Date Issued: August 17, 2023

File: ST-2021-008094

Type: Strata

Civil Resolution Tribunal

Indexed as: Wu v. The Owners, Strata Plan VR 2197, 2023 BCCRT 692

Between:

SHENG WU

Applicant

And:

The Owners, Strata Plan VR 2197

Respondent

AND:

SHENG WU

Respondent BY COUNTERCLAIM

AND:

HONG YI LU

Respondent BY THIRD PARTY CLAIM

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

INTRODUCTION

1.      This is a strata property dispute about approved special levies paid in trust and related accounting practices.

2.      The applicant and respondent by counterclaim, Sheng Wu, co-owns strata lot 3 (SL3) in the respondent strata corporation, The Owners, Strata Plan VR 2197 (strata). The strata is the applicant in the counterclaim. Hong Yi Lu is Ms. Wu’s son and the only other co-owner of SL3. He is a third party to the strata’s counterclaim.

3.      Ms. Wu makes 3 claims against the strata. First, she says the strata has withdrawn funds from the contingency reserve fund (CRF) without proper authorization contrary to the SPA. She seeks an order that the strata stop “misappropriating” money from the CRF and refund the unauthorized amount it has spent.

4.      In her second claim, Ms. Wu says the strata co-mingled different special levy funds approved between August 2020 and June 2021, in 1 bank account. She also says the strata spent the funds contrary to the Strata Property Act (SPA), including to defend a BC Supreme Court (BCSC) proceeding she commenced against the strata council members. Ms. Wu seeks an order prohibiting the strata from collecting any future special levies until it properly accounts for past special levies that are the subject of her claim.

5.      In her third claim, Ms. Wu says the strata has not properly accounted for disputed funds she has paid to the strata in trust. In particular, she says the disputed funds are shown as an asset on the strata’s financial statements, whereas she says they should be shown as a liability. She seeks an order that the strata amend its financial statements to show the disputed funds she has paid to the strata in trust as a liability on its financial statement.

6.      The strata denies Ms. Wu’s allegations and says all of the special levies have been properly accounted for under the SPA’s provisions. The strata also says the SPA permits borrowing from the CRF and since all funds have been fully repaid, there is no live issue. Finally, the strata says it has deposited payments made by Ms. Wu as a disputed debt to a separate bank account. The strata asks the CRT to dismiss Ms. Wu’s claims.

7.      In its counterclaim, the strata asks for orders that the special levies Ms. Wu paid as disputed debt totaling $7,448.50 be released to the strata, together with any future payments Ms. Wu may pay as disputed debt. Ms. Wu disagrees that her disputed special levy payments should be released to the strata. She argues some of the special levies are invalid and asks that those funds be released to her.

8.      The strata’s third party claim against Mr. Lu is identical to its counterclaim against Ms. Wu, and Mr. Lu’s Dispute Response is essentially the same as Ms. Wu’s. I take from the overall submissions that the strata added Mr. Lu as a party to this dispute because he co-owns SL3, and that Mr. Lu adopts the position taken by Ms. Wu.

9.      Ms. Wu represents herself and Mr. Lu. A strata council member represents the strata.

10.   As explained below, I find the strata must immediately stop using CRF funds contrary to the SPA, return loaned funds to the CRF, and complete a detailed accounting of the comingled special levy funds. I also order the strata to release $785.83 of Ms. Wu’s trust funds to Ms. Wu, and $2,644.17 of trust funds to the various special levy accounts of the strata as detailed below.

JURISDICTION AND PROCEDURE

11.   These are the formal written reasons of the Civil Resolution Tribunal (CRT). The CRT has jurisdiction over strata property claims under section 121 of the Civil Resolution Tribunal Act (CRTA). CRTA section 2 says the CRT’s mandate is to provide dispute resolution services accessibly, quickly, economically, informally, and flexibly. In resolving disputes, the CRT must apply principles of law and fairness, and recognize any relationships between the dispute’s parties that will likely continue after the CRT process has ended.

12.   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.

13.   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.

14.   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.

Late Evidence

15.   The strata submitted 2 pieces of evidence after the deadline had passed and after the parties had provided submissions. The first was a September 9, 2021 email to all owners containing minutes of a September 4, 2021 strata council meeting and resolutions to be put the owners at a September 21, 2021 special general meeting (SGM). The strata asks that the email version replace an earlier PDF version, because the PDF version does not show the email address the strata used for Ms. Wu.

16.   The second piece of evidence was minutes of a strata council meeting held April 21, 2023. It shows the strata decided to file a lien against SL3 in March 2021 and approved opening its own bank accounts due to the notice of resignation from its strata manager. The strata says these 2 decisions were made by email but never formally ratified and documented in strata council meeting minutes.

