Vancouver, VR 1411: Court ready to order windingup liquidation of leaky rotten condos at 1023, 1027 and 1029 W. 7th Avenue

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Buchanan v. S.P. VR 1411,

2008 BCSC 977

Date: 20080723
Docket: S074006
Registry: Vancouver

Between:

Mary Isobel Buchanan

Petitioner

And:

Strata Plan VR 1411, Ranald Craig Fraser, Maurice Bradley Duteau,
Vancouver City Savings Credit Union, Royal Bank of Canada and the
Toronto Dominion Bank

Respondents

Docket: S062820
Registry: Vancouver

Between:

R. Craig Fraser

Petitioner

And:

The Owners, Strata Plan VR 1411, Maurice Duteau
and Mary Buchanan

Respondents


Before: The Honourable Mr. Justice Curtis

Reasons for Judgment

Counsel for Mary Buchanan

Frank. R. Eadie

Counsel for Ranald Craig Fraser

Andrew Davis

Maurice Bradley Duteau

Appeared on his own behalf

Counsel for Court Appointed Administrator

G. Stephen Hamilton

Date and Place of Hearing:

June 9 and 10, 2008

Vancouver, B.C.

[1]                These applications concern a three-unit strata title property at 1029 West 7th Avenue, Vancouver.  There are two buildings, one in which Ms. Buchanan’s unit is located and one in which Mr. Fraser and Mr. Duteau’s units are located.  Both buildings require costly repairs for water damage.  The three owners are unable to agree upon how to proceed.  Ms. Buchanan and Mr. Duteau allege that they cannot afford the cost of repairs which they allege could be uneconomic and want the Strata Corporation wound up.  The Court Appointed Administrator has applied for the power to repair the building which coincides with the position of Mr. Fraser, who lives in his unit and wants his building repaired.  Ms. Buchanan lives in California and Mr. Duteau lives in Shanghai, neither of them occupies their units which are rented.  If repairs are ordered and either or both Ms. Buchanan or Mr. Duteau do not pay the portion of the repairs levied against their units, their units would be subject to being sold to realize the amount assessed.

[2]                The two buildings that compromise the strata title property share a foundation and stairway.  The buildings are constructed of steel studs and floors of metal decking topped with concrete.  Strata Lot 1, now owned by Ms. Buchanan was previously owned by Vinaya Vasent Kulkarni and Manoj Gupta.  In 2002, they did repair work to their roof and presented Mr. Fraser with a set of bylaws for the corporation that divided the obligation to repair between the buildings.  Mr. Fraser agreed to the bylaws and in November of 2004, he received a report dated April 29, 2002 from Spratt Emanuel Engineering Ltd. outlining deficiencies of Strata Lot 1.  In June of 2004, Mr. Fraser hired an architectural firm to help him with proposed changes to his balcony.  He hired Spratt Emanuel Engineering Ltd. to assess the condition of his building and received from that firm a report dated June 1, 2005 which outlined problems with the building in the following terms:

BACKGROUND:

The existing top storey of this 3-unit strata complex was altered at the time of construction to comply with the City of Vancouver height restrictions.  We understand that the roof had originally been constructed at a higher elevation and was cut down to comply with the City of Vancouver zoning By-Laws which require a maximum elevation of 25 ft 0 inches.  The original over-height structure was badly reconstructed at a new lower elevation to meet the City of Vancouver zoning and development By-Laws.  The resulting existing structure does not comply with the Building By-Law at the time of construction Vancouver Building By-Law 6134, nor does it comply with the current Vancouver Building By-Law 8057, 1999.  The following deficiencies were noted:

DEFICIENCIES:

1.         A mix of combustible and non-combustible construction materials were used.  The requirement was for non-combustible structure.

2.         The reconstructed structure contains window and door headers which are not supported by load bearing members.

3.         Load bearing members, where present, do not allow adequate transfer of load to subsequent lower floors.

4.         The roof structure appears to be under capacity due to the use of 2x4 wood roof rafters placed continually.

5.         Lack of adequate Environmental Separation, Part 5 of Vancouver Building By-Law 8057, 1999 requires adequate thermal and moisture protection.  The existing structure offers no dedicated roof insulation.  Heat transfer from the exterior to the interior has resulted in condensation within the roof structure and subsequent mould, fungus and deterioration.  The existing insulation value does not comply with Vancouver Building By-Law 8057, 1999 as well as the older By-Law in place at the time of construction.

6.         Unsafe wiring is present with inadequate clearance between the framing members, wiring and wall surfaces.

7.         Deficiencies of the exterior building envelope, due to improper roofing, flashing, wall cladding assemblies, insulation and vapour barrier assemblies, window detailing, door detailing, and deck detailing have all contributed to premature building envelop failure, resulting in rainwater infiltration and condensation on building surfaces.  The resultant damage consists of heavy rust to steel structural components, wood rot, fungus and mould on wood components, and subsequent damage to interior finishes.

RECOMMENDATIONS:

We recommend that extensive building envelope remediations are required at this building.  The remediations should include new roofing, new roof structure, new wall cladding, new wall structure, new windows, new doors, additional insulation, and better measures to deal with the thermal bridging evident at the walls and ceilings of the living space. This can best be accomplished by placing insulation out-board of the walls and roof of the existing living space.  In our opinion this additional exterior wall insulation will qualify for the City of Vancouver FSR exemption.  The addition of insulation to the roof will cause encroachment beyond the current building height, which we understand is at the allowable limit.

[3]                Mr. Fraser’s architect submitted an application to the City of Vancouver to repair the roof.  After the building was inspected, the City of Vancouver issued the following Legal Notice to the three unit owners:

RE:      1023, 1027 and 1029 West 7th Avenue (1029 West 7th Avenue)

A recent inspection of the unit (1029 West 7th) on the top floor of the above noted building revealed that there are multiple indications of faulty construction as follows:

1.         the roof structure is overspanned and sagging;

2.         vertical supports for the roof are not tied in to provide a continuous load path for the roof structure;

3.         beams and lintels and top wall plates are not supported to carry the superimposed loads;

4.         the bedroom wall is buckling near the top from lack of support;

5.         there is evidence of corrosion of wall members and fasteners of exterior gypsum sheathing board;

6.         the top wall plate is comprised of non structural material (flashing and partition guage metal);

The above structural deficiencies constitute AN UNSAFE CONDITION.

