Place LeBleu (Coquitlam): Judge finds conflict of interest; orders building envelope condition report

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Richardson et al. v. The Owners, Strata Plan LMS2435 and Gooch et al. v. E.M.F. Holdings Ltd. et al.,

 

2005 BCSC 636

Date: 20050428
Docket: L041997
Registry: Vancouver

Between:

Barbara Lynn Richardson and Gordon Gooch

Petitioners

And

The Owners, Strata Plan LMS2435

Respondent

 

- and -

 

Docket: H970963
Registry: Vancouver

Between:

Gordon Frederick William Gooch and
Barbara Lynn Richardson

Petitioners

And

E.M.F. Holdings Ltd., Francisco Manuel Martin Pereira and
Citizens Bank of Canada

Respondents


Before: The Honourable Mr. Justice E.R.A. Edwards

Reasons for Judgment

Counsel for the Petitioners

G. F. Gregory

Counsel for the Respondent:  The Owners, Strata Plan LMS2435

J. A. Bleay

Date and Place of Trial/Hearing:

April 25, 2005

 

Vancouver, B.C.

[1]                Two competing motions were heard together.

[2]                In the first, the Owners of Strata Plan LMS 2435 (“the Owners”) apply for an order for conduct of the sale of Strata Lot 2 of Strata Plan LMS2435, in a foreclosure proceeding, to recover approximately $35,000 in strata fees unpaid by E.M.F Holdings Ltd. (“EMF”), the bankrupt registered owner of Strata Lot 2.

[3]                In the second, Barbara Richardson and Gordon Gooch, mortgagees whose interest is registered against EMF’s title (“the Mortgagees”), petition for an order appointing Mr. Gooch, or someone else the Court deems appropriate, administrator of the Strata Corporation, for the purpose of hiring consultants to “find the source of all the building envelope leaks and sewage pipe leaks” which affect Strata Lot 2 and to hire contractors to effect repairs to the common property necessary to fix any leaks identified by the consultants.

[4]                The Mortgagees also seek a declaration that the Strata Corporation make a special assessment “to fund the administrator to complete the tasks” just described, and claim damages, and the right to set off unpaid fees against these damages.

[5]                The Mortgagees’ position is that the Owners of the 28 residential strata lots have acted to preclude the Strata Corporation from meeting its obligation to effect necessary repairs to the common property to prevent leaks into Strata Lot 2, which is a commercial premises leased to a video store and a grocery.

[6]                The Mortgagees assert that if the Owners are allowed to sell the property before the repairs are made the value of Strata Lot 2 will be reduced and the Mortgagees will suffer the loss.

[7]                EMF, the developer of the property, was insolvent when the building was completed in 1996.  EMF retained ownership of Strata Lot 2.  The Mortgagees lent EMF money secured by their mortgage.  EMF never paid its strata fees of about $1,000 per month, some 10% of the total assessments for the building.

[8]                The Mortgagees twice paid EMF’s arrears of strata fees and several months’ fees in advance.  Their counsel argued this amounted to consideration for two contracts under the terms of which the Owners agreed to fix leaks affecting Strata Lot 2.

[9]                If there were such contracts the Mortgagees may recover damages in an action for breach of contract.  I express no opinion on merits of such a claim.

[10]            The existence or otherwise of such contracts does not bear on the statutory power of the Court to appoint an administrator under s. 174(2) of the Strata Property Act S.B.C. 1998, c. 43 (“the Act”) “if, in the court’s opinion, the appointment is in the best interests of the strata corporation”.  Under s. 174(3)(c) of the Act, the Court may “order that the administrator exercise or perform some or all of the powers and duties of the strata corporation.”

[11]            The leading case on the appointment of an administrator to act on behalf of a strata corporation, cited by both counsel, is Lum v. Strata Plan VR519 2001 BCSC 493, in which Harvey J. set out at paragraphs 11 and 12 factors to be considered in exercising the Court’s powers under s. 174 of the Act.

[11]      In my view after reviewing the authority available, bearing upon this question, factors to be considered in exercising the Court's discretion whether the appointment of an administrator is in the best interests of the strata corporation include:

(a)        whether there has been established a demonstrated inability to manage the strata corporation,

(b)        whether there has been demonstrated substantial misconduct or mismanagement or both in relation to affairs of the strata corporation,

(c)        whether the appointment of an administrator is necessary to bring order to the affairs of the strata corporation,

(d)        where there is a struggle within the strata corporation among competing groups such as to impede or prevent proper governance of the strata corporation,

(e)        where only the appointment of an administrator has any reasonable prospect of bringing to order the affairs of the strata corporation.