17.   Ms. Wu objects to the late evidence being admitted. It appears her objection is largely based on her belief that the late evidence is not permitted under the CRT rules. As noted earlier, the CRT may accept as evidence information that it considers relevant, necessary and appropriate, even where the information would not be admissible in court. Further, CRT rule 1.2(2) states the CRT can waive the application of a rule or timeline “to facilitate the fair, affordable, and efficient resolution of disputes”. I admit the September 9, 2021 email as I find it is a different version of the same email already in evidence, except that it clarifies the email address used to send the information to Ms. Wu. I also admit the second piece of evidence, which I find it is intended to correct the strata’s decision about whether it should file a lien against SL3. In any event, nothing turns on the admission of this evidence given my conclusions.

Future Disputed Debts

18.   The strata seeks an order that future payments Ms. Wu makes in trust about disputed debt should be released to the strata. I find this is essentially a request to circumvent SPA section 114, which permits an owner to pay disputed amounts to a strata corporation under certain conditions discussed below. I also find it would not be appropriate to make an order about prospective issues. For these reasons, I dismiss the strata’s request about future disputed debt payments.

Additional Claims and Remedies

19.   In submissions, Ms. Wu alleges the strata did not provide her copies of requested records and documents she is entitled to receive. She also claims the strata’s insurance premium has increased because the strata’s insurer has paid to defend it from her BCSC and CRT claims. The strata argues these additional claims and remedies are procedurally unfair because they were not included in Ms. Wu’s original Dispute Notice and the Dispute Notice was not amended. I agree with the strata and decline to address these additional claims and remedies.

ISSUES

20.   The issues in this dispute are:

a.    Did the strata improperly spend money from its CRF?

b.    Did the strata act contrary to the SPA when it approved, accounted for, and spent special levy funds?

c.    Did the strata properly account for funds paid by Ms Wu as disputed debt, and if so, should the disputed debt be released?

BACKGROUND

21.   As applicant in a civil proceeding such as this, Ms. Wu must prove her claims on a balance of probabilities, meaning more likely than not. The strata must also prove its counterclaims and third party claim on the same standard. I have considered all the submissions and evidence provided by the parties, but refer only to information I find relevant to explain my decision.

22.   The strata plan shows the strata was created in July 1988 under the Condominium Act (CA). It continues to exist under the SPA and is comprised of 4 apartment-style strata lots in a single building.

23.   I have reviewed the strata’s bylaws filed with the Land Tittle Office and find there are no bylaws relevant to this dispute.

24.   Ms. Wu served as the strata council treasurer from June 2018 until about October 2020, when she was not re-elected as treasurer and resigned from the council. Ms. Wu has not served on the strata council since her resignation, but all 3 remaining strata lots are represented on the strata council. According to the strata, Ms. Wu did not provide financial statement information for the months nearing the end of her time as treasurer. Ms. Wu says she prepared the statements by hand and did not have any information to turn over to the strata council when she resigned, other than the financial statements themselves.

25.   In December 2020, the strata retained a bookkeeper, Ron Goyette doing business as Solutions That Fit (STF), to provide bookkeeping services. Based on the evidence provided, I find STF was asked to retroactively prepare financial statements from the start of the strata’s fiscal year of September 1, 2020. STF produced a report on its review of the accounting practices dated March 31, 2021, but resigned effective August 31, 2021, which is the strata’s fiscal year end. The strata then retained West Coast Property Management (West Coast) from September 2021 to September 2022 to provide full property management services, including bookkeeping services. West Coast reduced its services to financial services only in October 2022, and then resigned altogether effective April 30, 2023.

26.   The relevant period relating to this dispute is August 2020 through August 2022. Some of the special levies approved during this time are not at issue in this dispute although Ms. Wu may not have paid them. I note the strata issued a demand letter to Ms. Wu on February 18, 2022 for payment of outstanding special levies. The strata filed a lien against SL3 on March 14, 2022, which states $1,704.95 was owning to the strata. Both Ms. Wu and strata referred to these matters in their submissions, but I find the outstanding special levies and lien do not form part of this dispute because those special levies were not paid into trust.

27.   According to the strata, this is Ms. Wu’s ninth CRT dispute. Details of the BCSC proceeding against the 3 strata council members are not before me.

EVIDENCE AND ANALYSIS

Did the strata improperly spend money from its CRF?

28.   Ms. Wu says the strata spent money from the CRF account contrary to SPA section 98 between October 1, 2021 and February 1, 2022. She argues there is $3,215 “missing” from the CRF on February 1, 2022 based on the approved portion of monthly strata fees for the CRF of $302 and balances shown on the financial statements.

29.   Section 98 addresses unapproved expenses. In essence, section 98 allows unapproved expenditures from the operating fund in the lesser amount of $2,000 or 5% of the total contribution to the operating fund, unless a greater amount is set out in the bylaws. Here, the strata’s bylaws do not set out a greater maximum amount. The amount applies to the total unapproved expenses for the fiscal year, but does not apply to emergency-type expenses as defined in the section. SPA section 98(6) also requires the strata to inform owners “as soon as feasible” about any emergency-type expense made from the CRF.

