Date Issued: October 5, 2023
File: ST-2022-008619
Type: Strata
Civil Resolution Tribunal
Indexed as: Eustace v. The Owners, Strata Plan EPS7085, 2023 BCCRT 844
Between:
Applicant
And:
The Owners, Strata Plan EPS7085
Respondent
REASONS FOR DECISION |
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Tribunal Member: |
Kate Campbell |
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INTRODUCTION
1. This dispute is about short term accommodations (STAs) in a strata corporation.
2. The applicant, Dominique Eustace, owns strata lot 2 (SL2) in the respondent strata corporation, The Owners, Strata Plan EPS7085 (strata).
3. Dr. Eustace is self-represented in this dispute. The strata is represented by a strata council member.
4. Dr. Eustace says the strata has refused to provide her with a letter confirming that she may use SL2 for STAs. She says she requires this letter to obtain a municipal license for STAs. Dr. Eustace says she is entitled to the letter because the Rental Disclosure Statement (Form J) provided by the owner developer at the time of purchase allows her to rent out SL2.
5. As remedy for her claim, Dr. Eustace requests an order that the strata sign a provided letter confirming that STAs are permitted in SL2. The dispute application indicates a value of $6,000 for this claim, but in written submissions Dr. Eustace confirmed she does not seek any monetary award.
6. The strata says STAs are prohibited under strata bylaws, so Dr. Eustace is not entitled to the requested letter.
7. For the reasons set out below, I dismiss Dr. Eustace’s claim.
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 which 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.
ISSUE
12. Must the strata provide Dr. Eustace with a letter confirming that she may use SL2 for STAs?
BACKGROUND AND EVIDENCE
13. In a civil claim like this one, Dr. Eustace, as applicant, must prove her claims on a balance of probabilities (meaning “more likely than not”). I have reviewed all the parties' evidence and submissions, but below I only refer to what is necessary to explain my decision.
14. Documents in evidence show that the strata was created in October 2020. The owner developer did not file amended bylaws when the strata was created, so the Strata Property Act (SPA) Standard Bylaws apply: see SPA section 120(2). In December 2022, the strata filed a bylaw amendment adding bylaw 3(5). Bylaw 3(5) prohibits rentals, leases, and licenses to occupy for any period less than 1 month. I discuss this bylaw further in my reasons below.
15. Dr. Eustace purchased SL2 on September 2, 2022. On September 6, 2022, Dr. Eustace wrote to the strata, stating that she planned to use SL2 as a “short term rental” when she was not living in it. On September 8, 2022, the City of Vancouver (City) sent Dr. Eustace a letter stating that in order to obtain an STA license, she needed to provide certain documents, including an authorization for STAs from the strata.
16. Dr. Eustace requested an authorization letter, and the strata manager said the strata council must decide whether to provide it. After several email exchanges with the strata manager, and some delays by the strata, Dr. Eustace was granted a hearing with the strata council to present her position on November 4, 2022.
17. The council’s decision is set out in a November 4, 2022 letter from the strata manager. The letter says the council did not approve Dr. Eustace’s request for STA authorization. The letter said STAs can have a “significant impact” in a strata, and no councillor made a motion to grant the authorization. The letter said that since the strata would not issue an approval letter, the City would not issue a business license, so “short term rentals are not permitted at this property”.
18. On December 16, 2022, the strata held a special general meeting (SGM) to vote on a ¾ vote resolution to amend the strata’s bylaws by adding bylaw 3(5). Bylaw 3(5) states as follows (emphasis in original):
Rental: No person may rent out, lease, sublease, license, sublicense or otherwise grant any occupancy rights to any strata lot in exchange for consideration of any kind for any period of less than one full month.
19. The SGM minutes show that the resolution passed. Bylaw 3(5) took effect when it was filed in the Land Title Office (LTO) on December 19, 2022: see SPA section 120(1).
REASONS AND ANALYSIS
20. Dr. Eustace does not dispute the validity of bylaw 3(5). Essentially, Dr. Eustace has 2 arguments. First, she says the Form J issued by the owner developer exempts her from bylaw 3(5). Second, she says the strata’s decision to refuse to provide the STA approval letter was significantly unfair. I will address these 2 arguments in turn.
Form J
21. Dr. Eustace says that when she bought SL2, the owner developer provided her with a Form J rental disclosure statement which guarantees that SL2 may be rented out.
22. Dr. Eustace did not provide a copy of the Form J, but since the strata’s correspondence refers to it, I accept that it exists and permits rentals. However, a Form J cannot permit STAs. I explain the reasons for this below.
23. Until November 24, 2022, strata corporations could restrict or prohibit residential rentals. However, under SPA section 143, an owner developer could issue a Form J rental disclosure statement. A Form J permitted a strata lot owner to rent out the strata lot despite any rental restriction bylaw.
24. On November 24, 2022, the government amended the SPA to repeal various sections, including sections 142 to 144. This change removed the ability for a strata corporation to restrict residential rentals.
25. However, as discussed in various court and CRT decisions, rentals are legally distinct from STAs such as AirBnB and VRBO: see Highstreet Accommodations Ltd. V. The Owners, Strata Plan BCS2478, 2017 BCSC 1039 affirmed 2019 BCCA 64. STAs are legally considered “licenses to occupy”, rather than rentals. The ability for a strata corporation to restrict STAs continued after November 24, 2022, since STAs are not rentals. This is discussed in Hamian v. The Owners, Strata Plan NW 92, 2023 BCCRT 814. That case is not binding on me, but I find it persuasive and rely on it.