In addition, there is always to be considered the problem presented by the costs of involvement of an administrator.

[12]      I also take into consideration the comments of Huddart, J. in Cook, supra, that the democratic government of the strata community should not be overridden by the Court except where absolutely necessary.

[12]            The key factual issue which the several affidavits filed by the parties address is whether the Strata Corporation has responded reasonably to the many complaints of leaks affecting Strata Lot 2 made by the Mortgagees.

[13]            It is clear from these affidavits the parties are far apart on the extent of the problems which are detailed in those complaints and the solutions appropriate to address such complaints as may be well founded.

[14]            In Wright v. The Owners Strata Plan # 205 (February 15, 1996) Victoria Registry No. 4165/93, Drake J. at paragraph 30, referring to the statutory duty of strata owners to repair and maintain their building, stated:

The defendants are not insurers.  Their business, through the Strata Council, is to do all that can reasonably be done in the way of carrying out their statutory duty:  and therein lies the test to be applied to their actions.  [emphasis added]

[15]            In the present case, the Owners obtained a property inspection report in September 2004, from Best Choice Property Inspection Ltd. (“BCPI”), a member of the British Columbia Institute of Property Inspectors.  The report includes the following “Component Rating System”:

‘A’ =  May not be perfect but is functional – Consider the age of the building.

‘B’ =  Note of the presence of this item – Minor &/or possible attention may be required.

‘C’ =  Significant concern with this component/system – Major &/or probable attention will be required.

‘D’ =  Critical (immediate) intervention is required.

Investigation techniques are used to qualify and document the findings of the inspection and are based on the Possibility of risk being 50% or less and the Probability of the risk being higher than 50%.  The written report is in addition to a detailed, verbal commentary that has been given and/or offered.

[16]            Of the 28 components rated in the report, none received a “D” rating, two received an “A” rating, five received a “C” rating and the other 21 received a “B” rating.

[17]            The BCPI report does not estimate the cost of any repairs.

[18]            The competing affidavits of Mr. Gooch, Mr. Pereira and Ms. Manaquil filed by the Mortgagees, and Mr. O’Hearn filed by the Owners, indicate strong disagreement over the extent to which problems associated with components given “B” and “C” ratings in the BCPI report are significant or have been satisfactorily rectified.

[19]            On the basis for my assessment of these affidavits, I am not persuaded that the Owners through the Strata Corporation have “done all that can reasonably be done to in the way of carrying out their statutory duty”.

[20]            That duty is imposed by s.72 of the Act which provides:

72(1)    Subject to subsection (2), the strata corporation must repair and maintain common property and common assets.

[21]            Before 2000, the predecessor section 34(1) of the Condominium Act RSBC 1996, c. 65 (repealed) imposed a similar duty:

34(1)    A strata corporation must do all of the following:

(d)        keep in a state of good and serviceable repair and properly maintain common property, common facilities and assets of the strata corporation;

[22]            Failure by the Strata Corporation to meet these statutory duties exposes the Owners to potential litigation and an award of damages for failing to effectively address the problems identified in the BCPI report and any other building repair issues of which they were or are aware.

[23]            Obtaining the BCPI report was an appropriate but not a sufficient response to the Mortgagees’ complaints.  Once alerted there were problems rated “B” and “C” by the BCPI report, the Owners had a duty to do all that was reasonable to address them.

[24]            The next appropriate step was to obtain a professional assessment by recognized engineering experts of the extent and cost of the necessary repairs and to effect any such repairs either from the contingency fund or by special assessment.

[25]            The fact the residential strata lots are unaffected by the problems disclosed in the BCPI report may explain, but does not excuse, any disinclination of the Strata Corporation to expend funds to deal appropriately with the problems identified in the BCPI report.

[26]            The Owners have a lien against the title to Strata Lot 2 which gives priority to their claim for strata fees above even the unpaid municipal taxes.  Any reluctance they may have to do their duty cannot be based on a risk that those fees will ultimately go uncollected.

[27]            On the other hand, as their counsel pointed out, the Strata Corporation and the Owners are not going to go away and will remain vulnerable to a claim for damages for failing to do their duty.

[28]            I accept that the Mortgagees are vulnerable to a loss if the Owners are granted conduct of sale and sell the property at a price reduced by their own failure to do their duty.

