Ladysmith, Colonia Gardens: Leaky townhouse owners battle over whether those with basements should pay twice as much for repairs, $120,000 each, as those with crawl spaces

 

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Peace v. The Owners, Strata Plan VIS2165,

 

2008 BCSC 461

Date: 20080417

Docket: S47701

Registry: Nanaimo

Between:

Martha Peace, Rick Seaton also known as Robert Seaton,

Betty Seaton, John Wilson, Sheila Wilson, Gwen Brosz,

Grace Bennett, Suzanne Stephen, Douglas Stephen, Levonne Martyn,

Les Martyn, Pat Davidson, Jack Davidson, Diane Stephens

Plaintiffs

And

The Owners, Strata Plan VIS2165

Defendant

Before: The Honourable Mr. Justice Halfyard

Reasons for Judgment

Counsel for the Plaintiffs:

T. Huntsman

Counsel for the Defendant:

C. Wilson

Date and Place of Hearing:

April 1, 2008

 

Nanaimo, B.C.

[1]                Both parties have made interlocutory applications, which may be summarized as follows:

(a)        The defendant applies for an order dismissing the action, in whole or alternatively in part, based on the plaintiff’s failure to file a statement of claim within the time set by my order made on February 8, 2008, and various alleged defects in the statement of claim (including failure to plead facts which could constitute a cause of action under s.164 of the Strata Property Act).

(b)        The defendant sought an order requiring the plaintiff owners of Strata Lots 28-36 in Strata Plan VIS2165 to pay an additional $50,000 each toward the cost to complete “leaky condo” repairs to Strata Lots 1 to 41, and related relief.  However, this application was settled by way of a consent order during the hearing.

(c)        The plaintiffs applied for an order that would extend the time within which they could file a statement of claim, from February 22, 2008, to February 26, 2008, and for an order requiring the defendant to answer interrogatories delivered by the plaintiffs on February 11, 2008. 

The application of the defendant

[2]                On February 8, 2008, I ordered that the proceeding of the plaintiff by way of petition be converted into an action, and that the plaintiffs file and deliver a statement of claim within 14 days.  There was some misunderstanding of plaintiffs’ counsel as to whether such an order was actually made.  However, counsel for the defendant informed plaintiffs’ counsel that she was certain such an order had been made and warned plaintiffs’ counsel that she would move to strike out the action if the order was not complied with.  It appears that plaintiffs’ counsel scrambled to prepare a statement of claim, but it was not filed until February 26, 2008, which was about four days outside the time limit set by the order.

[3]                Having reviewed the evidence and heard the arguments on this point, I would not give effect to the defendants’ application to dismiss for failure to comply with the order of February 8.  I would grant an extension of time to February 26, so as to cure the procedural error committed by plaintiffs’ counsel.

[4]                For the defendant, Ms. Wilson took specific objection to a number of paragraphs in the body of the statement of claim and the prayer for relief.  Before considering these objections, I will set out enough of the background facts to provide a context for consideration of the application before me. 

Background Facts

[5]                The plaintiffs are the owners of nine of the 41 strata lots in the Strata Plan VIS2165, which is located at 815 Dunsmuir Street in Ladysmith, and which is known as Colonia Gardens.  The 41 residential suites in Colonia Gardens are contained in 15 separate buildings.  There are 11 triplexes and four duplexes.  The plaintiffs live in nine suites contained in three of the 11 triplex buildings. 

[6]                The defendant is the strata corporation created by statute to represent all of the owners, but in this action the defendant represents only the owners other than the plaintiffs, who own the other 32 strata lots contained in Colonia Gardens. 

[7]                In late 2005 or early 2006, the Strata Corporation retained an engineering firm to investigate and report on suspected water damage to the residential suites in the 15 buildings which comprise Colonia Gardens.  Kondra Associates Engineering inspected Colonia Gardens, and prepared an engineering report dated April 10, 2006.  The engineer concluded that the building envelopes of all of the 15 buildings in Colonia Gardens were leaking and that the water had caused substantial damage.  The estimated cost to complete repairs to all of the buildings was about $3,000,000. 

[8]                At a meeting of the owners on June 15, 2006, a motion was made to levy an assessment against the owners to pay the money to cover the costs of these repairs.  Twenty-nine voted in favour of the motion, and 12 voted against it.  The motion was defeated, as a three-quarter majority vote was required. 

