Part 18 published on 01/05/07
Court orders change to unit entitlements to reflect actual habitable areas
In this Strata Corporation, 30 of the total 78 units had basements, and the basements were finished, habitable areas. The Schedule of Unit Entitlements, submitted by the developer, purported to allocate unit entitlements based on the habitable area of each unit. However, the Schedule contained an error in that it did not include the basement areas of the 30 units that had basements.
The owners agreed that the Schedule required amendment, but could not agree on the appropriate amendment. Ultimately, a committee of owners proposed a new “formula” for allocating unit entitlements, which calculated each unit’s share based on 100% of the main floor area, 75% of the second floor area and 50% of any basement area. This formula was unanimously recommended by the committee as a compromise solution, and was then supported by about 90% of the owners.
An amendment to the Schedule required either the unanimous agreement of the owners or a court order pursuant to Section 246 of the Strata Property Act. Since unanimous approval had not been obtained, an application was made to Court. The question the Court was asked to decide, was as follows: Could the Court amend the Schedule of Unit Entitlements to reflect the formula recommended by the committee and accepted by about 90% of the owners? The Court’s answer was “no”. The Court said:
“The options open to the Court under Section 246(7) and (8) are to amend the Schedule to accurately reflect the habitable areas of the units or the leave it unamended. The Court has no jurisdiction under Section 246 to amend the Schedule on any other basis.”
The Court accordingly decided to amend the Schedule of Unit Entitlements to reflect the actual habitable areas of all of the units (i.e., to include the basements in the calculations).
Finally the Court said that Section 164 of the Strata Property Act did not confer jurisdiction on the Court to amend the Schedule, because amendments to the Schedule are specifically addressed by Section 246 of the Act.