Date Issued: July 14, 2022

File: ST-2021-005580

Type: Strata

Civil Resolution Tribunal

Indexed as Macdonald v. The Owners, Strata Plan EPS522, 2022 BCCRT 807

Between:

DAVID MACDONALD

Applicant

And:

The Owners, Strata Plan EPS522

Respondent

REASONS FOR DECISION
Tribunal Member:	Micah Carmody

INTRODUCTION

1.      The applicant, David Macdonald, co-owns a strata lot in the respondent strata corporation, The Owners, Strata Plan EPS522 (strata).

2.      Mr. Macdonald says the strata overspent its budget for legal expenses, created 2 “draconian” bylaws about entering a strata lot, and failed to comply with its obligations to provide access to records under section 36 of the Strata Property Act (SPA).

3.      Mr. Macdonald seeks orders that the strata

a.    Observe budget spending limits and call a special general meeting (SGM) if further spending is anticipated,

b.    Amend its bylaws to restrict aspects of the strata’s power to enter a strata lot, and

c.    Comply with record requests on time and with “fully authenticated” records.

4.      The strata asks me to dismiss Mr. Macdonald’s claims. First, the strata says its unanticipated legal expenditures were retroactively approved at the next annual general meeting (AGM) so the issue is moot. Second, the strata says there is no legal basis to order the strata to re-write its bylaws. Third, the strata says it has complied with its records access obligations under SPA section 36 and there is no legal obligation to “authenticate” records.

5.      Mr. Macdonald represents himself. The strata is represented by the strata council president.

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). 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.

7.      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. Based on the evidence and submissions provided, I am satisfied that I can fairly decide this dispute without an oral hearing.

8.      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 the parties and witnesses questions of and inform itself in any other way it considers appropriate.

9.      Under CRTA section 123, 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.   During the CRT’s facilitation process, Mr. Macdonald withdrew 2 claims. The Dispute Notice was amended to remove those claims, and I have not considered them here.

Person acting for the strata

11.   The person initially acting for the strata in this dispute was its strata council president, CD. CD provided a witness statement in which she said her term as council member ended at the March 22, 2022 AGM. The strata provided its written submissions on April 26, 2022. Mr. Macdonald noted in reply that the strata had not complied with the CRT’s rules.

12.   CRT rule 1.14(1)(a) says if a party is a strata corporation, the strata must act through an authorized member of the strata council. Rule 1.14(2) says a person acting for or representing an organization must have the authority to bind the organization at all stages of the CRT process. Given that the strata did not advise the CRT that its representative was no longer a member of the strata council and did not have authority to bind the strata after March 22, 2022, the strata was in contravention of CRT rules 1.14(1)(a) and 1.14(2).

13.   At my request, CRT staff contacted the strata through its strata manager and asked the strata to appoint a new representative and advise whether it wished to file new submissions or to adopt the submissions made by CD. The strata’s current president confirmed that they would act for the strata going forward and that the strata adopts the submissions previously provided by CD. I find the strata is now in compliance with rule 1.14, so I accept the strata’s evidence and submissions.

ISSUES

14.   The issues this dispute are:

a.    Is Mr. Macdonald’s claim about the strata’s budget for legal expenses moot?

b.    Did the strata’s legal expenditures comply with the SPA, and if not, what is an appropriate remedy?

c.    Must the strata amend or stop enforcing its strata lot entry bylaw?

d.    Should the strata be ordered to comply with SPA section 36, and is the strata required to “authenticate” documents?

EVIDENCE AND ANALYSIS

15.   As the applicant in this civil proceeding, Mr. Macdonald must prove his claims on a balance of probabilities, meaning more likely than not. While I have read all the parties’ evidence and submissions, I only refer to what is necessary to explain my decision.

