Vancouver, Maximillian: Strata Corporation loses court bid to get costs against strata lot owner

Citation:

Owners, Strata Plan VR1767 v. Seven Estate Ltd. et al.

Date:

20020530

 

 

2002 BCSC 827

Docket:

S063877

 

Registry:  New Westminster

IN THE SUPREME COURT OF BRITISH COLUMBIA

BETWEEN:

THE OWNERS, STRATA PLAN VR1767

PETITIONER

AND:

SEVEN ESTATE LTD. AND
THE IMPERIAL LIFE ASSURANCE COMPANY OF
CANADA

RESPONDENTS

 

 

 

REASONS FOR JUDGMENT
OF THE
HONOURABLE MADAM JUSTICE MARTINSON

 

 

Counsel for the Petitioner

G. S. Hamilton

Counsel for the Respondents

J. H. Rosner

Date and Place of Hearing/Trial:

May 16, 2002

 

 

Vancouver, B.C.

 

INTRODUCTION

[1]            I gave written reasons in this “leaky condo” case:  2002 BCSC 381.  This is an application by the Owners for costs.  The circumstances are fully canvassed in the reasons for judgment and I will not repeat them here.  At the conclusion of that judgment I said:

[60] Each party shall pay its own costs unless either party applies to the court for a different order within 30 days of the date of these reasons for judgment.

 

[2]            The Owners have applied for costs at Scale 3.  Seven Estate says that each party should pay its own costs.

THE OWNERS’ ARGUMENTS

[3]            The Owners point to the following background information in support of their application for costs:

1.    On December 1, 2000, the Strata Corporation commenced its Petition against Seven Estate Ltd. to recover unpaid special levies.  The amount claimed by the Petitioner at the commencement of proceedings totaled $62,240.27.

 

2.    Before initiating legal proceedings against Seven Estate Ltd., a demand was made for payment and a Certificate of Lien was registered against title to the property owned by Seven Estate Ltd.  Seven Estate Ltd. refused to pay any amounts whatsoever to the Petitioner and, therefore, the Petitioner had no choice but to commence legal proceedings.

 

3.    After the commencement of the Strata Corporation’s proceedings, Seven Estate Ltd. took the position that it was not obligated to pay any amounts whatsoever to the Petitioner as a result of an agreement between the Petitioner and Seven Estate Ltd. made in 1989.

 

4.    The Strata Corporation amended its Petition in February, 2001 to claim the sum of $124,480.54 based on the unit entitlement of Seven Estate Ltd.’s strata lot of 4030 registered at the Land Title Office.

 

[4]            They advance the following arguments:

1.    The refusal of Seven Estate Ltd. to pay any amounts whatsoever towards the special levies made it necessary for the Strata Corporation to commence legal proceedings under the provisions of the (Strata Property Act)Prior to the commencement of the legal proceedings, the Strata Corporation was asking Seven Estate Ltd. to pay the sum of $62,240.27 (i.e., a special levy based on a unit entitlement of 2015), the amount ordered by the Court to be paid.

 

2.    It was only after Seven Estate Ltd. raised the 1989 agreement as a complete defence to the Strata Corporation's Petition that it was determined by the Strata Corporation that the unit entitlement for strata lot 3 had not been reduced at the Land Title Office and, therefore, the Strata Property Act required the Strata Corporation to assess unit entitlement based on a calculation of 4030.

 

3.    At no time did Seven Estate Ltd. offer to pay an amount equal or even close to that ordered by the Court under the Strata Corporation’s Certificate of Lien.

 

4.    In our submission, it was the conduct of Seven Estate Ltd. that necessitated the commencement of legal proceedings by the Strata Corporation.  Moreover, in our submission, the Strata Corporation was successful in its Petition as it was awarded an amount payable under its Certificate of Lien.  That is, the Petitioner was completely successful in proving Seven Estate Ltd.’s liability under the Certificate of Lien and only the quantum of the claim was different than as submitted.  See Gutoski v. Hammett, 1998 Carswell BC 623.

