West Vancouver, Deer Ridge: Ms. Mason buys a new townhouse in Phase Four; court orders Ms. Mason to pay for repairs to older leaky condos in Phase One

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The Owners, Strata Plan VR2654 v. Mason, 2004 BCSC 685 (CanLII)

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Date:2004-05-21
Docket:H030648
Parallel citations: (2004), 32 B.C.L.R. (4th) 282
URL:http://www.canlii.org/en/bc/bcsc/doc/2004/2004bcsc685/2004bcsc685.html
Reflex Record (noteup and cited decisions)

Decisions cited

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

The Owners, Strata Plan VR2654 v. Mason,

 

2004 BCSC 685

Date: 20040521


Docket: H030648

Registry: Vancouver

Between:

The Owners, Strata Plan VR 2654

Petitioner

And

Carolyn Mary Mason and

Hongkong Bank of Canada

Respondents

 


 

Docket: H031146

Registry: Vancouver

 

Between:

 

Carolyn Mary Mason

 

Petitioner

 

And

 

The Owners, Strata Plan VR 2654

 

Respondent

 

Before: The Honourable Mr. Justice Joyce

Reasons for Judgment

Counsel for The Owners, Strata Plan VR 2654

 

Adrienne Murray

Counsel for Carolyn Mason

Herbert Rosner

Date and Place of Trial/Hearing:

February 16-17, 2004

 

Vancouver, B.C.

 

INTRODUCTION

[1]         These proceedings involve a dispute between The Owners, Strata Plan VR2654, which I will refer to as “Deer Ridge”, and Ms. Mason, who is the owner of one of the townhouse units in Deer Ridge.  Specifically, the dispute concerns the manner in which Deer Ridge has allocated operating fund expenses and contingency reserve fund expenses between the two different types of units within the strata development.

[2]         Deer Ridge is comprised of two types of strata lots – townhouses and apartments – and was constructed in phases.  Ms. Mason owns a townhouse in Phase Four.  This dispute arises because of special levies imposed by Deer Ridge to raise money to repair water ingress problems with some of the strata lots.  In particular, a number of the special levies related to townhouses constructed in Phase One.  Under the system of cost allocation by type of strata lot, only the owners of townhouses are responsible for the special levies that relate to townhouses.  Ms. Mason is unhappy that she, as an owner of a strata lot in Phase Four, which has not experienced water ingress problems thus far, has to contribute to the cost of repairs to Phase One when the owners of the apartments do not. 

[3]         Ms. Mason contends Deer Ridge has no authority to allocate the expenses as it has done.  As a consequence, she has refused to pay assessments charged against her strata lot.  Deer Ridge has brought this proceeding, inter alia, to recover unpaid strata fees and special levies. 

[4]         Ms. Mason has brought a counter-petition seeking a declaration that Deer Ridge’s method of assessment is invalid.  She seeks to have Deer Ridge converted into four separate strata sections with separate budgets.  Alternatively, she seeks to have all assessments made on the basis of unit entitlement without any allocation of expenses based on different types of units.

FACTS

[5]         Deer Ridge, a strata corporation located in West Vancouver, was created in four phases during the period 1990 to 1997.  It contains a mix of apartments and townhouses.  Phase One, comprised of 11 apartments (Tower One) and eight townhouses, was completed in 1990.  Phase Two, comprised of 20 apartments (Tower Two), was completed in 1993.  Phase Three, comprised of 25 apartments (Tower Three) and four townhouses, was completed in 1995 and Phase Four, comprised of eight townhouses, was completed in 1997.

[6]         Ms. Mason owns a townhouse in Phase Four.

[7]         Starting in 1991, operating costs and capital expenditures at Deer Ridge were allocated between apartments and townhouses.  In November 1992, Deer Ridge amended its bylaws to provide, by Bylaw 2.2, that both operating and contingency reserve fund expenses would be allocated based on the type of strata lot.  Bylaw 2.2, which was filed in the Land Title Office on November 26, 1992, reads as follows:

Prior to the commencement of each fiscal year, or as soon thereafter as possible, the Strata Corporation shall approve by majority vote of its owners at its Annual General Meeting an operating budget for the next fiscal year, which shall include all anticipated common expenses of the Strata Corporation allocated to each type of strata lot where so attributable in accordance with statutory bylaw 128, and the allocation of money to the contingency fund on the same basis.

 

[8]         Deer Ridge allocated operating expenses and the contingency reserve fund to the two types of strata lots until 2000, at which time the Strata Council prepared a budget by which it purported to allocate costs to six different cost centres representing each of the three apartment towers and the three phases of townhouses.

