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CONDOMINIUMS - Common elements - Common expenses

Tuesday, January 12, 2021 @ 7:23 AM  

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Appeal by the strata corporation from a decision declaring that strata fees and special levies based on unit entitlement levied against the respondent by the appellant constituted significantly unfair action under s. 164 of the Strata Property Act and ordering apportionment of the fees and special levies on a different basis. The building contained a hotel, some commercial properties and an underground parkade. The respondent owned the parkade lots. Before the development was complete, the parkade lots had a unit entitlement of 29.82 per cent of the total unit entitlement. The respondent purchased the parkade lots in 1999. From 1999 until 2006, the expenses allocated to the parkade lots were approximately five to six per cent of the total operating costs. In December 2006, the strata council put forward a single operating budget for 2007 that allocated common expenses based on unit entitlement which resulted in a proposed allocation of 29.82 per cent of the total expenses to the parkade lots. In 2011, it was agreed that the parkade lots would pay 18 per cent of all operating expenses and special levies related to common property. In 2015, Retirement Concepts purchased the majority interest in the hotel lots. Within months there were significant special levies to be divided based on unit entitlement, and Retirement Concepts used its majority to pass a budget for 2016 which allocated the operating expenses on the same basis.

HELD: Appeal dismissed. The judge made no errors in identifying and applying the proper test for significant unfairness under s. 164 of the Strata Property Act. The judge expressly noted the lack of a unanimous s.100 resolution and the fact that the formula for cost allocation changed over the years prior to the arrival of Retirement Concepts. She also focused appropriately on whether the result of the decision at issue was significantly unfair in relation to the respondent, rather than erroneously on whether it achieved the greatest good for the greatest number. Interpreting action and decision in s. 164 in a broad and inclusive manner was appropriate to achieve a fair sharing of common expenses and the prevention of significantly unfair conduct among community members. A broad and inclusive interpretation of the words action and decision was also consistent with their grammatical and ordinary meaning. While, as a rule, conduct that complied with the prescribed cost allocation scheme in the Strata Property Act would not amount to a significantly unfair action or decision for s. 164 purposes, exceptions to this general rule were possible. By approving the 2016 operating budget and special levies at the 2016 annual general meeting in the face of the respondent’s objections, the appellant unambiguously refused to remedy the respondent’s complaint of significant unfairness. In doing so, its conduct constituted an action or decision susceptible to s. 164 review, and the judge was able to consider whether that conduct was significantly unfair based on the evidence presented.

King Day Holdings Ltd. v. Strata Plan LMS3851, [2020] B.C.J. No. 1941, British Columbia Court of Appeal, L.A. Fenlon, G. Dickson and G.B. Butler JJ.A., December 1, 2020. Digest No. TLD-January112021004