Date Issued: September 29, 2022

File: ST-2022-001635

Type: Strata

Civil Resolution Tribunal

Indexed as: Gartner v. The Owners, Strata Plan VIS 2592, 2022 BCCRT 1076

Between:

GERALD GARTNER, DEBORAH TORKKO, DONNA STEPHENSON, PIETERNELLA MARIA HYMANS, JOYCE SPENCER, and Estate of DOROTHY RATCLIFFE, Deceased

Applicant

And:

The Owners, Strata Plan VIS 2592

Respondent

REASONS FOR DECISION
Tribunal Member:	Leah Volkers

INTRODUCTION

1.      This dispute is about the allocation of common expenses.

2.      The applicants, Gerald Gartner, Deborah Torkko, Donna Stephenson, Pieternella Maria Hymans, Joyce Spencer, and Estate of Dorothy Ratcliffe, Deceased, each own or co-own ground-level strata lots in the respondent strata corporation, The Owners, Strata Plan VIS 2592 (strata).

3.      The applicants say the strata’s use of unit entitlement to calculate common expense contributions, including for repair and maintenance of common property is significantly unfair. The applicants say the common property surrounding the upper 2-storey strata lots costs more to repair and maintain, and includes large limited common property (LCP) balconies on the “penthouse” level, among other things.

4.      As an example, the applicants say that during a 2020 exterior siding project, they each paid about $3,000 more than the costs associated with the actual siding applied to common property surrounding their strata lots. The applicants also say the strata unfairly changed the bylaws in 2014 which allocated less LCP repair and maintenance obligations to benefitting owners, which affected the applicants’ expense allocations.

5.      The applicants ask for the following orders:

a.    The strata reimburse each of the applicants $3,000 for their alleged overpayments on the 2020 siding project, totalling $18,000.

b.    The strata restore the LCP bylaw back to the “original intent” and make owners responsible for the repair and maintenance of any LCP designated to them.

c.    The strata draft and register a bylaw requiring the “penthouse” owners to pay for all repairs and maintenance to the “penthouse level”, excluding the roof.

d.    As an alternative to the requested orders (b and c above), the strata establish a new formula for future contributions to the contingency reserve fund (CRF) and special levies not based on unit entitlement, and instead reflecting the “cost to replace”, which the applicants say should be as follows: strata lots 1 to 6 - 35.2%, and strata lots 7 to 12 - 65.8%.

e.    As another alternative to the requested orders (b and c above), the strata should form a section within the strata for units 101-106 and a section for units 201-206.

6.      The strata says it has complied with the Strata Property Act (SPA) and its bylaws in allocating common expenses. The strata says doing so is not significantly unfairly.

7.      The applicants are self-represented. The strata is represented by a strata council member.

JURISDICTION AND PROCEDURE

8.      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.

9.      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.

10.   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.

11.   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.

ISSUES

12.   The issues in this dispute are:

a.    Has the strata allocated expenses in a significantly unfair manner?

b.    If yes, what are the appropriate remedies, if any?

EVIDENCE AND ANALYSIS

13.   In a civil proceeding such as this one, the applicants must prove their claims on a balance of probabilities (meaning more likely than not). I have read all the parties’ submissions and evidence, but I only refer to what I find relevant to provide context for my decision.

14.   The strata consists of 12 strata lots in one building. 6 strata lots are one-storey strata lots located on the ground-floor level of the building (lower strata lots).As noted, the 6 applicants in this dispute each own or co-own one of the 6 lower strata lots. The other 6 strata lots are 1½-storey strata lots located on the second and third level of the building (upper strata lots).

15.   The strata repealed and replaced its bylaws by filing new bylaws in the Land Title Office (LTO) on December 2, 2014. There have been further bylaw amendments since that time, but none are relevant to this dispute.

Has the strata allocated expenses in a significantly unfair manner?

16.   It is undisputed that the strata calculated expense allocations based on unit entitlement. The unit entitlement for each strata lot is set out in the strata plan. The applicants do not argue that the unit entitlements are incorrect, or that the strata has miscalculated expenses. Rather, the applicants say only that calculating expenses based on unit entitlement is significantly unfair. The applicants say doing so results in the lower strata lots paying more than their fair share of common property repairs, including the 2020 siding project. Before addressing significant unfairness, I will first outline how the strata must calculate each owner’s share of expenses.

Calculating common expenses

17.   Under SPA sections 3 and 72, the strata must repair and maintain common property and common assets. SPA section 91 says the strata corporation is responsible for the common expenses of the strata. In general, common expenses that occur at least once a year are paid for out of the strata’s operating fund, and common expenses that occur less often than once a year are paid for out of the CRF.

18.   Under SPA sections 92 and 99, strata lot owners must pay strata fees, which fund both the operating fund and the CRF. SPA sections 99 and 100 say that unless there has been a unanimous vote of the ownership to calculate strata fees in a different way, strata fees for each strata lot are calculated based on unit entitlement.

