Summerfield (Surrey): Court orders schedule of unit entitlement changed to reflect habitable area developed by Polygon Quail Park Development Limited

 

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Smith et al. v. The Owners, Strata Plan LMS 1821 et al.,

 

2007 BCSC 402

Date: 20070323
Docket: S067364
Registry: Vancouver

Between:

Thomas Bernard Smith, Louise Denise Smith, Hugh Hocking Trerise,
Amelia Barbara Trerise, Daniel George Mcinnis, Andrew John McInnis,
Theresa Louise Anderson, Allan Livingstone Dickie, Beverly June Dickie,
John Peter, Ronald Gerald Smith, Linda Rita Smith, Hedy Cassap,
William Charles Pound, Linda Anne Pound, Thomas Albert Schultz,
Hazel Gertrude Schultz, Marjory Kathleen Cope, Gordon Harold Chandler,
Eunice Jean Sobkowicz, Rhoda Louise O’Brien, Gale Patricia O’Brien,
Robert William Dube, Helen Jean Dube, Olga Moore, Marjorie Aileen Smith,
William Manning, Peter Manning, Francis Leo Manning, Margaret King,
Johann Bernhard Segelken, Audrey Annie Bittner, Jean Watson D’Angelo,
Douglas Pilgrim, Mildred Edith Pilgrim, Eileen Viola Green, Hendrick Jacob Kikstra,
Shirley Mona Kikstra, Valmar Harman, Diane Lawrence, Mark Harman,
Eileen Nurse, Ferguson Norman Will, Linda Anne Taphorn, Kenneth Edward Lehman,
 Jeannette Lehman, Neil Joseph Bavaro, Wendy Jane Bavaro,
Henry Robert Furness, Beatrice Olive Furness, Robert Gotts, Adeline Gotts,
Robert Morgan, Joy Mary Morgan, Maria Abolis, Donald Raymond Clelland,
Lucy Clara Clelland, Johanna Maria Van Koll, Wilbert Stuart Prentice,
Margaret Elizabeth Prentice, Melroy Frank Sauer, Audrey Evelyn Sauer,
Gerald Russell Doerksen, Norma Jean Doerksen, Richard George Ewart,
Marie Pauline Ewart, Donato Monetta, Caroline Aurelia Monetta, Bruce Arthur Mills,
 Margaret May Mills, Margaret Moseley, Geri Moseley, Richard Joseph Barrett,
Melba Yvonne Barrett, Audrey Lorraine Girard, Robert Romeo Girard,
Marian Catherine Maclean, Finn Nygaard, Donna Carol Nygaard, Nadia Odne,
John Harold Odne, and Lillian Elizabeth Pitkanen

Petitioners

And

The Owners, Strata Plan LMS 1821, Bernice Alice Thomas, Glenn Frederick Eyre,
William Joseph Hulgaard, Lana Marie Hulgaard, James Arthur Legge,
Mary Gail Legge, Clementine Morrison, Hans Karl Leupold, Margaret Ann Leupold,
Philip Anthony Fourchalk, Annette Dale Fourchalk, Maurice Jacob, Mary Gertrude
Jacob, Ronald Lorrie Sherman, Judith Lynne Sherman, Glenn Sydney Miller,
Elizabeth Kaban, David Warren Bieker, Shirley Myrtle Bieker, Vito Tunzi, Tina Tunzi,
Robert Ralph Ulmer, Shirley Carrie Ulmer, Lana Madeline Kettley, John William Bickle,
Sandra Geraldine Bickle, Daria Mosoryn, Ronald Edwin Collier, Catherine Scotland
Collier, Daljit Singh Sandhu, Patricia Isabel Livingston, Monika Marie Luise Jacques,
Robert Rene Albert Joseph Jacques, Marlene Justine Epneris, Arnold Fenrick,
Rosalie Fenrick, John Barrie Hancock, Bridget Teresa Hancock, Joan Marie Arnold,
Ronald Ayers, Lillie Patreta Ayers, Walter Janzen, Erna Janzen, Bennet Burleigh
McMillan, Jean Margaret McMillan, Edward Anthony Rainko, Helen Theresa Rainko,
Margaret Williams, Alvin James Williams, Lois Jean Harry, Wayne Chow,
Ruby Sum Yet Chow, George Harry Humberstone, Geraldine Marie Humberstone,
Arthur Edward Hunchak, and Lilian Margaret Hunchak,

Respondents


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

Reasons for Judgment

Counsel for the Petitioners

E. T. McCormack

Counsel for the Respondents
except The Owners, Strata Plan LMS 1821

C. G. Haddock

Date and Place of Trial/Hearing:

March 16, 2007

 

Vancouver, B.C.