[9]         The owners of the Phase One townhouses challenged the validity of Bylaws pursuant to which the Strata Council purported to create the six cost centres.  On September 5, 2001 Madam Justice Boyd declared the bylaws that the Strata Council relied on to create the six cost centres to be ultra vires the strata corporation (Lim v. Strata Plan VR2654, 2001 BCSC 1386 (CanLII), 2001 BCSC 1386).  She held that costs were to be allocated by type of strata lot in accordance with s.128(2) of the Condominium Act, R.S.B.C. 1996, c. 64 (Repealed).

[10]   Madam Justice Boyd also held that Deer Ridge must revise the budgets for the years ending 2000 and 2001 to allocate costs between two types of strata lots, rather than amongst six cost centres. 

[11]   Following the decision in Lim, Deer Ridge resumed allocating operating expenses and major repairs costs based on the two types of strata lots.

[12]   The townhouses in Phase One have required significant repair and remediation as a result of water ingress, the costs of which have been allocated to all townhouse owners, including Ms. Mason.  Between November 29, 2001 and October 14, 2003 Deer Ridge has imposed special levies totalling over 2.3 million dollars, of which Ms. Mason’s share was $56,516.28.  As of the date the petition was heard, Deer Ridge claimed the sum of $61,613.72 from Ms. Mason for unpaid strata fees, security charges, special levies and registry fees and disbursements.  Since that date further unpaid strata fees in the amount of $1,517.94 have accrued.  Deer Ridge claims a total of $63,131.66 as of May 10, 2004. 

[13]   On November 13, 2002, Deer Ridge filed a lien in the amount of $28,363.03 against Ms. Mason’s property under the provisions of the Strata Property Act, R.S.B.C. 1998, c. 43 (the “SPA”) relating to unpaid strata fees and special levies to that date.  Deer Ridge seeks a declaration of priority with respect to the sum of $63,131.66, which is the amount it says is secured by the lien, an order that if the amount of the lien is not paid within 60 days after the date of the order Ms. Mason’s townhouse be sold to satisfy the lien, personal judgment in the sum of $63,131.66, costs and liberty to apply for a summary accounting of any amounts that become due to Deer Ridge from Ms. Mason.

ISSUES

[14]   There are a number of matters that require determination but the key issues are these:

     1.   Does Bylaw 2.2 authorize Deer Ridge to allocate               operating fund expenses to the apartment-type strata          lots and the townhouse-type strata lots:

          (a)  for the period July 1, 2000 to January 1, 2002;

         (b)  for the period subsequent to January 1, 2002;            and

         (c)  regardless whether the funds are raised through               a budget or by special levy?

     2.   Does Bylaw 2.2 authorize Deer Ridge to allocate               contingency reserve fund expenses to the apartment-      type strata lots and the townhouse-type strata lots:

         (a)  for the period July 1, 2000 to January 1, 2002;

         (b)  for the period subsequent to January 1, 2002;            and

         (c)  regardless whether the funds are raised through               a budget or by special levy?

ANALYSIS

1.   Does Bylaw 2.2 authorize allocation by type of strata    lot?

[15]   Prior to July 1, 2000, there was no need to rely on Bylaw 2.2.  The statutory bylaws under Part 5 of the Condominium Act permitted Deer Ridge to allocate expenses based on type of strata lot (see Lim, supra).  Statutory Bylaw 128(2) provided as follows:

128(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.

[16]   While Deer Ridge was entitled to rely on the statutory bylaws, at least until July 1, 2000, it had in fact passed its own Bylaw 2.2, which authorized allocation of expenses by type, and had registered the bylaw in the Land Title Office prior to July 1, 2000.

[17]   On July 1, 2000 the Condominium Act was repealed and replaced by the SPA.  The scheme under the SPA for permitting allocation of expenses by type of strata lot is different than it was under the Condominium Act.  Whereas under s.128(2) of the former Act, if a strata corporation consisted of more than one type, expenses were to be allocated according to type, as this court has observed in Strata Plan LMS 1537 v. Alvarez, 2003 BCSC 1085 (CanLII), 2003 BCSC 1085, the general rule under the SPA is that all owners are responsible for all expenses in accordance with their unit entitlement – “you are all in it together”.  That general rule emerges from s.99 of the SPA, which provides:

99 (1) Subject to section 100, owners must contribute to the strata corporation their strata lots' shares of the total contributions budgeted for the operating fund and contingency reserve fund by means of strata fees calculated in accordance with this section and the regulations.

