Ladysmith, Twinfalls: Leaky condo owners stuck with bills from lawyers ignorant of Strata Council's ability to contract

Citation:

Giroday v. SP VIS 3242

Date:

20030117

 

2003 BCSC 66

Docket:

S30241

Registry:  Nanaimo

IN THE SUPREME COURT OF BRITISH COLUMBIA

BETWEEN:

PATRICK J. GIRODAY

SOLICITOR

AND:

STRATA PLAN VIS 3242

CLIENT

 

 

REASONS FOR DECISION

 

OF

 

MASTER J.W. HORN

AS REGISTRAR

 

 

Patrick J. Giroday Appeared In Person and for Mr. Torrie

 

 

Counsel for Strata Plan VIS 3242:

J.R. Jordan

Date and Place of Hearing:

July 17, 2002, Final Submissions Received November 29, 2002

 

Nanaimo, BC

 

[1]            Two bills were rendered by Patrick J. Giroday Law Corporation dated February 16, 2000, and June 7, 2000, and two bills were rendered by D. Douglas Torrie Law Corporation dated February 14, 2000, and April 27, 2000.  The bills were rendered to Strata Corporation VIS 3242.  The solicitors, Mr. Giroday and Mr. Torrie, are associated in practice and they were retained, if they were retained at all, in respect of one matter only.  Their services were terminated before they had completed the work upon which they were engaged and $1,578.78 of Mr. Giroday’s bill has been paid.  Mr. Giroday’s bills amount to $4,032.50.  Mr. Torrie’s bills amount to $1,247.43. 

[2]            During the hearing, Mr. Torrie acknowledged that $22 ought to be deducted as a disbursement improperly charged.

[3]            The chief issue before me was whether the lawyers were lawfully retained by the Strata Corporation.  If they were not so retained, then the Strata Corporation owes them nothing.  Some argument was addressed to me upon the basis that they had done work for the Corporation which was of value to it and were entitled to be remunerated on a quantum meruit basis.  That may or may not be a good claim in law but it is not a matter which I as a taxing officer have any authority to deal with upon a review under the Legal Profession Act.

[4]            The retainer issue arises out of s.49 of the Condominium Act which reads as follows:

Maximum expenditure by strata council

 

49    Unless otherwise provided by a bylaw added to Part 5, a strata council must not, except in emergencies, authorize, without authorization by a special resolution of the strata corporation, an expenditure of more than $500 which was not set out in the annual budget of the corporation and approved by the owners at a general meeting.

 

[5]            Mr. Sutherland and Mr. Baker were owners of two strata units in Twinfalls Condominium in Ladysmith.  There were twenty-three units, not all of which had been sold.  The owner/developer, a Mr. Lang, through the agency of a company, still owned five of the units.

[6]            By December, 1999, a Strata Council had been formed and Mr. Sutherland and Mr. Baker were respectively Chairperson and Secretary of the Strata Council. 

[7]            By December, 1999, concerns had arisen among the strata owners as to the integrity of the building envelope.  In other words, they feared that they had bought into a “leaky condo.”  They had received, informally and without cost, some opinions from building contractors as to steps that they should take to assure themselves of the integrity of the building envelope and they had been advised to obtain a building envelope assessment from some qualified person.  They had approached a governmental body called the Homeowner Protection Office and had been provided with a condominium-owner’s manual relating to managing major repairs.  They had been advised that if they obtained such assessment they might be in a position to obtain financial assistance from the Homeowner Protection Office.  They were also of the understanding that upon presentation of an assessment showing defects, the municipal assessed value of each of the condominiums might be reduced, resulting in lower taxes to the owners.

[8]            They had other concerns.  They were not able to ascertain whether Mr. Lang had, prior to the formation of the Strata Council, collected or paid Strata fees and if so, whether these fees had been expended upon things which were the responsibility of Mr. Lang rather than of the Strata Plan Corporation and they wanted an accounting.