19.   In Owners, Strata Plan LMS 1537 v. Alvarez, 2003 BCSC 1085, the BC Supreme Court cited SPA sections 91 and 99, and said that the general rule under the SPA is that within a strata corporation "you are all in it together" (paragraph 35). Based on the reasoning in Alvarez, the courts have found that common expenses of a strata corporation must be allocated in proportion to unit entitlement under SPA section 99, unless:

a.    the strata corporation has by a unanimous vote agreed to use a different formula for the allocation of contributions to the operating fund and contingency reserve fund, other than those set out in section 99 and the Strata Property Regulation (SPR) (SPA, section 100),

b.    the strata corporation has by a unanimous vote established a “fair division” of expenses for a special levy (SPA section 108(2)),

c.    “sections” have been created under Part 11 of the SPR, or

d.    the strata corporation has by a unanimous vote changed the unit entitlement of one or more strata lots (SPA section 261).

(See Coupal v. Strata Plan LMS 2503, 2004 BCCA 552 at paragraph 34, citing Alvarez at paragraph 55, and Poloway v. Owners, Strata Plan K69, 2012 BCSC 726 at paragraph 54.)

20.   A CRT vice chair noted in the non-binding decision of Trinden Enterprises Ltd. v. The Owners, Strata Plan NW 2406, 2020 BCCRT 807 that Strata Property Regulation (SPR) section 6.4 allows a different basis of expense allocation where there are different “types” of strata lots, or expenses that relate to and benefit only LCP (my emphasis added).

21.   SPR section 6.4 sets out formulas the strata must use instead of the unit entitlement formula in SPA section 99(2) when calculating expenses that relate to and benefit only LCP and expenses that relate to and benefit only one type of strata lot. For LCP-only expenses, the contribution is shared only between strata lot owners entitled to use the LCP to which the contribution relates. For type-only expenses, the contribution is shared only between owners of strata lots of the type to which the contribution relates.

22.   The strata’s bylaws do not create different types of strata lots, so I find the types exception under SPR section 6.4 does not apply.

23.   The strata plan shows LCP balconies designated to most upper strata lots. The strata plan also shows other designated LCP. The applicants argue that allocating expenses based on unit entitlement will result in the lower strata lots paying a disproportionate share of expenses to repair and maintain LCP balconies that only benefit the upper strata lots. However, they did not identify any expense allocations for LCP only. So, I find the LCP exception under SPR section 6.4 is not triggered in this dispute.

24.   At the 2019 annual general meeting, a unanimous vote resolution was proposed to change the formula used for calculating each strata lot’s contribution to the operating fund and CRF. The proposed resolution failed with 10 in favour and 2 opposed. So, there was no successful unanimous vote to change the formula for calculating expense allocations.

25.   Given the above, I find the strata was required to calculate expense allocations based on unit entitlement as required by SPA sections 99 and 100. This is true even if some strata lots benefit disproportionately from certain common property repairs and maintenance.

26.   I turn now to consider whether the strata’s decision to allocate expenses by unit entitlement is significantly unfair to the applicants.

Significant unfairness

27.   CRTA section 123(2) gives the CRT the power to make an order directed at the strata, if the order is necessary to prevent or remedy a significantly unfair action, decision or exercise of voting rights.

28.   In Reid v. Strata Plan LMS 2503, 2003 BCCA 126, the BC Court of Appeal interpreted a significantly unfair action as one that is burdensome, harsh, wrongful, lacking in probity or fair dealing, done in bad faith, unjust or inequitable. See also King Day Holdings Ltd. v. The Owners, Strata Plan LMS3851, 2020 BCCA 342. Significantly unfair conduct must be more than mere prejudice or trifling unfairness. See Dollan v. The Owners, Strata Plan BCS 1589, 2012 BCCA 44.

29.   The test for significant unfairness established in Dollan was restated in The Owners, Strata Plan LMS 1721 v. Watson, 2018 BCSC 164 at paragraph 28:

a.    What is or was the expectation of the affected owner or tenant?

b.    Was that expectation on the part of the owner or tenant objectively reasonable?

c.    If so, was that expectation violated by an action that was significantly unfair?

30.   The applicants say it is significantly unfair that the lower strata lot owners contribute to the costs of maintaining the strata’s second and third floor common property that surrounds the upper strata lots. I find the applicants’ expectation is that contributions to common expenses should be calculated based on perceived benefit.

31.   I do not find the applicants’ expectation reasonable in the circumstances. Even if I did, I find that their expectation was not violated by an action that was significantly unfair. My further reasons follow.

32.   As noted above, the SPA creates a scheme that “all owners are in it together” (see Alvarez). In allocating the common expenses according to unit entitlement, I find the strata is complying with the SPA. While not determinative, I find that complying with the prescribed cost allocation scheme in the SPA suggests the strata has not engaged in a significantly unfair action or decision for SPA section 164 purposes. See King Day at paragraph 69.

