Part 44 published on 01/11/13
Strata corporation’s separate claim for production of documents dismissed
The strata corporation was the residential component of a mixed commercial, hotel and residential complex in Vancouver. Because the development included both a residential portion and a hotel portion, some operating expenses common to both had to be shared between the hotel and the residential owners. The cost-sharing was set forth in a “Reciprocal Easement Agreement”. A dispute arose between the strata corporation and the hotel (which was still owned by the developer of the complex) respecting the cost-sharing between the properties.
The strata corporation launched this Court petition, seeking production of documents it believed were relevant to the cost-sharing issues. The lower Court Judge ordered the developer to produce some of the requested documents. The developer appealed. The Court of Appeal allowed the appeal and dismissed the strata corporation’s petition.
The Court of Appeal said:
(a) The strata corporation was required to obtain a ¾ vote, under Section 171 of the Strata Property Act, before launching the petition. However, this could not be raised as a defence to the petition due to Section 173.1(1) of the Act. The Court said that section 171 (2) of the Act is “directed to corporate governance of a strata council, and creates an internal procedural rule for the benefit of the owners to ensure a strata council acts in good faith and in their best interests…”. So, the requirement for a ¾ vote is a requirement that can be raised only by the strata lot owners, not by a defendant to the Court petition.
(b) However, the strata corporation still had no right to pursue the petition. Sections 20 and 35 of the Strata Property Act did not create a continuing disclosure obligation upon the developer. The request for production therefore could only be asserted in the context of a claim for breach of contract. The Court said:
- “If the respondent (strata corporation) seeks to pursue its dispute with the appellants, the proper course is an action in contract, with attendant discovery procedures.”