 

5.    As a result of Seven Estate Ltd.’s refusal to pay the special levy, the Petitioner has incurred considerable expense which has eroded Seven Estate Ltd.’s contribution to the building repair.  Whatever is not recovered from Seven Estate Ltd. must now be paid by other owners through another levy.  In our submissions, this would operate unfairly against owners who have already faced considerable financial hardship to repair a “leaky condo”.

 

DISCUSSION

[5]            The Owners were successful in proving Seven Estate’s liability under the Certificate of Lien.  However, they claimed $124,480.54 and did so by a specific amendment to the pleadings.  They pursued that claim through to conclusion and obtained judgment for only one-half that amount.  Success at the hearing was divided, and in my view it is appropriate that each party should pay its own costs.

[6]            When a party chooses to pursue a claim at trial, it requires the other party to respond to it, and to incur the resulting expense.  In the circumstances of this case, the Owners cannot pursue to conclusion a claim for double the amount they were prepared to settle for, and then say that they should not have to pay costs because they were prepared to settle.

CONCLUSION

[7]            The Owners' application for costs is dismissed. 

[8]            Seven Estate is entitled to its costs of this application at Scale 3.

“D.J. Martinson, J.”
The Honourable Madam Justice D.J. Martinson

Vancouver, Maximillian: Court finds Strata Corporation acted signifcantly unfairly against strata lot owner; orders change to unit entitlement; cuts leaky condo repair bill in half

Citation:

The Owners, Strata Plan VR1767 v. Seven Estate Ltd. et al. and Seven Estate Ltd. v. The Owners, Strata Plan VR1767

Date:

20020313

 

2002 BCSC 381

Docket:

S063877

Registry: New Westminster

IN THE SUPREME COURT OF BRITISH COLUMBIA

BETWEEN:

THE OWNERS, STRATA PLAN VR1767

PETITIONER

AND:

SEVEN ESTATE LTD. AND
THE IMPERIAL LIFE ASSURANCE COMPANY OF CANADA

RESPONDENTS


AND

 

 

Docket:

S066458

Registry: New Westminster

IN THE SUPREME COURT OF BRITISH COLUMBIA

BETWEEN:

SEVEN ESTATE LTD.

PETITIONER

AND:

THE OWNERS, STRATA PLAN VR1767

RESPONDENT

 

REASONS FOR JUDGMENT
OF THE
HONOURABLE MADAM JUSTICE MARTINSON

 

Counsel for the Owners

G. S. Hamilton

Counsel for Seven Estates

J. H. Rosner

The Imperial Life Assurance Company did not participate

 

Date and Place of Hearing:

24 and 25 January 2002

 

New Westminster and Vancouver, B.C., respectively

INTRODUCTION

[1]   This is a "leaky condo" case. The condominium complex in question, the Maximillian, consists of 25 residential strata lots, two commercial strata lots and a parking lot. The parking lot, Strata Lot 3, is located underneath the building envelope.

[2]   Repairs to the building envelope of over $700,000 were required and the Owners passed four special levies to cover the cost of those repairs. Though the parking lot is only one of 28 strata units, the Owners say that Seven Estate Ltd., the owners of the parking lot, should pay $126,912.18, or approximately one-sixth of the cost of the repairs, because the law requires them to do so. The highest assessment for any other lot is $35,127.43.

[3]   Seven Estate originally owned the land upon which the complex was built, and used it as a parking lot to provide parking for tenants in a nearby office building it also owned. It sold the land on the condition that it could purchase a lot and use it for parking. It says that the law does not require it to pay for repairs to the building envelope, and that doing so is both unfair and inconsistent with a 1989 resolution passed by the Owners lowering its Unit Entitlement by half and reducing the number of votes it is entitled to exercise from five to two. It says it should not be required to contribute based either on the "oppression" remedies found in the legislation that applies, or on the basis that the Owners are "estopped" or prevented from claiming contribution because of the 1989 resolution and the actions of the Owners since then.