16.   The strata was created in 2011 and includes 115 strata lots in an apartment-style building.

17.   For context, I briefly summarize the litigation history between the parties given that some of the litigation accounts for some of the strata’s recent legal expenditures. In 2018, Mr. Macdonald challenged various strata actions in a petition to the BC Supreme Court. The court made a number of directions to the strata and council and said that Mr. Macdonald was “substantially successful” (see Macdonald v The Owners, EPS 522, 2019 BCSC 876).

18.   In 2020, Mr. Macdonald filed a CRT dispute against the strata. The CRT dismissed most of Mr. Macdonald’s claims and refused to resolve one claim (see Macdonald v. The Owners, Strata Plan EPS522, 2021 BCCRT 1012). Mr. Macdonald filed for a judicial review of that decision, though as of the date of submissions in this dispute he had not taken steps to advance that proceeding.

Budget for legal fees

19.   The strata’s fiscal year begins February 1. For brevity I will refer to each budget by the year in which it started.

20.   In 2019, the strata budgeted $5,000 and spent $4,209 on legal fees. In 2020, the strata again budgeted $5,000, but it spent $9,187.

21.   In 2021, the strata again budgeted $5,000 for legal fees, and again substantially exceeded that estimate. Mr. Macdonald says the strata spent at least $29,000 on legal expenses that year. I note that the “estimated actuals” for 2021 from the 2022 AGM notice said the strata spent $12,761 on legal fees. I return to the 2021 spending below, but it is undisputed that the strata significantly exceeded its legal fees budget in 2021.

22.   Some of the legal fees for 2020 and 2021 arise from the strata’s decision to have legal counsel attend general meetings, something it says was made necessary by Mr. Macdonald’s actions at previous general meetings. Other legal fees relate to seeking legal advice about issues raised by Mr. Macdonald. Others relate to advice on bylaw amendments.

23.   The strata argues that Mr. Macdonald’s claim is moot. A claim is “moot” when something happens after a legal proceeding starts that removes any “present live controversy” between the parties (see Binnersley v. BCSPCA, 2016 BCCA 259). The strata says the claim is moot because the legal expenditures were “retroactively approved at the subsequent AGM when the previous year’s financial statements were approved.” I do not agree that approval of a financial statement represents the owners’ approval of each previous expenditure, or has the effect of erasing previous contraventions of the SPA. The SPA does not require owners’ approval of financial statements like it does budgets, it simply requires strata corporations to prepare them with specific information. So, I find the claim is not moot as a result of the approval of financial statements.

24.   On balance, I agree with Mr. Macdonald that there is a live issue about whether the strata complied with the SPA’s spending provisions. Part of the CRT’s mandate is to resolve disputes in a manner that recognizes ongoing relationships between the parties. To that end, I find there is value in having contraventions of the SPA identified and, where possible, corrected.

25.   SPA section 92(a) says a strata corporation must establish an operating fund for common expenses that occur at least annually. SPA section 97 says the strata must not spend money from the operating fund unless the expenditure is consistent with the purposes of the fund as set out in SPA section 92(a). The expenditure must also be first approved by a ¾ vote resolution at an AGM or SGM, or authorized in the budget, or authorized under SPA sections 98 or 104(3).

26.   The strata does not strenuously dispute that it did not follow SPA section 97 when it spent money on legal fees in 2020 and 2021 that exceeded the legal fee budget. There was no ¾ vote resolution before the expenditures. The strata does not argue that section 104(3) or any of the SPA section 98 exceptions applied.

27.   Mr. Macdonald says the strata intended to contravene the SPA and “funded CRT disputes with those unapproved funds.” However, I find there is no evidence the strata intended to contravene the SPA. Also, the strata did not file a CRT claim, it merely defended Mr. Macdonald’s claims. In that regard, I find the strata’s contravention of SPA section 97 is less blameworthy than one in which a strata council instigates the litigation without the owners’ consent, as described in Dockside Brewing Co. v. Strata Plan LMS 3837, 2005 BCSC 1209, affirmed 2007 BCCA 183.

