Dear Mary,

Your leaky rotten condo complex, Spinnaker West – 2368 Laurel St. - has adopted an illegal Budget for its 2006-2007 fiscal year, as it did the year previous.

The Statement of Income and Expenses 2005-2006 and the proposed Budget for 2006-2007 distributed just prior to the (late) AGM of June 7, 2006, included a line item called “Maintenance: Extraordinary”.

The Budget amount for this item April 2005 - March 2006 was $1,000.

The Actual amount expended was $5,091.90 being $4,091.90 over budget.

It is my opinion that the Strata Corporation records as distributed to the Owners do not provide an adequate explanation as to what the money was spent on.

It is my opinion that the Property Manager (Ann Hedley of Realacorp - who holds a temporary license to provide strata management services and who has not taken the required course nor passed the required examination) together with the Strata Council were not authorized by the Owners to over-spend the budgeted amount, which should not have been in the Budget in the first place.

It is my opinion that the line item “Maintenance: Extraordinary” is ultra vires the Strata Property Act, which states:

Operating fund and contingency reserve fund

92 To meet its expenses the strata corporation must establish, and the owners must contribute, by means of strata fees, to

(a) an operating fund for common expenses that usually occur either once a year or more often than once a year, and

(b) a contingency reserve fund for common expenses that usually occur less often than once a year or that do not usually occur.

…

Expenditures from contingency reserve fund

96 The strata corporation must not spend money from the contingency reserve fund unless the expenditure is

(a) consistent with the purposes of the fund as set out in section 92 (b), and

(b) first approved by a resolution passed by a 3/4 vote at an annual or special general meeting, or authorized under section 98.

Expenditures from operating fund

97 The strata corporation must not spend money from the operating fund unless the expenditure is

(a) consistent with the purposes of the fund as set out in section 92 (a), and

(b) first approved by a resolution passed by a 3/4 vote at an annual or special general meeting, or authorized

(i) in the budget, or

(ii) under section 98 or 104 (3).

Unapproved expenditures

98 (1) If a proposed expenditure has not been put forward for approval in the budget or at an annual or special general meeting, the strata corporation may only make the expenditure in accordance with this section.

(2) Subject to subsection (3), the expenditure may be made out of the operating fund if the expenditure, together with all other unapproved expenditures, whether of the same type or not, that were made under this subsection in the same fiscal year, is

(a) less than the amount set out in the bylaws, or

(b) if the bylaws are silent as to the amount, less than $2 000 or 5% of the total contribution to the operating fund for the current year, whichever is less.

(3) The expenditure may be made out of the operating fund or contingency reserve fund if there are reasonable grounds to believe that an immediate expenditure is necessary to ensure safety or prevent significant loss or damage, whether physical or otherwise.

(4) A bylaw setting out an amount for the purposes of subsection (2) (a) may set out further conditions for, or limitations on, any expenditures under that provision.

(5) Any expenditure under subsection (3) must not exceed the minimum amount needed to ensure safety or prevent significant loss or damage.

(6) The strata corporation must inform owners as soon as feasible about any expenditure made under subsection (3).

The Strata Corporation Minutes of the 2006 AGM held on June 7 show that Otto Folprecht and Glen Harris moved and the Owners approved a motion “That the Extraordinary Maintenance category be increased [from $2,000] to $20,000.”

In my opinion the motion was clearly “out of order” and should not have been considered at the meeting, which was chaired by Clive Boulton. Apparently several lawyers who were present raised no objection to the Owners passing a motion ultra vires the Act.

Also, contrary to the Act, you were not provided with a schedule showing your proportionate share of the Budget, with and without inclusion of the illegal $20,000.

In other words, 15 days later, you are still in the dark as to the amount of your annual strata fees, which, because of the illegal budget, will now be considerably more than the previous year.

Yet another year has passed under the continuing illusion of progress and false promises at Spinnaker West.

More tarps and clear plastic have been added to the roof area.

Your condo still leaks and rots.

The drywall in your kitchen is soggy and falls to the floor in larger and larger chunks.

The cost of repairs continues to climb enormously.

And yet the Owners of the Strata Corporation have still not resolved to fulfill their statutory obligation to repair the leaky rotten common property, despite having received several expert professional reports over several years prescribing the conversion from face-seal to rain-screen technology, the building envelope standard in Vancouver since 1996.

I am quite certain the other residential owners (Boulton, Lavajac, Hamilton, Harris/Hennsler-Harris, Reeves/Rykman and Folprecht) would have had the building fixed years ago if their interior walls were as soggy and rotten as the ones in your leaky condo.

And the rot goes on, and on, and on ….

My very best personal regards,

Dr. James Balderson, Ph.D., Q.S.

COLCO: The Coalition of Leaky Condo Owners

www.myleakycondo.com

JamesBalderson@myleakycondo.com

IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20060621

Docket: L051805

Registry: Vancouver

Between:

Lorne Terry

Petitioner

And

The Owners, Strata Plan LMS 2153, The Century Group

General Partnership and Kimberly Stubbs

Respondents

Before: The Honourable Mr. Justice Bauman

Reasons for Judgment

I

[1] This petition raises again an issue between owners concerning responsibility for costly repairs to "leaky condos" within a strata plan.

[2] It is a contest all too familiar in the lower mainland of British Columbia and in its various iterations, it has produced much jurisprudence.

[3] Many of the cases see the conflict between owners of different types of units within a single strata plan, for example, townhouse owners versus apartment owners; new unit owners versus heritage unit owners; and residential owners versus commercial owners.

