Date Issued: October 25, 2021

File: ST-2021-001731

Type: Strata

Civil Resolution Tribunal

Indexed as: Cardenas v. The Owners, Strata Plan NWR. 2247, 2021 BCCRT 1134

Between:

OLIN CARDENAS

Applicant

And:

The Owners, Strata Plan NWR. 2247

Respondent

REASONS FOR DECISION
Tribunal Member:	J. Garth Cambrey, Vice Chair

INTRODUCTION

1.      This strata property dispute is about a rental restriction bylaw and related fines.

2.      The applicant, Olin Cardenas, co-owns strata lot 8 (SL8) in the respondent strata corporation, The Owners, Strata Plan NWR. 2247 (strata).

3.      Mr. Cardenas says the strata’s rental restriction bylaw only restricts rental of an entire strata lot and does not prohibit rental of part of a strata lot. He also says the strata failed to follow the Strata Property Act (SPA) when it imposed bylaw fines for his alleged breach of the rental restriction bylaw. Mr. Cardenas seeks orders that the strata stop enforcing the rental restriction bylaw against him and reverse an undisclosed amount of bylaws fines that relate to the rental restriction bylaw.

4.      The strata says the rental restriction bylaw applies to Mr. Cardenas because SPA section 1(1) defines “rental” to include rental of part of a strata lot. It also says that it properly followed the SPA when it assessed fines against SL8 for Mr. Cardenas’ breach of the rental restriction bylaw. The strata asks that Mr. Cardenas’ claims be dismissed. In its Dispute Response, the strata also requests that Mr. Cardenas be ordered to reimburse the strata’s legal fees of $962.

5.      Mr. Cardenas is self-represented. The strata is represented by a strata council member.

6.      For the reasons that follow, I find Mr. Cardenas owes $2,214.29 in bylaw fines and largely dismiss his claims. I also find the strata is not entitled to reimbursement of its legal fees.

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). 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.

8.      CRTA section 39 says the CRT has discretion to decide the format of the hearing, including by writing, telephone, videoconferencing, email, or a combination of these. Here, I find that I am properly able to assess and weigh the documentary evidence and submissions before me. Further, bearing in mind the CRT’s mandate that includes proportionality and a speedy resolution of disputes, I find that an oral hearing is not necessary in the interests of justice and fairness.

9.      CRTA section 42 says the CRT may accept as evidence information that it considers relevant, necessary and appropriate, even where the information would not be admissible in court. The CRT may also ask questions of the parties and witnesses and inform itself in any other way it considers appropriate.

10.   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.

11.   As noted, the strata requested an order that Mr. Cardenas pay its legal fees of about $962.00. The CRT case manager sought and obtained additional submissions from the parties on the matter of the strata’s legal fees with the intention of requesting a preliminary decision on the issue. In its additional submissions, the strata now seeks reimbursement of $7,226.81 for legal fees. Ultimately, the case manager did not request a preliminary decision, but rather, provided the parties’ additional submissions to me for a decision. I have reviewed the parties’ additional submissions and I address the legal fee issue in my decision below, including the increased amount of claimed legal fees.

ISSUES

12.   The issues in this dispute are:

a.    Does the strata’s rental restriction bylaw apply to Mr. Cardenas?

b.    Was the strata entitled to impose fines against Mr. Cardenas and SL8 for breaching the rental restriction bylaw, and if so, in what amount?

c.    Is the strata entitled to reimbursement of its claimed legal fees?

BACKGROUND

13.   In a civil proceeding such as this, as applicant, Mr. Cardenas must prove his 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.

14.   The strata is residential strata corporation consisting of 45 strata lots in a single 3-storey building. It was created in January 1990 and continues to exist under the Strata Property Act (SPA).

15.   The strata filed a complete set of new bylaws with the Land Title Office (LTO) on February 12, 2002. I find these bylaws apply to this dispute. Among other things, bylaw 31 restricts strata lot rentals to a maximum of 5 strata lots at any given time and requires an owner to obtain the prior written permission of the strata council before renting their strata lot. It is undisputed that bylaw 31 does not expressly address rentals of part of a strata lot. Bylaw 23 sets out maximum fines the strata can impose for bylaw contraventions and includes a $500 fine every 7 days for the rental restriction bylaw.

16.   Subsequent bylaw amendments filed with the LTO are not relevant to this dispute. I note bylaw 3(7), that prohibits short-term accommodations, was filed with the LTO on January 28, 2020. However, I find bylaw 3(7) does not apply here because Mr. Cardenas admits to renting out a part of his strata lot on a long term basis. Further, bylaw 3(7) was not argued by either party.

EVIDENCE AND ANALYSIS

Does the strata’s rental restriction bylaw apply to Mr. Cardenas?

