Kelowna: Court rules owners of town houses must pay their share of cost to repair leaky condo tower in Kelowna


 

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Poloway v. Owners, Strata Plan K692,

 

2012 BCSC 726

Date: 20120522

Docket: S84849

Registry: Kelowna

Between:

James Michael Poloway, John Wayne Toljanich, Lorraine Dorothy Toljanich, William Rutherford Bradley, Deborah Louise Bradley, Gusbertus Bastiaan Bouma, Emma Josephine Bouma, Victoria Crompton, Nicholas John Kozuska, Elizabeth Gail Kozuska, Randall Yatscoff, Nancy Christine Yatscoff, Sherry Linn Priebe, David Gibbons and Carol Ponsford

Petitioners

And

The Owners, Strata Plan K692

Respondents

 

Before: The Honourable Mr. Justice Barrow

 

Reasons for Judgment

Counsel for the Petitioners:

J.D. Metherell

Counsel for the Respondents:

A. Murray

Place and Date of Hearing:

Kelowna, B.C.

January 11-12, 2012

Place and Date of Judgment:

Kelowna, B.C.

May 22, 2012


 

[1]             The petitioners are owners of townhouse-style strata lots within the respondent Strata Corporation (the “Strata Corporation”). They argue that the respondent has acted, and will act in the future, in a significantly unfair manner. The past unfairness relates to a special resolution put before a general meeting on April 30, 2011 (the “Special Resolution”). The future unfairness relates to costly repairs that are needed to the apartment tower within the development. The Strata Corporation proposes that those costs be borne by all of its members, including the owners of townhouses, on the basis of unit entitlement. The petitioners argue that to do so will result in them subsidizing repairs to a building that they have little connection with. They seek an order under s. 164 of the Strata Property Act, S.B.C. 1998, c. 43 creating “sections” within the Strata Corporation - one section for the townhouse-style strata lots and another for the apartment-style lots. They seek ancillary orders allocating the repair costs to the sections based on the building involved. The respondent argues that to allocate costs on the basis of unit entitlement is simply to follow the statutory regime, and in the absence of some reasonable expectation that another method would be used, that cannot be significantly unfair.

Background

[2]             The Strata Corporation was created with the filing of a strata plan in the Land Title Office in 1988. The property is comprised of 29 residential units housed in three buildings. Building A is a four-storey building containing 17 apartment-style strata units. Buildings B and C are single-storey buildings each containing 6 townhouse-style strata units. The petitioners are the owners of 10 of the 12 townhouse units.

[3]             The apartment building houses several amenities which benefit all of the strata lots in the development. Those amenities include a mailroom, a garbage collection room, and the primary water, cable and telephone hook ups for the development.

[4]             Between its creation and the year 2000 when the Strata Property Act came into force, the Strata Corporation functioned under the statutory framework contained in the Condominium Act, R.S.B.C. 1996, c. 64. Part 5 of the Condominium Act sets out the bylaws of strata corporations, and by s. 26 those bylaws applied until altered or repealed in a manner provided for by the Act. Part 5 included s. 128 which dealt with the allocation of common expenses. Although the Condominium Act did not define different types of strata lots, s. 128 (2) required that common expenses attributable to one or more types of strata lots be allocated to and shared by the owners of those particular strata lots in proportion to their unit entitlement. All other common expenses were required to be shared by all the owners in proportion to their unit entitlement to the entire condominium development. Section 128 read:

(2) If a strata plan consists of more than one type of strata lot, the common expenses must be apportioned in the following manner:

(a) common expenses attributable to one or more type of strata lot must be allocated to that type of strata lot and must be borne by the owners of that type of strata lot in the proportion that the unit entitlement of that strata lot bears to the aggregate unit entitlement of all types of strata lots concerned;

(b) common expenses not attributable to a particular type or types of strata lot must be allocated to all strata lots and must be borne by the owners in proportion to the unit entitlement of their strata lots.

[5]             Despite this statutory regime, the Strata Corporation did not allocate common expenses attributable to one type of strata lot solely to the owners of that type of lot; rather, except for the year 1991, the Strata Corporation’s budgets simply allocated all common expenses to all owners, regardless of whether the expenses were attributable to only one type of strata lot or not. The amended disclosure statement filed on March 22, 1989, foreshadowed the approach to common area expenses that the Strata Corporation would follow. Under the heading “Budget”, paragraph 6 (o) of that document provides in part as follows:

An estimated operating budget for a typical full year of operating expenses of the Strata corporation, based on current costs, is attached .... These common expenses will be allocated among the individual Strata Lot owners in the proportions that the Unit Entitlements of their respective Strata Lot bear to the total Unit Entitlements of all Strata Lots, and Exhibit “C” hereto gives the estimated monthly assessment for each Strata Lot based on the budget.

[6]             For the year 1991 the Strata Corporation changed the manner in which it treated the common area expenses that were attributable to one type of strata lot but not to others. Further, it seems that consideration was given to a similar approach in 1992. Uncertainty about this stems from a lack of minutes for that period indicating which of two proposed budgets was adopted by the Strata Corporation. There is a schedule of strata fees for 1991 and if fees were in fact levied based on that schedule then common area expenses were allocated according to the method prescribed in s. 128 of the Act. There is a “proposed” schedule of fees for 1992, and if it was adopted then common area expenses were shared by all strata lots in accordance with their unit entitlement and regardless of  whether the expenses related to only one type of strata lot.

[7]             What is clear from the material is that by 1993 the method of allocating common area costs associated with only one type of unit was becoming an issue within the Strata Corporation. The issue arose because expensive repairs to the fire sprinkler system in the apartment building were in the offing. One of the townhouse owners wrote to the Deputy Superintendent of Real Estate inquiring about how costs of that sort could be allocated. The Deputy Superintendant responded, and his letter and the issue more generally was the subject of discussion at an extraordinary general meeting of the Strata Corporation on September 29, 1993. The minutes of that meeting include the following:

Discussion of both letters [that is the letter to and the letter from the Deputy Superintendent] ensued. Owners recognized that there were a number of costs borne by the townhouse type units which were directly attributable to the highrise type units. However, it was stated that owners had agreed from the inaugural General Meeting onward that the Strata Corporation was to be treated “all as one” with the costs being apportioned among all units. It was decided to proceed with the meeting, but mention that the contents of the letter from [the Deputy Superintendent] had been received, and duly noted.

While nothing was decided at this meeting regarding the manner in which common area costs should be allocated, the minute is relevant in three respects. First, it tends to support the conclusion that the proposed budget that would have allocated common area costs according to unit type was not adopted. Second, it is an indication of what the owners knew about the cost sharing arrangements when they purchased their units. Third, it demonstrates that the Strata Corporation turned its corporate mind to the manner by which common area expenses should be shared.

[8]             It is clear that in the years since 1993 common area expenses have been shared by all strata units in accordance with their unit entitlement and without regard to whether the expenses related to one type of unit or another. This has been the case notwithstanding that on February 17, 1994 the owners adopted changes to the Strata Corporation’s bylaws. The changes were voluminous, and among them was the adoption of the cost allocation scheme envisioned by s. 128 of the Condominium Act. Thus, from 1994 forward the Strata Corporation should have been accounting for common area expenses by allocating those referable to one type of strata lot to strata lots of that type. In spite of the adoption of this approach in its bylaws, the Strata Corporation did not change the method by which it accounted for such expenses.

[9]             The ability to allocate common area expenses according to unit type changed with the coming into force of the Strata Property Act on July 1, 2000.

