Strata Plan BCS 3165 v. 1100 Georgia Partnership (B.C. Court Supreme Court)

This is a dispute between a strata corporation and its developer (and related parties), primarily respecting cost-sharing in relation to certain shared interests.  The dispute resulted in arbitration proceedings commenced by one of the developer affiliates, KBK No. 11 Ventures Ltd. (“KBK”), under the terms of a “Master Easement Agreement” (MEA) relating to the shared interests.  A Court action was commenced by the strata corporation and the strata corporation applied for an order allowing the Court action to proceed and staying the arbitration process.  The Court ruled against the strata corporation.  The Court ordered that the arbitration proceed and that the Court action be stayed (pending determination of the arbitration). The Court’s decision included the following: 

• “The dispute has its origins in the cost-sharing arrangements among the owners of the Shangri-La, a mixed-use residential, hotel and commercial tower located at 1111 Alberni Street in Vancouver.”
• “On July 9, 2012, KBK served its Notice of Claim in the Arbitration, seeking an award against the Strata for outstanding costs owing under the MEA and other consequential relief.”
• “The Strata commenced this action on April 30, 2013.”
• “The essence of the Strata’s complaint reflected in its Response and Counterclaim in the Arbitration is that the easement and cost-sharing structure was to be rational, fair, and equitable among the owners of the parcels but instead was allegedly structured by KBK to prefer the interests of KBK (on behalf of the developer) as owner of the Hotel Parcel and Remainder Parcel.”
• “Notwithstanding the Strata’s view that the Arbitration was an inappropriate forum for the resolution of the complaint, the Strata fully participated in the Arbitration and the Arbitration is now substantially advanced.”
• “In summary, it is my view that some aspects of the disagreement in this case clearly fall within the scope of section 10.1 of the MEA.  These include KBK’s claim against the Strata as currently advanced in the Arbitration, the Strata’s claims against KBK based on allegations of misrepresentation, fraud, and breach of statutory and fiduciary duties related to the easement and cost-sharing structure, and ultimately the validity of the MEA.  In addition, some aspects of the disagreement arguably fall within the scope of section 10.1of the MEA.  These including the validity of the Facility Area Easements, the Lease Options, and the Assignment & Assumption Agreement.  Finally, some aspects of the disagreement clearly fall beyond the scope of section 10.1 of the MEA.  These include the claim for damages and/or an accounting of profits as against the defendants other than KBK, the claim for injunctions against the members of the Developer other than KBK, and the claim against (another defendant).”
• “It is not practical for the action to proceed before the arbitrator has determined the scope of the Arbitration because that determination will directly affect the scope of the action.”
• “Further, the matters in issue in the action that are beyond the scope of the Arbitration are intertwined with and could be affected by the outcome of the Arbitration… As such, those claims will be affected by the outcome of the Arbitration.”