17.   Mr. Cardenas admits to renting a portion of his strata to roommates. He says the strata’s rental restriction bylaw 31 does not apply in this situation because it does not expressly restrict rental of part of a strata lot. He says the bylaw only restricts rentals of an entire strata lot largely because under the Residential Tenancy Act (RTA), a roommate arrangement is not a tenancy.

18.   The strata says Mr. Cardenas’ roommates are tenants because “rental” is a defined term under SPA section 1(1) that includes rental of part of a strata lot.

19.   Mr. Cardenas argues that because his roommate arrangement is not a tenancy under the RTA, the bylaw contravenes SPA section 121(1)(a), which essentially says a bylaw is not enforceable to the extent it contravenes an enactment or law. I disagree.

20.   The fact that the definition of tenant under the RTA excludes persons renting parts of a strata lot does not carry over to the SPA. In other words, the RTA does not apply to the SPA. They are separate pieces of legislation that each stand on their own. Just because a person renting part of his strata lot is not considered a tenant under the RTA does not mean that person is not a tenant under the SPA. The strata correctly states the definition of tenant under the SPA includes a person who rents all or part of a strata lot citing The Owners, Strata Plan VIS5602 v. Copeland, 2020 BCCRT 1188.

21.   The CRT has considered rentals of partial strata lots on several occasions and has routinely found that rental restriction bylaws apply equally to tenants renting part of a strata lot as they do to tenants (or roommates) renting an entire strata lot. See for example Copeland, K.M. v. The Owners, Strata Plan ABC XXXX, 2018 BCCRT 29, Wong v. Section 1 of The Owners, Strata Plan NW 2320 et al, 2017 BCCRT 25, Tran v. The Owners, Strata Plan 1667, 2018 BCCRT 669, and Shen v. The Owners, Strata Plan LMS 970, 2020 BCCRT 953, all of which were referenced by the parties. Although not binding on me, I find the analysis in these decisions persuasive and I rely on it here.

22.   I accept Mr. Cardenas’ statement that Copeland has different facts and a differently worded rental restriction bylaw, however, these things do not change the CRT’s determination that a rental within a strata corporation, includes a person renting part of a strata lot. Further, I agree with the strata that it does not matter if the persons paying rent are referred to as roommates or occupants. The fact they are paying rent, as Mr. Cardenas admits occurred here, means they are tenants under the provisions of the SPA.

23.   Based on my conclusion that his roommates are tenants under the SPA, Mr. Cardenas’ argument that he cannot comply with bylaw 31(4), which requires him to enter into a lease if the strata approves his rental, must also fail. First, because his roommates are tenants, and second, because he did not receive the strata council’s permission to rent SL8.

24.   For these reasons, I find Mr. Cardenas has failed to prove the rental restriction bylaw does not apply to roommate arrangements and I find that it does.

Was the strata entitled to impose fines against Mr. Cardenas and SL8 for breaching the rental restriction bylaw, and if so, in what amount?

25.   Given my findings above, it is clear that Mr. Cardenas breached the strata’s rental restriction bylaw because he did not obtain the strata council’s permission to rent all or part of SL8 as the bylaw requires.

26.   Mr. Cardenas argues the strata agreed not to fine him for 90 days from the date of the first bylaw complaint, which is undisputed to be January 13, 2021. The strata disagrees and says it gave Mr. Cardenas 90 days to have his tenant vacate SL8 but says it confirmed fines would commence March 1, 2021 for as long as SL8 was rented.

27.   Based on my review of the evidence, I find the strata did not agree to a 90-day period before imposing fines. Rather, I agree with the strata’s position as it was clearly set out in a February 16, 2021 letter it wrote to Mr. Cardenas that fines would start March 1, 2021 at $500 per week for as long as SL8 was rented.

28.   I turn now to the procedure followed by the strata when it imposed the bylaw fines.

29.   Under SPA section 135(1), before imposing bylaw fines, the strata must have received a complaint, given the owner written particulars of the complaint and a reasonable opportunity to answer the complaint, including a hearing if one is requested. Under section 135(2), the strata must give the owner written notice of its decision to impose fines “as soon as feasible”.

30.   The BC Court of Appeal has found that strict compliance with section 135 of the SPA is required before a strata corporation can impose bylaw fines. The court also determined that bylaw fines may be found to be invalid if the procedural requirements set out in section 135 are not followed. See Terry v. The Owners, Strata Plan NW 309, 2016 BCCA 449.