[9]                In June 2006 following this meeting, Victor Martin, an owner of a strata lot in Colonia Gardens, filed a petition.  He sought, inter alia, an order requiring the Strata Corporation to impose a levy against all owners of strata lots to pay for the repair costs in proportion to their respective unit entitlements.  Some years earlier, the developer had assigned a unit entitlement of two, to each of the nine strata lots owned by the plaintiffs, and a unit entitlement of one to the other 32 strata lots. 

[10]            The present plaintiffs filed a petition on July 7, 2006.  Their petition and the petition of Victor Martin came before the court on July 13, 2006.  On that date, I ordered that the Strata Council be authorized to require each of the 41 owners to pay $58,835.25 toward the cost of repairs.  The issue of whether the petitioners would ultimately be required to pay for repairs on the basis of a unit entitlement of two was adjourned.  Other orders were also made, respecting both petitions.

[11]            After two general meetings of the owners on September 11, 2006 and December 12, 2006, the owners passed resolutions by a three-quarter majority vote, which empowered the Strata Corporation (through its council) to impose a special levy of $120,000 against each of the nine strata lots owned by the plaintiffs, and $60,000 against each of the 32 other strata lots.  The Strata Corporation then made the assessments against the owners in accordance with the resolutions. 

[12]            It is agreed by all parties that the damage caused by water penetrating the building envelope, and the building envelope itself, are necessary.  The Strata Corporation entered into a contract with a building contractor, the building repair work was commenced in October 2007, and it is estimated that the repair work will be completed by July 2008. 

[13]            The strata lots in Colonia Gardens are all of the same type.  The difference between the lots owned by the plaintiffs and the other lots is that each of the nine lots owned by the plaintiffs have a concrete basement area, whereas the other 32 strata lots have only a concrete crawl space.

[14]            In making and enforcing these resolutions, the Strata Corporation was purporting to act within its powers under the Act.  However, an examination of the orders made on July 13, 2006 leads me to conclude that these actions were inconsistent with the orders made.  But, I am not persuaded that the breach of the orders was intentional.  I accept that the majority who voted for these resolutions believed they were acting within the powers given by statute.

The Pleadings

[15]            In their statement of claim, the plaintiffs allege two separate causes of action.  The first claim is based on s.164(1)(a) of the Act, which states in part as follows:

164(1)  On application of an owner or tenant, the Supreme Court may make any interim or final order it considers necessary to prevent or remedy a significantly unfair

(a)        action or threatened action by, or decision of, the Strata Corporation, including the council, in relation to the owner or tenant….

[16]            The plaintiffs allege that it would be “significantly unfair” to require them to pay twice as much as the other owners toward the cost of repairs because they say it will only cost about $10,000 more to repair each of their suites, than it will cost to repair the other 32 suites. 

[17]            The plaintiffs’ second cause of action is based on s.246 of the Act.  Among other things, that section empowers the Supreme Court to change the unit entitlement of a strata lot, where the unit entitlement of a residential strata lot is calculated on the basis of “habitable area” but the unit entitlement does not accurately reflect the habitable area or the square footage of a strata lot.  In this case, the plaintiffs do not say that the surveyors committed error in calculating the square footage of their strata lots.  Rather, they allege that the square footage measured, exceeds the habitable area.

Alleged Defects in the Statement of Claim

[18]            The defendants first argue that paragraph 2 incorrectly describes the defendants as being “the other owners” of the strata lots in Colonia Gardens (i.e., the owners other than the plaintiffs).  Counsel for the plaintiffs acknowledged that this description was incorrect, and undertook to amend it, with leave of the court.

[19]            The defendants next submitted that several paragraphs of the statement of claim should be struck out on the ground that they relate to claims for relief that have previously been abandoned by the plaintiffs, namely, sectioning and estoppel.  Paragraphs 5, 6, 7 and 8 of the statement of claims were attacked on one or both of these grounds. 

[20]            In my opinion, the statement of claim is not well drafted.  It is true that a number of the allegations could be seen as relating to estoppel or sectioning.  However, I think it is arguable that these paragraphs comprise circumstances which are relevant to the issue of significant unfairness.  I am not persuaded that they should be struck out.

[21]            Paragraph 9 of the statement of claim was challenged on the ground that it is argument.  I do not agree.  Moreover, I am not satisfied that the allegation as to the timing of the damage to the residential suites is irrelevant to any issue in this proceeding.  It will not be struck out.

[22]            As to paragraph 10 of the statement of claim, although drafted somewhat awkwardly, it contains the essence of the foundation for the plaintiffs’ claim of significant unfairness.  Accordingly, it will not be struck out. 