33.   The applicants say the common property around the upper strata lots, including some designated LCP, costs more to repair and maintain. The applicants say the upper strata lots’ “penthouse” level has “a full wall of ocean view windows and patio doors” and large LCP balconies. The applicants acknowledge that the upper strata lots already have a larger unit entitlement than the lower strata lots. However, the applicants say the penthouse level makes up 1/3 or more of the strata’s total repair and maintenance costs. The applicants say the upper strata lots’ “penthouse” level is only a half-level that does not significantly increase the upper strata lots’ unit entitlement. The applicants say this results in the lower strata lots contributing disproportionately to repair and maintain the common property.

34.   I find the strata plan and photographs in evidence confirm that the upper strata lots are larger and have more designated LCP than the lower strata lots. I place little weight on the applicants’ submissions that they have unfairly contributed to expenses related to the upper strata lots’ designated LCP balconies. I say this because although the applicants suggest such expenses may be incurred and unfairly allocated in the future, the evidence does not show any actual LCP expenses unfairly allocated to the applicants. Further, even if there were expenses that solely related to the LCP balconies, as noted above, SPR section 6.4 sets out formulas the strata must use to calculate expenses that relate to and benefit only LCP. There is no evidence of those expenses here.

35.   Returning to the 2020 siding project, the applicants say that the penthouse level incurred 35% of the total cost of the siding project, which they say resulted in the lower strata lots each paying on average $3,000 more for the siding project than the costs associated “with the actual siding applied” to the common property building exterior surrounding their respective strata lots. However, the building envelope is common property and is owned by all owners. I find the 2020 siding project clearly benefits all strata lot owners because it maintains the integrity of the entire strata building, among other benefits. I find the applicants did not reasonably explain why their expense allocations should be limited to only the cost of the siding applied to the common property immediately beside their own strata lots. I find that doing so would generally be contrary to how the SPA says expenses should be allocated.

36.   The applicants also say that if a window and door replacement project is necessary, the upper strata lots’ penthouse level would incur similar costs to both the lower strata lots and the upper strata lots’ first level. However, no window and door replacement has not occurred. So, I place little weight on this submission.

37.   I accept that using unit entitlement to calculate expense allocations between strata lots may, at times, result in the lower strata lot owners’ perception that they pay disproportionately for certain common expenses. This is true with the 2020 siding project. However, given that the upper strata lots all have higher unit entitlements than the lower strata lots, there are likely several other expenses, such as common property roof and roadway repairs and maintenance, where the upper strata lot owners may also feel that they pay disproportionately. This is the nature of strata living, and there is no requirement that common property expenses be divided based on perceived benefit. The fact that the applicants can identify some common expenses where they paid disproportionately to their perceived benefit is not sufficient to prove that the strata’s use of unit entitlement to calculate expense allocations is significantly unfair.

38.   Given all the above, I find the applicants have not proved that the strata’s calculation of expense allocations based on unit entitlement is significantly unfair.

39.   I have also considered whether the strata’s adoption of bylaws 3 and 8 is a significantly unfair action and find that it is not. Bylaws 3 and 8 set out the respective repair and maintenance obligations of owners and the strata, and allocates some LCP repair and maintenance costs to benefitting owners, while leaving other LCP costs as the strata’s responsibility. The applicants suggest that the strata did not explain that the new bylaws would change the allocation of costs between the owners, and they would not have voted in favour of them had they known.

40.   The evidence indicates the strata circulated the proposed bylaws and had a bylaw discussion meeting on September 26, 2014, before the general meeting. At the October 30, 2014 AGM, the owners undisputedly voted to repeal and replace the bylaws by a ¾ vote resolution with 11 in favour and 1 opposed. This included bylaws 3 and 8.

41.   I acknowledge that the applicants are unhappy with the repair and maintenance obligations set out in the bylaws 3 and 8, including who is responsible for the repair and maintenance of certain LCP. However, there is no indication that the bylaw amendment process was flawed or incorrect. The evidence does not show that the strata acted significantly unfairly. As stated in Lum v. Strata Plan VR519 (Owners of), 2001 BCSC 493, the democratic government of the strata community should not be overridden by a court except where “absolutely necessary”. It remains open to the strata to amend its bylaws.

42.   As I find there is no significant unfairness here, I find it unnecessary to address any of the applicants’ requested remedies. I dismiss the applicants’ claims.

CRT FEES AND EXPENSES

43.   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 in this case not to follow that general rule. As the applicants were unsuccessful, I dismiss their fee claim. The strata did not pay any CRT fees, and none of the parties claimed any dispute-related expenses, so I award none.

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

ORDER

45.   I dismiss the applicants’ claims and this dispute.