[10]         From 1993, when the fire suppression system in the apartment tower was replaced at a cost of just over $14,000, until 2007, there were at least four special levies imposed to cover the cost of various repairs. According to John Tolijanich, one of the petitioners, those levies totalled $213,922, and of that sum $42,000 was for repairs that benefited the complex as a whole; $51,717 was for repairs that benefited only the townhouse units; and $120,205 was for repairs associated with the apartment complex. In addition the Strata Corporation spent a further $90,000 to repair the balconies attached to the apartment units and to fix some associated water damage. These costs were treated as common area expenses and borne by all units regardless of type.

[11]         There remains some dispute as to whether the foregoing amounts are properly categorized as benefiting the apartment tower or the townhouses. When this petition initially came on for hearing in August 2010 Burnyeat J. adjourned the matter. He said that it would be of assistance if the Strata Corporation had its auditors prepare a list of past and future expenses allocating them according to the unit type benefited. That exercise has not been done for reasons I will mention below. All I am now asked to take from the evidence about how past expenses have been allocated is that it demonstrates that the townhouse owners have not disproportionately benefited from the uniform sharing of expenses. In other words this is not a situation in which the apartment owners have subsidized repairs to the townhouses, and that the townhouse owners are now seeking to avoid doing the same for in relation to repairs needed to the apartment tower. This conclusion is well supported by the evidence even if the cost of past repairs or their characterization is not entirely accurate.

[12]         What is not in dispute, and what prompted this petition, is that there are much needed and very expensive repairs necessary to address water ingress in the apartment tower. These expenses may exceed $2 million. The deficiencies that give rise to these costs first surfaced in 2007. From the outset, at least some of the townhouse owners have been concerned about how these costs would be allocated. In February 2009 the Strata Corporation held its annual general meeting. In advance of that meeting some of the townhouse owners, including the petitioners, requested that a resolution be placed before the meeting as provided for by s. 46 of the Strata Property Act. The resolution read:

The Bylaws of the Strata Corporation KAS692 be amended to provide for the creation and administration of separate sections for the town house style strata lots (strata lots 18 to 29) and the apartment style strata lots (strata lots 1 to 17) in accordance with Section 191 and 193 of the Strata Property Act. ...

The resolution was defeated by a vote of 10 in favour and 16 opposed.

[13]         The next event of consequence occurred in the spring of 2009 when the Strata Corporation’s insurers carried out an inspection of the development. In April 2009 they wrote to the corporation advising of a number of issues which, in an effort to reduce and manage future risks, needed to be addressed. On that list was water ingress in several of the apartment-style units. At a September 2009 meeting, council authorized the expenditure of $4,000 to have a professional building inspection done. In October 2009 this petition was filed. On January 31, 2010 the building inspection report prepared by Aqua - Coast Engineering Ltd. was released. The report noted significant water penetration problems primarily in relation to the cladding, the balconies and the skylights in the apartment tower. While it is not entirely clear exactly how much of these repairs relate to the apartment tower and how much relate to the townhouses, it is reasonable to assume that close to 90 percent of the costs would be for the apartment building.

[14]         Aqua - Coast provided three options for remedying the problems and the costs of those options ranged from just over $1 million to $1.14 million. The petitioners sought a second opinion and that opinion was provided by Timothy Spiegel, a professional quantity surveyor, on June 17, 2010. He estimated the costs, exclusive of soft costs, mark ups and the like, at $1.14 million. Of that sum, $954,035 was for repairs to the apartment tower and $186,665 was for repairs of the townhouses.

[15]         Votes at meetings of the Strata Corporation are allocated according to units; each unit has one vote. Given that there are 29 units of which 17 are apartments, the apartment owners hold 58 percent of the available votes and townhouse owners the remaining 42 percent. Allocation of common expenses is done according to unit entitlement, and the apartments have 57.9 percent of the units of entitlement while the townhouse owners have 42.1 percent.

[16]         When the petition came on before Burnyeat J. he had two concerns. One related to resolving the evidentiary conflict surrounding how to characterize the past expenses, that is, whether they related to the townhouses, the apartment tower or both. Burnyeat J.’s other concern was that the petition was premature insofar as the Strata Corporation had not yet resolved to proceed with the repairs. He therefore asked for the accounting noted above and ordered that the Strata Corporation convene a special general meeting prior to November 15, 2010 for the purpose of considering a special resolution to be prepared by the strata council dealing with the levy by which the repair costs would be funded. The resolution the council was to prepare was to be “fair to all owners”.

[17]         Following Burnyeat J.’s decision the owners of the Strata Corporation established an ad hoc committee with four members, two from each type of strata unit (the “Committee”). The Committee was charged with exploring the possibility of a consensual solution to the issue of cost allocation between the different types of units and with providing input on the resolution ordered by Burnyeat J.

[18]         Not long after the Committee was struck there was a serious rain storm in Kelowna which caused flooding in three of the apartments. Aqua - Coast was asked to revisit its recommendations in light of this additional damage. It issued its second report on January 17, 2011 (the “2011 Report”) (in the interim the parties had filed a consent order extending the deadline imposed by Burnyeat J.). In the 2011 Report the cost of remediation is estimated at just over $2 million. Of those costs, $1.88 million relate exclusively to the apartment tower and $137,838 relate to the townhouses. In percentage terms, just over 93 percent of the costs relate to the tower and just under 7 percent relate to the townhouses.

[19]         Armed with this new information, the Committee set about attempting to agree on an acceptable resolution to be placed before the special general meeting. The townhouse representatives on the Committee proposed that townhouse owners pay for the repairs to the townhouses recommended in the 2011 Report and contribute $200,000 towards the repairs necessary to the apartment tower. Further, they recommended that going forward any common area repairs to the apartment tower would be paid for by the owners of the units in the tower, and the townhouse owners would pay for repairs to their buildings; in neither case would there be contribution by owners in buildings housing one type of strata unit to repairs made to buildings housing another type of unit. The townhouse owners on the Committee thought that if the Committee could not agree on a resolution, then each faction on the Committee would put forth a draft resolution and council would put them in final form for presentation to the owners.

[20]         The apartment owners provided a counter proposal in which they suggested the townhouse owners would only contribute 33 percent of the cost of the remediation of the apartment tower (down from the 42 percent that would otherwise apply) but that all future repairs would be paid for in accordance with unit entitlement regardless of which type of building needed the repairs.

[21]         These drafts were given to the council who, after seeking legal advice, proposed the Special Resolution that would have had the townhouse owners contribute $300,000 to the remediation of the apartment building as well as pay for all the repairs to the townhouse buildings. As a percentage of the total cost, this amounted to just under 22 percent. Further, the Special Resolution included an explicit rejection of future sharing of costs otherwise than on the basis of unit entitlement without regard to which building the repairs may relate to. The Special Resolution was put before a special general meeting on April 30, 2011, and defeated by a vote of 19 opposed and 6 in favour.

[22]         After the April 30 meeting, the respondent retained Ms. Murray. She advised that it was not legally possible for the Strata Corporation to allocate costs otherwise than by unit entitlement unless the Strata Corporation passed a unanimous resolution to that effect or created sections. Given Ms. Murray’s advice on the matter, further attempts at a consensual resolution appeared doomed and the parties reset their petition.

Analysis

[23]         The petitioners seek relief under s. 164 of the Strata Property Act which provides that:

(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.