[4] The nuance which presents here sees the owners of two buildings in a phased strata plan resisting responsibility for costly repairs to two other buildings in the earlier phase of the plan. They do so by invoking the provisions of s. 164 of the Strata Property Act, S.B.C. 1998, c. 43:

Preventing or remedying unfair acts

164 (1) On application of an owner or tenant, the Supreme Court may make any interim or final order it considers necessary to prevent or remedy a significantly unfair

(a) action or threatened action by, or decision of, the strata corporation, including the council, in relation to the owner or tenant, or

(b) exercise of voting rights by a person who holds 50% or more of the votes, including proxies, at an annual or special general meeting.

(2) For the purposes of subsection (1), the court may

(a) direct or prohibit an act of the strata corporation, the council, or the person who holds 50% or more of the votes,

(b) vary a transaction or resolution, and

(c) regulate the conduct of the strata corporation's future affairs.

[5] These owners complain that the imposition of a proposed special levy to fund the cost of the repairs is "significantly unfair" in the circumstances which I will now describe.

II

[6] The strata corporation consists of four multiple family residential buildings in Richmond collectively know as "Victoria Park".

[7] The buildings are known as the Elgin, the Empress, Zenia 1 and Zenia 2. They comprise in total 302 residential dwelling units.

[8] The development proceeded as a phased strata plan under the provisions of the Condominium Act, R.S.B.C. 1996, c. 64 and latterly, the Strata Property Act, S.B.C. 1998, c. 43.

[9] The Elgin and the Empress were developed in 1995 as Phase 1 of the project. The owner/builder was Barbican Developments Ltd. ("Barbican").

[10] Phase 2, consisting of Zenia 1, was constructed in 2002. The owner/developer at this point was The Century Group General Partnership, which included Barbican and others.

[11] The Elgin and the Empress were occupied in 1996.

[12] The first strata lot in Phase 2 was sold on 28 April 2002. The remaining strata lots within this phase were sold in the months between April 2002 and March 2003. The Phase 2 strata plan was registered in the Land Title Office on 10 November 2003.

[13] The first strata lot in Phase 3 - Zenia 2 - was sold on 7 June 2002 and the remaining lots were sold in the months between June 2002 and March 2004. The strata plan for Phase 3 was registered on 23 July 2004.

[14] I attach as Schedule I to these reasons, a copy of the strata plan which conveniently identifies the phases and the buildings within them.

[15] Soon after Phase 1 was completed, the owners noticed some problems with water ingress into portions of the buildings.

[16] An engineering firm was retained by the strata corporation. A number of deficiencies were identified and the developer carried out some repairs.

[17] Further water ingress problems surfaced and in 1999, the strata council engaged the engineering firm, McArthur Vantell Ltd. ("MVL") to prepare a report. That report ("MVL #1") was issued on 15 September 1999.

[18] It is critical to the position advanced by the owners within Phases 2 and 3 to consider, as I relate the chronology, what the pre Phases 2 and 3 strata council knew of the water ingress problem, and when it knew it.

[19] MVL #1 focussed on problematic areas around windows and balconies. A moisture probe analysis showed dangerously high readings in some areas. The report recommended repairs to windows, vinyl siding, several balconies and further investigations. No budget was presented.

[20] One could characterize the approach recommended by the authors of MVL #1 as one calling for targeted repairs, rather than a full scale remediation of the two buildings within Phase 1.

[21] Upon receipt of the report, the strata council took a number of steps. They are summarized in Mr. Terry's Affidavit #2 at paragraph 2 so:

(a) repairing the area of investigation on the 8100 building;

(b) asking McArthur Vantell to provide specifications for repair of the area of investigation on the 8080 building;

(c) asking McArthur Vantell to provide a summary of the larger water ingress investigation required and a quotation for the cost of such investigations;

(d) sending a letter to the original developer, Barbican Properties, (the "Developer") noting these decisions and stating that the repairs were the Developer's responsibility; and

(e) submitting a claim to New Home Warranty.

[22] These repairs were pursued in 2000 and 2001.

[23] On 17 May 2000, MVL produced its second report ("MVL #2). According to its terms "The primary focus of this investigation was the balconies and exterior walls clad in vinyl siding as recommended in the Moisture Investigation Report dated September 15th, 1999 %u2026".

[24] The report concentrated, in part, on the window areas of the two buildings:

The areas that were tested around suite 102, the leaking hall window and the Bay-windows are believed to have similar window detail problems as suite 106, (refer to the MVL moisture ingress report, dated September 23rd 1999 for more details). The window trims and flashings are suspected to have been poorly installed and are a probable source of moisture infiltration. This opportunity may be compounded by inadequate roof over-hangs and insufficient cladding waterproofing details. The areas that are most severely affected are window/wall areas with no roof over-hangs.

We recommend repairs of the building envelope be carried out on all the windows as soon as possible, which should include the removal of vinyl and wood siding, to determine the source of moisture ingress and condition of the substrate. All deteriorated sheathing and framing should be identified and repaired, with the wall cladding system rebuilt to current standards. The details should include but not necessarily be limited to the following items: caulked joints and membrane back-up at all penetrations, membranes and saddle flashings at all saddle points, membranes under all cap flashings, and a drained cavity wall system (complying with City of Richmond Requirements.

[25] The authors recommended, as a first step in this process, that three mock-up locations be selected and "reworked to determine the appropriate repairs, including waterproofing details".

[26] This table summarizes the report's recommendations:

Summary of Recommendations

The Table below summarizes the above recommendations in terms of cost (not including GST).

priority and schedule.