[4]   Both the Owners and Seven Estate have filed Petitions seeking relief. The Imperial Life Assurance Company of Canada (the other party named in the Owners' Petition) did not participate in these proceedings.

THE OWNERS' POSITION

[5]   The Owners say that both the Condominium Act, R.S.B.C. 1996, c. 64 and the Strata Property Act, S.B.C. 1998, c. 43, which replaced the Condominium Act on July 1, 2000, require them to assess the costs of the building envelope repair based on Unit Entitlement ("UE"). UE is an amount based on square footage, approved by the Superintendent of Real Estate and registered in the Strata Plan for the complex at the Land Titles Office. They say that the Condominium Act applies to the special levies passed before July 1, 2000 and the Strata Property Act applies to the special levies passed after July 1, 2000.

[6]   The UE for the parking lot is 4030. The Owners agree that of the 28 strata lots, the second highest UE, 1025, applies to one of the two commercial stratas. The UE for the other commercial strata is 736. The UE for the largest residential strata lot is 937 and the UE for the smallest is 437. The parking lot was purchased for $120,000. Five of the other strata lots were purchased for less than that amount, the lowest being $83,800. The most expensive strata lot was $205,000.

[7]   The Owners acknowledge that right from the start Seven Estate said that the UE assessment was a mistake and complained about the inequities caused by it because of the nature of a parking lot. The Owners agree that in 1989, after a lengthy dispute that included the filing of a law suit, the then owners passed a resolution at the annual general meeting saying that the UE for the parking lot should be 2015. The resolution also said that the voting rights for the parking lot should be reduced from five to two.

[8]   It is common ground that the Strata Plan was never amended to reflect this resolution. However, the Owners agree that both parties acted upon the resolution in any case. In fact, the UE for the parking lot used to make the original building envelope repair assessment was 2015, not 4030. The original claim in this lawsuit was based on 2015. The petition was later amended to include a claim based on 4030.

[9]   Nevertheless, the Owners say that the 1989 resolution was enacted without legal authority as there is no authority under either the Condominium Act or the Strata Property Act to amend the UE in this circumstance. They say that both pieces of legislation required them, when passing special levies, to assess the individual owners on the basis of UE: s. 35(d) and s. 128 of the Condominium Act and ss. 99 and 100 of the Strata Property Act and s. 6.4(2) and (3) of the regulations. Bylaw 5000, passed in 1996, specifically provides that owners must contribute to special levies based on UE.

[10]  The Owners rely on Royal Bank v. Holden (1996) 7 R.P.R. (3d) 80 (B.C.S.C.), where Mr. Justice Bauman stated, at para. 17, that:

The strata corporation has certain essential duties under the Act to maintain common property, common facilities and assets of the strata corporation. These are fundamental duties, and, I perceive, their execution by the strata corporation is critical to the realization of the condominium concept - that is people living together in individually owned units within a common shell. The mix of personal fee simple title and co-operative living necessitates a vehicle by which maintenance and repairs of the common property will be undertaken and payment shared and forthcoming from the individual owners. The vehicle created by the Act is, of course, the strata corporation.

[11]  They say that there is an exception to the general rule that owners must contribute to special levies based on UE, but they argue that it does not apply in this case. That is, under s. 128 of the Condominium Act, there can be a variation if the repairs are not attributable or partially attributable to the parking lot. Under regulation 6.4(2) of the Strata Property Act, there can be a variation if the repairs do not relate to or benefit the parking lot.

[12]  They argue that the repairs in this case are either attributable to, or relate to or benefit the parking lot. Failure to maintain and repair the building envelope would result in a complete failure of the building, which would directly affect the parking lot. The envelope protects the roof and sides of the complex and prevents the penetration of water. If the repair had not been made, the building would become dilapidated and unusable as a parking lot. The resale value of the parking lot would be affected. The expert report obtained by the Owners shows that there was water ingress into the garage. The Owners say that this conclusion is supported by a decision of this court in Strata Corp LMS 509 v. Andresen, 2001 BCSC 201.