[24]         The parties agree that the definition of “significantly unfair” is that set out in Reid v. Strata Plan LMS 2503, 2003 BCCA 126, 12 B.C.L.R. (4th) 67. In that case Ryan J.A. approved of the definition of “significant unfairness” in Gentis v. Strata Plan VR 368 2003 BCSC 120, 8 R.P.R. (4th) 130, where at paras. 27-29 Masuhara J. held:

[27]      The scope of significant unfairness has been recently considered by this Court in Strata Plan VR 1767 v. Seven Estate Ltd. (2002), 49 R.P.R. (3d) 156 (B.C.S.C.), 2002 BCSC 381. In that case, Martinson J. stated (at para. 47):

The meaning of the words "significantly unfair" would at the very least encompass oppressive conduct and unfairly prejudicial conduct or resolutions. Oppressive conduct has been interpreted to mean conduct that is burdensome, harsh, wrongful, lacking in probity or fair dealing, or has been done in bad faith. "Unfairly prejudicial conduct" has been interpreted to mean conduct that is unjust and inequitable: Reid v. Strata Plan LMS 2503, [2001] B.C.J. No. 2377.

[28]      I would add to this definition only by noting that I understand the use of the word ‘significantly’ to modify unfair in the following manner. Strata Corporations must often utilize discretion in making decisions which affect various owners or tenants. At times, the Corporation’s duty to act in the best interests of all owners is in conflict with the interests of a particular owner, or group of owners. Consequently, the modifying term indicates that court should only interfere with the use of this discretion if it is exercised oppressively, as defined above, or in a fashion that transcends beyond mere prejudice or trifling unfairness.

[29]      I am supported in this interpretation by the common usage of the word significant, which is defined as “of great importance or consequence”: The Canadian Oxford Dictionary(Toronto: Oxford University Press, 1998) at 1349.

[25]         The Strata Property Act recognizes and permits the creation of “sections” within a strata corporation. Section 191 provides that:

(1) A strata corporation may have sections only for the purpose of representing the different interests of

(a) owners of residential strata lots and owners of nonresidential strata lots,

(b) owners of nonresidential strata lots, if they use their strata lots for significantly different purposes, or

(c) owners of different types of residential strata lots.

(2) For the purposes of subsection (1) (c), strata lots are different types if they fall within the criteria set out in the regulations.

[26]         Section 11.1 of the Strata Property Regulation, B.C. Reg. 43/2000, establishes three types of strata lots, including apartment-style and townhouse-style lots. Sections may be established either by the owner developer on depositing the strata plan or by the strata corporation following its creation. In relation to the latter, s. 193 of the Act provides in part that:

(1) To create or cancel sections, the strata corporation must hold an annual or special general meeting to consider the creation or cancellation.

(2) The notice of meeting must include

(a) a resolution to amend the bylaws to provide for either the creation and administration of each section or the cancellation of the sections, ...

(3) The resolution referred to in subsection (2) (a) must be passed

(a) by a 3/4 vote by the eligible voters in the proposed or existing section, and

(b) by a 3/4 vote by all the eligible voters in the strata corporation.

[27]         In Chow v. Strata Plan LMS 1277, 2006 BCSC 335, 54 B.C.L.R. (4th) 380 Taylor J. ordered the creation of sections pursuant to the remedial power in s. 164. The parties agree that this Court has the authority to order the creation of sections under s. 164; they disagree on whether anything done or proposed to be done by the Strata Corporation has been or will be significantly unfair.

[28]         The petitioners argue that two actions, one that has occurred and the other which is proposed, has been or will be significantly unfair. The past action is the manner in which the Strata Corporation dealt with the Special Resolution which Burnyeat J. wanted the Strata Corporation to consider. The proposed action is the imposition of a special levy that will be necessary to fund the repairs to the apartment tower.

[29]         It is the prospect of the special levy which is at the core of the petitioners’ concern and I will therefore deal with that issue first. The Strata Property Act prescribes how operating and other costs are to be shared. Section 99 sets out how the owners’ contribution to the Strata Corporation’s operating and contingency reserve fund are to be calculated. It provides that each owner is to pay that portion of such costs that the owner’s unit entitlement bares to the total unit entitlement of all the lots in the Strata Corporation. Repairs of the kind necessary to the apartment tower are not operating expenses and the contingency reserve fund does not and will not have a sufficient balance to cover them. As a result they will have to be funded by a special levy. Section 108 of the Actprovides that:

(1) The strata corporation may raise money from the owners by means of a special levy.

(2) The strata corporation must calculate each strata lot's share of a special levy

(a) in accordance with section 99, 100 or 195, in which case the levy must be approved by a resolution passed by a 3/4 vote at an annual or special general meeting, or

(b) in another way that establishes a fair division of expenses for that particular levy, in which case the levy must be approved by a resolution passed by a unanimous vote at an annual or special general meeting.

...

[30]         The Strata Corporation has a total unit entitlement of 3,537. The unit entitlement of the apartments range from 108 to 138 per lot and total 2,041 units or 58 percent of the total. The townhouse lots range from 118 to 150 per lot and total 1,496 or 42 percent of the total unit entitlement.

[31]         The 2011 Report groups the recommended repairs according to the urgency of undertaking them. The two most urgently needed repairs relate exclusively to the apartment tower. As noted above they are estimated to cost $1,882,406. The third category of repairs, those that are the least urgently needed, relate to the two townhouse buildings and are expected to cost $137,838. Assuming all the repairs are undertaken, the cost per unit of entitlement will be $571. The cost for each apartment-style lot will range from a low of $61,668 to a high of $78,798. The cost for the townhouse lots will range from $67,378 to $85,650. If the Strata Corporation is divided into sections and the repair costs are borne by the type of units to which they relate, the cost per unit of entitlement for the apartment-style lots would be $922 per unit. The cost to each apartment owner would range from a low of $99,576 to a high of $127,236. The townhouse owners’ cost per unit of entitlement would be $92. The individual owners would have to pay from $10,856 to $13,800.

[32]         Put in other terms, some 93 percent of the repairs relate to the apartment tower. If they are paid for by all of the owners contributing according to their unit entitlement, the townhouse owners will pay 42 percent of these costs. In terms of the impact on individual townhouse owners, they will be paying from between $56,522 to $71,850 more than if they were paying only for repairs to the buildings housing their units. This, they say, is significantly unfair.

[33]         The apartment owners on the other hand argue that they purchased lots in the Strata Corporation as a whole and on the assumption that every owner would contribute as provided for by theAct. If sections are created and costs allocated according to unit type and building benefited, then they will pay from between $37,908 to $48,438 more than they reasonably expected to pay. They also say that there is no history of treating the townhouse buildings differently than the apartment tower. Further, they argue they will be saddled with the additional administrative costs associated with running what will be in effect three strata corporations - the two sections and the umbrella Strata Corporation. Those costs they argue are not insignificant. Finally, they point out that there are amenities and services housed in the apartment tower which benefit the townhouse owners. To the extent that is so, repairs to the apartment building benefit the townhouse owners. Section 195 of the Strata Property Act provides that only the expenses that relate “solely” to the strata lots in a section are section expenses to be paid for by that section. If the townhouses benefit from the cost of repairs to the apartment building, then arguably the expense does not relate “solely” to the apartment-style units and is not an expense to be borne by only one section.

[34]         The petitioners argue that their situation is similar to that dealt with in Chow and to a lesser extent Shaw v. Strata LMS 3972, 2008 BCSC 453, 71 R.P.R. (4th) 255. The respondents argue that support for their position is found in  Strata Plan LMS 1537 v. Alvarez, 2003 BCSC 1085, 17 B.C.L.R. (4th) 63; Terry v. Strata Plan LMS 2153, 2006 BCSC 950; Peace v. Strata Plan VIS 2165, 2009 BCSC 1791; Liverant v. Strata Plan VIS-5996, 2010 BCSC 286, The Owners, Strata Plan VR1767 v. Seven Estate Ltd., 2002 BCSC 381, 49 R.P.R. (3d) 156 and Large, McCall v. Strata Plan No. 601, 2005 BCSC 1128, 34 R.P.R. (4th) 62.