[9]            On December 2, 1999, Mr. Giroday, who specializes in civil litigation, and Mr. Torrie, who is a solicitor with a practice including real property, met with Mr. Sutherland and Mr. Baker who represented the Strata council.  They were engaged by them to act in respect of all the matters with which the Strata owners were concerned. 

[10]        No written retainer was obtained, but they were informed of the hourly rate at which the two lawyers would be charging their fees.

[11]        Since what was said by Messers. Sutherland and Baker in respect of the services that they were seeking has assumed some importance, in that it is argued that the lawyers were also asked to advise them in regard to the internal management of the Strata Corporation and the Strata Council’s affairs, I shall set out what my notes of evidence say in that regard, with my interpretations in brackets.

[12]        My notes of what Mr. Giroday said in evidence in chief are:

I was asked if there was any problem entering into a contract (i.e. a contract with the consulting engineer).  I advised on form of contract.  I did not advise Sutherland or Baker that they would need a special resolution to contract – wasn’t asked about internal affairs nor to give advice.

 

[13]        My notes as to the relevant questions and answers in cross examination are as follows:

Question:   “Did you ask if they had authority?”

Answer:     “I assumed that they did.”

Question:   “Aware that no expenditure without approval?”

Answer:     “Engaged to give advice.”

Question:   “Could not spend money outside budget?”

Answer:     “They did not ask me anything except the form of the contract.  Aware that quote was $3,900.  Was not aware that such expenditure requires special resolution – not necessarily required – emergency – no special resolution and can use contingency fund.  In hind sight, I wish I had asked.”

Question:   “Emergency measures or in budget?  Did anyone say it was urgent?”

Answer:     “BC Assessment Authority to meet in February or March also Levelton report showed serious problems.” 

Answer:     “My retainer was to help them assess the problems with view to litigation.” 

Answer:     “I understood they had attended a seminar and had a manual.”

Answer:     “I gave no advice as to their duties.”

Answer:     “My firm prepared a borrowing resolution.”

Question:   “No representation?

Answer:     “Yes, they gave us to believe that they had authority.”

Question:   “See s. 49.  If you had read section would you have got a special resolution?”

Answer:     “I don’t know.  They did not ask.”

Question:   “When did you become aware that a borrowing resolution might be required?”

Answer:     “I don’t know.  I don’t know if it was required.  They presented a draft resolution.  They received information from HPO see March 15, 2000, (this was a letter marked Exhibit 7 which advises that the wording of the borrowing resolution should be completed by Mr. Giroday’s office to ensure against any future problems).

            I never advised them to comply with the Condominium Act.”

Question:   “Were you aware that they had to have a special resolution to commence litigation?  Any concern they could not get the votes?”

Answer:     “My involvement was arranging envelope assessment.”

[14]        My notes as to Mr. Torrie’s evidence in chief are as follows:

I did not ask for authority or special resolution to spend more than $500.  I was aware that a resolution was required to spend money out of budget.  Their authority was based on the “indoor management rule” – I did not concern myself with their bylaws.  I proposed a borrowing resolution to vote for “expenses incurred in work done and to be done.”  I knew that they needed resolution to borrow.  I did not concern myself with their budget or bylaws.

 

[15]        My notes of Mr. Baker’s evidence in cross examination are:

I had a copy of the Home Protection Office brochure.  It was distributed to members in November, 1999.  I knew how to approach management of leaky condos – there are references (in the brochure).  I did not know that a special resolution was required to spend money over $500.

 

Question:   Did you go to him (Mr. Giroday) for legal advice.

 

Answer:     He did not ask if we had authority or to obtain a special resolution – as soon as we knew we got a borrowing resolution – we wanted to find out how a developer could be held responsible for deficiencies and failures.

 

[16]        The evidence which I recorded and set out above leads me to the conclusion that

1.    Neither Mr. Giroday nor Mr. Torrie was approached to give advice about the internal management of the strata corporation or the strata council.  They were approached to undertake litigation, if so advised, in respect of the cost of repairs to the condominium and to undertake litigation, if so advised, to obtain an accounting of strata fees owed by the developer. 

