25/08/2018 – Jurisdiction British Columbia
Part 63 published on 01/09/2018
Court dismisses Strata Corporation’s claim for payment of strata fees and related amounts because of invalid by-laws
One of the units had been owned by Patricia Louis. Ms. Louis died in 1999. On her death, she named Nancy Kirk executrix of her will and bequeathed the condominium to her sons, Roderick Louis and Timothy Louis. Roderick Louis took occupancy of the unit in 1999 and subsequently paid all costs associated with the property. In 2012, Mr. Louis stopped paying strata fees because he disputed the strata corporation’s right to collect strata fees for a number of reasons going back to a 2008 dispute. The strata corporation subsequently registered a lien against the unit and then brought this petition for judgement of the debt owing for strata fees and for an order for sale of the unit.
Mr. Louis opposed the petition and sought a declaration that the strata corporation had acted improperly and in violation of his rights under the Canadian Charter of Rights and Freedoms.
Mr. Louis also petitioned for a declaration that decisions and votes at past meetings of the strata corporation were invalid, due to improper actions of the strata corporation.
The Supreme Court had previously determined (in 2015) that the strata corporation had “acted improperly in refusing to recognize Ms. Kirk’s proxy in favour of Mr. Louis, in failing to give the statutory notice of meetings to Ms. Kirk and Mr. Louis, and in commencing the Strata Petition against the respondents without the required vote of the owners.”
Nevertheless, the Court said (in 2015) that Mr. Louis was not entitled to withhold his strata fees. Furthermore, the Court refused (at that time) to overturn past decisions or votes of the corporation. The Court did order that the strata corporation perform its duties and comply with the Strata Property Act and the corporation’s by-laws going forward. The Court also ordered that the strata corporation’s petition (ie. seeking a sale of the unit) be stayed until there had been a three-quarter vote at a meeting in favour of continuing the petition.
[See Condo Cases Across Canada, Part 52, November 2015.]
The necessary three-quarter vote to authorize the petition was subsequently obtained.
However, the parties also appealed to the B.C. Court of Appeal. The Court of Appeal dismissed the appeals EXCEPT: The Court of Appeal held that the lower Court had improperly dismissed Mr. Louis’ application for a declaration that the votes and by-laws passed since 2010 were invalid. The Court of Appeal ordered that the Supreme Court reconsider those matters.
On reconsideration, the Supreme Court held that by-laws underpinning many aspects of the debt had not been validly passed. Accordingly, the strata corporation could not proceed with enforcement of the debt until the invalidities were cured and/or appropriate adjustments made to the amount of the debt claimed from the owner.
The Court said:
Neither Ms. Kirk nor Mr. Louis were given notice of the annual general meeting at which the 2012 bylaws were adopted. There are significant differences between the 2012 bylaws and the SPA’s Standard Bylaws that would otherwise have applied to Unit 206. For example, the Standard Bylaws do not allow for fines or interest charges on unpaid strata fees whereas the 2012 bylaws prescribed a rate of 10% coupled with a $25 per month fine. Section 130 of the SPA permits a fine for breaches of bylaws and rules but before enforcement of a bylaw or rule notice must be given with a time limit for compliance.
…
Taking into account the court’s conclusions in Omnicare and Daniels, I am satisfied there is no discretion to relieve against NW449’s failure to give the notices required under the SPA and conclude that the 2012 bylaws are invalid. It follows that the bylaws setting the budgets and strata fees are also invalid. There must be valid bylaws in place to set budgets and strata fees and to collect those fees and fines in regard to Unit 206. Absent the necessary authority, NW499 is not entitled to judgment because the strata fee debt is not yet owing.
…
This is not to say that the owners of Unit 206 are not obliged to pay their pro rata share of strata fees, special levies and costs, but only to conclude the process of obtaining the lien cannot be supported because the debt does not exist until the requisite bylaws and resolutions are passed or adopted.
…
The fact that NW499 may have to correct shortcomings from 2012 onward, is a matter almost entirely within their control. I do not accept that there has been laches or acquiescence in the dispute raised by Mr. Louis and would not dismiss his petition on that basis.
I am satisfied that the petition of NW499 bases its claim for strata fees, legal costs, penalties or fines, on bylaws and/or resolutions of NW499 that are invalid. This does not mean that the strata fees necessary to operate NW499 from 2011 to the present will not be payable by the owners (including Mr. Louis); it simply means that the current debt claim arising from resolutions and bylaws passed since the 2012 bylaws fails.
So in summary, the Court’s decision appears to be that the condominium corporation is obligated – after the fact – to take steps to cure the past improper procedures. Once that has been done, the strata corporation should then be in a position to seek recovery of the debt from the owner.
The Owners, Strata Plan NW 499 v. Kirk (BC Supreme Court) July 25, 2018