Accordingly, pursuant to Article 1A.6.1.2. of the Vancouver Building By-Law, you are ordered to:

1.         make application for a building permit to re-construct the roof structure and supporting members to meet the minimum requirements of the by-law BY JUNE 27, 2005

and

2.         commence repairs immediately upon issuance of the building permit

[4]                Mr. Richard Balfour, the architect hired by Mr. Fraser wrote a report dated June 8, 2005 to Mr. Fraser particularizing his findings followed by an estimate in December 2005 in which he suggested the repair costs for Messrs. Fraser and Duteau’s building would be $517,920 and $34,920 for the shared foundation and walkway structures.  No estimate was given to repair the deficiencies to Ms. Buchanan’s building.

[5]                Mr. Fraser retained legal counsel in November 2005.  His lawyer wrote a letter in December 2005 suggesting a sharing of repair costs as follows: Ms. Buchanan, $152,180.18, Mr. Duteau, $132,311.91, Mr. Fraser $167,000.83.  This expenditure would not have repaired any of the deficiencies in Ms. Buchanan’s property.

[6]                On the 15th of February 2006, Mary Buchanan commenced an action seeking a declaration that she was not required to contribute to the remedial costs of the Fraser/Duteau building.  She did so on the basis that she was led to believe that was the case when she purchased her unit.

[7]                Mr. Fraser applied to the Court by petition in Action No. S062820 for an order for repair of the buildings financed through an assessment upon the three owners.

[8]                The matter came on for hearing before Mr. Justice Cullen August 29, 2006 and resulted in the following order:

THIS COURT ORDERS THAT:

1.         The owners of strata lots 2 and 3 will contribute to the costs of remedial work to Building B, pro rata in accordance with their respective unit entitlements.

2.         The owners of strata lots 2 and 3 are responsible to contribute to the costs of repair and maintenance of Building B, pro rata in accordance with their respective unit entitlements.

3.         The Bylaws of the Owners, Strata Plan VRl411 (herein referred to as the "Strata Corporation") registered in the Land Title Office at New Westminster, in the Province of British Columbia under number BV313905 (herein referred to as the "Existing Bylaws") are hereby revoked and registration of same on the common property record of the Strata Corporation shall be cancelled upon delivery of a certified copy of this Order to the Registrar of the said Land Title Office.

4.         The Bylaws attached as Schedule "A" to this Order (herein referred to as the "New Bylaws") shall be deemed to have been passed and adopted by all members of the Strata Corporation as of the 11th day of August, 2003,

5.         The New Bylaws shall be registered on the common property record of the Strata Corporation upon delivery of a certified copy of this Order to the Registrar of the said Land Title Office.

6.         As of August 11, 2003 the rights and obligations of the owners of strata lots 1, 2 and 3 of the Strata Corporation shall be determined in accordance with the provisions of the New Bylaws and not the Existing Bylaws to the extent those bylaws affect the rights and obligations of the said owners.

7.         Pursuant to s. 174 of the Strata Property Act, S.B.C. 1998, c. 43 as amended (the "Act"), Garth Cambrey of Stratawest Management Ltd. is hereby appointed as the Administrator for the Strata Corporation to exercise the powers and perform duties of the Strata Corporation and the Strata Council, subject always to the Act, the New Bylaws and the Rules of the Strata Corporation in connection with repairs, maintenance and remediation of Building B and the stairs and foundations, part of the common property as defined under the New Bylaws.

8.         The Administrator has the following specific responsibilities:

(a)        to determine what is necessary for the proper repair and maintenance of Building "B" (strata lots 2 and 3) of the Strata Corporation and to oversee that work;

(b)        to review the expenses incurred by the Petitioner to the date of this Order and determine which of them, or which portions of them, are expenses properly attributable to the Strata Corporation as a whole, to Building B, or to either of the individual owners of strata lots 2 and 3, as the case may be, in accordance with the New Bylaws;

(c)        to determine what is necessary for the proper repair and maintenance of the stairs and foundations of the Strata Corporation covered in section 3 of the New Bylaw and to oversee that work;

(d)        to issue any demand letters or liens that may be necessary against any strata lot owner who does not pay their share of a special levy or levies approved or imposed under this Order; and to take such steps, including action under section 116 of the Strata Property Act, as may be necessary to pay for the repairs.

9.         The Administrator's determination of the allocation of previous expenses under paragraph 8(b) of this Order is subject to further review by this Court on application by any strata lot owner;

10.       The Administrator take such steps as may be reasonable and necessary to ensure that the Strata Corporation determines the appropriate recommendation and course of action for the repair of Building "B" including, without limitation:

(a)        appoint an independent engineering firm to undertake further investigations, if the Administrator deems that necessary;

(b)        consider the recommendations made in all building envelope investigation studies and other engineering or architect reports including any existing studies (collectively the "Existing Studies");

(c)        ensure that all owners have access to the reports of the independent engineering firm and the Existing Studies at least 20 days prior to any meeting called for the purpose of presenting recommendations and voting to raise funds to repair the building envelope;

(d)        ensure that the preferred repair program satisfies the requirements of the City of Vancouver so that the various Work Orders and Stop Work Orders issued by the City can be and are removed;

(e)        recommend what work if any, should be done to repair the building envelope of Building "B" and the estimated cost of any such work;

(f)         present the owners of Strata Lots 2 and 3 with the findings of the building envelope inspection, the evaluation of the Existing Studies and the suggested repair program for Building "B"; and

(g)        draft a resolution incorporating the preferred repair plan, the estimated cost, the name of the engineering firm to be hired to supervise the work and put that resolution to a ¾ vote of the Owners for their approval and acceptance, at a meeting called for such purpose by no later than January 30, 2007

(h)        if the owners fail to approve the ¾ vote resolution, to apply to Court on five clear days notice for an order determining that the recommended work is necessary and imposing a special levy on the owners in accordance with the New Bylaw.

11.       The Administrator take such steps as may be reasonable and necessary to ensure that the Strata Corporation determines the appropriate recommendation and course of action for the repair of the stairs and foundation, (which are areas that remain the responsibility of the Strata Corporation under the New Bylaw) including, without limitation:

(as in paragraph 10).

12.       The Petitioner, Mary Buchanan and Maurice Duteau and their successors in title to Strata Lots 1, 2 and 3 provide access to all information, records and documents requested by the Administrator, and provide such authorizations as are requested by the Administrator to obtain information, records and documents held by third parties which relate to the Strata Corporation.

13.       The Administrator may retain professionals, including legal counsel, for opinion, advice and services in respect of his duties pursuant to this appointment.

14.       The Administrator's fees of $150.00 per hour plus disbursements shall be rendered monthly, and shall be payable by the Strata Corporation, provided that at the request of any party, the Administrator shall pass his accounts before the Registrar of the Supreme Court of British Columbia.

15.       The Administrator shall allocate his time and disbursements, insofar as it is possible, between Building B and the stair and foundation issues referred to in paragraph 11 of this Order, which are the responsibility of the Strata Corporation in accordance with the New Bylaw, and the owners are responsible for their pro rata share of the Administrator's fees in accordance with the breakdown set out in the New Bylaw.

