Case Studies, Pendrell Place: Tim Dudra expresses concern about the Strata Council

May 4th, 2001

To: Strata Council Members for Strata VR 1008 (the "Strata Property")

Since I was elected as a council member on March 19th, 2001 I have been made aware of a number of matters concerning the management of the Strata Property and I am concerned with how the current council is dealing with the issues. My concerns are itemized below:

General Management Issues

1. On the issue of council meetings, recent attempts to hold council meetings have resulted in either cancellation or have been poorly attended (as indicated in the minutes of the April 30th, 2001 meeting). There has been no official notification made regarding resignations from council by council members nor has there been a notice of dissolution of the council. The British Columbia Strata Property Act (the "Act") has no rules allowing dissolution of an existing council (see Part 4 - Strata Corporation Governance). In spite of this, it appears that, for all intents and purposes, the council no longers exists in any functional manner.

2. Ascent Management has not made the receipts belonging to the strata corporation available to all owners and council members. Irene Dudra (an executive of the corporation tht owns unit 502) has requested an accounting of the receipts for this strata lot and her request has been refused by Ascent Management. Lynne Doupe Gonzalez has also informed me that her attempts to gain access to the corporation's financial records have been refused. Section 38 of the Act imposes an obligation on the strata council to provide copies of documents to owners upon request.

3. The council has been informed that Ascent Management will be withdrawing their services from the Strata Property within two months. It was agreed in the council meeting of April 10th, 2001 that we would need to interview new management companies. Interviews with two candidate companies were apparently planned and organized but then cancelled on April 25th, 2001, the night they were to occur.

4. Four council members are currently involved in a law suit concerning the Strata Property.

5. Ascent Management has been asked to hold a general meeting by the President of the Council. As yet, the agenda for this meeting has not been discussed in council meetings or even been distributed to current council members.

Financial Issues

6. As discussed by council members on April 10th, 2001 the strata corporation was billed for work performed on the deck of suite 102 but it appears that the work was not performed. Council members, including myself, have suggested that this matter be investigated thoroughly. No action has been taken by council to address this issue.

7. An audit of the past three years financial statements as requested by Richard Oldaker at the latest general meeting and has also been requested by current council members Tim Dudra, Lynne Doupe Gonzalez and Chris Monk, but has not been acted upon to my knowledge.

8. As mentioned at the annual general meeting of March 19th, 2001, approximately $100,000 in proceeds raised by special resolution were not allocated as required by the resolution of April 12th, 1999. The resolution states that $38,000 of the special levy was "to replenish the contingency reserve fund." As stated in the minutes for the 2001 general meeting, the $38,000 "did not make it into the CRF and was used for daily operations and expenses." Sections 95, 96 and 98 of the Act detail how the contingency reserve fund can be used; the Act does not allow for the CRF to be used for daily operations and expenses. Section 108 of the Act states that "The strata corporation must use the money collected for the purpose set out in the resolution..." and "If the amount collected...is not fully used for the purpose set out in the resolution, the strata corporation must return the money to the owners..." I am concerned that the council has not prusued any action to determine if the redirection of this money was a breach of the Act and, if so, what action we must take to rectify this situation.

9. Allegations have been brought to my attention that previous councils hav not used a competitive bid process when deciding upon contractors to perform repairs and/or restorations upon the common property. There is no record in the minutes of previous councils of competitive bids being solicited for the work done by "The Maintenance Company" on the decks of Suites 102, 104 and 105. Why was this company selected? Were other bids solicited? If not, why not? I believe as council it is our obligation to thoroughly investigate these issues.

I do not have enough knowledge to say whether any or all of the allegations and matters brought to my attention are true, however, I am most concerned that if the council fails to properly investigate the allegations of financial irregularities it may be in breach of the duty of care to the owners of the Strata Property as outlined in Section 31 of the Act.

To address the situations mentioned above I would like the council to do the following:

1. Council must produce and/or locate all financial documents and records for the current and past three years.

2. Hire an independent auditor to review the strata corporation's books for the past three years.

3. Provide, in this year's budget, an auditor for the current year.

4. Seek repayment of any monies improperly spent if investigation of our financial records reveals this to be the case.

5. Those council members involved in the aforementioned litigation must either resign from council or at least excuse themselves from council meetings during discussions or votes concerning the law suit.

6. Resume regular council meetings to enable us to fulfill our obligatons as council members as specified in Section 31 of the Strata Property Act.

I have contacted my own legal counsel about these matters and, if the above points are not dealt with in a timely manner ten I may be forced to resign from council and pursue remedies to have these matters dealt with appropriately.

Sincerely,

Tim Dudra