Richmond: Court decides leaky condo repair refund belongs to the seller not the leaky condo buyer who had holdback agreement with the seller

Citation:

Dewar v. Brooks

Date:

20040331

2004 BCPC 0084

File No:

C20216529

 

Registry:

Richmond

 

 

IN THE PROVINCIAL COURT OF BRITISH COLUMBIA

 

 

 

 

BETWEEN:

GARRY JOHN DEWAR

CLAIMANT

 

 

AND:

ANNA BROOKS and CHARLES BROOKS

DEFENDANTS

 

 

 
 
 

 

 

 

 

REASONS FOR JUDGMENT

OF THE

HONOURABLE JUDGE E. D. SCHMIDT

 

 

 

 

 

 

 

 

Appearing in person:

Garry Dewar

Appearing on their own behalf:

Anna Brooks and Charles Brooks

Place of Hearing:

Richmond, B.C.

Date of Hearing:

January 30, 2004

Date of Judgment:

March 31, 2004

 

[1] The Claimant is the seller of a strata unit in a townhouse development. The Defendants are the purchasers of the unit. The Agreement of Purchase and Sale was entered into by the parties on January 23, 2000.

[2] At the time the Agreement for Purchase and Sale was entered into, the Strata had proposed a special assessment for required repairs on the building envelope for the development and was awaiting completion of the study by engineers.

[3] The sale was completed on April 25, 2000. Prior to completion, an extra-ordinary meeting of the Strata Corporation was held to discuss the findings and that meeting was adjourned to April 26, 2000. The Strata Corporation had not yet determined the amount of the proposed special levy. Since an assessment had not yet been made against each strata unit and the completion was to occur before the assessment was made, the conveyancing notary and the purchasers' solicitor agreed on a holdback of $45,333 after discussion with the Strata Corporation as to the expected cost.

[4] The holdback was pursuant to a clause of the Agreement for Purchase and Sale which provided that:

"If a special assessment has been proposed, but not passed by the Strata Corporation before the Completion Date, the Buyer may hold back the amount of the proposed assessment and either pay said amount to the Strata Corporation or, if the proposed special assessment is defeated pay said amount to the Seller."

[5] The amount of the holdback was to be held in trust by the purchasers' solicitor until such time as the Strata Corporation established the exact amount of the assessment.

[6] The Strata Corporation determined that the amount of the special assessment was $37,390.66, and on July 17, 2000, that money was paid to the Strata Corporation by the purchasers' solicitor, and the amount of $7,924.34 was refunded to the seller.

[7] Approximately two years later, the work encompassed by the special assessment was completed and the Strata Corporation found that they had assessed an amount greater than what was required to undertake the work. The Strata Corporation voted to refund the excess to the unit holders. The purchasers received, as a result, the sum of $13,000.

[8] The seller Claimant learned of this refund from a neighbour and requested that the purchasers refund the money to him. The purchasers declined, and this action was brought by the seller.

[9] The question in the case is to whom the moneys rightfully belong.

[10] The Agreement for Purchase and Sale does not provide for this contingency. Neither the Statement of Adjustments of the Vendor or the Purchaser deal with the payment of any holdback moneys. The only indication of how the holdback moneys are to be disbursed is in correspondence between the seller's Notary and the purchaser's solicitor.

[11] The pertinent paragraph of the Notary's letter of April 19, 2000 is as follows:

"These documents are forwarded to you on your further undertaking to hold the sum of $45,333.00 in trust until such time as the Strata Corporation establishes the exact special assessment resulting from

(i) the Building Envelope Study prepared by Thermal Consultants (1999) Ltd. dated March 31, 2000 including payment of legal fees for advice regarding same;

(ii) the blockage of sewer or drain under an access cover on the south lane of the property.

Said funds shall only be paid to the Strata Corporation after providing written proof that the special assessment is in payment only for the above noted items (i) and (ii) and a detailed accounting of the purpose of the assessment to my office in order that I may put the Vendors on notice. Further upon confirmation from the Strata Corporation that all of the items listed in (i) and (ii) above have been completed and assessed that any excess trust funds held over the amounts paid for special assessments as noted above shall be paid to the Vendors care of my office. Finally that in the event the Strata Corporation establishes that vinyl siding will be used to finish the exterior of the buildings, immediately upon written verification of same from the Strata Corporation, the holdback amount will be amended to $37,021.95 and the Vendors will be paid the difference being $8,311.05."

[12] Apparently, the Strata Corporation was deciding between a number of options for completing the work, but in making the special assessment, chose the more expensive option to be on the safe side. The letter reflects that contingency. The amount of the holdback was in excess of even that higher estimate of the cost of the work, and the seller was refunded the difference between the holdback and the assessment based on the more expensive estimate.

[13] Through good management, the Strata Corporation was able to complete the work for less than was anticipated and a further $13,000 was refunded to this unit from the special assessment which had been paid by the seller's holdback.

[14] The purchasers say that they, as owners and thereby members of the Strata Corporation which had worked hard to keep the costs in line, should be entitled to the savings on the assessment. They also point out that it was they who went through the inconvenience of the building envelope reconstruction. They say that because the contract was silent and because of the previously mentioned considerations, they should be entitled to keep the money.

[15] These excess moneys however, were never the property of the purchasers and can only benefit the purchasers if, in fact, they were spent by the Strata Corporation to complete the work of the special assessment. Once refunded, as excess money collected for the special assessment, the refunded money became the property of the persons who paid to have the work performed. In this case, it was the seller of the unit, even though the work was done after the sale to the purchasers completed.

[16] The court finds that the seller is entitled to a return of the excess holdback money, and since the jurisdiction of the court is limited to $10,000, the amount of the judgment is $10,000.

[17] The seller is also entitled to court ordered interest in the amount of $523.66 from the date of demand being February 18, 2002, plus filing and service costs of $176.00, the judgment therefore totalling $10,699.66.

 

_____________________________

E. D. Schmidt, P.C.J.