16.       The Petitioner shall take reasonable steps to add the Administrator as a named insured on its errors and omissions insurance policy, at the expense of the Petitioner.

17.       In the alternative, the Administrator may purchase liability insurance coverage for the work performed as the Administrator under this Order and all expenses associated in obtaining the insurance coverage shall be charged to the Petitioner as an expense of the Administrator.

18.       The Administrator shall report to the Court as soon as possible after February 1, 2007, or such other date as determined by this Honourable Court, with respect to the steps taken under this Order, the costs incurred as a consequence of his appointment as Administrator, and whether his appointment as Administrator should continue.

19.       The Administrator may apply to the Court for directions to assist and permit him to discharge his duties as Administrator hereunder.

20.       The Administrator and/or any party may apply to the Court to substitute another Administrator for the one appointed, extend the term of an Administrator for any subsequent term or terms, or to expand or reduce the scope of an Administrator's powers, as the Court deems appropriate.

21.       If any ¾ vote resolution(s) or majority vote resolution(s) of the owners are required to give effect to any of the Orders set out herein, and if such resolution(s) do not pass at a general meeting of the owners, the Administrator and/or any party shall have leave to apply to the Court for an Order approving the resolution(s).

22.       No person shall issue any legal process against Mr. Cambrey, Stratawest Management Ltd. or any employee or representative of Stratawest Management Ltd. related to this appointment without leave of the British Columbia Supreme Court.

23.       The issue of costs is adjourned generally and may be dealt with by way of a separate order.

24.       The Respondent, Maurice Duteau, has liberty to apply to this Court to make submissions with respect to this Order on five clear days notice to counsel for the Petitioner and the Respondent, Mary Buchanan.

The order made by Cullen J. makes no provisions for repairs to Strata Lot 1 owned by Ms. Buchanan. 

[9]                The order of Cullen J. was not settled by the parties until November 8, 2006.  As a result of this delay, the Administrator was unable to meet the deadlines set out in the order which were extended by the order of Groberman J. January 30, 2007.  A further order of Satanove J. extended the time to July 23, 2007.

[10]            In October 2006, on the instructions of Mr. Fraser, an action was started against parties responsible for the construction of the buildings, but there is no suggestion significant recovery is likely.  The Administrator deposes in his affidavit of February 27, 2008, “As far as I am aware, Mr. Fraser commenced the Leaky Condo Action unilaterally without the approval of the Strata Corporation.”

[11]            On June 12, 2007, Mary Buchanan filed Petition No. S074006 seeking an order to wind up the Strata Corporation.

[12]            Mr. J. Garth Cambrey, the Administrator appointed by the order of Cullen J., submitted a report dated July 12, 2007.  The Administrator called a meeting for April 16, 2007 at which resolutions were proposed to raise $20,000 by Special Levy to retain an engineering firm to prepare design and specification documents for building envelope repair for the Fraser/Duteau building, to raise $20,000 by Special Levy to prepare design specification documents for stair and foundation repair and to pay the Administrator’s fees, and to raise $5,000 by Special Levy for Administrator expenses to review Mr. Fraser’s claims for monies spent on the property.  None of the proposed resolutions was considered or discussed.  Mr. Duteau and Ms. Buchanan took the position that the repair costs were uneconomic and that the Strata Corporation should be wound up and the property sold.  The Administrator stated in his report, “It is my opinion that the Strata Corporation should proceed with obtaining cost estimates on the building envelope repairs of building “B”….”

[13]            The Administrator’s report also gave his assessment of the proper allocation of expenses incurred by Mr. Fraser.  The Administrator assigned the already incurred costs as follows: Strata Lot 1 Ms. Buchanan $4,352, Strata Lot 2 Mr Duteau $38,633.07, Strata Lot 3 Mr. Fraser $69,555.01.

[14]            The Administrator also reported as follows:

Governance of the Strata Corporation is also of concern to me as I have not seen any evidence to support that the Strata Corporation is operated within the guidelines of the Strata Property Act.  For example, the Strata Corporation does not collect Strata Fees for common expenses, does not hold strata council or Annual General Meetings to approve budgets or elect a Strata Council and, as mentioned earlier, does not have an insurance appraisal completed in order to ensure the property carries property insurance to the full replacement value as required by the Section 149(4) of the Strata Property Act.  The Strata Corporation does have a bank account that was set up for the purposes of raising funds to investigate the walkway/foundation issues.

The Strata Corporation is currently in the position of not being able to pass a ¾ Vote Resolution required to raise funds to complete the repairs to Building “B” nor the foundation/walkway repairs.  As a result, the governance of the Strata Corporation has failed in that the Strata Corporation is unable to meet its statutory obligation to repair and maintain the common property pursuant to Section 72 of the Strata Property Act.

It is my opinion that proper governance of the Strata Corporation could assist in alleviating some of the issues at hand as it would force the Strata Corporation and owners to meet at least annually to discuss the property.  To date, the Owners have been embroiled in legal battles over the condition of the property and have been unable to focus on resolving the matters at hand.  If the Owners are not willing to operate the Strata Corporation consistent with the Strata Property Act, consideration should be given to retaining a licensed strata manager who would be capable of ensuring the Strata Corporation operates within the requirements of the Strata Property Act.

[15]            In the result, the Administrator recommended “… that my appointment continue and that I be required to report to the Court on or before September 30, 2007 with respect to the results of the preparation of the design and specification and cost estimates based on such design and specification documents in order that the Strata Corporation may decide if repairs are warranted or, alternatively, consider winding up of the Strata Corporation….”

[16]            The Administrator’s Report was brought before Rice J. July 23, 2007 as a result of which the following order was made:

THE APPLICATION of Mr. J. Garth Cambrey, the Court-appointed Administrator coming on for hearing at Vancouver, British Columbia on July 23, 2007, and on hearing G. Stephen Hamilton, counsel for the Administrator, Frank R. Eadie, counsel for Mary Buchanan and Messrs. Maurice Duteau and R. Craig Fraser appearing on their own behalf, and on reading the materials filed:

THIS COURT ORDERS that:

1.         a special levy in the sum of $20,000.00 be assessed against the owners of strata lots 2 and 3 in Strata Plan VR 1411 for the purpose of preparing a design and specifications for building envelope repairs to the strata corporation's building (the "Design and Specifications Work"), to be paid immediately in accordance with unit entitlement;

2.         before Mr. Cambrey authorizes the commencement of the Design and Specifications Work, he shall:

(i)         provide to the parties the fee quotes he receives from engineers respecting the Design and Specifications Work;