2.    Mr. Jordan in his supplementary submissions of September 30, 2002, says in Paragraph 64:  “The council member who gave evidence, unchallenged, was clear that he and the other member were at the lawyers for legal advice on how to proceed and be in compliance with the Act.  Mr. Baker specifically asked for that assurance.  Mr. Giroday said he gave it.”  My notes, though admittedly sketchy, do not indicate that such assurance was requested or given.

[17]        I have only been directed to one authority dealing with the effect of s.49 of the Act upon parties contracting with a Strata Corporation.  It is Can-Pac v. Carriage Management (1990) 49 BCLR (2d) 139 (BCCoCt).  In that case the plaintiff company was engaged in the sale and servicing of a heat-saving device.  The defendant, Carriage Management, was the building manager operating under written contract for the strata owners of an apartment block.  The plaintiff proposed to install an energy management system on a 90-day trial and that proposal was accepted by the property manager who forwarded the proposal to a member of the strata council recommending that it be authorized.  It was unclear whether any such authorisation was given by the council. 

[18]        The court held that the defendant management corporation had actual authority to manage the common property and to perform all acts usually performed by property managers.  To this extent the agreement was binding and created contractual rights between the plaintiff and the strata corporation. 

[19]        As to s.49, the court accepted that there was no authorization by special resolution for an expenditure over $500 and but came to the conclusion that s.49 did not make a contract for such expenditure void and that it was only voidable.  The court observed that this seems to follow from the fact that s.49 itself does not attach any consequence to the failure to obtain such a special resolution. 

[20]        Accordingly, the contract in this case is a valid contract until such time as one of the parties brings it to an end.  It is not entirely clear when that event occurred.

[21]        It is said, however, that knowledge of the fact that a contract for legal service in excess of $500, must be authorized by special resolution and had not been so authorised, must be attributed to the solicitors. 

[22]        It seems to me that what would have to be attributed is the knowledge: 

(a)   That the strata corporation had no bylaw added to Part 5 which exempted the strata council from the provisions of s.49

(b)   That there was no special resolution of the strata corporation authorising the expenditure.

(c)   That the expenditure was not provided for in the annual budget of the corporation approved by the owners at a general meeting. 

[23]        It is not easy to see how the solicitors can be deemed to have knowledge of all these matters.  Perhaps they should have enquired.  But I find that they did not enquire and did not know of any restriction on the Strata Council’s ability to contract with them.

[24]        Ignorance of the law is not an excuse, of course, but I am not aware of any principle laying down that a solicitor is deemed to know all of the law or is to be held to any higher standard of inquisitiveness than a lay person about the authority of a person to contract with him.

[25]        I do not believe that s.49 was intended to prevent tradesmen such as plumbers or electricians, who have done work for a strata council in excess of $500, from being paid, simply because no special resolution has been passed to authorize an expenditure over $500.  The section, it seems to me, is aimed at the internal management of the strata corporation and not at external relations with persons such as plumbers, electricians or solicitors.  One of the consequences, for example, of a breach of s.49 by a strata council is that a strata owner may not be liable to a levy to cover the cost.  (See Re Blunt and Strata Corporation VR 45 (1977) 2BCLR 248(BCSC))

[26]        What happened after the solicitors were engaged is not in question nor is it submitted that they over charged for the work done.  Between the two of them they had several conferences with Messers Sutherland and Baker.  They engaged a suitable person to make a building report.  They delivered the report to the strata council.  They engaged an accountant to prepare an opinion as to whether the strata fees had been collected and, if not, what amount should have been collected.  They drew a resolution to approve borrowing in order to pay for past and future expenditures in and about the assessment of and repairs to the building. 

[27]        On April 15, 2000, there was an annual general meeting of the strata owners and the borrowing resolution was on the agenda, but at the meeting it was decided to adjourn that resolution until the engineering report had been received.  Neither Mr. Sutherland nor Mr. Baker were re-elected to the council.  A further meeting was then held on May 24, 2000, at which the report was considered.

[28]        Mr. Giroday was present at the latter meeting.  The borrowing resolution was not passed by the necessary majority.  The voting was 13 in favour and 10 against and five of the contra votes were cast by the developer, Mr. Lang. 

