Victoria, Cooperage Place: Sellers lose leaky condo repair refund to buyers

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Hutka v. Aitchison et al,

 

2006 BCSC 1169

Date: 20060731
Docket: 06-1258
Registry: Victoria

IN THE MATTER OF 405-11 COOPERAGE PLACE

Between:

Glen Hutka and Olga Hutka

Petitioners

And:

Kenneth Wayne Aitchison, Carole Joan Aitchison,
Strata Corporation 1889 and Proline Management Ltd.

Respondents


Before: The Honourable Mr. Justice R. D. Wilson

Reasons for Judgment

Counsel for the Petitioners:

R. P. Warburton

Counsel for the Respondents Kenneth Wayne Aitchison and Carole Joan Aitchison:

H. J. Rusk

Date and Place of Trial/Hearing:

July 18, 2006

 

Victoria, B.C.

I.

[1]                The interesting question on this application is one of entitlement to a partial refund of a special assessment.  That special assessment was paid by the previous owner of a strata lot, into a fund, to repair a defective condominium building.  The previous owner sold the strata lot to the current owner.  After the sale completed, the refund issued.  Both parties claim entitlement.  The petitioners' claim sounds in contract.  The respondents' claim sounds in the equitable remedy of unjust enrichment.

II.

[2]                Prior to 31 August 2004, the respondents owned strata lot 32 in a condominium building.  The envelope in that building suffered premature failure.  The strata corporation imposed a special levy on the owners of the strata lots in the building to fund rectification and litigation.  Individual assessments were calculated by unit entitlement.  The respondents, as owners of strata lot 32, paid $60,135.01 into that fund on a date not identified in the evidence.

[3]                By a contract of purchase and sale dated 16 June 2004, the respondents agreed to sell, and the petitioners agreed to buy, strata lot 32, with completion and possession dates of 1 September 2004.  On that latter date, the respondents' transfer of their fee simple interest in strata lot 32, to the petitioners, was registered in the Land Title Office at Victoria.

[4]                By mid-July 2005, the rectification and litigation, for which the fund had been established, had been concluded.  The strata corporation was left with an excess of money.  It resolved to refund the excess to the owners.  The amount attributable to strata lot 32 is $17,758.03.

III.

[5]                It appears to be common ground that there is nothing express in the contract between the parties addressing the contingencies inherent in the special fund.[1]  As current owners of the strata lot, the petitioners have a prima facie entitlement to the refund.

[6]                The Form B, Information Certificate, dated 23 August 2004, records, among other information, the following:

(d)        Any amount that the owner of the strata lot described above is obligated to pay in the future for a special levy that has already been approved .................................................................$0.00

...

(f)         Amount in the contingency reserve fund minus any expenditures which have already been approved but not yet taken from the fund .............................................$81,937.03 as of July 31, 2004

...

(j)         Is the strata corporation party to any court proceedings or arbitration, and/or are there any judgments or orders against the strata corporation?

                          No            X       Yes - Litigation is currently proceeding against a number of defendants for certain water penetration issues.

[7]                I find that by omitting any reference to a future special levy, or the contingency reserve fund, the parties, by their contract, implicitly allocated the risk of contingencies of the litigation.  Thus, any adjustment to the contingency reserve fund, either by increase through a future special levy, or decrease, by a refund, was a risk allocated to the purchaser.

IV.

[8]                The remedy of unjust enrichment, the remedy sought by the respondents, is dependent upon proof of three elements:

1.         an enrichment;

2.         a corresponding deprivation; and,

3.         an absence of juristic reason for the enrichment.[2]

[9]                The respondents say that if the refund is paid to the petitioners, then the petitioners will be enriched at the respondents' corresponding deprivation, for no juristic reason.

[10]            The first element mentioned above is probably satisfied.  Receipt of money is conventionally taken as an enrichment.