28.   Former strata council president, CD, provided a written statement. I accept CD’s evidence that the strata council was not attempting to deceive owners or hide spending. The president’s report from the 2021 AGM advised owners that the strata was facing “excess legal fees.” Strata council members are volunteers and may make mistakes even with the best of intentions. I find some latitude is justified when scrutinizing the volunteer council's conduct (see Mitchell v. The Owners, Strata Plan KAS 1202, 2015 BCSC 2153).

29.   The strata held an SGM on December 2, 2021. At that SGM, the strata acknowledged it had already spent $12,760 on miscellaneous legal services and $16,297 defending Mr. Macdonald’s claims. The strata anticipated a further $4,000 in miscellaneous legal fees and $5,000 for bylaw amendments, plus related unspecified property management budget overages. The strata asked for $20,000 from the contingency reserve fund (CRF) to cover the non-litigation expenses. The strata also proposed a $40,000 special levy assessed against all strata lots except Mr. Macdonald’s, to pay for previous and anticipated litigation expenses. The ownership voted almost unanimously in support of both resolutions.

30.   SPA section 97 required the strata to “first” obtain the owners’ approval before spending any money from the operating fund. However, I find the strata has now corrected its error by using the CRF to pay the extraordinary non-litigation legal expenses and a special levy to fund the litigation expenses. Based on the votes, the vast majority of owners support the strata’s decision.

31.   Mr. Macdonald says the strata council is “completely unrepentant as to its unauthorized overspending, is therefore likely to continue that practice into the future.” I disagree. I note that for 2022, the strata’s annual budget for legal fees is $15,000. I find this, and the strata’s decision to use the CRF and a special levy, indicate that the strata is now taking seriously its obligations under SPA section 97 and related provisions.

32.   Mr. Macdonald seeks an order requiring the strata corporation to observe all line item spending limits and to call an SGM if further spending is anticipated. On balance, I find that no order is necessary. The strata is already required to comply with the SPA, has addressed its past mistakes, and is now observing budgetary limits.

Strata lot entry bylaw

33.   On May 5, 2021, the strata filed a complete set of bylaws with the Land Title Office. It is undisputed that the bylaws were approved by a ¾ vote resolution at the 2021 AGM.

34.   Mr. Macdonald takes issue with bylaw 15, a 2-page bylaw titled “Permit entry to strata lot”. Bylaw 15(2) allows the strata to enter a strata lot (a) in an emergency, without notice, to ensure safety or prevent significant loss or damage, and (b) at a reasonable time, on 48 hours’ written notice, to meet its repair and maintenance obligations or to ensure compliance with the SPA and the bylaws.

35.   Bylaw 15(5) allows the strata to enter a strata lot using “reasonable force and assistance” if the owner, tenant or occupant refuses access to the strata lot for 7 days following notice of failure to provide access. Bylaws 15(5),(6), and (7) limit the strata’s liability for claims arising from forcible entry and require owners to reimburse the strata for forcible entry costs.

36.   Mr. Macdonald says the power to enter a strata lot to ensure compliance with the SPA and the bylaws is “overly broad” as it requires no “previously-established cause” for entry. He says it could be abused under the guise of ensuring compliance with trivial bylaws, such as bylaw 7(1)(a) that requires the number of small fish kept to be reasonable. Mr. Macdonald says the bylaw should be reworded to limit entry to instances where complaints have been lodged against an owner and the complaint process has not achieved a satisfactory result.

37.   Mr. Macdonald also says the forced entry provision is a “barbaric and untenable use of force.” He says it denies owners access to the complaint process, to a hearing, and to the possibility of fines being levied, which might lead to a resolution of the issue. Mr. Macdonald seeks an order to amend bylaw 15(2)(b) to reduce its applicability to instances where previous cause warrants entry, and an order to amend bylaw 15(5) to be “consistent with the legal processes that must be followed before forcible entry can be executed.”