[35]         An examination of this jurisprudence should begin with Alvarez, a decision of Bauman J. (as he then was). The issue in Alvarez related to the cost of repairs to the building envelop. The threshold legal question was whether the regime created by the Strata Property Act or the Condominium Act governed the allocation of those costs. In the course of answering that question Bauman J. considered the overall scheme of the Strata Property Act. He held at paragraph 35 that the organizing principle of the Strata Property Act is that “you are all in it together”.

[36]         The strata development in Alvarez consisted of eight units - two of which were in a heritage house while the other six were in a new building attached to the heritage house. The new building experienced water penetration problems and costly repairs were needed to remedy them. The Alvarezes, who owned one of the heritage units, did not want to contribute to the cost of the repairs, taking the position that the repairs did not benefit them at all. Bauman J. concluded that all of the units in the development were of one type, and thus the option of creating sections was not available. The question of whether the allocation of the repair costs in accordance with unit entitlement was significantly unfair was however considered. At paragraph 97 he wrote:

            From the perspective that this building is an integrated structural unit (albeit marrying old and new construction) there is nothing unfair or oppressive, as urged in the alternative by Mr. and Mrs. Alvarez, in the resolution of 15 October 2001. On the contrary, it is wholly consistent with the implicit representations made by the Alvarezes as owner developers of this project. That is to say, there was never any suggestion in the disclosure statement for this development but that common expenses would be shared by all units in accordance with their unit entitlement.

[37]         The repair costs in Alvarez were estimated at $160,000. The precise implications for the individual owners is not set out in the decision but, assuming relatively equal unit entitlement, the cost to the Alvarezes would likely be $20,000 if all contributed to the repair costs. If only those housed in the newly constructed portion of the building paid, then each of them would pay about $26,666.

[38]         Terry is another decision of Bauman J. It involved a phased strata development. All the units were of the same type and thus sectioning was not available as a remedy if the actions complained of were found to be significantly unfair. Phase 1 of the development had water penetration problems. The other two buildings did not. The cost of repairing the problems was variously estimated at between $2.9 million and $4 million. There were 302 units in the building. The repairs would cost between about $10,000 and $13,500 per unit. If only phase 1 units were required to shoulder the cost, the levy would be about $25,000 per unit (about half the units were in phase 1). The phase 1 owners sought declarations that the repairs were necessary and that there be a special levy applicable to all owners according to their unit entitlement. This was resisted on the ground that it would be significantly unfair. The court held that all owners in all phases were required to contribute to the cost of repairs. In reaching that conclusion Bauman J. adopted the more expansive definition of “significant unfairness” in Reid and then noted at paragraph 86:

I begin by noting that in each of the cases cited by counsel where "significantly unfair" conduct was found, there had been a history of past dealing or conduct which the strata corporation, in each case, was ignoring in pursuing the impugned action, usually against a distinct minority within the strata corporation...

He then concluded in paragraphs 100 and 102 that:

[100]    Nothing in the conduct of the strata corporation before the advent of Phases 2 and 3 can sustain a submission that the corporation has been "significantly unfair" to these new members. ...

...

[102]    The unfairness argument really falls away when one looks at what the Phase 2 and Phase 3 owners knew, or ought to have known, when they purchased their units. Nothing about the problem with the Phase 1 buildings was kept secret. The nature and extent of that problem was disclosed in the minutes of the strata corporation. The problem was also, eventually, more fully disclosed by the developer, at least to the extent of putting purchasers on their enquiry in the amended Disclosure Statement of October 2003. There is no suggestion that the Phase 1 owners delayed so as to subject the Phases 2 and 3 owners to responsibility for the repair costs.

[39]         The declarations requiring the strata corporation to effect the necessary repairs and allocate costs based solely on unit entitlement sought in Terry were, for the most part, made. The court found that it was not significantly unfair for owners in buildings that did not have water ingress problems to pay, according to their unit entitlement, for repairs necessary to the buildings that did have those problems.

[40]         The matter at hand has three circumstances that may serve to distinguish it from Terry. Those three circumstances are: firstly, in the matter at hand the buildings house different types of units; secondly, the expenses are not ones that anyone anticipated when they purchased; and finally, the expenses per unit of entitlement are significantly higher.

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Kelowna, KAS 2048: Strata lot owner failed to provide evidence to prove significant unfairness

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Southern Interior Construction Association v. Strata Plan KAS 2048,

 

2007 BCSC 792

Date: 20070605
Docket: S066553
Registry: Vancouver

Between:

Southern Interior Construction Association, Inc. No. 8302A

Petitioner

And

The Owners, Strata Plan KAS 2048

Respondent


Before: The Honourable Mr. Justice Rogers

Reasons for Judgment

Counsel for the Petitioner:

T.A.M. Peters

Counsel for the Respondent:

D.M. Rush

Date and Place of Hearing:

May 28, 2007

 

Kelowna, B.C.

Introduction

[1]                The petitioner owns two of nine strata lots in a commercial development located in Kelowna, B.C.  The petitioner asserts that the current allocation of common costs, based upon the petitioner’s strata entitlement units, is significantly unfair to it.  It says that the court should exercise its discretion to vary the allocation so as to relieve it of the unfairness.

[2]                These Reasons follow the hearing of the petition.

The Facts

[3]                The strata development in issue was created in June 1998.  It is located in Kelowna, B.C.  The development is exclusively commercial – there are no residences in the building.  The developer was University Business Park Ltd.  There were originally eight separate strata titles.  The relevant legislation in effect at the time required the developer to file a schedule of unit entitlement for each of the eight strata lots.  The schedule of units of entitlement determined, among other things, the proportion of common expenses that any given lot owner had to pay.  The 1998 schedule was thus:

Lot No.

 

Size in
Square Meters

 

Units of
Entitlement

1

 

152

 

152

2

 

153

 

153

3

 

153

 

153

4

 

178

 

178

5

 

181

 

181

6

 

153

 

153

7

 

153

 

153

8

 

152

 

152

[4]                The building is two stories tall, but the size in square meters for each unit was based only on the footprint of the ground floor.  There was no evidence before the court that, when the original schedule of units of entitlement was created, a second floor or mezzanine had been built in any of the units.

[5]                In October 1999, the petitioner offered to buy Lot 4 from the developer.  At that time, that is, in October 1999, a mezzanine had been constructed inside Lot 4.  The petitioner stipulated a condition in its offer.  The condition was that it be permitted to subdivide Lot 4 into two separate lots, one lot to comprise the ground floor and a portion of the mezzanine and totalling 242 square meters, and the other lot to comprise the remainder of the mezzanine which totalled 116 square meters.  The subdivision plan required unanimous consent from the other strata lot owners.  Those other owners gave their consent.  The petitioner completed its purchase of Lot 4 and it began the process of subdivision.

[6]                The subdivision was completed in October 2000.  The subdivision plan was submitted to the Land Title Office.  Under the plan, Lot 4 was replaced by Lot 9 which was the ground floor and a portion of the mezzanine totalling 242 m2, and Lot 10 which comprised the 116 m2 remainder of the mezzanine.  The subdivision plan was accompanied by a certificate from a surveyor.  The surveyor confirmed the area in square meters of the two new lots.  A new schedule of unit entitlements was also created.  Lot 4 was deleted from the new schedule and the newly created Lots 9 and 10 were added.  The new schedule of unit entitlement was thus:

Lot No.