[23]            Paragraph 11 of the statement of claim makes allegations relating to the habitable area of the nine suites owned by the plaintiffs, as compared to the habitable area of the other residential suites in Colonia Gardens.  While it is not well worded, this paragraph encompasses the plaintiffs’ second cause of action, based on s.246 of the Strata Property Act, and will be allowed to stand. 

[24]            The remaining challenges to the statement of claim relate to the prayer for relief.  I agree with the defendants’ submissions concerning paragraphs A, B and C.  Those three paragraphs will be struck out. 

[25]            I do not agree with the challenge to paragraph E (i.e., that it claims relief tantamount to sectioning), and it will be allowed to stand.

[26]            As to F of the prayer for relief, the first part of that paragraph (i.e. the part before the alternative claim) will be struck out.

[27]            It seems to me that paragraphs G and J of the prayer for relief claim estoppel, and for that reason they should be struck out. 

[28]            Paragraph H of the prayer for relief requests an order which would authorize the Strata Corporation to collect $5,000 from each of the owners as a contribution for legal fees, to pay for a legal opinion as to whether the Strata Corporation should bring action against someone (presumably the developer or builder) to recover the costs of the leaky condo repairs.  To my mind, that is a matter entirely separate from the allegations made in the statement of claim, and there are no allegations in the statement of claim which could support such relief.  Accordingly, paragraph H will be struck out.

Does the Statement of Claim disclose a reasonable cause of action under s.164 of the Strata Property Act?

[29]            The defendant seemed to acknowledge that the statement of claim does disclose a reasonable cause of action based on s.246 of the Strata Property Act (although imperfectly stated).  But it was submitted that the pleadings do not disclose any reasonable claim based on s.164 of the Act.  In essence, it was asserted that, even if the plaintiffs were able to prove that the cost to repair each of their residential suites would not be anywhere near twice as much as the cost to repair each of the other 32 residential suites, such proof could not support a finding of significant unfairness.

[30]            I repeat the relevant part of s.164 of the Act:

164(1)  On application of an owner or tenant, the Supreme Court may make any interim or final order to prevent or remedy a significantly unfair

(a)        action or threatened action by, or decision of, the Strata Corporation, including the council, in relation to the owner or tenant. . . .

. . .

(2)        For the purposes of subsection (1), the court may

(a)        direct or prohibit an act of the Strata Corporation [or] the council

. . .

(b)        vary a transaction or resolution, and

(c)        regulate the conduct of the Strata Corporation’s future affairs.

[31]            In this cause of action, the plaintiffs allege that, in the particular circumstances of this case, it would be “significantly unfair” to permit the Strata Corporation to require the plaintiffs to pay twice as much for the “leaky condo” repairs, than the owners of the other 32 residential suites in Colonia Gardens.  The key allegation of the plaintiffs is that it will only cost about $10,000 more to repair each of their suites than it will cost to repair each of the other 32 suites.  Based on that assertion, the plaintiffs allege that it would be significantly unfair to require each of them to pay $120,000 for repairs, but to require the other owners to pay only $60,000 for repairs.

[32]            Counsel for the defendants submit that it could never be “significantly unfair” for a strata council to require owners to pay for the cost of repairs to the suites comprising a strata plan, on the basis of the unit entitlement assigned to each strata lot.  Counsel argued that a unit entitlement of two was assigned to each of the nine strata lots owned by the plaintiffs in accordance with the provisions of the legislation (i.e., by the developer).  Next, counsel referred me to s.99 of the Act, which in substance requires a strata corporation to assess owners for the cost of repairs, in accordance with the unit entitlement assigned to each of their strata lots.  From this foundation, Ms. Wilson contends that, in this case, the strata corporation had no discretion in the matter, and only did what the law required it to do.  It was further pointed out that the plaintiffs have made no allegation of bias, conspiracy to injure or abuse of the democratic process.  I was referred to several authorities which were said to support the conclusion that the court should never interfere with the lawful democratic processes of a strata corporation.  Ms. Wilson made the point that the Strata Corporation could only change unit entitlement by a unanimous vote under s.100, or s.108(2)(b) of the Act, which had not been (and could not be) done. 

[33]            The main cases relied on by the defendants were Coupal v. Strata Plan LMS2503 2004 BCCA 552 and Strata Plan LMS1537 v. Alvarez 2003 BCSC 1085.

[34]            In the Coupal case, the main issue was whether the provisions of the Condominium Act or those of the Strata Property Act applied to a strata corporation’s allocation of the costs for “leaky condo” repairs.  If the former statute applied, the respondent owners would not be required to pay any of the

 

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