38.   The strata says bylaw 15 is reasonable and permits the strata to take extraordinary measures to in extraordinary circumstances. It says the bylaw was approved by the owners and the CRT should not interfere by re-writing bylaws as Mr. Macdonald suggests.

39.   In Parlett and Watson v. Owners SP LMS 2706, 2000 BCSC 1565, the court said that bylaws reflect the will of the owners. I interpret this statement to mean that significant weight should be given to the democratic rights of owners to adopt bylaws specific to their strata corporation. This view is found in many BC Supreme Court decisions where the court determined that it should not interfere with the democratic government of a strata corporation except where absolutely necessary (see Lum, above, and Oldaker v. The Owners, Strata Plan VR 1008, 2007 BCSC 669). Given these decisions, I find it would be an inappropriate infringement on the owners’ democratic rights to order bylaw 15 to be amended. That said, the CRT can order a strata corporation to stop enforcing a bylaw in certain circumstances, such as a conflict with SPA section 121, or if the bylaw results in significant unfairness to an owner or tenant.

40.   SPA section 121 says a strata bylaw is unenforceable to the extent that it conflicts with the SPA, its regulations, the Human Rights Code or any other enactment or law.

41.   Mr. Macdonald argues that bylaw 15 does not accord with the legislative intent behind the SPA. Bylaw 15 is similar to bylaw 7(1) in the SPA’s Standard Bylaws, which allows a strata corporation to enter a strata lot in an emergency without notice, to ensure safety or prevent significant loss or damage, and on 48 hours’ written notice, to meet its repair and maintenance obligations. However, standard bylaw 7(1) does not allow entry to ensure compliance with the SPA or bylaws. Mr. Macdonald notes that when the SPA received royal assent in 1998, standard bylaw 7(1) allowed strata corporations to enter to ensure compliance with the SPA or bylaws. Mr. Macdonald argues that the Legislature’s decision to remove that power from the Standard Bylaws is an unequivocal indication that it did not intend for strata corporations to have the power to enter strata lots for the purpose of bylaw enforcement.

42.   Accepting Mr. Macdonald’s argument would mean disregarding SPA section 120, which says that a strata’s bylaws are the standard bylaws except to the extent that different bylaws are filed in the LTO. The plain meaning of SPA section 120 is that filed bylaws that conflict with the standard bylaws prevail over the standard bylaws. As well, SPA section 126 says a strata corporation may change, repeal, replace, add to or otherwise amend its bylaws by complying with division 2 of part 7.

43.   I note that the CRT has found bylaws allowing a strata corporation to enter a strata lot to ensure bylaw compliance to be enforceable (see Cheng v. Section 2 of The Owners, Strata Plan BCS 2321 et al, 2018 BCCRT 881, and Weinrauch et al v. The Owners, Strata Plan NW 3119 et al, 2019 BCCRT 257. While these decisions are not binding on me, they suggest that bylaws allowing a strata corporation to enter a strata lot for the purposes of bylaw enforcement are enforceable.

44.   Mr. Macdonald says bylaw 15 possibly conflicts with the Trespass Act and the Privacy Act. Section 4 of the Trespass Act says a person commits an offence if they enter premises after receiving notice from an occupier that entry is prohibited. However, section 4.1 says “lawful authority” is a defence to trespass. Section 1(1) of the Privacy Act says it is a tort to violate the privacy of another person wilfully and without a “claim of right”. Mr. Macdonald acknowledges that the terms “lawful authority” and “claim of right” are open to interpretation. I find Mr. Macdonald has not demonstrated that bylaw 15 conflicts with the Trespass Act or the Privacy Act, or any other enactment or law.