30.   The strata relies on SPA section 98, and section 95(4) that permits it to lend money from the CRF to the operating fund subject to the Strata Property Regulation (regulation). Regulation section 6.3(1) permits the strata to lend CRF funds to its operating fund only if the loan is repaid by the end of the fiscal year and only if the loan is to cover temporary shortages in the operating fund based on expenses becoming payable before budgeted contributions are collected. Section 6.3(2) requires the strata to inform its owners “as soon as feasible” about the purpose and amount of the loan made.

31.   I first note that I do not know how Ms. Wu arrived at her starting CRF balance figure for September 30, 2021 as it does not match the CRF balance shown on the September financial statements before me. However, I find I do not need to know the correct starting balance to determine if the strata acted contrary to the SPA. This is because the strata provided a detailed review of the CRF transfers it made, arguing any borrowed funds have now been repaid to the CRF or were captured as an emergency-type expense under section 98.

32.   For the reasons that follow, I find the strata contravened the SPA.

33.   As noted, section 95(4) permits the strata to lend money from its CRF to its operating fund. However, the strata admits it borrowed CRF funds to pay for invoices related to its special levy accounts, largely because Ms. Wu had paid her portion of some special levies into trust under section 114. I find this is contrary to section 95(4) because the CRF funds were not used as regulation section 6.3(1) permits. I also agree with Ms. Wu that, based on the evidence before me, the strata council did not notify its owners about the amount or purpose of the loans, even though the loans were not made to the operating fund. The strata argues it does not need to obtain approval for loans made under section 95(4), and I agree. However, obtaining approval to borrow from the CRF is different from notifying owners of the amount and purpose of any loaned amount, which is what SPA section 95(4) requires.

34.   The strata also makes a secondary argument. It says that the amounts paid from the CRF were necessary because it had reasonable grounds to believe that an immediate expenditure is necessary to ensure safety or prevent significant loss or damage, physical or otherwise. This is the test for emergency-like expenses contemplated under section 98. However, I disagree with the strata. The strata used the CRF funds to pay invoices related to bookkeeping, a $362.50 insurance premium, and architect fees. I am not persuaded by the strata’s argument that potential liability for penalties, late interest, loss of insurance, loss of services, and lawsuits amount to an emergency as contemplated under section 98. There is no evidence the strata was facing any of these things, and even if there was, I do not see the risk as immediate. Contrary to the strata’s argument, there are other things the strata could have done to meet its financial obligations. These included calling a general meeting to approve an operating fund or CRF expense to pay the invoices by ¾ vote.

35.   Ms. Wu also says that the strata often ratifies CRF expenses retroactively. I take that to mean that the strata spends CRF funds and then calls a general meeting to ratify its actions, which the strata seems to agree with. Ms. Wu says this is contrary to the SPA and I agree. I find such a process circumvents the SPA requirements about unapproved expenses.

36.   Finally, the strata argues that it relied on professional advice at all times and, in any event, it has returned all funds, except possibly some bank charges, to the CRF account. However, from my review, it is unclear if all the CRF funds used have been returned. I cannot reconcile the strata’s submissions about CRF balances with the financial statements, especially considering the several accounting errors the strata says were made. Further, the fact that the strata relied on professional advice, which is undisputed, does not mean it can contravene the SPA. The courts have held that when a strata corporation reasonably relies on professional advice, and that advice is later found to have been wrong, the strata cannot be found to be negligent. See for example Oldaker v. The Owners, Strata Plan VR 1008, 2007 BCSC 669.

37.   Here, Ms. Wu does not argue the strata was negligent. Rather she effectively seeks orders that the strata stop using CRF money contrary to SPA, and that it return all funds loaned from the CRF before August 31, 2022. I have found the strata contravened the SPA. I also find on balance, that the strata has not returned all funds loaned from the CRF. Accordingly, I order the strata to immediately stop using CRF money contrary to the SPA, and to ensure all loaned funds are returned to the CRF within 90 days of the date of this decision.

Did the strata act contrary to the SPA when it approved, accounted for, and spent special levy funds?

Bookkeeping and Business Special Levies

38.   Ms. Wu claims the strata combined or “pooled” 3 approved special levies into 1 bank account described as a single account entitled “Bookkeeping & Business Services” on the strata’s financial statements. I summarize the special levies as follows:

a.    $1,000 for “professional services” raised at the August 13, 2020 SGM.

b.    $1,500 for bookkeeping services raised at the February 11, 2021 SGM, and

c.    $900 for “administration” raised at the June 10, 2021 SGM.