[29]            I therefore adjourn the Owners’ application for conduct of sale, with liberty to reapply if the Mortgagees do not meet the condition specified below.

[30]            I find it is not in the best interests of the Strata Corporation or the Owners to be exposed to a continuing claim for damages for failure to meet the statutory duty to repair.

[31]            I find that a conflict of interest between the majority of owners of residential strata lots, whose lots are unaffected by leaks and the Mortgagees whose interest in the commercial Strata Lot 2 is affected by leaks, has resulted in a “struggle” between two “groups” akin to that noted in para. 11(d) of the reasons of Harvey J. in Lum, cited above.

[32]            I am mindful of the consideration that “the democratic government of the strata community should not be overridden by the Court unless it is absolutely necessary.”

[33]            I am also mindful that this is a relatively small Strata Corporation and the Owners are entitled to keep expenses to a minimum.

[34]            I am disinclined to appoint Mr. Gooch as the administrator of the Strata Corporation, even for limited purposes, because he will be perceived by the Owners as someone preoccupied with his own, rather than the Strata Corporation’s interests.

[35]            I am disinclined to impose the expense of an administrator on the Strata Corporation for the limited purpose for which an administrator is immediately required, namely to engage an expert consultant to investigate the Mortgagees’ complaints and report on, and estimate the cost of, any necessary repairs.

[36]            I direct that the Mortgagees pay their outstanding strata fees and subsequent monthly assessments into the trust account of Mr. Bleay, the Owners’ lawyer.  If the Mortgagees fail to do so, the Owners may renew their application for an order for conduct of sale of Strata Lot 2.

[37]            I direct that the expense of engaging an expert consultant for the purpose set out above be paid from the funds deposited in Mr. Bleay’s trust account.

[38]            I adjourn the Mortgagees’ application for the appointment of an administrator for the purpose of engaging such expert in order to spare expense and because no person other than Mr. Gooch was suggested.

[39]            If counsel for the Owners and Mortgagees cannot agree on the expert to be engaged and the terms of the engagement, either may apply to the Court for a specific administrator to be appointed for the purpose of engaging the expert.

[40]            Once the expert’s report is before it, the Strata Corporation must take appropriate steps to meet its statutory duty to repair and maintain the common property.  Failure to do so will provide a basis for the Mortgagees to renew their application for the appointment of an administrator for that purpose.

[41]            Money held in trust by Mr. Bleay may be paid to the Strata Corporation with the agreement of counsel for the Mortgagees, or by further order of the Court.

[42]            Since I have only adjourned the two applications on conditions, I make no order as to costs at this stage of the proceedings.

[43]            In order not to prevent the parties getting before a judge quickly should it be necessary to renew either application, I will not seize myself of either application.

“E.R.A. Edwards, J.”
The Honourable Mr. Justice E.R.A. Edwards

Riverbend, Coquitlam: Marion Lochhead Disciplined by Real Estate Council of BC for failing to correctly provide disclosure statement while marketing Riverbend

 

 

REAL ESTATE COUNCIL OF BRITISH COLUMBIA

In the matter of the Real Estate Act

R.S.B.C. 1996, c. 397 As Amended

AND in the matter of a Consent Order pursuant to Section 31 of the Real Estate Act

Respondent:   MARION SHIRLEY LOCHHEAD

File:  141-03

Date of Consent Order:  April 27, 2005

Complaint                 
Breach of section 61(9) of the Real Estate Act  

Issue                         
Marion Shirley Lochhead, Representative, Sutton Group 1st West Realty, Coquitlam breached section 61(9) of the Real Estate Act in that she failed to deliver a copy of the disclosure statement to the prospective buyers and afford them an opportunity to read the disclosure statement, and obtain a receipt from the buyers, acknowledging that they had been afforded the opportunity, prior to the buyers entering into the Contract of Purchase and Sale with the developer. 

Penalty                     
Marion Shirley Lochhead was reprimanded for the breach described above after an Agreed Statement of Facts, Proposed Acceptance of Findings and Waiver was entered into between the Real Estate Council and Ms. Lochhead and a Consent Order was issued.  In addition, as a condition of continued licensing, she is required to successfully complete Chapter 2 (Real Estate Services Act) of the Real Estate Trading Services Licensing Course and pay costs to the Council in the amount of $500. 

P: June 3, 2005 R: June 3, 2006

Case Studies, Pendrell Place: Proposed Illuminated Garbage Shack

COLCO: Coalition of Leaky Condo Owners
www.myleakycondo.com

April 26, 2005


To: Richard B. Oldaker, Owner, Strata Lot 22, Suite 504, Strata Plan VR 1008.