(2) Subject to the regulations, the strata fees for a strata lot's share of the contribution to the operating fund and contingency reserve fund are calculated as follows:

 

Unit entitlement of strata lot

 


 X total contribution

total unit entitlement of

all strata lots

 

      

[18]   While s.99 deals with budgeted amounts for the operating fund and the contingency reserve fund, s.108 deals with special levies as follows:

108 (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.

[19]   The general rule is subject to an exception in that, under s.100 of the SPA, a strata corporation may, by resolution passed by a unanimous vote, agree to use a formula other than that set out in s.99 and the regulations to calculate a strata lot’s share of expenses.  Section 195 of the SPA is engaged where a strata corporation is comprised of different “sections” under Part 11 of the Act.

[20]   The general rule is also subject to the following formulas under s.6.4 of the Strata Property Regulation, B.C. Reg. 43/2000 (the “Regulation”):

6.4 (1) For the purposes of section 99 of the Act, but subject to a resolution under section 100 of the Act, if a contribution to the operating fund relates to and benefits only limited common property, the contribution is shared only by owners of the strata lots entitled to use the limited common property, and each strata lot's share of that contribution is to be calculated in accordance with the following formula and not in accordance with the formula set out in section 99 (2) of the Act:

 

unit entitlement of strata lot

 


  x contribution to operating fund

total unit entitlement of all strata lots whose owners are entitled to use the limited common property to which the

contribution relates

 

 

(2) For the purposes of section 99 of the Act, but subject to a resolution under section 100 of the Act, if a contribution to the operating fund relates to and benefits only one type of strata lot, and that type is identified as a type of strata lot in the bylaws of the strata corporation, the contribution is shared only by owners of strata lots of that type, and each strata lot's share of that contribution is to be calculated in accordance with the following formula and not in accordance with the formula set out in section 99 (2) of the Act:

 

Unit entitlement of strata lot

 


  x contribution to operating fund

total unit entitlement of all strata lots of the type to which the

contribution relates

 

 

(3) Subject to a resolution under section 100 or 108 (2) (b) of the Act, if a strata lot's share of a contribution to the operating fund is calculated in accordance with subsection (1) or (2), each strata lot's share of the total contribution to the contingency reserve fund or a special levy is to be calculated using the following formula:

 

unit entitlement of strata lot

  x  

total contribution to contingency
reserve fund or special levy


total unit entitlement of all strata lots

 

6.5 (1) For the purposes of section 99 of the Act, but subject to a resolution under section 100 or 108 (2)(b)of the Act, if a strata corporation has, by a bylaw passed under section 72 (3) of the Act, taken responsibility for the repair and maintenance of specified portions of some but not all of the strata lots, a contribution to the operating fund or a special levy in respect of the repair or maintenance of those portions is shared only by the owners of the strata lots to which the contribution or special levy relates, and each strata lot's share of the contribution or special levy is to be calculated in accordance with the following formula and not in accordance with the formula set out in section 99 (2) of the Act:

 

unit entitlement of strata lot

 

contribution to operating fund
or special levy 

 

9


  x  

total unit entitlement of all strata lots to which the contribution or special levy relates

 

 

(2) Subject to a resolution under section 100 of the Act, if a strata lot's share of a contribution to the operating fund or special levy is calculated in accordance with subsection (1), each strata lot's share of the total contribution to the contingency reserve fund is to be calculated using the following formula:

 

unit entitlement of strata lot

  x  

total contribution to
contingency reserve fund


total unit entitlement of

all strata lots

 

[21]   Thus, as Mr. Justice Bauman concluded in Alvarez, supra at ¶54, where a strata corporation consists of more than one type of strata lot, contributions to the operating fund may be allocated by type (6.4(2)) but contributions to the contingency reserve fund or a special levy will be allocated to all strata lots in accordance with their unit entitlements (6.4(3)).

[22]   Mr. Justice Bauman summarized the scheme under the SPA as it relates to the contingency reserve fund and special levies at ¶55 as follows:

I would summarize the statutory scheme in relation to the allocation of contributions to the contingency reserve fund or to a special levy, the two sources of funds to pay for typical leaky condo repairs, in this manner:

Absent an agreement under s. 100 of the SPA, those contributions are to be allocated to all strata lots in accordance with their unit entitlements and regardless of their type (s. 99) unless:

(i)  in the case of a special levy, an alternative "fair division" has been approved by a unanimous vote of the strata lot owners (s. 108(2)); or

(ii) "sections" have been created under Part 11 of the SPA Regulation.