39.   The SGM meeting minutes describe the purpose of the special levies as follows:

a.    August 13, 2020 SGM: “approve funding of up to $1,000 to hire professional services (for example bookkeeper, agenda/minute taker) to assist VAS 2197 Strata Council with their duties up to December 31, 2020”. [Reproduced as written. Emphasis in original].

b.    February 11, 2021 SGM: $1,500 for “bookkeeping assistance”.

c.    June 10, 2021 SGM: $900 approved for “the Strata book keeper to continue to provide administrative assistance… to the end of the year” [August 31, 2021].

40.   The strata admits it deposited these 3 special levies into a single bank account, which the STF report confirmed. I also note the STF report stated the August 2020 special levy payments were combined with the CRF account until October 29, 2020. On that date, the strata transferred the special levy funds to a separate bank account it identified on its financial statements as the “special assessment account” (SAA). It says the SAA is separate from its operating account and CRF account. The STF report and financial statements in evidence confirm this. The result of the strata’s actions was that special levy funds it had collected up to March 31, 2021 were combined in the SAA account. The July 31, 2021 financial statements prepared by STF show the strata had moved all 3 of the disputed special levy funds the “Bookkeeping & Business Services” special levy account.

41.   Ms. Wu says the strata should separate special levies into separate bank accounts. The strata says SPA section 108(4)(a) does not require it to deposit special levy funds into separate bank accounts. Rather, it says the strata must only account for the special levies separately. I agree with the strata’s interpretation and find the language of the SPA is clear and unambiguous.

42.   Ms. Wu also says the strata never reported the expenses of the pooled special levy funds separately. As a result, she says the strata used the “pooled fund on whatever and whenever it saw fit”, and that she does not know what amounts collected for the 3 special levies, if any, remain. While Ms. Wu says the strata should maintain separate bank accounts for each special levy, I find that her main argument is that the strata has failed to properly account for these 3 special levies.

43.   The strata does not directly address this aspect of Ms. Wu’s claim. It submits Ms. Wu has misinterpreted its financial statements and says it has relied on the advice of its bookkeeper and property manager, STF and West Coast, respectively. The strata also says the funds have been spent “with no evidence of any “disappearance” or misappropriation of funds”, but it provided no supporting evidence.

44.   For the reasons that follow, I find the strata has not properly accounted for the 3 disputed special levies described above. I note also that it is not clear whether the $1,000 August 13, 2020 special levy is in fact a special levy. However, the parties agree it is a special levy, so I accept it was properly approved as such.

45.   Based on the approved resolutions for the 3 special levies, I find their purposes are different. The purpose of the $1,000 August 2020 special levy was for “professional services” to December 31, 2020. I find professional services include bookkeeping services, but the August 31, 2021 year end financial statement shows the strata paid only $870 to STF before December 31, 2020, leaving an unspent balance of $130 from that special levy. This differs from the amount of $250, which Ms. Wu claims was unspent, but I find nothing turns on that. Therefore, I do not agree with the strata that the August 2020 special levy has been fully spent. I acknowledge the strata authorized, by ¾ vote, a transfer of $130 from the SAA account to the CRF at its November 9, 2021 AGM, which is a permitted way under SPA section 108(6) to address the surplus of the August 2020 special levy. However, it is unclear from the wording of the approved ¾ vote, and other financial transfers, what the $130 transfer was for.

46.   The $1,500 February 2021 special levy for bookkeeping services arguably had the same purpose as the August 2020 levy, except there as no time restriction. Therefore, I see no issue with the strata combining the August 2020 and February 2021 special levies, provided they were accounted for separately, and subject to the restriction that the August special levy was only for expenses prior to December 31, 2020. Further, in reply submissions, Ms. Wu accepts the $1,500 February 2021 special levy monies were properly spent on bookkeeping services as evidenced by the STF invoices provided by the strata. However, I agree with Ms. Wu that it is unclear if a surplus of special levy funds remain, or if the strata overspent the approved amount.

47.   This leaves the $900 June 10, 2021 special levy for the “administrative services” of STF, which the evidence confirms includes services to assist with preparing meeting agendas. I find administrative services differ from bookkeeping services, so I find it was not appropriate for the strata to combine this special levy with the earlier special levies. It was also contrary to SPA section 108(3) for the strata to pay STF for bookkeeping services from this special levy, because that is not the purpose for which the funds were raised. It appears from the financial statements in evidence that this was what the strata did.

48.   Ms. Wu argues that only $262.50 of the approved $900.00 special levy relates to administrative services leaving $637.50 in unspent funds. Based on my review of STF’s invoices, I find there were at least 2 occasions where STF charged $60.00 to write a demand letter, which I would include as an approved administrative expense. This would leave an unspent balance of special levy funds of $517.50. In any event, I find the strata did not properly account for the $900.00 June 2021 special levy.

49.   Based on the foregoing, I order the strata to complete a detailed accounting of the expenses relating to these 3 special levies bearing in mind the purpose for which the funds were raised. The strata will have 90 days from the date of this decision to do that, and must provide a copy of the accounting to Ms. Wu within 10 days of its completion.