[13]  The Owners respond to the "oppression" and estoppel remedies in a similar way. In addition to the factors just mentioned they say that a contribution based on full UE is not inconsistent with the arrangements reached in 1989. They never did consider how Seven Estate would contribute towards a significant building envelope repair. The arrangements were focused on ordinary operating expenses and the monthly strata fees. They advised the Court that Seven Estate will continue to contribute to monthly strata fees based on a reduced UE of 2015, which operates as a convenient formula to apportion operating expenses in recognition of Strata Lot 3's unique characteristics. They say they have authority to use such a formula under s. 99 of the Strata Property Act and regulation 6.4.

[14]  The Owners also point out that when Seven Estate sought assistance from the Superintendent in 1987, that assistance was not granted. Some of the reasons for doing so were stated by the office of the Superintendent this way:

One factor in the approval was that strata lot 3 appeared likely to be resubdivided in the future, as evidenced by two large areas of limited common property specifically set aside for the use of strata lot 3. But perhaps more importantly, strata lot 3 is a commercial unit and it seemed reasonable to approve the most general method of calculating unit entitlement and allow any business concern contemplating purchasing the strata lot to determine for itself whether the unit entitlement as disclosed in the disclosure statement would be suitable for its circumstances.

[15]  The Owners note that the parking lot is, in fact, rented out and is a business investment for Seven Estate. Seven Estate had the chance to assess the viability of the business investment at the time it purchased the strata lot. It may have made an unhappy investment. That may be unfortunate, but it is not unfair. The Owners say that with respect to the bargain made in 1989, the only thing Seven Estate has lost is that if they had the amendment they would have been able to take advantage of it with respect to a matter that was not anticipated by anyone. While this may be disappointing for Seven Estate, it does not operate unfairly.

[16]  The Owners argue that no prejudice has been shown with respect to the reduction in voting rights. The vote to approve $600,000 of the repair costs was unanimous. They point out that while a mistake may have been made in the Disclosure Statements, the Disclosure Statements themselves contain a disclaimer.

[17]  In the result, the Owners say that there is no unfairness or prejudice of the kind required to support an oppression remedy under the Condominium Act or the Strata Property Act, or on the basis of estoppel.

SEVEN ESTATES' POSITION

[18]  Seven Estate says that the problems arose because of a mistake by the developer. It says that in the Disclosure Statements it received Strata Lot 3, which included 17 parking spaces on one floor, and seven other parking spaces that were contained in Strata Lot 3. The seven are on a different floor.

[19]  Seven Estate argues that a mistake was made originally with respect to the square footage. In the original Disclosure Statements UE was to be assessed based on habitable square footage. Yet, when the strata plan as approved by the Superintendent of Real Estate was registered at Land Titles, UE was based on the square footage of the parking lot. Seven Estate also notes that the amended Disclosure Statements refers to parking as a class distinct from commercial and residential.

[20]  Therefore, it says that there was a fundamental mistake in the initial assessment of UE. The Superintendent should have seen that in the Disclosure Statements UE was based on habitable square footage.

[21]  Seven Estate says that it raised the inequities involved in allocating expenses based on that UE from the start. The inequities are said to be that, notwithstanding the fact that it only used and can only use the premises for parking, which is totally underground, the Owners were charging it for water, sewer and insurance on the total building. Using the UE approach with respect to maintenance meant that it was paying a disproportionate amount for management. They paid for items that are of no concern or benefit to the lot, such as exterior and elevator maintenance, and all other matters associated with the use of the property by residential and commercial owners.

[22]  Seven Estate also notes that it does not have access to the building itself. There are 32 steps down to the parking lot. It says that the condominium complex is a wooden structure on the top of a concrete garage. It uses the analogy of the parking lot underneath the two court houses and the Art Gallery in downtown Vancouver. The lot is separate from each. (More)