26. Since a Form J rental disclosure statement only applies to rentals and not STAs, I find the Form J does not permit Dr. Eustace to offer SL2 for STAs, and does not exempt her from bylaw 3(5).
Significant Unfairness
27. CRTA section 123(2) says the CRT may make orders remedying a strata corporation's significantly unfair acts or decisions. The court has the same authority under section 164 of the SPA, and the same legal test applies. See Dolnik v. The Owners, Strata Plan LMS 1350, 2023 BCSC 113.
28. In Dollan v. The Owners, Strata Plan BCS 1589, 2012 BCCA 44, the BC Court of Appeal established a reasonable expectations test, restated in The Owners, Strata Plan BCS 1721 v. Watson, 2018 BCSC 164 at paragraph 28 as follows:
a. What was the owner’s expectation?
b. Was that expectation objectively reasonable?
c. If so, was that expectation violated by an action that was significantly unfair?
29. In Kunzler v. The Owners, Strata Plan EPS 1433, 2021 BCCA 173, the court confirmed that significantly unfair actions or decisions are those that are burdensome, harsh, wrongful, lacking in probity or fair dealing, done in bad faith, unjust, or inequitable.
30. Dr. Eustance expected that since there was no bylaw prohibiting STAs in fall 2022, the strata would issue the approval letter she requested to support her City business license. She says that since she requested the STA approval letter from the strata before bylaw 3(5) was proposed or approved, SL2 should be exempt from it, and the strata should permit her to use SL2 for STAs.
31. Dr. Eustace says she bought SL2 with the intention of using it for STAs, since she would only be living in Vancouver part time. This is confirmed in correspondence with her realtor. Dr. Eustace also says that in September 2022, the strata manager initially told her she could offer SL2 for STAs, and she did so with full transparency to the strata and her neighbours.
32. Instead of granting the requested approval letter in September 2022, the strata held the December 2022 SGM and allowed owners to vote on proposed bylaw 3(5). The correspondence in evidence shows that some council members were concerned about security, safety, garbage, and parking issues related to STAs.
33. Applying the Dollan test, I find Dr. Eustace’s expectation that the strata would issue an approval letter was objectively reasonable, since there was no bylaw restricting STAs. However, I find the strata’s decision to hold a vote rather than issue the letter was not significantly unfair. The outcome was not favourable to Dr. Eustace, and I accept that there is a financial consequence to her. However, several court decisions have emphasized that strata corporations are governed by the strata lot owners, based on democratic principles. See for example The Owners, Strata Plan LMS 1537 v. Alvarez, 2003 BCSC 1085, at para. 35 and Oakley v. Strata Plan V1S1098, 2003 BCSC 1700, at para. 16.
34. This principle of democratic governance was explained in Oldaker v. The Owners, Strata Plan VR 1008, 2010 BCSC 776 at paras. 39-40:
...for better or worse the majority of owners make the rules. For better or worse the minority of owners are to abide by those rules. ...
Not remarkably the views of disparate groups within a strata corporation are often strongly held. The force of these convictions can lead to internal friction, to competing camps within the strata corporation and to paralysis of the corporation. The ongoing efficacy of the strata corporation requires that the views of the majority be respected.
35. Based on this reasoning, a strata lot owner may be bound by democratically-made decisions, even if those decisions affect them negatively.
36. The evidence shows that when Dr. Eustace requested her STA approval letter, the strata was relatively new. The first strata council was elected in December 2021. The strata had not previously considered whether to permit STAs. Although the outcome was not favourable to Dr. Eustace, I find it was reasonable in the circumstances, and consistent with democratic governance, to hold an ownership vote on the issue. There was some delay in replying to some of Dr. Eustace’s correspondence, but overall I find the vote was held within a reasonably short time, given the SGM notice requirements.
37. I also note that even if the strata had provided the approval letter as requested in September 2022, that approval would have become void when bylaw 3(5) came into force in December 2022. While the SPA allows retroactive exemptions for some types of bylaws, such as those about pets and age restrictions, there is no such retroactive exemption possible for STA bylaws. So, I find Dr. Eustace’s expectation that she would be exempted from bylaw 3(5) was not objectively reasonable. Dr. Eustace is bound by the outcome of the SGM vote. There is no provision in the SPA to exempt her from bylaw 3(5). Even though there was no STA prohibition bylaw when Dr. Eustace bought SL2, there is nothing in the SPA that prevented the strata from approving bylaw 3(5) in December 2022.
38. So, I find it was not significantly unfair for the strata to refuse to provide an STA approval letter.
39. For these reasons, I dismiss Dr. Eustace’s claim.
CRT FEES AND EXPENSES
40. 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. The strata is the successful party. It paid no CRT fees and claims no dispute-related expenses, so I award no reimbursement.
41. The strata must comply with section 189.4 of the SPA, which includes not charging dispute-related expenses against Dr. Eustace.
ORDER
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Kate Campbell, Tribunal Member |
42. I dismiss Dr. Eustace’s claim and this dispute.