45.   Mr. Macdonald argues that bylaw 15 is open to abuse. I find he means bylaw 15 could be applied in a way that is significantly unfair to owners to tenants. I find Mr. Macdonald’s argument is theoretical, with no factual foundation. Whether bylaw 15 is unfair ultimately comes down to how the strata uses its discretion. That discretion must be exercised reasonably and in good faith (see The Owners, Strata Plan LMS 3259 v. Sze Hang Holding Inc., 2016 BCSC 32, paragraph 237). Those obligations prevent the strata council from unfairly targeting individuals or, to use Mr. Macdonald’s example, kicking down doors to count goldfish. If the strata council does cross the line, SPA section 164 and CRTA section 123(2) allow owners to turn to the BCSC or the CRT to address the strata’s significantly unfair actions.

46.   I also find Mr. Macdonald’s argument that owners and tenants will be denied access to a hearing misplaced. The procedural rights in SPA section 135 apply before the strata imposes fines or other penalties, not before the strata investigates alleged bylaw contraventions.

47.   In summary, Mr. Macdonald has not established that the bylaw is unenforceable or significantly unfair in application, so I dismiss this claim.

Access to records and “authentication”

48.   SPA section 35(1) lists the records the strata corporation must prepare. Section 35(2) lists the records the strata corporation must retain. Section 36 says the strata must make the records referred to in section 35 available for inspection and provide copies to an owner, tenant, or authorized person upon request. The strata has 2 weeks to comply with most requests and may charge a fee for copies.

49.   Mr. Macdonald says records he requests are often either

a.      Not provided at all,

b.      Provided only after multiple requests,

c.      Provided well beyond the required 2-week response time, or

d.      Provided without “authentication as to their source.”

50.   Mr. Macdonald seeks an order that the strata fully comply with SPA section 36 and provide records “on time and fully authenticated.” Mr. Macdonald does not ask for any documents, and I infer that he has no outstanding document requests.

51.   The strata acknowledges it has not always met the 2-week deadline, but says Mr. Macdonald’s document requests have not been reasonable or made in good faith. The strata says Mr. Macdonald makes the requests hoping to catch a minor contravention of the SPA or a bylaw in order to magnify it into a large and time-consuming dispute.

52.   What does Mr. Macdonald mean by “fully authenticated”? It is not entirely clear. The SPA does not explicitly require a strata corporation to authenticate documents. Mr. Macdonald provides an example of a document he considered to require authentication. In the context of noise complaints he had made, he sought to confirm when a tenant moved into the strata lot above his. The strata provided a Notice of Tenant’s Responsibilities (Form K) in response to his request. The form K was dated October 22, 2021, but indicated that the tenancy commenced on September 14, 2022 (I infer this was a typo and should have read 2021). Mr. Macdonald found this suspicious and made a follow-up request for the email to which the Form K was attached, perhaps to “authenticate” the date the Form K was submitted. He says the strata never provided this. However, an April 25, 2022 email shows that the strata manager sent Mr. Macdonald a copy of the email confirming the date the Form K was submitted. The response came after the 2-week deadline set by SPA section 36, but the strata manager explained that the previous strata manager failed to forward the email to the current manager and it had to be tracked down.

53.   Mr. Macdonald provided other examples, including his requests for the legal fee ledger, for which the strata also missed the 2-week deadline. The strata delayed responding because it was in the process of obtaining new invoices to separate litigation and non litigation work for insurance claim purposes. I find the strata failed to promptly provide a copy of its “books of account showing money received and spent and the reason” as required by sections 35(1)(d) and 36.

54.   Overall, I find the strata did not always comply with its disclosure obligations in SPA section 36. However, I do not find that the strata exhibited a pattern of disregarding its access to records obligations. I find no evidence that the strata failed to provide records that existed and that it was required to provide. I also find that the strata promptly provided many documents to Mr. Macdonald, including some that it was not required to provide, such as invoices, in an effort to be transparent.

55.   The strata is already required to comply with SPA section 36, and I see no utility in ordering it to do so. I dismiss this claim.