[29]        After the meeting the issue was raised by some of the strata members whether Mr. Lang was entitled to vote in respect of the units that he still owned in view of the fact that, as developer, he had a conflict of interest.  Subsequently, Mr. Giroday prepared and gave an opinion on that matter.  Though Mr. Giroday was not involved in the subsequent litigation, that issue eventually went to court.  It was held that the votes at the two meetings were valid.

[30]        While it is not easy, on the evidence, to fix the time at which it can be said that the Strata Council terminated the relationship with the solicitors it was, in my opinion, at the meeting of May 24, at which the borrowing resolution was defeated.  Any work done after that was, in my view, unauthorized by the new Strata Council elected on April 15th.

[31]        Dealing with Mr. Giroday’s bill, the entries for May 25, 26, and 30, 2000, are, for this reason, disallowed.  Dealing with Mr. Torrie’s bill, the bill is allowed in full. 

[32]        If counsel, on the basis of this decision, will provide me with a certificate with agreed calculations, then I will sign it.

[33]        I have not taxed off more than one-sixth of either of the bills and unless there is an offer to settle, the solicitors will have their costs on a party and party basis but for one common bill.  Failing agreement, a party and party bill of costs may be presented to me for assessment.

“Master J.W. Horn as Registrar”

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Vancouver, MacGregor Tower & Court: Buyer loses deposit to seller after seller convinced judge seller did not know that MacGregor Tower was leaking and rotting despite million dollars spent repairing leaks and rot at MacGregor Court

Citation:

Xuan Ngo v. Michael Loke

Date:

20030114

2003 BCPC 0004

File No:

2002-73633

 

Registry:

Vancouver

 

 

IN THE PROVINCIAL COURT OF BRITISH COLUMBIA

Small Claims Division

 

BETWEEN:

XUAN NGO

CLAIMANT

 

 

AND:

MICHAEL LOKE

DEFENDANT

 

 

 

 

REASONS FOR JUDGMENT

OF THE

HONOURABLE JUDGE SMYTH

 

 

 

 

 

 

 

 

Appearing in person:

Xuan Ngo

Appearing in person:

Michael Loke

Place of Hearing:

Vancouver, B.C.

Date of Hearing:

25 November 2002

Date of Judgment:

14 January 2003

 

 

[1] In this action the claimant says that the defendant is in breach of contract for failing to complete the purchase and sale of the claimant's condominium. She says that she is entitled to his $5000 deposit. The defendant replies that the deposit should be returned to him. He claims that he was entitled to rescind the contract because the claimant fraudulently misrepresented the condition of the condominium development in which her unit was situated. He says that, in any case, the deposit was meant to be applied to actual damages, and since the claimant sold the condominium to another buyer for more than the defendant had agreed to pay, she suffered none and is not entitled to it.

[2] The parties entered into the contract on 25 January 2002. The purchase price was $153,000 with completion 28 March 2002 and possession 1 April. The defendant deposited $1000 on the vendor's acceptance of his offer and was required to deposit a further $4000 on the satisfaction of several conditions attached to the offer, including these:

Subject to the Seller providing to the Buyer on or before February 8, 2002 and the Buyer approving on or before February 15th/2002 by 10 p.m...
The minutes of any meetings held between the period from Jan/2001 to Dec/2001 by the strata council, and by the members in annual, extraordinary or special general meetings, and by the members or the executive of any section to which the strata lot belongs.
And:
This offer is made on the condition precedent that the Buyer will approve the Property Condition Disclosure Statement on or before 5th February 2002. Such statement will be incorporated into and form a part of this contract. This condition is for the sole benefit of the Buyer.

The conditions were apparently met and the defendant deposited the additional amount.

[3] On 25 March 2002 the claimant was told by her realtor that the defendant would not complete the sale. She heard the same from her notary public on 27 March and on the same day she wrote to the defendant's solicitors telling them that she was "ready and able to complete the sale and purchase contract" and that she would hold the defendant liable for damages if he did not do so.