 

Size in
Square Meters

 

Units of
Entitlement

1

 

152

 

152

2

 

153

 

153

3

 

153

 

153

(deleted) 4

 

-

 

-

5

 

181

 

181

6

 

153

 

153

7

 

153

 

153

8

 

152

 

152

9

 

242

 

242

10

 

116

 

116

[7]                The new schedule did not show any changes in the area of the lots not affected by the subdivision.  There is no evidence that the surveyor was asked to survey the other lots for the presence of mezzanines, nor was there evidence that in October 2000 there were, in fact, any other mezzanines constructed inside those lots.

[8]                The petitioner immediately sold Lot 10 to a third party.  In October 2002, the petitioner bought Lot 10 back from the third party.

[9]                In the fall of 2001, the petitioner put a motion to the strata corporation to alter the basis on which the area in square meters of the strata lots should be determined.  The status quo then was that the area of the lots was determined by the footprint of the lot’s ground floor (i.e.:  the original method of determining unit entitlement).  The petitioner’s motion would have changed the formula by increasing the lot area to 1.5 times the footprint of the ground floor.  This, presumably, would have had the effect of including in the lot’s area whatever floor space might have been added by the construction of a mezzanine level.  The members of the strata corporation considered the petitioner’s proposal.  In November 2001, the strata corporation members voted to reject the petitioner’s motion to revise the schedule of units of entitlement.

[10]            In 2006, the development’s roof required repair.  The repair was carried out at a cost of approximately $52,000.  That expense was allocated among the strata owners in accordance with their units of entitlement.  The petitioner’s share of the roof expense, based upon its allocation of a total of 358 units (242 units for Lot 9, plus 116 units for Lot 10) was slightly shy of 25 percent of the total.  If the petitioner’s units had been limited to the area of Lot 9’s ground floor footprint, its share of the expense would have been only 14 percent.

[11]            Although there was no reliable evidence led on the point, the parties agreed that as of the petition’s filing in October 2006, Lot 6 did not have a mezzanine but the other Lots did have mezzanines constructed inside them.  There was no evidence and no agreement with respect to the size of those other mezzanines or when they were built.

Relief Sought

[12]            The petitioner seeks a declaration that the current allocation of units of entitlement is significantly unfair to it.  The petitioner asserts that all but one of the other Lot owners have and use mezzanines, but that the petitioner is alone in having to pay common costs based upon its ownership and use of a mezzanine.  The petitioner says that the proper thing to do is to quash the new schedule of units of entitlement and to reinstitute the original schedule.  That would, according to the petitioner, be fairer in an overall sense than the present regime.

Applicable Legislation

[13]            The relief the petitioner seeks engages two sections of the Strata Property Act, S.B.C. 1998, c. 43.  They are s. 246 and s. 164.

[14]            Section 246 describes the method by which units of entitlement shall be determined when a strata plan is developed.  There are two schemes:  one for residential and one for non-residential (oftentimes called commercial) strata developments.  The portions of the section relevant to this proceeding read thus:

246(1)  The person applying to deposit a strata plan must establish the unit entitlement of a strata lot in accordance with subsection (3).

(3)        The unit entitlement of a strata lot, other than a strata lot in a bare land strata plan, must be calculated as follows:

(a)        if the strata lot is a residential strata lot, the unit entitlement is either

(i)         the habitable area, in square metres, of the strata lot, as determined by a British Columbia land surveyor, rounded to the nearest whole number,

(ii)        a whole number that is the same for all of the residential strata lots, or

(iii)       a number that is approved by the superintendent and that in the superintendent's opinion allocates a fair portion of the common expenses to the owner of the strata lot;

(b)        if the strata lot is a nonresidential strata lot, the unit entitlement is either

(i)         the total area, in square metres, of the strata lot, as determined by a British Columbia land surveyor, rounded to the nearest whole number,

(ii)        a whole number that is the same for all of the nonresidential strata lots, or

(iii)       a number that is approved by the superintendent and that in the superintendent's opinion allocates a fair portion of the common expenses to the owner of the strata lot.

(4)        For the purposes of subsection (3), "habitable area" has the meaning set out in the regulations.

(7)        Subject to the regulations, an owner or the strata corporation may apply to the Supreme Court for an order under subsection (8) if

(a)        the unit entitlement of a residential strata lot is calculated on the basis of habitable area in accordance with subsection (3) (a) (i) or on the basis of square footage in accordance with section 1 of the Condominium Act, R.S.B.C. 1996, c. 64, and

(b)        the actual habitable area or square footage is not accurately reflected in the unit entitlement of the strata lot as shown on the Schedule of Unit Entitlement.

(8)        On application under subsection (7) and after consideration of the matters set out in the regulations, the Supreme Court may

(a)        order that a Schedule of Unit Entitlement be amended, in accordance with the regulations, to accurately reflect the habitable area or square footage of a strata lot, and

(b)        make any other orders it considers necessary to give effect to an order under this subsection.

[15]            Section 164 of the Act clothes the court with the power to rectify decisions taken by a strata corporation that are significantly unfair to one or more strata owners.  Section 164 reads:

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.

Issues

Application of Section 246

[16]            The remedial provision in s. 246(7) has no application in this case.  That is because that remedial provision is limited to redressing problems in the allocation of entitlement units based on habitable areas in residential developments.

[17]            However, the fact that there is no remedial provision for commercial developments is, nevertheless, instructive.  The fact that the Legislature did not include a remedial provision for commercial strata plans indicates that the Legislature wished that commercial strata developers should adhere to one of the three allocation methods stipulated by s. 246(3)(b) (i.e.:  prorated based on area in square meters, equal allocation, or some other formula approved by the Superintendent).

[18]            In the context of commercial developments, then, s. 246 comprises a code for the calculation and determination of entitlement units in commercial strata developments.  There is no room for departure from the statute.

[19]            In the present case, the subdivision of Lot 4 engaged the allocation method prescribed by s. 246(3)(b)(i).  The petitioner did not take the position that equal allocation in accordance with s. 246(3)(b)(ii) should have been employed.  The petitioner did not bestir itself to seek the Superintendent’s approval of a custom designed formula as it might have done under s. 246(3)(b)(iii).

[20]            What in fact happened was that the subdivision surveyor determined the area in square meters of each of the two new lots that derived from Lot 4.  Those areas were incorporated into a new schedule of unit entitlement.  The subdivision process thus adhered to the statutory prescription for determination of area and the entitlement schedule.  Neither party to this proceeding can reasonably complain because the subdivision followed the statute.

[21]            Neither can the petitioner reasonably complain that the surveyor did not survey all the other lots in the development in the year 2000 to determine whether they, too, had mezzanines.  The petitioner offered no evidence that, in October 2000, when the subdivision was completed, any of its neighbours had built or were using second story space in their units.  Absent some evidence that there was reason to believe that the area in square meters of the other units had increased by virtue of additional mezzanine space, the petitioner cannot credibly complain that the survey ought to have included all the other strata lots.  There was, therefore, no reason then, and no ground now, for complaint that the area of the other units remained unchanged when the new schedule of unit entitlement was created.

Application of Section 164

[22]            There are three distinct steps to determining whether an order should be made pursuant to s. 164.  The first step is to identify the decision under attack; the second is to assess all the facts relevant to the fairness of that decision; and the third is to assess whether the decision was, in all the circumstances, significantly unfair to the applicant.