[1]                This is a dispute between two groups of owners of strata lots in a 78 unit residential strata complex.

[2]                The Owners, Strata Plan LMS 1821, (“the strata corporation”) though served, was not represented at the hearing.  Hereafter, I refer to the individual owners who are respondents collectively as “the respondents”.

[3]                The petitioners, a majority, apply under s. 246 of the Strata Property Act, S.B.C. 1998, c. 43 (“SPA”) for an amendment to the Schedule of Unit Entitlement of the Strata Plan Owners (“the Schedule”) based on the habitable areas of the units.

[4]                The respondents acknowledge that the Schedule should be amended but ask the court to approve an amendment to the Schedule based on a formula for allocating unit entitlement which was approved by some 90% of the unit owners at a Special General Meeting of the strata corporation in 2005, but which failed to obtain the unanimous agreement of owners required for an amendment to the Schedule.

[5]                The underlying cause of the dispute is that although the Schedule, when submitted by the developer of the complex pursuant to the Condominium Act, R.S.B.C. 1996, c. 64, purported to allocate unit entitlements based on the square footage of each unit, it failed to do so by not including the basement areas of the 30 of the 78 units which have basements.

[6]                There is no dispute that all the basements were finished habitable areas at the time the developer sold the units.  Because the basement areas were not included in the calculation of unit entitlements, units without basements have unit entitlements which are disproportionately large in comparison to otherwise equivalent units with basements.

[7]                There are three types of units:  Browning, Shelley and Tennyson.  By way of example, a Browning unit with no basement has a habitable area of say, X sq. ft. and a unit entitlement of Y, while a Browning unit with an equivalent main floor area and habitable basement has a total habitable area of, say, 1.2 times X sq. ft. but also has a unit entitlement of Y, equal to that of the non basement Browning unit.

[8]                Under the definition of “unit entitlement” in the Condominium Act, which was in effect when the Schedule was originally filed, unit entitlements had to be based on the “square footage” of each unit relative to the total square footage of all units or based on an alternative formula, acceptable to the Superintendent of Real Estate (“the Superintendent”), which would “result in a more equitable contribution by the owners to the common expenses of the strata corporation”.

[9]                In this case there is no evidence the Superintendent accepted a formula other than that based on the relative square footage of the units.  The purported basis for allocation of unit entitlements to all 78 units was their relative square footage.

[10]            The practical effect of the allocation of unit entitlements not including the areas of basements is that the units without basements have paid disproportionately more towards the common expenses of the strata corporation.

[11]            Under the Schedule the owners of units without basements pay, in aggregate, 61% of the strata corporation’s expenses while the owners of units with basements pay 39%.  If the Schedule allocated unit entitlement on the basis of habitable area including basements the owners of units without basements would pay 52% and the owners of units with basements 48%.

[12]            As result the owners of units without basements have effectively subsidized those with basements by paying, in aggregate, a disproportionately high share of the strata corporation’s expenses since the complex opened in 1995.

[13]            Not surprisingly, the majority of owners whose units do not have basements sought to rectify this situation but they faced the obstacle of the requirement of unanimous approval of the owners to amend the Schedule by resolution.

[14]            In 2005, the owners passed a resolution establishing a committee of owners to propose a reallocation of unit entitlement all owners might accept.  Half its members were owners of units with basements and half were owners of units without basements.  A representative of owners of units with basements indicated they would be prepared to accept an increase in their monthly assessments for common expenses of $15 to $16 each.

[15]            A formula (“the Formula”) for allocating unit entitlements which calculated each unit’s share based on 100% of the main floor area, 75% of the second floor area and 50% of any basement area was proposed by the committee.  The Formula, if applied to reallocate unit entitlements, would result in the approximate increase in monthly fees for each unit with a basement which the owners of those units had indicated they were prepared to accept.

[16]            If the Schedule were amended with unit entitlements allocated using the Formula, the owners of units without basements would pay 57% of the strata corporation’s expenses and the owners of units with basements 43%.

[17]            The Formula was unanimously recommended by the committee as a compromise solution to the unit entitlement dispute.  It was the basis for the resolution which failed to obtain the required unanimous approval to amend the Schedule in 2005.

[18]            The threshold issue before the court is whether the court has jurisdiction to order the amendment of the Schedule in accordance with the Formula proposed by the respondents which was supported by about 90% of the owners in 2005.

 

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