[4] The property in question was the claimant's tenth-floor apartment in a condominium complex which consisted of the high-rise building in which the claimant's unit was located, MacGregor Tower, and a separate, low-rise townhouse complex called MacGregor Court. In 2001 the developer of the complex spent more than $1 million on repairs to MacGregor Court to correct problems with water entry. As far as the evidence discloses the repairs were successful. Later, however, evidence that water was entering three of the more than 200 units in MacGregor Tower appeared. This problem was being investigated by professional engineers and the strata corporation's property managers at least as early as April, 2001 and had not been solved when the claimant completed the property-condition disclosure statement on 26 August 2001 or at the completion date.

[5] The disclosure statement contains the following questions and the claimant's answers under the heading "Structural:"

E. Are you aware of any damage due to wind, fire or water? No.
G. Are you aware of any leakage or unrepaired damage? No.

[6] In the submission of the defendant, these were dishonest answers. He contends that the past water-entry problem in McGregor Court and the current problem in McGregor Tower required that the claimant answer affirmatively.

[7] As to the claimant's non-disclosure of the MacGregor Court water damage, in my view the point was decided against the defendant by Chamberlist, J. in Alan Best v. Alain Lavoie and Nicole Lavoie (Unreported, 1999, Prince George Registry No. 00710) and Boyle, J. in Arsenault v. Pedersen (Unreported, 26 April 1996, New Westminster Registry No. SO21575). The questions in the disclosure statement that the defendant says were dishonestly answered were addressed to the state of things as of the date of the statement, and as of that date the claimant's answers were correct.  

[8] The minutes that the defendant asked for included the minutes of a special general meeting held 1 November 2001 which recorded the approval of a resolution that the strata corporation execute certain documents, referred to as "the Agreement and the Release." The minutes contained no other details about these documents, but the notice of the meeting, which had been issued 5 October 2001, included copies of letters from lawyers which showed that "the Agreement and the Release" had to do with remedial work concerning what was described in one of the letters as "MacGregor Court Water Ingress Issues." The defendant says that he should have received the notice as well as the minutes. I do not agree. He had specifically asked for minutes and that is what he got. While the minutes of the 1 November meeting did not give the background to the agreement and the release, they brought them to the defendant's attention and included the text of the resolution. He was free to ask for more information. It has not been shown that the 5 October 2001 notice was withheld from the defendant for a dishonest purpose.

[9] What of the claimant's failure to disclose that a problem with the entry of water had been found in MacGregor Tower? She testified that she did not disclose the problem because she did not know of it. Her evidence is supported by the evidence of Mr. Jim Allison of the firm of property managers responsible for the complex. Mr. Allison testified that it was not until the annual general meeting of 14 March 2002 that owners first became aware of the problem. Those who, like the claimant, did not attend the meeting would not necessarily have learned of the problem until the minutes of the meeting were distributed in mid-April. I accept the claimant's evidence. I am satisfied that she was truthful in her answers on the disclosure statement.

[10] The contractual provision governing the deposit is this:

Time will be of the essence hereof, and unless the balance of the cash payment is paid and such formal agreement to pay the balance as may be necessary is entered into on or before the Completion Date, the Seller may, at the Seller's option, terminate this Contract, and, in such event, the amount paid by the Buyer will be absolutely forfeited to the Seller in accordance with the Real Estate Act, on account of damages, without prejudice to the Seller's other remedies.

[11] The defendant submits that the claimant suffered no actual damages because she sold the condominium for $7000 more than the defendant had agreed to pay and so the deposit should be returned to him. This point arose in similar circumstances in Williamson Pacific Developments Inc. v. Johns et al. [1997] B.C.J. No. 1109. In that case a sale of real property had collapsed and the seller later sold the property for considerably more than under the failed contract, but was nevertheless held at trial to be entitled to keep the purchaser's deposit. The contract had a term governing forfeiture of the deposit identical to the one in the present contract. The appellant argued before the British Columbia Court of Appeal that the words "on account of damages" imply that the seller must sustain actual damages against which the deposit might be applied, and so displace the common-law rule that a true deposit becomes the property of the seller where the contract fails owing to the buyer's default, even if the seller resells the property at a higher price. Rowles, J.A. delivered the reasons of the Court. She said this at para 14:

In view of the express stipulation that the deposit was non-refundable, I think the use of the words "on account of damages", found in clause 2(c), cannot have been intended by the contracting parties to mean that if the vendor incurred no damages, the deposit would be returned to the defaulting purchaser.  Use of the words "absolutely forfeited" in clause 2(c), in relation to the deposit paid by the purchaser, is consistent with the deposit being non-refundable, regardless of whether there were damages. [My emphasis.]

[12] Williamson Pacific differs from this case in that the contract there described the deposit as "non-refundable." The present contract does not do so, but it does use the words "absolutely forfeited," found by Rowles, J.A. to be consistent with the intention that the deposit be non-refundable. I conclude that, as in Williamson Pacific, the parties did not displace the common-law rule. It was the sense of their agreement that the deposit be a guarantee of the defendant's performance, to be forfeited to the claimant in case of his default and irrespective of whether the claimant suffered damages in the amount of the deposit or any damages at all.

[13] I conclude, then, that the defendant has not discharged the heavy onus on him of showing that the claimant behaved fraudulently. He was not entitled to rescind the contract. The defendant's $5000 is forfeited to the claimant. There will be judgment accordingly. The claimant is entitled to filing and services fees and such other expenses as the registrar approves.

 

 

_________________________________

D.I. Smyth, P.C.J.

VR 1280: Court orders leaky condo owners suing Oberto Oberti to produce evidence of special resolution and written consents

Citation:

Strata Plan VR 1280 v.

Oberti Architecture et al

Date:

20030110

 

2003 BCSC 112

Docket:

S001082

Registry:  Vancouver

IN THE SUPREME COURT OF BRITISH COLUMBIA

Oral Reasons for Judgment

The Honourable Mr. Justice Henderson

January 10, 2003

 

BETWEEN:

THE OWNERS, STRATA PLAN VR 1280

PLAINTIFF

AND:

 

OBERTO OBERTI ARCHITECTURE AND URBAN DESIGN INC.

OBERTO OBERTI, DEF CO. LTD., and XYZ CO. LTD.

#1 THROUGH XYZ CO. LTD. #10

 

DEFENDANTS

 

 

Counsel for the Plaintiff:

B.D. Gleig

Counsel for the Defendants:

Oberto Oberti Architecture and Urban Design Inc. and Oberto Oberti

 

C.E. Hirst

No other appearances

 

 

 

[1]            THE COURT:  The defendants ask for production of certain documents which are said to be relevant to the capacity or authority of the plaintiff to bring the action and a stay of proceedings pending production of those documents.  The plaintiff is described as “The Owners, Strata Plan VR 1280”.  This is what has come to be called a “leaky condo” case.

[2]            The endorsement on the writ of summons recites that the strata corporation is bringing the action on its own behalf and on behalf of the owners.  It goes on to refer to a claim for damage suffered by the strata lots, the common property, the common facilities, and the other assets of the strata corporation.

[3]            The statement of claim is long and detailed.  It sets out a number of claims for compensation caused by damage to the common property.  It also makes certain claims which are clearly advanced on behalf of individual owners.  For example, paragraph 15(f) of the statement of claim asks for damages for diminution in value of strata lots.  Paragraph 15(g) asks for damages for the loss of use and enjoyment of strata lots.  Those are claims which, in the absence of special provision made by legislation (to which I will refer in a minute), could be advanced only by the individual owners.  No individual owners are named as plaintiffs.

[4]            It is my view, therefore, that Mr. Gleig’s first argument in opposition to disclosure must fail.  He argued that, when the endorsement and statement of claim are read reasonably and as a whole, they advance no more than a claim for damages by the strata corporation itself with respect to damage caused to the common property.  The plain language of the writ and statement of claim demonstrate otherwise.

[5]            There are two Acts bearing on the capacity in law of a strata corporation to commence civil action. 