[23]            The petitioner relied on s. 164 but did not specifically identify the decision or decisions it wants remedied.  Be that as it may, the court should nonetheless assess the evidence before it in order to determine whether there are any decisions that might be reviewable pursuant to the statute.

[24]            As noted earlier, the original and the new schedules of unit entitlement were prepared in accordance with the area formula prescribed by s. 246(3)(b)(i).  They were not the product of a decision of the strata corporation or council.  The original allocation of unit entitlement and the allocation that followed the subdivision were not, therefore, decided by the strata corporation or council.  The original and the new schedules of entitlement units are not, therefore, reviewable under s. 164.

[25]            The petitioner did put forward a motion in 2001 for a reallocation of the units of entitlement.  By that motion, the petitioner sought to revise the definition of “strata lots’ area” in square meters.  The revision would have had the effect of grossing up each lot’s ground floor area by one-half.  The corporation did not adopt the petitioner’s proposal.  That was a decision by the corporation, and it is a decision that could be subject to review pursuant to s. 164.

[26]            The evidence the petitioner adduced in the hearing did not describe the facts and circumstances of the strata owners when they cast their votes.  More specifically, the petitioner did not lead any evidence to show that when they voted on the petitioner’s measure, one, some, or all of the lot owners actually had mezzanines or second floors in their lots.  Absent that information, the court cannot assess whether it was fair, ordinarily unfair, or significantly unfair for the owners to have decided to reject the petitioner’s proposal to revise the allotment formula.  The petitioner has, therefore, simply failed to establish that the circumstances surrounding the November 2001 vote could bottom a finding that the corporation’s decision was significantly unfair to the petitioner.

[27]            The only other decision by the strata corporation to which the petitioner referred was its decision to allocate the cost of repairing the building’s roof in accordance with the new schedule of unit entitlement.  That was clearly a decision taken by the corporation and it is, therefore, capable of being the topic of review under s. 164.

[28]            That decision was taken only a few months before the petition was filed.  The petitioner asserts that as of the advent of the petition all of the other strata lots, excepting only Lot 6, had mezzanine space.  Given that only two or three months passed between the decision and the petition, it is reasonable to infer that those mezzanines were in place when the corporation decided to alloca

Judge belittles condo owner for insisting that strata corporation provide financial reports and otherwise comply with the Strata Property Act

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Maciaszek v. Gosselin,

 

2007 BCSC 437

Date: 20070329


Docket: S67020
Registry: Kelowna

Between:

Stan Maciaszek

Plaintiff

And

Frank Gosselin

Defendant


Before: The Honourable Mr. Justice Rogers

Reasons for Judgment

Counsel for the Plaintiff:

T.T. Brown

Appearing on his own behalf:

F. Gosselin

Date and Place of Trial:

March 15, 16, 20 and 21. 2007

 

Kelowna, B.C.

Introduction

[1]                The plaintiff is suing the defendant for damages arising out of the plaintiff’s allegations that the defendant harassed, discriminated against, and inflicted intentional emotional stress upon him, and that the defendant trespassed upon and damaged the plaintiff’s property.

The Facts

[2]                There is on Cameron Road, in Kelowna, B.C., a five-unit strata complex.  The plaintiff owned Unit No. 2710.  He was the first person to occupy the strata.  He moved in shortly after it was built.  That was in 1992 or 1993.  The other units at 2712, 2714, 2716, and 2718 eventually filled up with other owners.  One of those owners was the defendant, who occupied Unit No. 2718.

[3]                The owners of the units were members of a strata corporation.  The corporation governed the operation of the complex.  The members elected the corporation’s officers each year at an annual general meeting.  Such financial reports as could be produced were presented at these AGMs.  The AGMs were generally held near the end of February or beginning of March.  The strata corporation was charged with setting rules and regulations for the occupiers of the complex, and with collecting enough money from the unit owners to meet the strata’s common expenses.  Those common expenses included landscaping, irrigation, maintenance and replacement of infrastructure, and so on.  With only five units in it, it was possible for the strata to be both efficient and informal.

[4]                The plaintiff’s personality did not easily mesh with the other occupiers of the complex.  I accept the evidence of those witnesses who described the plaintiff as a rigid authoritarian.  After having observed the plaintiff during this three-day trial, I would adopt that description as well.  The plaintiff’s unwillingness to compromise on any issue on which he felt he was right and others were wrong, coupled with his disinterest in the expectations and desires of other members of the complex, made personality conflicts with the other members inevitable.  When those conflicts arose, they tended to fester.  That is because the plaintiff was not prepared to accept any resolution short of capitulation to his point of view.

[5]                Up until December 2000, it was not necessary for the plaintiff to be an officer of the strata corporation.  Unfortunately, in that month the strata’s chairman planned to move out.  Another owner who had previously taken a role in strata governance was also leaving.  That left three occupiers, the plaintiff, the defendant, and Rebecca Secord, to fill the corporation’s three offices of president (or chair), treasurer, and secretary.  The defendant had been elected treasurer at the previous AGM.  Ms. Secord was the secretary.  At a meeting on December 3, 2000, the plaintiff volunteered to act as chairman until the next AGM.  The others agreed.  When that next AGM was called in early March 2002, the plaintiff was elected to his position as chair (although the term “elected” gives the process rather more glamour than it deserves – the plaintiff, the defendant, and Ms. Secord were the only members present at that meeting; the plaintiff took office more by default than by a genuine democratic exercise).

[6]                It would be an understatement to say that the plaintiff took his role of chairman seriously.  He acquired a copy of the Strata Property Act, S.B.C. 1998, c. 43.  He read it carefully.  He studied the strata’s rules and regulations.  He maintained an alert lookout for infractions committed by his neighbors.  There was no evidence at trial that any felonies or misdemeanors were actually taking place at the time.  Nevertheless, in April 2002, the plaintiff took it into his head to circulate a survey to the four other households in the complex.  The survey was ostensibly an invitation to the other households to express their opinion on the adequacy of the strata’s rules and regulations and to comment on any changes they might like to see made to those rules.  The survey was written with rather imperious language.  For example, the introductory paragraph included this:

In order to bring our Strata situation to the compliance with the Strata’s RULES AND REGULATIONS we are asking every member of our Strata to respond to this survey...

[7]                The plaintiff used the royal first-person pronoun “we” in this paragraph.  There was no “we” behind the survey; the plaintiff acted on his own and without conferring with the corporation’s officers or its members.  There was no suggestion in any of the evidence that around this time affairs in the complex made this survey necessary or even a good idea.

[8]                In any event, the recipients of this missive naturally took from this language that the survey’s author thought that rampant rule breaking was going on.  This impression was reinforced by the survey’s closing:

12.       Strata Council will review all responses, will do own examination of the whole property, and will make final decision within approximately two month.  Final decision of the Strata Council will be implemented and enforced.

[9]                This language brooks no nonsense from unit occupiers.  I find that even though two households did complete and return it, the plaintiff’s survey was generally not welcomed by the strata’s occupants.

[10]            I have no doubt that in the plaintiff’s mind his survey was a good thing.  I accept that the plaintiff believes that rules are meant to be strictly obeyed and deviation should be sanctioned.  I also accept that the plaintiff genuinely wanted to know whether the strata members wished to alter the regulatory regime within which they lived.  I also have no doubt that, except for the plaintiff, the strata’s members were primarily interested in just getting along with one another, doing the strata’s business in a relaxed and sometimes informal manner, and not “getting in one another’s faces” over minor infractions.