(ii)        allow the parties 15 days from the receipt of the fee quotes to ask questions or provide comments in relation to the fee quotes;

(iii)       by no later than 7 days following the 15 day period referred to in paragraph 2 (ii) of this Order, confirm in writing the fee quote he intends to accept for the Design and Specifications Work;

3.         the parties will have no more than 7 days following receipt of Mr. Cambrey's written confirmation that he intends to accept a fee quote for the Design and Specifications Work, to apply to Court to seek relief in relation to Mr. Cambrey's intention to accept a fee quote, and if no application to the Court is made by any party, Mr. Cambrey may accept the fee quote without further notice to the parties;

4.         a special levy in the sum of $10,000.00 be assessed against the owners of strata lots 1, 2 and 3 in Strata Plan VR 1411 for the purpose of funding the consulting fees related to the investigation and design work for the repair of the Strata Corporation's walkways and foundation (the "Walkways and Foundation Work"), to be paid immediately in accordance with unit entitlement;

5.         before Mr. Cambrey authorizes the commencement of the Walkways and Foundation Work, he shall

(i)         provide to the parties the fee quotes he receives from engineers respecting the Work, he shall:

(ii)        allow the parties 15 days from the receipt of the fee quotes to ask questions or provide comments in relation to the fee quotes;

(iii)       by no later than 7 days following the 15 day period referred to in paragraph 5 (ii) of this Order, confirm in writing the fee quote he intends to accept for the Walkways and Foundation Work;

6.         the parties will have no more than 7 days following receipt of Mr. Cambrey's written confirmation that he intends to accept a fee quote for the Walkways and Foundation Work, to apply to Court to seek relief in relation to Mr. Cambrey's intention to accept a fee quote, and if no application to the Court is made by any party, Mr. Cambrey may accept the fee quote without further notice to the parties;

7.         a special levy in the sum of $3,648.81 be assessed against the owner of strata lot 1 for the purpose of funding the Administrator's expenses, but such assessment is subject to review by the Registrar both as to the quantum of the Administrator's fees and expenses and distribution of same between the three members of the Strata Corporation;

8.         a special levy in the sum of$13,308.67 be assessed against the owners of strata lots 2 and 3 for the purpose of funding the Administrator's expenses, to be paid immediately in accordance with unit entitlement;

9.         the parties may make reasonable inquiries of the Administrator respecting his expenses within 14 days of the date of this Order, and the Administrator shall respond to the inquiries within 14 days;

10.       the parties may review the Administrator's expenses before a Registrar of the Supreme Court provided that an appointment for a review is brought within 14 days of Mr. Cambrey responding to any reasonable inquiries received from the parties;

11.       Mr. J. Garth Cambrey may cause the Strata Corporation to obtain an insurance valuation report on the Strata Corporation's property to establish replacement value for insurance purposes and to amend the Strata Corporation insurance policy to reflect the value established by the insurance appraisal and that the cost of the insurance appraisal and any increase in premium required as a result of the appraisal be paid from the funds contained in the Strata Corporation account located at VanCity Credit Union;

12.       Mr. J. Garth Cambrey may sign a Form “I” on behalf of the Strata Corporation with respect to the new Bylaws established by the Cullen J. Order and attend to the proper registration of the bylaws at the Land Title Office;

13.       Mr. J. Garth Cambrey will report to the Court by no later than October 1, 2007; and

14.       the signatures of the Petitioner, R. Craig Fraser, and the Respondent, Maurice Duteau, are not required to approve the form of this Order.

[17]            The Administrator’s second report is dated September 21, 2007.  He reported that his total fees and disbursements from November 1, 2006 to August 31, 2007 amounted to $36,524.10.  He felt that he had not obtained sufficient information to determine whether it would be beneficial to the Strata Corporation to repair the building or alternatively wind it up and sought an extension of his appointment and recommended he report to the Court as soon as possible after February 29, 2008.  This report came before Master Tokarek October 1, 2007 who ordered the Administrator to report to the court by February 29, 2008.

[18]            A further Administrator’s Report was filed February 20, 2008.  He noted his fees and disbursements to January 31, 2008 totalled $46,454.09 being $18,329.59 for Administrator’s Fees and $21,055.90 for legal fees.  The Administrator’s recommendations in that report were as follows:

Although in the report of February 5, 2008 McArthur Vantell sets out budget repair figures, these figures still remain estimates.  A more accurate repair cost of building “B” will not be known until the design is completed and the specifications are tendered.  I expect the bids pursuant to the tender to be received before May 31, 2008.  McArthur Vantell is proceeding with this work as authorized in the Rice J. Order

At the time the bids are received for the building repair of building “B” a decision will be required to either proceed with the repairs or wind up the Strata Corporation under the terms of the Strata Property Act.  It is highly unlikely that the Owners would be able to follow through with the necessary building envelope repair and roof repair of building “B” or the walkway and foundation repairs as recommended by McArthur Vantell without the assistance of an Administrator.  It is equally unlikely that the Owners would be able to make a decision on the winding-up of the Strata Corporation without the assistance of the Court or an Administrator.

The attitude of the individuals that make up the Strata Corporation are so diverse and polarized that I do not believe the Strata Corporation could govern itself through a building envelope repair or a winding up the Strata Corporation.  Ms. Buchanan and Mr. Duteau remain of a similar mind and philosophy which is contrary to that of Mr. Fraser.  As a result, I recommend that my appointment continue until the building repair work of building “B” has been rendered.

I have not been requested by the court to comment on the possibility of winding up the Strata Corporation and seek judicial direction in this regard.

I noted in my July 12, 2007 report my concerns with respect to the governance of the Strata Corporation and the fact that it does not comply with the requirements of the Strata Property Act as it does not hold Annual General Meetings, approve budgets, elect strata council members, collect strata fees or adhere to many of the procedures and requirements of the Strata Property Act.

Although the legal operation of the Strata Corporation is not the most pressing issue of the Owners, the Strata Corporation does have a statutory obligation to operate its affairs consistent with the Strata Property Act.

There has not been cooperation of Owners, even in the simplest of matters, such as payment of the insurance premium.  It is my opinion that with the current ownership, the Strata Corporation is not able to govern its own affairs and I recommend that my appointment as administrator be expanded to include the powers and duties of the strata council and strata corporation as required under the Strata Property Act and bylaws of the Strata Corporation.  In addition, I recommend that the current bank account held by the Strata Corporation at Vancity Credit Union be closed and all remaining funds transferred to me in trust.