[11]            On the second element mentioned above, I find it instructive to refer to the comments of Southin, J.A. in Scott v. Noble:[3]

The learned judge in his reasons found that there was an enrichment of the defendants from the plaintiff's labour but no corresponding deprivation because the plaintiff was an employee who received the salary bargained for.  If the learned judge was using the word "enrichment" in its dictionary sense, I agree with him that there was an enrichment.  The interesting question of whether the term "enrichment" in the formula "unjust enrichment" is a term of art with some ingredient added to the dictionary meaning may wait for another day.  However, even if using the word "deprivation" in its ordinary dictionary sense means that there can be said to have been a deprivation, here it was justified by the simple juristic reason of a contract of employment which was observed by the employers.  [my underlining]

[12]            That interesting point was not argued before me.  Accordingly, I assume, without deciding, that the second element is satisfied:  there would be a corresponding deprivation.

[13]            The third element, the absence of juristic reason, has received further explanation by the Supreme Court of Canada in Garland v. Consumers' Gas Co..[4]

[14]            "... The proper approach to the juristic reason analysis", said Mr. Justice Iacobucci, "is in two parts":

... First, the plaintiff must show that no juristic reason from an established category exists to deny recovery.  ... The established categories that can constitute juristic reasons include a contract ..., a disposition of law ..., a donative intent ..., and other valid common law, equitable or statutory obligations ...  If there is no juristic reason from an established category, then the plaintiff has made out a prima facie case under the juristic reason component of the analysis.  [Authorities omitted; the underlining is mine]

[15]            In the case at hand, there is a contract.  That contract has been performed by the petitioners.  There is no "element of injustice or want of commercial good conscience".[5]  Accordingly, this case falls within an established category and I do not consider the second part of the analysis.

[16]            The parties were free to contract as they would.  In Dewar v. Brooks,[6] the parties to a real estate transaction, in circumstances similar to those in this case, addressed specifically, the allocation of risk.  The task of the Court in Dewar was to interpret the parties' contract.  I see my task in this case to be similar, even though in the absence of an express term.

[17]            There is a comment in Restitution,[7] which commends itself to me:

The law of contract is designed to recognize and protect rights created by agreement.  By agreement, as long as such agreement does not offend the law by being obtained fraudulently or under duress, for example, or is in some other way susceptible to attack, one party may enrich the other, even, it may be added, unjustly.

V.

[18]            The petitioners will have the relief prayed for in their petition.  I declare that they are entitled to the common property and common assets of Strata Corporation No. 1889, including the proceeds of litigation as a tenant in common in a share equal to the unit entitlement of Strata Lot 32, District Lot 119, Esquimalt District, Strata Plan 1889 divided by the total unit entitlement of all the strata lots.

[19]            I further order that Strata Corporation No. 1889 and/or its property manager, Proline Management Ltd., pay all money held by it to the credit of Strata Lot 32 to the petitioners.

[20]            The petitioners will have their costs against the respondents Aitchison only.

“R.D. Wilson, J.”
The Honourable Mr. Justice R.D. Wilson



[1]           I am constantly perplexed by counsel's senseless practice of encumbering their material with illogical documentation.  To a vexing degree, the exhibits attached to Mr. Johnston's affidavit are unreadable.  Fortunately, by not putting in issue the content of that documentation, counsel have spared me the inconvenience of adjourning this matter until proper material is placed before the court.

[2]           Pettkus v. Becker, [1980] 2 S.C.R. 834, at page 848.

[3]           (1995), 99 B.C.L.R. (2d) 137 (B.C.C.A.), at page 143, paragraph 17.

[4]           [2004] 1 S.C.R. 629, at pages 648 to 652, paragraphs 38 to 47.

[5]           See:  Cherrington v. Mayhew's Perma-Plants Ltd. (1990), 45 B.C.L.R. (2d) 374 (B.C.C.A.); Atlas Cabinets and Furniture Ltd. v. Nat. Trust Co. (1990), 45 B.C.L.R. (2d) 99 (B.C.C.A.).

[6]           2004 BCPC 84 (B.C. Prov. Ct.)

[7]           Restitution, Fridman and McLeod, Carswell 1982, at page 247.