[6]            The Condominium Act addresses the topic in s. 15.  Section 15(1) provides that:

A strata corporation may, as representative of the owners of the strata lots included in the strata plan, bring proceedings for damages and costs for any damage or injury to the common property, common facilities and the assets of the strata corporation caused by any person.

 

Section 15(7)(a) provides that:

A strata corporation may sue, on its own behalf and on behalf of an owner, about matters affecting the common property, common facilities and other assets of the strata corporation.

 

[7]            Those provisions are clearly limited to a claim for damages arising from damage to the common property.  They permit the strata corporation to act as a representative of the owners as a whole.  They would permit the strata corporation to bring the present claim, insofar as it is a claim for damages arising from damage to the common property, but they say nothing about the right of the strata corporation to step into the shoes of an individual unit holder and advance a claim which is personal to that unit holder.

[8]            Section 15(7)(b) of the Condominium Act goes further.  It permits a strata corporation to sue:

...on behalf of those owners who consent in writing to the strata corporation so doing, about matters affecting individual strata lots... 

 

The first requirement, as the section indicates, is that the individual owner, who enjoys the right of action concerning his or her individual strata lot, must consent in writing prior to the commencement of the action. 

[9]            The section contains another stipulation.  The action must be “authorized by special resolution of the strata corporation.” 

[10]        In my view, those are necessary preconditions to the advancement of any claim made on behalf of an individual owner.  That is so whether or not the claim is coupled with a claim by the strata corporation relating to the common property.

[11]        The second statute bearing on the question is the Strata Property Act.  In ss. 171 and 172, that Act provides for a right of action in terms which are very similar (but not identical) to the Condominium Act.

[12]        It follows from what I have said that this plaintiff has no capacity or authority to advance some of the claims it makes unless, at the time the writ was filed, there was in existence a special resolution of the strata corporation; and unless there was a consent in writing from each of the individual owners whose units are the subject of the claim or claims.

[13]        The question, then, is whether the plaintiff has a legal obligation to disclose evidence of the special resolution and copies of the written consents. 

[14]        The plaintiff argues that such documents are privileged.  It says they were created for the dominant purpose of this litigation and are not discoverable. 

[15]        In my view, that submission misconceives the nature of the documents.  The special resolution of the strata council and the written consents of the owners come into existence for the very purpose of authorizing the action to begin.  They are evidence of the strata corporation’s exceptional right to sue on behalf of someone else, that is to say, the owners.  That evidence must be available to any who would question the right or capacity of the strata corporation to sue.  It was created for that very purpose.  It is true that the documents were created for the purpose of this litigation, but there was never at any time a reasonable expectation on anyone’s part that the documents would remain private or confidential.  I find that the concept of privilege has no application to such documents.

[16]        Traditionally, courts have accepted without question the proposition that a plaintiff who brings an action has the capacity or authority to bring it.  However, when that authority or capacity is called into question, the courts have never been slow to require the production of evidence to justify the claimed authority or capacity.

[17]        I make no criticism of this plaintiff for failing to disclose the special resolution or the written consents in the first instance.  Now that the defendant has placed the matter in issue, those documents must be disclosed.  It is particularly important that the defendants know which of the unit holders has consented to this action being brought on his or her behalf and which have not, so that the defendants may appreciate the scope of the liability to which they are exposed.

[18]        In argument, counsel suggested that the plaintiff might prefer to amend the statement of claim so as to remove any claim for damages on behalf of an individual unit holder rather than make the requested disclosure.  I think the plaintiff should be permitted that option. 

[19]        My order is as follows. The plaintiff is to produce evidence of the special resolution and copies of the written consents within 21 days or, in the alternative, the plaintiff is to amend its statement of claim so as to remove the individual claims of the unit holders within 21 days. 

(DISCUSSION BETWEEN THE COURT AND COUNSEL)

 

[20]        THE COURT:  The application was somewhat unusual.  It is not what I would call routine disclosure.  I will leave costs in the cause.

“A.G. Henderson, J.”
The Honourable Mr. Justice A.G. Henderson