Dear Richard;

Re: Proposed Illuminated Garbage Shack at Leaky Rotten Condo Complex, Strata Plan VR 1008, a/k/a, Pendrell Place, 1819 Pendrell Street, Vancouver, B.C., Canada

Our investigation of Pendrell Place continues.

This is to advise that:

J. P. Daem, President, Strataco Management Ltd., 8555 Commerce Court, Burnaby, Tel 604-294-4141, has recently distributed a proposal from the Security Committee for a "security upgrade budget totaling $28,285.00."

The budget provides $7,000 for construction of a garbage shack that is variously described as "relocation of refuse containers", "Dumpster Encloser" [sic], and "waste encloser" [sic] at the rear of the building.

The documents include a "Quote" for $6,995.00, including GST, for the garbage shack from Glenlee Contracting, 10332 - 2013 125th Street, Surrey, Cel 604-897-8900, GST #85602 3481RT0001.

The City of Surrey reports Glenlee has a current Business License #107857 and that the holding of a License says nothing about quality of work.

The Workers Compensation Board reports that Glen Edward Nikkel is Registered with the WCB and is in good standing as providing "handyman services" doing business as Glenlee Contracting.

The City of Vancouver reports no record of a current Business License for Glenlee.

The City of Vancouver reports that the Strata Corporation would need a Development Permit for the garbage shack at a cost of approximately $450.00.

The City of Vancouver reports that, if the Pendrell Place Development Proposal for a garbage shack is approved and a Development Permit for the garbage shack is issued, a Building Permit for the garbage shack would be required at a cost of approximately $104.20.

It is unclear at this time whether the Owners of Strata Plan VR 1008 would be advised to inform neighbors and post a Proposed Development sign regarding the proposed development and construction of an illuminated garbage shack. Other condominiums in the West End have had to dim or shield newly installed exterior lighting devices due to complaints from neighbours. [Note: in fact, Pendrell Place did receive a complaint about security lighting that was later installed, as mentioned in the Minutes of June 13, 2005 and noted here.]

The Government of Canada, CRA-ARC, GST Investigations Section, reports that the GST #85602 3481RT0001 provided by Glenlee is not a valid GST number.

The documents distributed by Strataco also contain a quote from Static Industries Ltd., 3756 Avondale St., Burnaby B.C., Tel 604-433-0641, to install "2 metal halide 100 watt exterior wall pack fixtures" to illuminate the garbage shack area at a cost of $990.00, including labor, piping and wiring.

The City of Burnaby reports that Static Industries Ltd. has not been at that residential address since 1996.

The City of Burnaby reports that Static Industries Ltd. does not have a current Business License.

The City of Vancouver reports that Static Industries Ltd. does not have a Business License.

The proposed electrical work in the City of Vancouver would apparently require an Electrical Permit that is not specifically provided for in the quotation.

The WCB cannot find "Static Industries Ltd." in their computer records.

It is unknown at this time whether Len [no last name provided] of Static Industries Ltd. is a qualified electrician or that Len will provide a qualified electrician to illuminate the garbage shack.

I trust the above information will assist you so that, as J. P. Daem of Strataco states, "you can provide clear direction and guidance to Council".

In light of the above determinations, the Owners of Pendrell Place may want to review their contractual and any other arrangements the Strata Council and/or the Strata Corporation has with J. P. Daem and with Strataco Management Ltd.

It is shocking that The Owners of Strata Corporation/Strata Plan VR 1008, have completed building envelope repairs to much of the building, but have left your condo isolated and uninhabitable for years because of leaks, rot and mould, yet they now propose to use more of your retirement money for painting the garage and constructing and illuminating a garbage shack with unlicensed personnel.

In our view, the well-documented historical policies and operational management procedures and decisions of the Strata Corporation were and remain clearly dysfunctional, deviant and oddly abnormal with respect to the unequal treatment of you as an owner of a leaky rotten condo in Pendrell Place and with respect to apparent non-conformance with the requirements of the Strata Property Act and the Vancouver Building By-Law.

Our investigation of Pendrell Place and the behaviour of Strata Corporation VR 1008 will continue.

Once again, I thank you and Chris Monk, who sold his leaky rotten condo in Pendrell Place with full disclosure to the purchaser, for providing piles of fascinating material for my research and book about condo rot. Pendrell Place is proving to be an intellectually rewarding case study.