Legal Expenses

Ms. Wu’s Claim

50.   In her submissions, Ms. Wu also says the strata paid for legal expenses of Clark Wilson LLP (Clark Wilson) from the SAA related the strata’s defence of the BCSC action she commenced. Other than her assertions that the strata spent funds to defend her court action, Ms. Wu has not provided any supporting evidence. The strata provided a written statement from Judith Warchol, a claims attorney and Vice President with the strata’s insurer, Great American Insurance Company. The statement confirms that Great American Insurance Company retained Clark Wilson to defend the BCSC action against the strata, as well as several CRT disputes, including this one. The statement also confirms there is no retention payable which means the strata is not required to pay any amount, subject to the limits of the insurance policy, which I infer has not been reached.

51.   However, this does not end the legal expense issue. There are 2 remaining issues. The first relates to the SAA and the second relates to the strata’s counterclaim, which I discuss below.

52.   As for the SAA, although not raised by the parties, during my review of the strata’s financial statements, I note the strata paid Clark Wilson $250 from the SAA account in March 2022. The description on the general ledger states the payment was for “the 3^rd party CRT reply”, which I infer relates to this dispute. I could not locate any reimbursement to the SAA account for this amount, but it is possible Great American Insurance Company reimbursed the strata at a later date. In any event, I find this is sufficient reason for the strata to also complete an accounting of SAA account.

53.   I turn now to a remedy. Ms. Wu seeks an order prohibiting the strata from collecting any special levy money until the strata has properly accounted for the special levies expenses. I decline to make such an order because there may be a need for the strata to raise special levy funds to address its obligations before the issue is resolved. I find it appropriate in the circumstances of this dispute to order the strata to complete a detailed accounting for the SAA at the same time it completes the accounting for the 3 combined special levies discussed above. Therefore, the strata must also complete this accounting within 90 days of the date of this decision bearing in mind SPA sections 108(3) and (4), and must provide Ms. Wu with a copy of the final accounting within 10 days of its completion.

Strata’s Counterclaim

54.   As for the strata’s counterclaim, it is undisputed the strata held an SGM on July 22, 2022. Ms. Wu did not attend because she mistakenly thought she could not vote at the meeting. Mr. Lu also did not attend. Because SL3 was not represented at the SGM, the strata then held another SGM on August 15, 2022 to re-consider the same resolutions from the July 2022 SGM. At the August SGM, the strata passed a ¾ vote resolution to raise a $10,000 special levy for legal services along with other resolutions approving different special levies. Neither Ms. Wu nor Mr. Lu attended the August SGM. SL3’s portion of the legal services special levy was $2,500, which Ms. Wu paid to the strata in trust as disputed debt. SL3 paid the other approved special levies without conditions.

55.   The strata seeks release of the $2,500 Ms. Wu paid into trust. It provided copies of 2 Clark Wilson invoices that relate to the special levy, which total $6,856.67. One is dated April 15, 2022 in the amount of $6,427.14 for services provided between March and April 2022. The other is dated October 15, 2022 and totals $429.53 for services between August 16 and 25, 2022. The strata says there are no other invoices that relate to the approved resolution and that it intends to refund the surplus balance once Ms. Wu pays. Ms. Wu essentially claims she was not properly notified of the August 15, 2022 SGM, the approved resolution did not authorize legal expenses the strata incurred prior to August 31, 2022, and that the invoices included payment of legal fees to defend her legal proceedings. I disagree for the reasons that follow.

56.   The email evidence suggests that Ms. Wu was aware the purpose of the August 2022 SGM was to reconsider the July 22, 2022 resolutions because of her misunderstanding that she could not vote. I find notice of the August 2022 SGM met the requirements of the SPA. While I acknowledge there was some later confusion about the date of the August meeting, I find that was due to an incorrect date given in an email to Ms. Wu from the strata manager. I find the incorrect date was inadvertent and corrected by the strata manager before the date of the meeting. Ms. Wu submits that there was “nothing urgent in the resolutions” and claims the approved resolutions are invalid. However, I find Ms. Wu’s arguments contradict her actions. I say this because she paid the other special levies passed at the August 15, 2022 SGM in full. It does not make practical sense to argue all the approved resolutions are invalid while at the same time paying some of them.

57.   Finally, I find the services provided by Clark Wilson do not include defense of her legal proceedings. They also occurred before August 31, 2022 as stipulated in the approved resolution. Therefore, I find the strata properly accounted for the legal fees related to this part of the parties’ claims. I address a remedy below when I consider Ms. Wu’s other disputed debt claims.