 (More)

Vancouver, VR 1411: Mary Buchanan buys a leaky rotten condo; court appoints administrator; owners have 30 days

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Fraser v. Strata Plan VR1411 et al,


2006 BCSC 1316

Date: 20060829
Docket: S062820
Registry: Vancouver

Between:

R. Craig Fraser

Petitioner

And

The Owners, Strata Plan VR1411, Maurice Duteau and Mary Buchanan

Respondents


Before: The Honourable Mr. Justice Cullen

Reasons for Judgment

Counsel for the Petitioner

M.A. Worfolk

Counsel for the Respondent, Mary Buchanan

F. Eadie

Date and Place of Trial/Hearing:

June 29, 2006


Vancouver, B.C.

[1] This dispute concerns a three unit strata corporation owned by the petitioner, R. Craig Fraser, and the respondents, Mary Buchanan and Maurice Duteau.

[2] There are cross-applications brought by Mr. Fraser and Ms. Buchanan. By his petition, Mr. Fraser seeks a series of orders set out in the petition at paragraphs (a) to (l) inclusive, as follows:

(a) a declaration that an amount of at least $560,000.00, plus a contingency of 20%, is required to pay for the rehabilitation of the building envelope on Building B at 1029 West 7th Avenue, Vancouver, B.C., V6H 1B2 as recommended by Spratt Emanuel Engineering Ltd. in its report dated June 1, 2005 (the “Building B Repairs”);

(b) in the alternative, a declaration that an amount of at least $725,000, plus a contingency of 20%, is required to pay for the rehabilitation of the building envelope on Buildings A and B at 1025, 1027 and 1029 West 7th Avenue, as recommended by Spratt Emanuel Engineering Ltd. in its report dated June 1, 2005 and by Morrison Hershfield in its report dated March 27, 2006 (the “Entire Strata Corporation Repairs”);

(c) a declaration that the Strata Corporation’s buildings require repair and the Strata Corporation is required under Section 72 of the Strata Property Act to repair and maintain;

(d) a declaration that the Strata Corporation is in breach of its obligation to repair and maintain the buildings;

(e) a declaration that sections 1 through 6 of the bylaw resolution filed by the owners of Strata Plan VR 1411 on August 11, 2003 and registered in the Land Title Office under BV313905 are invalid;

(f) a declaration that sections 8 and 10 of the bylaw resolution filed by the owners of Strata Plan VR 1411 on August 11, 2003 and registered in the Land Title Office under BV313905 are not enforceable;

(g) an Order directing that common expenses be paid by the owners in accordance with the Strata Property Act, SBC 1998, c. 43, as amended;

(h) an Order that Mary Buchanan and Maurice Duteau reimburse the petitioner for common expenses paid by him personally to date in accordance with their unit entitlement and the Strata Property Act;

(i) an Order authorizing and empowering the Strata Corporation to issue a special assessment to the Owners, based on their respective unit entitlement, not exceeding $560,000 plus a contingency of 20%, such assessment to be payable 14 days after the date this Order is granted;

(j) in the alternative, an Order authorizing and empowering the Strata Corporation to issue a special assessment to the Owners, based on their respective unit entitlement, not exceeding $725,000 plus a contingency of 20%, such assessment to be payable 14 days after the date this Order is granted;

(k) alternatively, a mandatory injunction requiring the Strata Corporation to expend the sum of up to $725,000, plus a contingency of 20%, to finance the Building B Repairs or the Entire Strata Corporation Repairs, said assessment to be due and payable 14 days after the date this Order is granted;

(l) in the alternative:

(i) an Order that an Administrator be appointed to exercise the powers and perform the duties of the Strata Corporation and the Strata Council for The Owners, Strata Plan VR 1411 (the “Strata Corporation”) in relation to the repair and maintenance of the Strata Corporation’s building envelope, and related components;

(ii) an Order that if a ¾ vote resolution to raise a special levy for the Repair is put to a vote of the owners, and such resolution does not pass, the Administrator and/or any interested party shall have leave to apply to this Court for an Order approving the resolution without a ¾ vote;

(iii) an Order that the Strata Corporation provide access to all information, records and documents requested by the Administrator, and provide such authorizations as are requested by the Administrator to obtain information, records and documents held by third parties which relate to the Strata Corporation;

(iv) an Order that the Administrator may retain the necessary professionals, including independent legal counsel, for opinions, advice and services in respect of his or her duties pursuant to this appointment as Administrator;

(v) an Order that the Administrator’s fees of $150.00 per hour plus disbursements shall be rendered monthly, and shall be payable by the Strata Corporation;

(vi) an Order that six months after the Administrator’s appointment, the appointment shall be reviewed by the Court, at which time the Administrator shall report to the Court with respect to the steps taken, the costs incurred as a consequence of his or her appointment as Administrator and whether his or her appointment as Administrator should continue;

(vii) an Order that the Administrator shall be at liberty to apply to the Court for directions to assist and permit him or her to discharge his or her duties as Administrator hereunder;

(viii) an Order that, if any ¾ vote resolution(s) or majority vote resolution(s) of the owners are required to give effect to any of the Orders set out herein, and if such resolution(s) do not pass at a general meeting of the owners, that the administrator and/or any party have leave to apply to this Court for an Order approving the resolution(s);

(ix) an Order that no person shall issue any process against the Administrator or any employee related to the Administrator’s appointment without leave of the British Columbia Supreme Court;

(x) an Order that the Strata Corporation be ordered and directed to proceed with the Repairs in such manner as the Strata Council or, if an Administrator is appointed, in such manner as the Administrator may decide;

[3] By notice of motion dated June 21, 2006, Ms. Buchanan seeks the following relief:

1. the owners of strata lots 2 and 3 contribute to the cost of remedial work to Building “B”, pro rata in accordance with their respective unit entitlements;

2. a declaration that, in accordance with the resolution of the Strata Corporation attached hereto as Appendix “A” (the “Existing resolution”) that the Defendants Fraser and Duteau are solely responsible to contribute to the costs of repair and maintenance of Building “B”;

3. the Existing Resolution be revoked and that the Resolution attached hereto as Appendix “B” be deemed to be passed by all the members of the Strata Corporation and that the same be filed in the Land Title Office against the title of the common property of the Strata Corporation as a resolution passed pursuant to Section 100 of the Strata Property Act;

4. in the alternative, that the Respondent, Mary Buchanan be solely responsible to contribute to a special levy to pay for the repairs to Building ”A” in the amount of $241,000 and the Respondent, Maurice Duteau and the Petitioner be solely responsible to contribute to a special levy to pay for the repairs to Building “B” in the amount of $410,000 pro rata in accordance with the relative value of their unit entitlements.

5. the Respondent, Mary Buchanan have her costs of these proceedings.

[4] The strata corporation consists of two buildings which share a common foundation. Building “A” houses the strata lot owned by Mary Buchanan and a garage forming part of strata lot 2, owned by Maurice Duteau. Building “B” is comprised of the balance of Mr. Duteau’s strata lot 2, and Mr. Fraser’s strata lot 3. The roof of Building “B” is on top of Mr. Fraser’s unit, which is built above Mr. Duteau’s unit. Buildings “A” and “B” do not share a common roof.