Yours truly,

James Balderson

COLCO: Coalition of Leaky Condo Owners
JamesBalderson@myleakycondo.com


[NOTE: the information contained in this letter was challenged by J.P. Daem of Strataco Management as being "inaccurate and misleading". Mr. Balderson addresses Mr. Daem's comments here.]

 

Case Studies, Pendrell Place: Building Envelope Anomolies; Daem Blocks Levelton

On April 22, 2005, Dr. James Balderson sent a letter to Levelton Engineering on behalf of Mr. Richard Oldaker. Dr. Balderson's letter was seeking clarification on points raised in a March 8, 2005 letter from Levelton to Strataco Management Ltd. Levelton's letter referred to a March 3, 2005 site visit conducted by one of their agents which made specific reference to Mr. Oldaker's unit #504.

A copy of Dr. Balderson's April 22, 2005 letter, as it appeared in a May 2, 2005 update from Dr. Balderson, appears below:

May 2, 2005.

This will confirm that Dr. Balderson is continuing his investigation of leaks and rot at Pendrell Place with increased enthusiasm.

Dr. Balderson expects to have answers to these questions shortly and will share his findings with you and others.

COLCO: Coalition of Leaky Condo Owners
www.myleakycondo.com


April 22, 2005

To: Levelton Engineering Ltd. - Building Science Division

Attention: Joe Hoy and David Evans, P.Eng.

Dear Sirs:

Re: Strata Lot 22; Unit/Suite #504
Strata Plan VR 1008, a/k/a, Pendrell Place,
1819 Pendrell Street, Vancouver, B.C., Canada

I write on behalf of Mr. Richard B. Oldaker, the owner of Suite #504 that remains today uninhabitable due to the effects of leaks, rot and mould.

I refer to your file 903-0264-3.2 and your letter to Strataco Management Ltd. dated March 8, 2005 which has been recently copied to all owners as part of the package of documents for the Annual General Meeting of the Strata Corporation currently scheduled for Wednesday, May 4, 2005.

Your letter, based on a March 3, 2005 site visit by Tim Stubbins "to review and verify reported claims by Owners of possible water leaks", states with specific reference to Unit 504: "Not assessed. Previously reviewed by Levelton. Anomalies within the building envelope have been previously addressed."

Q1. When was Unit 504 previously reviewed by Levelton?

Q2. What documents refer to those reviews?

Q3. What anomalies within the building envelope were identified?

Q4. When were the anomalies addressed?

Q5. How were the anomalies addressed?

Q6. What documents refer to the identification and addressing of the anomalies?

Your quick response to the above questions will be appreciated and will assist our preparation for the Annual General Meeting.

Yours truly,

Dr. James Balderson, B.Ed., M.Ed., Ph.D., Q.S., CIA.
JamesBalderson@myleakycondo.com
www.myleakycondo.com


This April 22, 2005 letter by Dr. Balderson was subsequently addressed by J.P. Daem of Strataco, and Mr. Daem's comments effectively served to block the timely answers to the questions raised by Dr. Balderson in his letter to Levelton:

"The first COLCO letter, dated April 22, 2005, raises a series of questions regarding work done at suite 504. It deals with issues which have already been discussed in detail in material distributed to all owners. We have instructed our consulting engineers not to respond to any communications which simply ask them to repeat in new format information already available to all owners. They are also advised not to respond to communications that would result in unnecessary and frivolous costs to the Strata Corporation."

- STRATACO MANAGEMENT LTD. (signed) J.P. Daem, Property Manager.

Castle Beach Club (Miami): City orders owners out; cuts power

Castle Beach Club - Miami condo/hotel


Article Courtesy of WPLG Channel 10

Published April 15, 2005


Residents of a 543-unit Miami Beach condominium are being kicked out of their homes today. At 10 a.m. the city is cutting off power to the Castle Beach Club.

Some residents didn't receive notification that they would have to leave until Thursday afternoon, when they saw bright orange stickers posted on the building, informing them that the structure was unsafe.

Other residents got the word Thursday when Miami Beach police knocked on their doors, telling them the county's building department had condemned the Castle Beach Club due to an electrical problem, which created a problem for all units.

Some residents are upset with the board of directors, claiming it has been using monthly association fees to renovate a portion of the building that is a hotel.

"The electrical is unsafe. The plumbing is unsafe. The structural is unsafe and they have not maintained this building the way they should have," said one resident.

Residents said they didn't know when they would be allowed back.

Stickers posted on the building say that the building department is taking action against the building's owner.

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