58.   I pause to note that Ms. Wu filed another dispute with the CRT on October 24, 2022 (ST-2022-006597 or new dispute), which appears to partially relate to the legal fees I have just discussed. A copy of the Dispute Notice for the new dispute was provided in evidence and I confirmed with CRT staff that ST-2022-006597 is currently in the CRT’s facilitation stage. I asked staff to place the new dispute on hold until this decision was issued because of concerns about the new dispute being partially decided here (res judicata). I leave it to the parties to raise any concerns about res judicata during the ST-2022-006597 proceedings.

Did the strata properly account for funds paid by Ms Wu as disputed debt, and should the disputed debt be released to the strata?

59.   This issue involves Ms. Wu’s claim and the strata’s counterclaim. Ms. Wu’s claim is about disputed debt payments she made about approved resolutions passed at the November 4, 2021 AGM. The strata’s counterclaim is about a disputed debt payment Ms. Wu made about the special levy to approve legal fees passed at the August 15, 2022 SGM, as I have discussed.

Has the strata properly accounted for Ms. Wu’s disputed payments?

60.   Ms. Wu says the strata incorrectly shows funds paid to the strata under SPA section 114 as an asset on the strata’s financial statements. She argues that does not meet the requirements of SPA section 108(4) and that disputed debt payments should be shown as a liability. I find Ms. Wu’s allegations are that the strata has failed to keep its books of account in accordance with generally accepted accounting principles (GAAP).

61.   The strata says the opposite. In particular, it relies on the definition of “asset” in the Merriam-Webster dictionary as "the entire property of a person, association, corporation, or estate applicable or subject to the payment of debts." The strata also says “liability” is defined in the Merriam-Webster dictionary as "something for which one is liable".

62.   Finally, the strata says that because Ms. Wu’s payments were made for a disputed debt owed to the strata, the debt is properly categorized as an asset of the strata and not a liability.

63.   As for Ms. Wu’s argument that the strata has not accounted for her disputed funds in compliance with SPA section 108(4), I disagree. Section 108(4) requires the strata to account for special levies “separately from other money of the strata corporation”. While the disputed debt payments paid by Ms. Wu all relate to special levies, I find section 108(4) does not apply to disputed debt payments. Those are captured under section 114. I find Ms. Wu has conflated the 2 provisions of the SPA. Further, I find there are no provisions in the SPA that address how a strata must account for funds paid under SPA section 114.

64.   The parties did not provide any other evidence to support their arguments about the accuracy of the strata’s trust fund accounting or if it complies with GAAP. I conclude that the question of whether the strata’s financial records accurately reflect Ms. Wu’s trust fund payments, or otherwise comply with GAAP, is beyond the knowledge and expertise of an ordinary person. This means that there must be expert evidence to establish whether the strata’s financial records are incorrect. See Bergen v. Guliker, 2015 BCCA 283. As no expert evidence was provided, I find Ms. Wu has not proven her claim and I dismiss it.

Should any of Ms. Wu’s disputed payments be released?

65.   I will first discuss Ms. Wu’s claim for release of $3,005 she paid for the November 4, 2021 AGM special levies. Then I will discuss the strata’s counterclaim for release of the $2,500 paid by Ms. Wu following the August 15, 2022 SGM that I have just considered above.

66.   As for Ms. Wu’s claim, the parties agree the strata approved a total of 6 special levies at its November 4, 2021 AGM. The total amount of the approved special levies was $12,020, broken down as follows:

a.    $1,800 “for the purpose of Administrative Support Costs”,

b.    $1,661 for a metal gate,

c.    $615 (amended from $2,275) for a balcony gate,

d.    $1,029 for painting,

e.    $415 for stair nosing, and

f.     $6,500 for architectural fees.

67.   Ms. Wu’s proportionate share of the approved levies was $3,005 ($20,020/4), which she paid to the strata as disputed debt under SPA section 114. She also paid her share of the special levy for legal fees of $2,500 as disputed debt shortly after the August 15, 2022. I find the total amount of disputed debt relating to this dispute is $5,505.

68.   The relevant part of section 114(1) says a disputed amount an owner owes a strata corporation may be paid to the strata corporation to hold in trust if an initiating notice has been given under the CRTA. An initiating notice is the same as a Dispute Notice. The Dispute Notice here was issued on January 5, 2022. Ms. Wu undisputedly paid the strata $3,005 on January 14, 2022. The strata deposited cheques into a separate bank account (or sub account) on January 20, 2022 labelled “SL3 (WU) LEVY PAYMENTS IN DISPUTE”. There is no question both parties acted in accordance with SPA section 114 when addressing this disputed debt.

69.   Section 114 goes on to say that the strata corporation holds the money in trust for the parties until the dispute is resolved, when it must pay the amount set out in the legal decision. The strata seeks an order that the trust money be released to it, while Ms. Wu says otherwise, as discussed below.