 

[23]   While that is the general scheme under the current legislation, the SPA and Regulation contain transition provisions that are relevant to this issue:

Strata Property Act

293 (1) Except as otherwise provided by this Act and the regulations, this Act and the regulations apply to a strata plan deposited and a strata corporation created under the Condominium Act, R.S.B.C. 1996, c. 64 or any former Act.

(2) On the coming into force of this subsection, a regulation of a strata corporation is deemed to be a rule and the provisions of this Act that apply to rules apply to regulations made by a strata corporation.

(3) The coming into force of this Act does not affect the deposit of a strata plan if the application for deposit was made before the coming into force of this Act.

(4) The Lieutenant Governor in Council may make regulations for meeting or removing any difficulty arising out of the transition to this Act from the Condominium Act, R.S.B.C. 1996, c. 64, and for that purpose disapplying or varying any provision of this Act.

 

Strata Property Regulation

17.11 (1) Except as provided in section 17.9 of this regulation, the Standard Bylaws do not apply to a strata corporation created under the Condominium Act until January 1, 2002, and on that date apply only to the extent set out in this section.

(2) Subject to subsections (3) to (5), a strata corporation bylaw existing under the Condominium Act immediately before the coming into force of this section, including a bylaw under Part 5 of the Condominium Act or under a former Act which was deemed, by section 26 (2) of the Condominium Act or a similar section of a former Act, to be a bylaw of the strata corporation, continues to have effect despite any provision of the Act or this regulation.

(3) On January 1, 2002,

(a) the Standard Bylaws are deemed to be the bylaws for all strata corporations created under the Condominium Act, except to the extent that conflicting bylaws are filed in the land title office, and

(b) any bylaws under Part 5 of the Condominium Act or under a former Act which were deemed, by section 26 (2) of the Condominium Act or a similar section of a former Act, to be bylaws of the strata corporation cease to have effect.

(4) Subject to subsection (5), if a strata corporation bylaw filed in the land title office conflicts with a Standard Bylaw, the filed bylaw prevails.

(5) On January 1, 2002, a strata corporation bylaw filed in the land title office ceases to have effect to the extent that it conflicts with a provision in Parts 1 to 17 of the Act or this regulation.

(6) Subsection (5) does not apply to a bylaw that was filed in the land title office before July 1, 2000 to the extent that the bylaw provides for the apportionment of contributions to a contingency reserve fund as a common expense according to type of strata lot, if that type of strata lot is a type identified in the bylaws of the corporation or a section.

17.13 (1) Subject to the bylaws of the strata corporation, if a strata corporation's budget, in effect on the coming into force of this section, apportions any common expenses to one or more type of strata lot in accordance with section 128 (2) of the Condominium Act or a similar bylaw, the strata corporation may continue to use the type of strata lot identified in the budget as a "type of strata lot" for the purposes of sections 6.4 (2) and 11.2 (2) of this regulation.

(2) Subsection (1) is of no effect on or after January 1, 2002.

(3) Before January 1, 2002, a strata corporation may enact a bylaw that identifies the type of strata lot set out in the budget referred to in subsection (1) as a "type of strata lot" for the purposes of sections 6.4 (2) and 11.2 (2).

(4) Despite section 128 (1) of the Act, a bylaw under subsection (3) may be approved by a resolution passed by a majority vote at an annual or special general meeting.

 

[24]   Thus, it will be seen that under s.17.13(1) during the transition period from July 1, 2000 to January 1, 2002, a strata corporation could rely on the former Statutory Bylaw 128(2) to allocate expenses by type in certain circumstances if it had a budget in place prior to July 1, 2000 that allocated expenses on the basis of type.  Deer Ridge submits it had such a budget in place and that the transition provisions provided the authority to allocate by type. 

[25]   What Deer Ridge seems to ignore in making this submission is that s. 17.13(1) permits allocation by type “for the purposes of sections 6.4(2) [relating to an operating fund] and 11.2(2) [relating to “sections”] of this regulation”.  As Bauman J. said in Alvarez, supra at ¶69, this transition provision:

permits a pre-SPA strata corporation to continue to allocate certain common expenses to one or more types of strata lot in accordance with s. 128(2) of the CA.  But it is only for the purposes of ss. 6.4(2) and 11.2(2) of the SPA Regulation, which cover contributions to the operating fund, not to the contingency reserve fund or a special levy, the sources for funding extraordinary building envelope repairs.

 

[26]   Deer Ridge submits, however, that it need not rely on the transition provisions set out in s. 17.13 because it had enacted and filed its own Bylaw 2.2 prior to July 1, 2000 and that bylaw continued in effect pursuant to the transition provisions. 

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