[5] There is evidence that the strata property is in need of significant repair. On June 10, 2005 the City of Vancouver sent a legal notice to the owners identifying “multiple indications of faulty construction” on the top floor of Building “B” and ordering the owners to:

1. make application for a building permit to re-construct the roof structure and supporting members to meet the minimum requirements of the by-law by June 27, 2005; and

2. commence repairs immediately upon issuance of the building permit.

[6] The particulars of the faulty construction identified by the City is as follows:

1. the roof structure is over-spanned and sagging;

2. vertical supports for the roof are not tied in to provide a continuous load path for the roof structure;

3. beams and lintels and top wall plates are not supported to carry the superimposed loads;

4. the bedroom wall is buckling near the top from lack of support;

5. there is evidence of corrosion of wall members and fasteners of exterior gypsum sheathing board; [and]

6. the top wall plate is comprised of non-structural material (flashing and partition gauge metal).

[7] The previous owners of Ms. Buchanan’s strata lot 1, Manoj Gupta and Dinaya Kulkarni, undertook significant renovations to lot 1. The City of Vancouver legal notice does not apply to Building “A” which houses that strata lot. The renovation work to strata lot 1, was made without any contribution from the other lot owners through the operating fund contingency reserve fund or otherwise, although, according to Mr. Gupta, the renovations included approximately $63,000 of maintenance and repair to common property associated with Building “A”.

[8] Mr. Gupta deposed that he sought to have contribution from Mr. Fraser and Mr. Duteau towards the repairs. According to Mr. Gupta, Mr. Fraser was not willing to contribute to the cost of repairs and asserted to him that in the past, owners of the units had always paid for the repairs to their own buildings.

[9] Before strata lot 1 was sold to Ms. Buchanan, the strata corporation passed a by-law amendment on August 11, 2003. The amendment was unanimously approved by the then owners in the strata corporation, Mr. Gupta and Ms. Kulkarni, Mr. Duteau and Mr. Fraser. The amended by-laws read as follows:

Types

1. Strata lot 1 shall be one type of strata lot and shall be referred to in these bylaws as the “Strata Lot in Building A”.

2. Strata lots 2 and 3 shall be a different type of strata lot and shall be referred to in these bylaws together, as the “Strata Lots in Building B”.

3. A contribution to the operating fund which relates to and benefits only the Strata Lot in Building A shall be borne only by the owner of the Strata Lot in Building A.

4. A contribution to the operating fund which relates to and benefits only the Strata Lots in Building B shall be shares only by the owners of the Strata Lots in Building B. Each strata lot’s share of that operating fund contribution shall be in the proportion that each strata lot’s unit entitlement bears to the total unit entitlement of the Strata Lots in Building B.

5. A contribution to the operating fund which relates to and benefits all of the strata lots shall be shared by the owners of all strata lots. Each strata lot’s share of that operating fund contribution shall in the proportion that each strata lot’s unit entitlement bears to the total unit entitlement of all strata lots.

6. A contribution to the operating fund that relates to and benefits only limited common property shall be shared only by owners of the strata lots entitled to use the limited common property. Each strata lot’s share of that operating fund contribution shall be in the proportion that each strata lot’s unit entitlement bears to the total unit entitlement of all the strata lots entitled to use the limited common property.

7. Each strata lot’s share of a contribution to the contingency reserve fund or a special levy shall be shared by all strata lots in the strata corporation in proportion to their unit entitlement.

Sole Responsibilities of the Strata Lot in Building A

8. Notwithstanding any bylaw contained in the Schedule of Standard Bylaws to the Strata Property Act, S.B.C. 1998, c. 43 (the “Act”), the owner of the Strata Lot in Building A has the sole duty to repair and maintain the following:

c. chimneys, balconies, light fixtures, eavestroughs, downpipes and other things attached to the exterior of Building A, excluding the exterior stairs and the courtyard between Building A and Building B (as shown on the strata plan);

d. doors, windows and skylights on the exterior of Building A, except for the two doors to the garage of Strata Lot 2; and

e. fences, railings and similar structures that enclose patios, balconies and yards, except for the railings along the external stairs and the railings connecting Building A and Building B.

Sole Responsibilities of Strata Lot 2

9. Notwithstanding any bylaw contained in the Schedule of Standard Bylaws to the Act, the owner of Strata Lot 2 has the sole duty to repair and maintain the two doors to the garage of Strata Lot 2.

Shared Responsibilities of Strata Lot 2 and Strata Lot 3

10. Notwithstanding any bylaw contained in the Schedule of Standard Bylaws to the Act, the owners of Strata Lot 2 and Strata Lot 3 have the shared duty to repair and maintain the following:

a. the structure of Building B (as shown on the strata plan as building B),

b. the exterior of Building B,

c. chimneys, balconies, light fixtures, eavestroughs, downpipes and other things attached to the exterior of building B, excluding the exterior stairs and the courtyard between Building A and Building B,

d. doors, windows and skylights on the exterior of Building B, excluding the door to the Meter Room as shown on the strata plan (commonly referred to as the “utility room”); and

e. fences, railings and similar structures that enclose patios, balconies and yards, except for railings along the external stairs and between Building A and Building B.

Responsibilities of the Strata Corporation

11. The Strata Corporation must repair and maintain the following:

a. the railings along the external stairs and the railings connecting Building A and Building B;

b. the external stairs;

c. the utility room;

d. the courtyard between Building A and Building B;

e. the sump pump that is located in the garage of Building A; and

f. all utility lines services and drains.

[10] By-laws 1 to 6 and 8 to 10 reflect the past practice of the strata lot owners to apportion responsibility for expenses to owners according to whether the expenses relate to Building “A” or Building “B”. By-law 7 appears inconsistent with by-laws 1 to 6, and 8 to 10 as it provides that each strata lot’s share of contributions to the emergency reserve fund or a special levy, is to be shared by all strata lots within the corporation on the basis of unit entitlement.

