior dispute about those very funds.

37.   Second, Mr. Gaudin says the strata’s refund letter is misleading and untrue because it says the strata obtained legal advice before proposing the 2019 resolution which, Mr. Gaudin says, is not true. I find that whether the strata did, or did not, receive any legal or other advice before proposing the 2019 resolution does not form any basis for Mr. Gaudin’s request for a forensic auditor. This is because an auditor typically investigates the strata’s financial dealings and accounting, and not whether the strata accurately communicated with owners, or followed the SPA.

38.   Finally, Mr. Gaudin argues that the strata council is disregarding its duties and responsibilities, and not acting in the best interests of the strata.

39.   Section 31 of the SPA sets out the standard of care for strata council members. It says that in exercising the powers and performing the duties of the strata corporation, each council member must act honestly and in good faith, with a view to the best interests of the strata corporation, and must exercise the care, diligence, and skill of a reasonably prudent person in comparable circumstances. So, I find Mr. Gaudin’s allegations are a claim that the strata council members violated section 31 of the SPA.

40.    In The Owners, Strata Plan LMS 3259 v. Sze Hang Holding Inc., 2016 BCSC 32 at paragraph 267, the BC Supreme Court said that the duties of strata council members under SPA section 31 are owed to the strata corporation, and not to individual strata lot owners. More recently in Rochette v. Bradburn, 2021 BCSC 1752 at paragraphs 82, the BCSC confirmed that the SPA does not allow another strata owner to sue for violations of section 31. This means that a strata lot owner cannot bring a claim against a strata corporation for duties owed by its strata council members under section 31. So, to the extent that Mr. Gaudin claims that an auditor should be appointed because the strata council members are violating their section 31 duties, I find he has no standing to bring those claims.  

41.   For these reasons, I dismiss Mr. Gaudin’s claim about appointing a forensic auditor.  

42.   In summary, I dismiss Mr. Gaudin’s claims for orders that the strata disclose the name of its advisor, inform the owners that the 2019 resolution about the special levy surplus violated the SPA, inform the owners that this dispute is a lawsuit, and that a forensic auditor be appointed. I refuse to resolve Mr. Gaudin’s claim for an administrator.

43.   The strata asks that Mr. Gaudin pay its legal fees as dispute-related expenses, or pay the strata punitive damages. However, the strata filed no counterclaim and, in the absence of any award to Mr. Gaudin I cannot consider any potential set-off against such an award. So, I decline to consider the strata’s request for punitive damages. I will address its request for reimbursement of legal fees below.

 

CRT FEES and EXPENSES

Mr. Gaudin’s time spent

44.   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. As Mr. Gaudin was unsuccessful in his dispute, I find he is not entitled to reimbursement of his CRT fees, or any dispute-related expenses.

45.   Even if Mr. Gaudin had been successful, I would not have awarded him the $1,000 he claims for time spent on this dispute, or the $1,000 he claims for time spent dealing with the strata and attending strata council hearings on “these issues”. To the extent “these issues” relate to Mr. Gaudin’s request for information from the strata, I find the request, and the surrounding circumstances are not extraordinary. CRT rule 9.5(5) only allows compensation for time spent dealing with a dispute in extraordinary circumstances. To the extent that Mr. Gaudin’s time was spent on the issues that were decided, or should have been decided in the 2020 Decision, I would find that Mr. Gaudin’s claim for time spent should have been raised in that decision and is now res judicata.

The strata’s legal fees

46.   The strata claims reimbursement of approximately $6,500 it says it spent on legal fees in this dispute.

47.   CRT rule 9.5(3) says the CRT will not order reimbursement of lawyer’s fees in a strata dispute unless there are extraordinary circumstances. CRT rule 9.5(4) says the CRT may consider the complexity of the dispute, the degree of the lawyer’s involvement, whether the conduct of a party or their representative has caused unnecessary delay or expense, and any other factors the CRT finds appropriate, in determining whether to award reimbursement of legal fees.

48.   Contrary to the strata’s argument, I find this is not a complex dispute, although it involved the consideration of legal principles including res judicata. Although both parties have strongly held positions, there was not a significant amount of evidence filed by either side and I find the issues no more complex than a typical CRT strata property dispute. I find the strata had legal assistance, but not representation. The strata asserts, and Mr. Gaudin does not dispute, that he requested an extension of time to file his evidence. I do not find this unnecessarily delayed the proceedings. I find nothing turns on the fact that Mr. Gaudin only filed 1 piece of evidence, as it contained several documents equalling 22 pages.

49.   The strata seeks an order analogous to special costs, as discussed in Parfitt et al v. The Owners, Strata Plan VR 416 et al, 2019 BCCRT 330. Aas discussed in cases such as Westsea Construction Ltd. v. 0759553 B.C. Ltd., 2013 BCSC 1352, special costs are an unusual order, only made in exceptional circumstances, intended to chastise a party for reprehensible, scandalous or outrageous conduct. In Garcia v. Crestbrook Forest Industries Ltd., [1994] B.C.J. No. 2486 (BCCA), the BC Court of Appeal said that special costs should be ordered against a party when their conduct in the litigation was reprehensible, meaning deserving of reproof or blame. I find the parties’ litigation conduct is “another factor” to be considered in reference to legal fee reimbursement under CRT rule 9.5(4).

50.   I find that Mr. Gaudin’s conduct in communicating with the strata prior to this CRT dispute is not relevant to an order akin to special costs, as it is only the effect of a party’s conduct on the litigation that is relevant. I find the emails Mr. Gaudin wrote to the strata after the start of this dispute do not display reprehensible conduct. Mr. Gaudin alleges attempted, not actual, misappropriation. While Mr. Gaudin’s emails to the strata are clearly disrespectful, not all forms of misconduct meet the threshold of reprehensible conduct and the courts must exercise restraint in awarding special costs (see Hirji v. Owners Strata Corporation VR44, 2016 BCSC 548).

51.   In his submissions, Mr. Gaudin says the strata attempted to perpetuate what he considered to be fraud. However, I do not find this is repeated accusations of unsubstantiated fraud, as argued by the strata.

52.   I agree with the strata that some of Mr. Gaudin’s claims were res judicata. However, given that he is a lay person without the benefit of legal advice, I do not find that his attempt to resolve his concerns through the CRT is vexatious or an abuse of process. I find Mr. Gaudin’s allegations against the strata council are personal but did not rise to the level of a vexatious claim (see discussion of vexatious conduct in Extra Gift Exchange Inc. v. The Owners, Strata Plan LMS3259, 2014 BCCA 228).

53.   I find Mr. Gaudin’s conduct did not delay the CRT process, as noted above. I do not find Mr. Gaudin’s submissions were an attempt to mislead the CRT but rather showed Mr. Gaudin’s opinions on the strata’s conduct. I find this situation different than that in Parfitt, where the applicant threatened a witness during the dispute process, with the apparent goal of suppressing evidence. I disagree with the strata that Mr. Gaudin requested no particular resolution, given his 6 requested remedies in his dispute application.

54.   On balance, I find extraordinary circumstances do not exist to justify an award of legal fee reimbursement. Even if the strata had succeeded in this claim, the strata provided no evidence that it paid any legal fees so I would have found it failed to prove its damages.

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

ORDER

56.   I refuse to resolve Mr. Gaudin’s claim for a court-ordered administrator.

57.   I dismiss the rest of Mr. Gaudin’s claims, and this dispute.