[11]            Unfortunately, the plaintiff decided that not only was he the strata chairman, he was also something like a park superintendent or camp policeman.  He took it upon himself to tell other occupants that they were breaking the rules.  On one occasion in early summer 2002, he upbraided Mr. Secord for parking his commercial truck on the roadway some distance from the plaintiff’s unit and for using a power-tool to buff its aluminum wheels.  The plaintiff’s own evidence on this is telling of his attitude.  The plaintiff said words to the effect that he went to tell Mr. Secord that this was not a proper place to park and that he should work on his truck elsewhere.  When confronted by direction, Mr. Secord asked who the plaintiff thought he was to be issuing orders.  The plaintiff replied that he was the chairman of the complex and so he had the authority to tell Mr. Secord what to do.

[12]            Not surprisingly, this episode circulated among the rest of the strata’s members.  On July 10, 2001, the four other unit owners presented the plaintiff with a letter.  In the letter, the plaintiff’s neighbors told him that they wanted him to resign as chairman of the strata corporation.  On July 14, 2001, the members held a meeting and elected Mr. Kruger to be their new chairman.

[13]            The plaintiff did not take his ouster with good grace.  The plaintiff became convinced that the defendant was spearheading a conspiracy against him.  The plaintiff’s theory is that because the defendant was slow in producing the strata’s financial reports (the defendant was still the corporation’s treasurer), and because the plaintiff continually badgered the defendant for those reports but did not receive them, and because, as the plaintiff later learned, the defendant was in arrears on his own strata fees, the defendant encouraged the other strata members to dislike the plaintiff.

[14]            The plaintiff believes that ultimately the defendant orchestrated things so that the plaintiff became isolated from his neighbors, his unit was starved of water for its lawn, and the strata corporation refused to underwrite the cost of repairing a crack in an exterior wall of his unit.  In the end, the plaintiff believes that the defendant’s harassment left him with no choice but to sell his unit for less than fair market value and to quit the strata altogether.

[15]            As to those specific allegations, I accept that the other strata members did not like the plaintiff.  They did not like him because he was difficult to get along with.  I find that his uncompromising attitude alienated his neighbors.

[16]            I find that the plaintiff’s lawn did go brown for a period during the summer of 2002 and that this was because the lawn wanted more water than the irrigation system delivered.  I also find that the defendant was not the cause of the plaintiff’s problem.  The plaintiff’s problem with his lawn was caused by the fact that the strata development is on a slope, with the plaintiff’s unit at the top.  Irrigation water runs downhill and collects in the septic system at the bottom of the development.  The volume of irrigation had to be moderated so that the strata was not faced with repair bills for when the septic field backed up into the lowest unit (which the defendant happened to own) and so that the strata would not have to pay for the expensive removal of waste water from the septic tank.  The strata corporation balanced the cost of having too much irrigation against the cosmetic effect of cutting back on irrigation and chose to act rationally by reducing the volume of irrigation.  The plaintiff’s lawn suffered in the result.

[17]            The plaintiff asserts that the installation of a padlock on the irrigation control panel was an element of the harassment he suffered at the defendant’s hands.  The evidence concerning the padlock was that someone who had no authority to access that panel was, in fact, going into it and was increasing the irrigation settings.  This unauthorized increase exacerbated the septic overflow problem.  The strata members who were authorized to access the irrigation control panel decided that the only thing to do was to secure the panel against tampering.  They decided to install a padlock and to limit distribution of the keys to the chairman and the treasurer.

[18]            In the spring of 2002, Mr. Kruger sent a notice around the strata to say that he would like to have a walk-around meeting during which the strata members could have a look at their common facilities together and discuss their plans for the coming year.  Only the plaintiff objected to the chairman’s proposal.  The plaintiff called Mr. Kruger on the telephone, and in an abrupt, authoritative and uncompromising tone, the plaintiff instructed Mr. Kruger that his “walk-around” meeting was not a proper AGM, that a proper AGM had to be called by giving a certain number of weeks notice, and that the notice had to include a proposed agenda and the corporation’s financial reports.  Mr. Kruger was an ordained clergyman before he moved into the strata complex.  His profession required him to deal with a wide variety of personalities.  It also equipped him with skills in assessing how people will behave given their demeanor and communication styles.  I accept Mr. Kruger’s characterization of his conversation with the plaintiff.  He said that the plaintiff was impolite when the plaintiff did not start the conversation with a polite “hello” but instead launched directly into a lecture on how to properly convene an AGM.  I also accept Mr. Kruger’s evidence that the plaintiff’s tone indicated that he would tolerate no opinions contrary to his own.

[19]            I also accept Mr. Kruger’s evidence that from this conversation and from the plaintiff’s general demeanor, he could “see the writing on the wall”.  He predicted (accurately, as it turned out) that the plaintiff was going to be a significant irritant to whoever managed the strata’s affairs.  Mr. Kruger wanted nothing to do with the strife he saw approaching.

[20]            In late May 2002, Mr. Kruger resigned as the corporation’s chair.  Ms. Secord took his place.  The plaintiff then began a campaign to force the calling of an AGM.  He sent around letters telling the others that he planned to convene an AGM on one of several dates.  With the exception of Ms. Secord, who told the plaintiff she could not attend because she had to work, the other strata members simply ignored the plaintiff’s messages.

[21]            The defendant was treasurer from February 2000 through 2001 and 2002.  He did not, however, diligently produce financial records and reports for the strata corporation.  While there was no evidence that any of the strata’s money, whether documented with receipts or not, was misspent, the plaintiff became increasingly agitated by the fact that the defendant had not produced financial reports as required by the Strata Property Act.  Finally, in January 2002, the plaintiff stopped paying his monthly strata fees.  He did this because, in his words, not having financial reports, he was not satisfied that his fees were being properly spent by the corporation.

[22]            As 2002 wore on, the four other unit owners began to withdraw from one another.  I accept Mr. Kruger’s evidence that the general sentiment at the time was that no one wanted to talk to anyone else because the only topic of conversation was how rotten the strata had become.  The members stopped having meetings. 

[23]            In December 2002, the plaintiff launched a petition out of the B.C. Supreme Court Registry at Kelowna.  His petition named the strata corporation as respondent.  The proceeding sought a court order appointing a management company to take over governance of the strata corporation.  The plaintiff’s complaint was that the corporation had not received financial reports from its treasurer and had not held a regular AGM.  The petition dismayed the plaintiff’s neighbors.  In their view, the discord and tension in the complex which it led to was the product of the plaintiff’s difficult nature.  It seemed unnecessary and unfair that they should be embroiled in a lawsuit over a situation that the plaintiff himself had manufactured.

[24]            The plaintiff’s petition was set for hearing in December 2002, but just before the matter was called, the plaintiff and the other strata members agreed that a management company would take over operation of the strata.  They consented to an order to that effect.  Okanagan Strata Management Ltd. was appointed to manage the strata’s affairs.  OSM assigned Mr. Ardley to attend to the strata’s business.  I accept Mr. Ardley’s evidence that the plaintiff was combative throughout Mr. Ardley’s involvement in the strata.  I also accept his evidence that the strata was deeply divided – the plaintiff was in his corner with his ideas of how things should be done, and the other four strata owners were in their corner.