[11] In addition to the remediation identified by the City of Vancouver legal notice, there is evidence that the strata property has other building envelope deficiencies effecting both Building “A” and Building “B”, leading to “water ingress problems”. In June of 2005, Mr. Fraser received a report from Spratt Emanuel Engineering Ltd. (phonetic) recommending extensive building envelope remediation to Building “B” “including new roofing, new roof structure, new wall cladding, new wall structure, new windows, new doors, additional insulation, and better measures to deal with the thermal bridging evident in the walls and ceilings of the living space.” In his reporting letter to Mr. Fraser dated June 1, 2005, Mark Emanuel of Spratt Emanuel Engineering Ltd. noted as follows:

BACKGROUND

The existing top storey of this 3-unit strata complex was altered at the time of construction to comply with the City of Vancouver height restrictions. We understand that the roof had originally been constructed at a higher elevation and was cut down to comply with the City of Vancouver zoning By-Laws which require a maximum elevation of 25 ft 0 inches. The original over-height structure was badly reconstructed at a new lower elevation to meet the City of Vancouver zoning and development By-Laws. The resulting existing structure does not comply with the Building By-Law at the time of construction Vancouver Building By-Law 6134, nor does it comply with the current Vancouver Building By-Law 8057, 1999. The following deficiencies were noted:

DEFICIENCIES:

1. A mix of combustible and non-combustible construction materials were used. The requirement was for non-combustible structure.

2. The reconstructed structure contains window and door headers which are not supported by load bearing members.

3. Loan bearing members, where present, do not allow adequate transfer of load to subsequent lower floors.

4. The roof structure appears to be under capacity due to the use of 2x4 wood roof rafters placed continually.

5. Lack of adequate Environmental Separation, Part 5 of Vancouver Building By-Law 8057, 1999 requires adequate thermal and moisture protection. The existing structure offers no dedicated roof insulation. Heat transfer from the exterior to the interior has resulted in condensation within the roof structure and subsequent mould, fungus and deterioration. The existing insulation value does not comply with Vancouver Building By-Law 8057, 1999 as well as the older By-Law in place at the time of construction.

6. Unsafe wiring is present with inadequate clearance between framing members, wiring and wall surfaces.

7. Deficiencies of the exterior building envelope, due to improper roofing, flashings, wall cladding assemblies, insulation and vapour barrier assemblies, window detailing, door detailing, and deck detailing have all contributed to premature building envelope failure, resulting in rainwater infiltration and condensation on building surfaces. The resultant damage consists of heavy rust to steel structural components, wood rot, fungus and mould on wood components, and subsequent damage to interior finishes.

RECOMMENDATIONS:

We recommend that extensive building envelope remediations are required at this building. The remediations should include new roofing, new roof structure, new wall cladding, new wall structure, new windows, new doors, additional insulation, and better measures to deal with the thermal bridging evident at the walls and ceilings of the living space. This can best be accomplished by placing insulation out-board of the walls and roof of the existing living space. In our opinion this additional exterior wall insulation will qualify for the City of Vancouver FSR exemption. The addition of insulation to the roof will cause encroachment beyond the current building height, which we understand is at the allowable limit.

Should you have any questions please do not hesitate to contact the undersigned.

[12] Mr. Fraser also received a report from Richard Balfour of Balfour and Company Architects, detailing the construction deficiencies in Building “B” and estimating the cost of repairs at approximately $560,000.

[13] For her part, Ms. Buchanan obtained a report from Morrison Hershfield dated March 27, 2006 expressing the opinion that Building “A” also requires significant “envelope repair work” and estimating the cost of that work at approximately $234,000.

[14] On May 4, 2006, Mr. Fraser received a quotation from Coast Pro Contracting Ltd. estimating the cost of remediating both buildings together at $723,000 plus a 10% to 15% contingency allowance. The cost of remediating each building separately is $224,000 for Building “A” and $534,000 for Building “B” for a total of $758,000 plus the 10% to 15% contingency allowance.

[15] The Coast Pro quotation assessed the remediation of the roof structure of Building “B” at $198,000 and the balance of the remedial envelope work at $210,000 for Building “A” and $315,000 for Building “B” if done together, and $224,000 and $336,000 respectively if done separately.

[16] Mr. Fraser obtained a further report from VVV Services Ltd. on May 17, 2006 which confirmed the identified problems reflected in the earlier reports and identified some additional problems relating to the foundation, providing an approximate budget of $410,000 for remediation. According to the VVV report, the breakdown of costs associated with the remediation of the envelope for Building “B” includes $220,000 for remediation of the stucco walls, and $81,000 for the roof, comprised of renewal of the roof structure and membrane ($45,000); window replacement and roof deck door replacement ($22,000); and, roof deck and pedestrian grade membranes ($16,000). The balance of the budget relates to the problems identified in the foundation and a contingency amount of $75,000 for unseen deficiencies.

[17] In support of his position, Mr. Duteau submits a report from Andrew Mill, a structural engineer with David Nairne & Associates respecting the roof on Building “B”. Mr. Mill concluded in his report as follows:

The 4 inch wood decking system spanning the full width of the building from the east wall to the west wall has sufficient capacity to safely support the design live loads. If the north sloped portion of the roof is framed in accordance with the building permit drawings, the joist framing is satisfactory, only localized reinforcing of the built up wood beams supporting the joice would be required.

[18] Mr. Mill estimated the cost of the work to reinforce the wood roof framing would not likely exceed $15,000. His analysis was confined to a structural analysis of the existing roof framing.

[19] When Mr. Fraser initially obtained his engineering and architecture reports in relation to Building “B”, it was on the assumption that the amended by-laws validly allocated the costs and responsibilities for remediating Building “B” to himself and Mr. Duteau alone. Mr. Duteau disagreed with Mr. Fraser’s view of what was needed to remediate the building and accordingly, Mr. Fraser sought legal advice from Michael Walker of Miller Thomson concerning the appropriate action to take under the Strata Property Act, R.S.B.C. 1998, c. 43 (the “SPA”) to deal with the building’s problems. After meeting with Mr. Fraser, Mr. Walker wrote a letter dated December 21, 2005 on behalf of Mr. Fraser to Mr. Duteau and Ms. Buchanan. Mr. Walker’s letter outlines Mr. Fraser’s position which is substantially the same as he takes on this application. The letter reads, in part, as follows:

We have been retained by Mr. Craig Fraser, registered owner of Strata Lot 3, Strata Plan VR1411, located at 1029 West 7th Avenue. We have been provided with a copy of the City of Vancouver’s letter to Mr. Fraser dated June 10, 2005 (“City Notice”), a copy of which is enclosed, ordering the reconstruction of the roof structure and supporting members of Building B (1027/1029 West 7th Avenue).

In addition to the conditions noted in the City Notice, consultants retained by our client have noted a number of other serious deficiencies in the building construction, including inadequate design and inappropriate materials for decks and floors, and extensive building envelope deficiencies. We enclose correspondence from Richard Balfour & Company, Architect and from Spratt Emanuel Engineering Ltd. (the “Consultants’ Reports”).

As you will see below, the responsibility for dealing with the City Notice rests with the strata corporation not with Mr. Fraser as the owner of the top floor strata lot in Building B. Therefore, Mr. Fraser has reluctantly instructed us to write to you proposing that the owners raise funds to comply with the City Notice by a special levy.