31.   The strata’s January 2021 letter confirmed it had received a written complaint about Mr. Cardenas’ breach of bylaw 31. The parties agree the complaint came from Mr. Cardenas’ tenant. In the January 31 letter, the strata reproduced bylaw 31, and urged Mr. Cardenas to evict his tenant within 30 days. The strata gave Mr. Cardenas until February 13, 2021 to “have the matter remedied” in order to “prevent any further action”. Mr. Cardenas was referred to SPA section 135(1) and advised he had 14 days to answer the complaint, including requesting a hearing, failing which the strata council would “make a decision on this matter as it considers appropriate”. The letter did not advise Mr. Cardenas that bylaw fines might be imposed. Following Terry, I find the January 13, 2021 letter did not give Mr. Cardenas “fair notice that the strata was contemplating fines” and therefore did not comply with section 135(1).

32.   However, that is not the end of the matter. A hearing was arranged for February 11, 2021 as a result of the strata’s January 2021 letter. The strata provided its decision on the rental bylaw issue to Mr. Cardenas in a February 16, 2021 letter that stated it would start imposing $500 per week fines for contravention of bylaw 31 on that date. Later, after another hearing held February 25, 2021 about the same rental bylaw issue, the strata wrote to Mr. Cardenas on February 26, 2021 stating the fines would start on March 1, 2021 and continue until SL8 no longer had tenants. I find by the time Mr. Cardenas received the strata’s February 26, 2021 letter, after attending 2 hearings on the rental bylaw issue, and likely having discussed potential fines that were raised in the strata’s earlier correspondence, he had received fair notice that $500 per week bylaw fines would start March 1, 2021 until SL8 was untenanted. Thus I find the strata was in compliance with SPA section 135(1) when it issued its February 26, 2021 letter.

33.   Based on the email exchanges between the parties, I find Mr. Cardenas no longer had tenants in SL8 on April 13, 2021. Therefore, I find the strata was entitled to impose fines contravention of bylaw 31 for the period March 1 to April 13, 2021. A copy of an accounting statement for SL8 was provided in evidence that shows a $500 fine was imposed on February 16, 2021. I am unable to confirm if the fine was later reversed as the accounting statement only shows transactions to May 1, 2021. For the reasons stated above, I find the February 16, 2021 bylaw fine is invalid, and Mr. Cardenas is not required to pay it. I order the strata to reverse the $500 fine imposed February 16, 2021 if it has not already done so. Otherwise, I dismiss Mr. Cardenas’ claim that the strata must reverse bylaw fines imposed for his breach of bylaw 31.

34.   Neither party stated the amount of fines owing by Mr. Cardenas. The accounting statement shows the strata imposed rental restriction bylaw fines totaling $2,214.29 between March 1 and April 13, 2021 consisting of 4-$500 fines and a $214.29 fine on March 29, 2021. The strata does not explain how it calculated the $214.29 fine, but the statement reference for this fine is “Per PM email Mar”, which I find means a property manager March 2021 email. Base on the accounting statement and my conclusion above, I find Mr. Cardenas owes the strata a total of $2,214.29 for rental restriction bylaw fines.

35.   Given the strata made no counterclaim for payment of fines, I decline to make such an order.

Is the strata entitled to reimbursement of its claimed legal fees?

36.   In its Dispute Response, the strata claims reimbursement of $962 for legal fees. In its additional submissions, it claims for $7,226.81, which the total of 3 legal invoices dated March 1, June 1, and June 18, 2021 provided in evidence. Mr. Cardenas had an opportunity to respond and provided submissions, so I find it is not procedurally unfair for me to consider the increased amount claimed.

37.   Dispute-related expenses are expenses incurred during the course of a dispute and, in the case of a respondent such as the strata here, do not require it to file a counterclaim. As discussed below, I do not find the strata’s claimed legal fees are dispute-related expenses. Nor do I find the strata is entitled to reimbursement of its claimed expenses for other reasons as argued by the strata.

38.   Mr. Cardenas notes CRT rule 9.5(3) that 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.

39.   Neither party was represented by legal counsel but based on the strata submissions for legal expenses it is clear the strata had legal assistance. Despite the strata’s assertion that Mr. Cardenas put forward a legal argument that caused the strata to retain legal counsel, I find the issues in this dispute were not overly complex as the fundamental issue is interpretation of a bylaw. I find Mr. Cardenas did not cause unnecessary delay or expense during the proceedings and there is no indication his conduct was reprehensible during the course of this dispute. I have also considered the strata’s argument that Mr. Cardenas was aware he was in contravention of bylaw 31 and tried to conceal his tenants. I find there is no evidence to support this argument, such as witness statement, and accept Mr. Cardenas’ submissions that he reasonably believed bylaw 31 did not apply to renting parts of his strata lot. Overall, I find the rule 9.5(4) factors, and the lack of extraordinary circumstances, weigh against ordering reimbursement of the strata’s legal fees as a dispute-related expense.

