Poloway v. Strata Plan K692 (B.C. Supreme Court)

This Strata property is comprised of 29 units in 3 buildings. Building A is a 4-storey building containing 17 apartment-style strata units. Buildings B and C are single-storey townhouse buildings containing the remaining 12 (townhouse-style) strata units. 

Significant repairs, estimated to cost perhaps $2,000,000.00, were needed to the apartment building. The owners of 10 of the townhouse units applied for an Order creating sections (one section for the townhouse-style strata units and another for the apartment-style strata units). They sought this Order under s. 164 of the Strata Property Act, to prevent alleged significant unfairness. 

The total unit entitlement of the apartment-style strata units is 57.9%. The total unit entitlement of the townhouse-style strata units is 42.1%. Therefore, it was clear that the townhouse owners would incur significant expense if required to contribute towards the costs of the repairs to the apartment building. Nevertheless, the Court dismissed the application and declined to order sectioning of the strata units. 

The Court noted certain differences between the former Condominium Act and the Strata Property Act (which arrived in 2000).  The Court said: 

Under the (former Condominium Act) the default approach was that set out in s. 128(2), which provided that ‘common expenses attributable to one or more type of strata lot must be allocated to that type of strata lot and must be borne by the owners of that type of strata lot’. Under the Strata Property Act the opposite is the case. All common expenses are borne by all strata lot owners in accordance with their unit entitlement. A strata corporation can change that approach, but the threshold that must be met in order to do so is very high. One way is to change the formula (that is, individual unit entitlement as a percentage of total unit entitlement). To do that requires a resolution passed by a unanimous vote (s. 100(1)). Another way is to change the unit entitlement of one or more strata lots; that too requires a unanimous resolution (s. 261). Yet a further way is for the strata corporation to create sections. A unanimous vote is not required to create sections but a series of votes, each of which requires a three-quarters majority, is (s. 193). Thus the general rule is ‘you are all in it together’ and that general rule cannot and ought not be lightly displaced. 

The Court noted that the Strata Plan, in this case, had been filed in 1988. From 1988 until the year 2000 (when the Strata Property Act came into force) – except for the year 1991 – the Strata Corporation had always allocated common expenses to all owners regardless of whether the expenses were attributable to only one type of strata unit (despite the provisions of the former Condominium Act). This had continued under the Strata Property Act, but was now being questioned by the townhouse owners because of the very substantial repairs to be carried out to the apartment building. A Special Resolution to authorize sectioning had been defeated at a meeting of owners in 2009. Another Resolution to authorize alternative cost-sharing was also defeated in 2011. After that 2011 meeting, the Strata Corporation had sought legal advice. The legal counsel had advised that it was not legally possible for the Strata Corporation to allocate costs otherwise than by unit entitlement unless the Strata Corporation passed a unanimous resolution to that effect, or created sections. Given that advice, further attempts at a consensual resolution appeared doomed and the parties returned to Court. 

The Court’s conclusions were as follows: 

• The general rule (“you are all in it together”) was the starting place (and again should not be lightly displaced).
• The historical approach, in this case, was consistent with this general rule.  Generally speaking, expenses had historically been shared by all owners.
• There was nothing unfair in the conduct or approach taken by the Strata Corporation in this case.
• Although the cost of the repairs to the apartment building would unquestionably be “burdensome” to the townhouse owners, this was not sufficient to allow for a finding of “significant unfairness”.  

The Court said that this result was consistent with the Strata Property Act and, in fact, prescribed by it. In the absence of improper conduct by the Strata Corporation, the consequences could not be considered significantly unfair.