We have reviewed the bylaw resolution filed by the owners of Strata Plan VR1411 on August 11, 2003 and registered in the Land Title Office under BV313905. It is our legal opinion that sections 1 through 6 of these bylaws are invalid as the Strata Property Act did not permit such a bylaw to be adopted after January 1, 2002, and that sections 8 and 10 are not enforceable as they contravene section 72 of the Strata Property Act, which provides as follows:

Under section 68 of the Strata Property Act, the boundary of each strata lot is the mid-point of the wall, floor or ceiling. From the mid-point outward is common property which must be repaired and maintained by the strata corporation as a common expense of all owners.

We have advised Mr. Fraser that the strata corporation has a legal obligation to comply with the City Notice by:

1. retaining consultants and contractors to undertake the required work; and

2. raising funds to finance this work by special levy under section 108 of the Strata Property Act.

To this end, we enclose a resolution for adoption by written consent of the owners. The amount to be raised by special levy under this resolution is based on the budget estimate of Mr. Balfour, which we attach for your reference. Please note that Mr. Balfour’s estimate is subject to the qualifications noted on it. Following adoption of this resolution, the strata council (which in the case of a three-unit strata corporation is made up of all owners pursuant to section 9 of the standard bylaws set out in the Strata Property Act) will have authority to collect the special levy contributions and apply them towards correction of the deficiencies noted in the City Notice. Any excess funds remaining from the special levy after completion of the work will be refundable to the owners pursuant to section 108 of the Strata Property Act. The strata corporation, through the strata council, will also have a legal obligation pursuant to the strata corporation, through the strata council, will also have a legal obligation pursuant to the Strata Property Act to engage consultants and contractors to commence repairs in compliance with the City Notice.

It should be noted that the principles outlined above will also apply to any deficiencies in the structure of Building A.

This is a matter of great urgency to all owners within the strata corporation. If the strata corporation does not adopt the enclosed resolution and proceed promptly and diligently to comply with the City Notice, our client will be entitled to apply to BC Supreme Court for an order under section 165 of the Strata Property Act requiring the strata corporation to perform its legal duties and imposing a special levy on the owners to finance the required work. In addition, if the strata corporation does not proceed diligently, my client will be entitled to apply under section 174 of the Strata Property Act for the appointment of an administrator to exercise the powers and perform the duties of the strata corporation. In either event, our client will also seek an award of costs against the strata corporation, which award will be payable only by the owners of strata lots 1 and 2.

We request your prompt attention to this matter to protect the investments of all owners and to avoid costly litigation. If we have not received the enclosed resolutions signed by all owners by January 15, 2006, our client is prepared to initiate legal proceedings against the strata corporation.

[20] Mr. Walker’s letter did not lead to a resolution of the issue of the responsibility for the remediation of Building “A” and Building “B”. Mr. Duteau has taken and continues to take the position that substantial parts of the remediation work to the roof identified in Mr. Walker’s letter as necessary are actually not, and in fact constitute renovations designed only to benefit Mr. Fraser. Ms. Buchanan has resisted and continues to resist any responsibility for any remediation of Building “B” relying on the amended by-laws and on the unfairness to her, given her reliance on those by-laws and representations concerning them when she decided to purchase her unit.

[21] Ms. Buchanan’s alternative position is taken in an action she commenced on February 14, 2006 against the vendors of her unit, Mr. Gupta and Ms. Kulkarni, and against Mr. Fraser, Mr. Duteau, the strata corporation and Richard Neilson, the lawyer who handled the conveyance of the property. In that action, Ms. Buchanan seeks a declaration that she is not required to contribute to the remediation costs of Building “B”, or in the alternative, as against the strata corporation and the co-owners, she seeks relief pursuant to s. 164 of the SPA. As against Mr. Gupta and Ms. Kulkarni, Ms. Buchanan seeks damages for negligent and fraudulent misrepresentation in connection with the amended by-laws, and as against Mr. Neilson, damages for professional negligence for failing to advise her with respect to the validity of the amended by-laws.

[22] Ms. Buchanan deposed that she entered into a contract of purchase and sale dated July 10, 2003 with Mr. Gupta and Ms. Kulkarni in relation to strata lot 1 on the basis of representations that she would not be responsible for the care and maintenance of Building “B” and that a resolution to that effect would be passed by the strata corporation before the completion date of August 26, 2003 (the amendments as earlier noted, were passed and filed on August 11, 2003).

[23] Ms. Buchanan deposed that as a result of the representations and resolutions that were made, she did not concern herself with the condition or future repair issues with respect to Building “B” as she had with Building “A” (by obtaining a building inspection) before deciding to enter into the agreement. She also deposed that in her view, strata lot 1 would have a significantly higher value if the owner could deal with Building “A” independent of the other two strata lot owners and that it would decrease in value if the owner is required to contribute to the costs of repair and maintenance of all the common property of the strata corporation pro rata in accordance with the unit entitlement of strata lot 1. Ms. Buchanan submits evidence that the difference in value between strata lot 1 with independent responsibility and strata lot 1 with interdependent responsibilities is between $40,000 and $50,000.

[24] Although not parties to this petition, because it implicates the validity or invalidity of the amended by-laws which are at the heart of the lawsuit initiated by Ms. Buchanan, Mr. Gupta, Ms. Kulkarni and Mr. Neilson were represented at and made submissions in the hearing of the petition with respect to the validity of the by-laws at issue and the appropriate exercise of the court’s discretion in relation to Ms. Buchanan’s responsibility for contribution towards the remediation of Building “B”.

THE POSITION OF THE PETITIONER

[25] The petitioner relies on the basic proposition that under the present SPA, the strata corporation has a duty to repair and maintain common property which includes the building envelope encompassing the deficiencies identified in the present property. In particular, the petitioner relies on s. 3 of the SPA which reads as follows:

Except as otherwise provided in this Act, the strata corporation is responsible for managing and maintaining the common property and common assets of the strata corporation for the benefit of the owners.

[26] The petitioner also relies on s. 72 which provides as follows:

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

(2) The strata corporation may, by bylaw, make an owner responsible for the repair and maintenance of

(a) limited common property that the owner has a right to use, or

(b) common property other than limited common property only if identified in the regulations and subject to prescribed restrictions.

(3) The strata corporation may, by bylaw, take responsibility for the repair and maintenance of specified portions of a strata lot.

[27] The petitioner contends that pursuant to sections 3 and 72(1), the strata corporation has a duty to repair and maintain the roof and the building envelope which it has, to date, failed to do because the respective positions of Ms. Buchanan and Mr. Duteau prevent the necessary authorization to proceed.


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