70.   Ms. Wu makes several arguments as to why the trust money relating to her claim should not be released to the strata or why it should be released to her. Her arguments allege the strata followed improper procedures, such as failing to hold the November 2021 AGM within 2 months of the strata’s fiscal year end, not providing adequate notice for the AGM, improperly amending a ¾ vote resolution at the meeting, and not providing her with 2-weeks written notice demanding payment of the special levies before filing a lien against SL3. She says these things invalidated the special levies. I will address Ms. Wu’s procedural arguments, before considering her arguments about the individual special levies themselves.

Procedural Allegations

71.   I do not agree with Ms. Wu’s arguments about procedural irregularities for the reasons that follow.

72.   Ms. Wu claims the strata failed to hold the November 2021 AGM within 2 months of the strata’s fiscal year end as required under SPA section 40(2). She says the meeting and approved resolutions are invalid as a result. The strata’s fiscal year end is August 31, which means it should have held its AGM by October 31, 2021, so it was 4 days late. The strata acknowledges it was late in holding the AGM largely because of the retention of West Coast and the time required for the transition of accurate financial records from STF to West Coast. I find that the strata held its AGM 4 days late is a technical breach of the SPA, but not one that would invalidate the meetings entire proceedings in the circumstances.

73.   Ms Wu also claims she did not receive adequate notice of the AGM stating she received the notice only 13 days in advance of the meeting rather than the required 14 days’ notice. I agree with the strata that it is not the date Ms. Wu actually received the notice, but the date she is deemed to receive notice that is relevant. I accept that notice was provided to all owners on October 15, 2021 as set out in the letter from the strata manager. SPA section 45 requires the strata to give at least 2 weeks’ notice of the AGM. SPA section 61 sets out how notice, including an AGM notice, must be given by the strata, and that it is deemed received 4 days after mailing or emailing (excluding the date mailed or emailed under section 25.2 of the Interpretation Act). That means the AGM notice was deemed received by Ms. Wu on October 20, 2021, which is more than 2 weeks before the date the meeting was held on November 4, 2021. Contrary to Mr. Wu’s claim, the AGM notice was mailed or emailed in accordance with the SPA.

74.   I turn now to the specific special levies in dispute.

Administrative Support Cost Special Levy

75.   As noted, the November 4, 2021 AGM minutes show the strata approved a $1,800 special levy “for the purpose of Administrative Support Costs”, but that term was not defined in the approved resolution. According to the August 15, 2022 SGM minutes, the strata re-allocated these special levy funds to pay for West Coast’s administrative fees by passing another ¾ vote. Ms. Wu does not object to the reallocation of these funds, and I find the reallocation is permitted under the SPA provided it is passed by a ¾ vote, which it was here. Ms. Wu objects to the strata passing the special levy because she says it was unnecessary and duplicative because West Coast was retained at the time and had already included administrative expenses in its contract with the strata.

76.   I find I do not need to determine the necessity of the special levy because, according to the March 3, 2023 strata council meeting minutes, the strata refunded the entire $1,800.00 special levy to all owners, at $450.00 each. This is the strata had not spent any special levy funds given both STF and West Coast had resigned by that time. In reply submissions, the strata withdrew its claim for release of the $450. Given this withdrawal, and that the strata has already reimbursed Ms. Wu $450 for this special levy, I dismiss this aspect of Ms. Wu’s claim.

Metal Gate and Balcony Gate Special Levies

77.   Ms. Wu says the 2 gate special levies are for the same project. The November 2021 AGM minutes confirm the metal gate levy was to repair several common property metal gates itemized in the ¾ vote resolution. The minutes also confirm the resolution passed by a vote of 3 in favour and 1 opposed. It is undisputed Ms. Wu voted against the resolution. The strata argues that simply voting against the special levy does not excuse Ms. Wu from paying the levy or dispute it. I agree. My reasons follow.

78.   The November 2021 AGM minutes also show the gate special levy was for the repair of Ms. Wu’s balcony gate, other back gates and fence repairs. I agree with Ms. Wu that there is a certain amount of overlap in the purposes of the 2 proposed ¾ vote resolutions. The minutes also show that the ¾ vote resolution was amended to reduce the amount of the total special levy from $2,275 to $615. Ms. Wu voted against the amendment and the amended resolution. She says a unanimous vote is required to amend a ¾ vote resolution. However, SPA section 50(2) says a ¾ vote resolution can be amended by passing a ¾ vote, provided the amendment “does not substantially change the resolution”. Ms. Wu did not argue that a reduction in the total special levy was substantial, and I find that it was not. I also find that Ms. Wu’s removal of the SL3 gate that was to be repaired did not remove the requirement for the special levy as it is clear the special levy included other things.

79.   Once a strata corporation approves a ¾ vote, the dissenting owners are generally bound by the decision and are required to pay any associated special levy, subject to some exceptions that do not apply here. I find there is no valid or legal reason for Ms. Wu to dispute payment of the metal gate special levy or gate special levy. I find the strata is entitled to release the amount of these 2 special levies ($415.25 and $153.75 respectively) that it holds in trust for Ms. Wu into the respective special levy accounts to be used for the purposes in which the levies were intended, and I so order.