[25]            As to the crack in the plaintiff’s wall, the plaintiff acknowledged that this was a longstanding problem with his unit.  He attributed it to subsidence of the soil on which his unit’s foundation was built.  The plaintiff approached the strata council in 2003 to pay for the repair of the crack.  The council considered its financial position at the time and decided to assess the crack but to put off repairing the crack because it wanted to ensure that it had the financial resources to meet the various contingencies that it faced.  Those contingencies included having to pay lawyers to defend itself from further legal proceedings that they anticipated the plaintiff might launch.  This was not an unwarranted concern – even after OSM took over management, the plaintiff continued to involve his lawyer and threaten legal action if his grievances were not addressed.  The plaintiff interpreted the council’s decision to assess but put off repairing the crack as an outright refusal to fix his problem.  This solidified his feelings of having being “hard-done-by” and discriminated against.  The plaintiff put his unit up for sale, and in March 2004 he moved out.  This, he says, was a consequence of the defendant’s harassment.

[26]            The plaintiff says that he lost money on the sale of his unit because the outside wall of his unit was cracked and because the defendant pulled some stucco away from the crack, thus exposing more of its length to potential purchasers.  I accept Ms. Secord’s evidence that after the council decided to assess the crack, she and the defendant attended the outside of the plaintiff’s unit.  They located the crack.  The defendant touched the stucco around the crack and the stucco simply fell off the building.  There was no tugging or pulling involved.

[27]            The plaintiff did not adduce evidence from persons who looked at the unit and who might have said that their impression of the house’s value was negatively influenced by seeing, say, a 20 cm as opposed to a 10 cm crack in the building’s foundation.  The plaintiff testified that he thought that if the crack had been repaired he should have got between $165,000 and $170,000.  However, the plaintiff did not adduce reliable evidence that the $155,000 he, in fact, received for his unit was less than what it would have been worth had the visible portion of the crack been shorter or if the crack had been repaired.  Such reliable evidence would have come from a properly qualified real estate appraiser.  The plaintiff does not, obviously, have any such qualification.

Analysis

[28]            The plaintiff may have been technically right when he insisted that the strata corporation operate strictly within the requirements of the Strata Property Act.  However, the way that the plaintiff expressed his opinions and demands quickly and thoroughly alienated his neighbors.

[29]            The plaintiff may also be correct that the defendant may have had a motive to drive the plaintiff away, viz:  a desire to conceal the arrears on his strata fee account.

[30]            The difficulty with the plaintiff’s case is that he adduced no evidence whatsoever that the defendant actually defamed him, or that the defendant did or failed to do anything that might amount to harassment, or that the defendant influenced others against the plaintiff.  That evidence, if it existed, would necessarily have come from the persons to whom the defendant published the defamatory remarks, or whose minds the defendant poisoned against the plaintiff.  Those persons would have been the three other unit owners:  Mr. Kruger, Ms. Secord or the Martins.  Mr. Kruger and Ms. Secord testified, and neither of them gave any evidence that could be interpreted as supporting the plaintiff’s case against the defendant.  The Martins were not called.  The plaintiff’s own evidence as it related to his allegations against the defendant amounted to nothing more than suspicion and supposition.  That is to say, the plaintiff was not able to testify that anyone told him that the defendant had defamed him, or that the defendant had taken steps to oust him from the complex, or that the defendant had done or failed to do something that might amount to harassment.

[31]            The plaintiff’s request for repair amounted to an expressed or implied invitation to attend at his unit to deal with the cracked wall.  The strata council, therefore, had the plaintiff’s authority to inspect the crack the plaintiff wanted it to repair.  The defendant was a bona fide member of the strata council and was entitled to look at the crack himself.  I accept Ms. Secord’s evidence that the stucco around the crack was fragile and that it simply fell off when the defendant happened to touch it.  Nothing about that event suggests that the defendant acted deliberately or negligently so as to increase the crack’s exposure.  In the result, I cannot find that the defendant trespassed on or caused damage to the plaintiff’s property.

[32]            The plaintiff did not, therefore, adduce evidence to support his claims against the defendant.  Despite his having good quality legal advice, and despite his counsel’s competent presentation of his case, that case was lacking.  The burden was on the plaintiff to prove the allegations against the defendant on the balance of probabilities, and he failed to do so.

Conclusion

[33]            The plaintiff’s action must be and is dismissed.  The defendant shall have his costs on Scale B.

“P.J. Rogers, J.”
The Honourable Mr. Justice P.J. Rogers

Case Studies, Discovery Bay (Kelowna): Residents move out - CHBC video

Discovery Bay residents move out (video)
Web posted on Tuesday, 18 July 2006
He paid a pretty penny for a deluxe waterfront condo, but tonight Bill Tzetsos is living in a student dorm. That's the story for one of the owners of the 236 units at Kelowna's Discovery Bay. Shoddy engineering has left the builders with a huge reconstruction task... It's left residents scrambling for other accommodation, and it's left unanswered questions about how such a big project could have gone so terribly wrong.

This is G o o g l e's cache of http://www.chbc.com/index.php?name=News&file=article&sid=13042

Case Studies, Discovery Bay (Kelowna): Still no solutions after three years of complaining

Faulty condos will be gutted (KELOWNA)

By J.P. SQUIRE Tuesday, July 18, 2006, 12:01 AMhttp://www.kelownadailycourier.ca/article_2584.php
The 236 condo owners at Discovery Bay learned Monday they may not have structural repairs to their building completed for up to two more years.A representative of the strata council and a senior city manager were the only two people who emerged from a two-hour meeting willing to speak to reporters.Bill Tzetzos, who owns one unit, said owners learned repairs will apparently involve tearing out virtually every piece of drywall on load-bearing walls, installing more studs and re-drywalling.Another assessment will be conducted during the next 10 weeks, he said, but work is not scheduled to begin until January 2007.That is in addition to repairs to inadequate foundations, the first problem with the project to emerge three years ago.Monday’s meeting of all those involved in Discovery Bay was called by Ken Cameron, chief executive officer of the provincial Homeowner Protection Office.He was concerned some of those involved were not living up to the spirit of the provincial legislation, said Tzetzos.Cameron was unavailable after the meeting, but in a letter, he told those involved: “This situation is not in keeping with the intent and purpose of the mandatory home insurance warranty program . . . which is that construction defects should be rectified as quickly as possible, and the risk and the damage to the homeowners as innocent parties should be minimized.”He proposed a meeting to determine if there are ways of expediting repairs and/or mitigating the legitimate concerns of homeowners.“We’ve been asking for a meeting like this, unsuccessfully, for a long time,” said Tzetzos.Owners began complaining of deficiencies to Pointe of View Developments (the developer), the city and National Home Warranty program in August 2003, he noted, adding the cityfinally recognized the problems in October 2005 and the NHW in recent months.Ron Dickinson, the city’s manager of inspection services, responded the city has been involved in looking for solutions for more than a year.“The city has not washed itself of the situation. We don’t have the solutions yet. It’s coming now, when it didn’t appear to be coming months ago,” he said.The latest engineering report, released on June 30, concluded the six-storey building at 1088 Sunset Dr. was not safe to occupy and recommended everyone move out pending repairs.The safest units are apparently the two-storey townhouses at the front and back since they don’t face the same demands on structural integrity. Tzetzos, who paid $301,000 for a one-bedroom unit in the centre, said Monday he hasn’t seen a lot of people move out, but some are leaving every day. Some of the owners of 100 rental units are asking renters to sign a waiver agreeing not to sue if something happens.Those owners expected to collect $1,600 to $2,000 a week during the lucrative summer months to help pay mortgages or as investment revenue. “I can see litigation over that loss of revenue,” said Tzetzos.Owners who live in their units can get $100 a day or $3,000 a month for living expenses from the national program, based on receipts, but those with rental units don’t qualify. At this time of year, the only accommodation that Tzetzos could find is a spartan dormitory room at UBC Okanagan.The 236 units average $400,000 each for a total assessment of almost $100 million.

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