40.   The strata also claims SPA section 133 gives the strata authority to obtain legal advice from a strata property lawyer to assist with bylaw enforcement and charge the legal fees to the owner as a “reasonable cost of remedying the contravention”. I find a claim under SPA section 133 is not a claim for a dispute-related expense and would require the strata to file a counterclaim, which it did not do. Therefore, I find the strata’s claim for reimbursement of legal fees under section 133 is not properly before me. Regardless, a claim under section 133 requires the strata to follow the procedural requirements of SPA section 135. There is no evidence the strata followed section 135 to recover legal fees from Mr. Cardenas, so I find the strata’s claim for reimbursement of legal fees under section 133 must fail.

41.   The strata also claims reimbursement of its legal fees under bylaw 23(3) which I find is also not a claim for reimbursement of a dispute-related expense. Again, I note the strata did not file a counterclaim, so I find the claim is not properly before me. In any event, the bylaw requires an owner to indemnify the strata for all expenses and costs, including legal fees, incurred by the strata in collecting overdue fines. As noted by the strata, the CRT has previously ordered reimbursement of legal fees incurred to collect outstanding bylaw fines, where recovery of legal fees is specifically authorized under a strata’s bylaw (see The Owners, Strata Plan VR 293 v. Bains, 2019 BCCRT 504 and The Owners, Strata Plan KAS 1201 v. Neilson, 2021 BCCRT 607).

42.   I accept that bylaw 23(3) authorizes recovery of the legal costs spent to collect unpaid assessments, fines, banking charges, filing costs, and interest charges. However, to the extent that such legal costs relate to the strata filing its application in the CRT, participating in this dispute, or defending against Mr. Cardenas’ dispute claims, I find the strata cannot recover those legal fees. I say this because SPA section 171(6)(a) says that an owner who is being sued by their strata is not required to contribute to the expense of the lawsuit. SPA section 167(2) says an owner who sues their strata is not required to contribute to the expense of defending the suit. Section 189.4 says these sections also apply to CRT disputes. So while I find bylaw 23(3) authorizes recovery of legal fees, I find it cannot apply to legal fees for bringing, or defending against, a CRT dispute.

43.   My conclusion is consistent with the vice chair’s reasoning in Bains, where she awarded reimbursement of only ½ the strata’s legal bill on a judgment basis, finding at least some of the fees were spent on defending the strata from the owner’s counterclaim in the CRT dispute, and thus recovery was prohibited under SPA section 167(2). I find the tribunal member in Bains did not consider the impact of SPA sections 167(2) or 171(6)(a) on the strata’s bylaw allowing legal cost recovery. Further, it is unclear from the decision whether the claimed legal fees were incurred in relation to the CRT dispute, or about collection of unpaid fines prior to the CRT dispute.

44.   In this case, the time entries of the March 1, 2021 invoice are for work completed in February 2021, before the Dispute Notice was issued. The time entries are for scheduling a Zoom meeting, reviewing material in preparation for the meeting and conducting the Zoom meeting with the strata council. It is unclear from the invoice whether the time charges are for work related to Mr. Cardenas’ situation or unpaid fines, so I find the invoice is not about dispute-related expenses or collection of unpaid fines.

45.   Based on my review of the remaining 2 legal invoices, I find the legal charges are almost entirely to do with the strata’s defence of Mr. Cardenas’ claims, such as reviewing evidence and arguments, providing advice on next steps and drafting arguments for the strata. There are other charges for uploading evidence to the CRT online portal and downloading Mr. Cardenas’ evidence, which are things that are not required by a lawyer. I find the strata is not entitled to recovery of those legal fees as dispute-related expenses. Further, given the invoices provided do not show the legal fees claimed were incurred to collect Mr. Cardenas’ unpaid fines before the CRT dispute, I find the strata is not entitled to reimbursement of its claimed legal fees in these circumstances.

46.   For these reasons, I dismiss the strata’s claim for reimbursement of legal fees.

CRT FEES AND EXPENSES

47.   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 Mr. Cardenas was mostly unsuccessful in this dispute, so I do not order reimbursement of CRT fees. Mr. Cardenas did not claim dispute-related expenses, so I make no such order.

48.   The strata must comply with section 189.4 of the SPA, which includes not charging dispute-related expenses against Mr. Cardenas, as I have discussed.

ORDER

49.   If it has not already done so, I order the strata to reverse its $500 fine imposed against Mr. Cardenas on February 16, 2021. This leaves at total of $2,214.29 in fines resulting from Mr. Cardenas’ contravention of bylaw 31 for renting part of SL8 to his tenants between March 1 and April 13, 2021.

50.   I dismiss Mr. Cardenas’ remaining claims.

51.   I dismiss the strata’s claim for reimbursement of legal fees.

52.   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.