Painting and Stair Nosing Special Levies

80. Ms. Wu’s only argument about disputing the painting and stair nosing special levies is the strata’s past history of combining special levy money. However, the strata’s financial statements show that these 2 special levies were not combined and were each deposited into separate bank accounts. Therefore, I again find there is no valid or legal reason for Ms. Wu to dispute payment of the painting and stair nosing special levies. Accordingly, I find the strata is entitled to release the amount of these 2 special levies funds ($257.25 and $103.75 respectively) into the appropriate special levy accounts to be used for the purposes in which the levies were intended, and I so order.

Architectural Fee Special Levy

81.   On April 19, 2022, the CRT issued a decision indexed as Wu v. The Owners, Strata Plan VR2197, 2022 BCCRT 446. In that decision, the CRT concluded that the architectural special levy was properly approved under SPA section 108 by way of a ¾ vote resolution and the SL3 owners were required to pay it. Based on the decision, Ms. Wu agreed to release her portion of the special levy, $1,625, to the strata from the funds the strata held in trust under SPA section 114. I therefore dismiss this aspect of Ms. Wu’s claim.

Legal Fees Special Levy

82.   I turn now to the strata’s counterclaim for the release of $2,500 for funds it holds in trust for the legal fees approved at the August 15, 2022 SGM. I first note that there is no conflict with Clark Wilson acting directly for the strata and through its insurer as alleged by Ms. Wu.

83.   I have found that the strata properly accounted for the legal fees. The strata says the 2 Clark Wilson invoices related to the special levy noted above are the only invoices, and that it intends to reimburse the surplus special levy funds to the owners in accordance with SPA section 108. Based on my conclusion above, I find Ms. Wu is responsible to pay her proportionate share (1/4) of the $6,856.67 invoiced by Clark Wilson. This equals $1,714.17. Therefore, I order the strata to release $1,714.17 from the funds it holds in trust to its special levy account for legal expenses to pay the Clark Wilson invoices noted above. I also order the strata to release the remaining balance of $785.83 ($2,500.00 - $1,714.17) to Ms. Wu.

84.   In summary, Ms. Wu’s claims for release of her portion of the administrative support cost special levy and architectural special levy are dismissed. She is entitled to receive $785.83 of her disputed payment about legal fees, and I order the strata to release that amount to her. The strata is entitled to keep $2,644.17 from the remaining money it holds in trust for Ms. Wu, broken down for each of the following special levies:

a.    $415.25 for the metal gate levy,

b.    $153.75 for the balcony gate levy,

c.    $257.25 for the painting levy,

d.    $103.75 for the stair nosing levy, and

e.    $1,714.17 for the legal fees levy.

85.   I order the strata to release $2,644.17 from the funds held in trust for Ms. Wu to the respective special levy accounts to be used for the purpose each of the special levies was raised.

CRT FEES AND EXPENSES

86.   Under CRTA section 49 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. In this dispute, neither party was entirely successful so I find they should each bear their own CRT fees.

87.   No party claimed dispute-related expenses so I order none.

88.   Under section 189.4 of the SPA, the strata may not charge any dispute-related expenses against Ms. Wu or Mr. Lu.

DECISION AND ORDERS

89.   I order the strata to:

a.    Immediately stop using CRF funds contrary to the SPA,

b.    Within 90 days of the date of this decision:

                              i.        Return all funds loaned from the CRF before August 31, 2022, if it has not already done so,

                            ii.        Prepare a detailed accounting of the expenditures made for the following special levies, and provide a copy of it to Ms. Wu within 10 days of completion:

1.    $1,000 for “professional services” raised at the August 13, 2020 SGM.

2.    $1,500 for bookkeeping services raised at the February 11, 2021 SGM, and

3.    $900 for “administration” raised at the June 10, 2021 SGM.

c.    Within 90 days of the date of this decision:

                              i.        Prepare a detailed accounting of the SAA account from September 1, 2020 until it was closed, and

                            ii.        Provide a copy of the accounting it prepares to Ms. Wu within 10 days of completion.

d.    Within 30 days of the date of this decision:

                              i.        Release $2,644.17 from the trust account set up for Ms. Wu’s disputed payments to the various special levy accounts as follows:

1.    $415.25 for the metal gate levy,

2.    $153.75 for the balcony gate levy,

3.    $257.25 for the painting levy,

4.    $103.75 for the stair nosing levy, and

5.    $1,714.17 for the legal fees levy.

                            ii.        Pay Ms. Wu $785.83 from the trust account set up for Ms. Wu’s disputed payments for unspent special levy funds for legal fees.

90.   The parties’ remaining claims are dismissed.

91.   Ms Wu is entitled to post-judgement interest under the Court Order Interest Act, as applicable.

92.   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.