CRT FEES AND EXPENSES

56.   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 I dismissed Mr. Macdonald’s claims, I find he is not entitled to reimbursement of CRT fees or expenses.

57.   Although the strata was not represented by a lawyer, it seeks reimbursement of expenses paid to its lawyer in defending Mr. Macdonald’s claims, relying on Parfitt et al v. The Owners, Strata Plan VR 416 et al, 2019 BCCRT 330. The strata says those expenses total $6,074.51, based on the lawyer’s letter setting out previous billed and unbilled services related to this dispute.

58.   The CRT may order reimbursement of a lawyer’s fees in strata disputes with extraordinary circumstances. Rule 9.5(4) says in determining whether there are extraordinary circumstances, the CRT may consider the dispute’s complexity, the lawyer’s involvement, whether a party’s conduct has involved unnecessary delay or expense, and any other factor the CRT considers appropriate.

59.   Several CRT decisions, including Parfitt, have considered the law of special costs under the BC Supreme Court Civil Rules in deciding whether to award legal fees. The leading case on special costs is Garcia v. Crestbrook Forest Industries Ltd., 1994 CanLII 2570 (BC CA). The Court of Appeal said that special costs may be awarded for reprehensible conduct in the course of litigation that is deserving of rebuke. In Casses v. Canadian Broadcasting Corp., 2016 BCSC 949, the court said that special costs may also be awarded where “a party made the resolution of an issue far more difficult than it should have been”.

60.   The strata notes that at the BC Supreme Court, Madam Justice Young did not grant Mr. Macdonald costs despite finding him “substantially successful” because he persisted in unfounded allegations of fraudulent or dishonest conduct. Madam Justice Young said at paragraph 154, “With these rulings, I am hopeful that the [strata] will change some of its conduct and that [Mr. Macdonald] will put to rest some of the issues he has repeatedly raised.” The strata says rather than putting issues to rest, Mr. Macdonald has been emboldened to raise several more issues. However, I find Mr. Macdonald has raised different issues here. I agree with Mr. Macdonald that Madam Justice Young’s comment cannot be taken to mean that he should forever be silent.

61.   The strata argues that Mr. Macdonald has been a drain on strata resources over the last 5 years. However, special costs are awarded based on conduct during litigation, not pre-litigation conduct. By analogy, I find my consideration of extraordinary circumstances under the CRT’s rules must focus on conduct during the CRT proceeding.

62.   In Parfitt, the CRT found Mr. Parfitt’s conduct reprehensible because he sent a threatening email directly related to the CRT proceeding with the implicit goal of suppressing further evidence. In Kornylo v. The Owners, Strata Plan VR 2628, 2019 BCCRT 1387, the CRT found Mr. Kornylo persisted in unfounded allegations of fraud and dishonesty through the dispute, and made threats related to the dispute. I find the circumstances here are different from those in Parfitt and Kornylo. The Strata does not take issue with Mr. Macdonald’s conduct during this proceeding, other than bringing the proceeding itself.

63.   As noted, Mr. Macdonald agreed to drop 2 of his 5 claims in facilitation. Although his submissions were lengthy, he did not cause undue delay. And although I did not grant the orders Mr. Macdonald requested, his claims were not entirely without merit given my findings that the strata contravened the SPA. Weighing all the factors set out above, I dismiss the strata’s claim for legal fees.

64.   Reasonable disbursements may be considered dispute-related expenses, separate from legal fees. The strata’s evidence does not break down its disbursements or provide any detail, other than its lawyer’s statement that the “largest disbursement” was $600 in “printing and scanning costs” to upload evidence. CRT does not generally allow printing and scanning costs without explanation given the CRT is an online tribunal. I find the strata has not proven any reasonable dispute-related expenses.

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

ORDERS

66.   I dismiss Mr. Macdonald’s claims. I also dismiss the strata’s claim for dispute related expenses, including legal fees.