Appointment Of An Administrator

 

Appointing An Administrator

An administrator is a person appointed by the court to perform some or all of a strata corporation’s duties.

The Strata Property Act permits any of the following persons to apply to the Supreme Court of British Columbia to appoint an administrator: 1

  • the strata corporation,
  • an owner,
  • a tenant,
  • a mortgagee, 2 or
  • other person having an interest in a strata lot.

The court may appoint an administrator if, in the court’s opinion, the appointment is in the best interests of the strata corporation. In making the appointment, the court may order that the administrator exercise or perform some or all of the powers and duties of the strata corporation. After ordering the appointment of an administrator, the court over time may modify its order to expand or reduce the administrator’s powers, if circumstances justify it. 3

If a strata corporation wishes to apply to the court to appoint an administrator, a majority of strata council may authorize the application. 4 It is not necessary for the eligible voters to first authorize the application by passing a 3/4 vote at a general meeting. Although section 171 of the Strata Property Act normally requires the corporation to first obtain a 3/4 vote before commencing a lawsuit, that section does not apply to an application for an administrator.

In Lum v. Strata Plan VR 519, a number of owners applied to the court to appoint an administrator under the Strata Property Act. 5 Although the court in the Lum case decided that an administrator was not necessary, the court set out the following factors that should be considered when determining whether the appointment of an administrator is in the best interests of the strata corporation:

1. Is there a demonstrated inability to manage the strata corporation?

2. Is there substantial misconduct or mismanagement, or both, in relation to the affairs of the strata corporation?

3. Is the appointment of an administrator necessary to bring order to the affairs of the strata corporation?

4. Is there a struggle within the strata corporation among competing groups that impedes or prevents proper governance of the strata corporation?

5. Will the appointment of an administrator have any reasonable prospect of bringing order to the affairs of the strata corporation?

The court also noted that, in addition to these factors, the cost of an administrator to a strata corporation must always be considered.

In the Lum case, the court also agreed that “the democratic government of the strata community should not be overridden by the court except where absolutely necessary.” 6

An Administrator’s Authority

An administrator exercises some or all of the powers and duties of the strata corporation. An administrator may do no more than the strata corporation may do. In many cases, the Strata Property Act requires a strata corporation to first obtain the approval of the eligible voters at a general meeting, before the corporation exercises a power under the Act. Where, before taking action, a strata corporation needs the prior approval of the eligible voters at a general meeting, so too does the administrator, unless the court orders otherwise.

Effective December 11, 2009, the provincial government amended the Strata Property Act to allow the Supreme Court of British Columbia to authorize an administrator to dispense with the necessity of prior approval where a majority, 3/4 or unanimous vote at a general meeting would otherwise be required. This means, for example, that the court may empower an administrator to authorize a special levy, to approve a budget or to pass any other resolution normally requiring approval by the eligible voters.

Before the December 2009 amendment, the court could not excuse an administrator from the necessity of prior voting approval, where the Strata Property Act required it. If the strata corporation could not act without prior approval of the eligible voters, the administrator was equally restrained. Given the wording of the Strata Property Act at the time, the court took the view that if the Act required the prior approval of the eligible voters at a general meeting, to allow an administrator to act without the necessary vote abrogated the rights of owners. 7

The court, however, could do what the administrator could not. The court, for example, could order an administrator to impose the necessary special levy to carry out repairs. For instance, in Ranftl v. Strata Plan VR 672 the court appointed an administrator with directions to obtain a building envelope construction report for a strata complex containing six strata lots. 8 The administrator obtained a building envelope report from a well-known engineering firm. Since the report recommended extensive, costly repairs, the administrator obtained a second opinion from another engineering firm.

In general, the second opinion confirmed the recommendations in the first report. Several of the owners opposed the major repairs recommended in the engineering reports. Those owners engaged their own consultant to write a report. Their consultant took a different view, recommending limited maintenance-related measures. The consultant assumed that the observations and measurements taken by the engineering firms in support of their recommendations were accurate, but disagreed with their conclusions. Unlike the engineering firms, the consultant did not carry out an on-site inspection.

The administrator applied to court for an order requiring the strata corporation to repair its buildings in accordance with the first engineering firm’s report, and to direct the administrator to impose a special levy to fund those repairs without the necessity of a 3/4 vote. The administrator told the court how the strata corporation was paralyzed by disagreement regarding which repairs to make and how to pay for them. After carefully reviewing the reports of the respective engineers and the consultant, the court ordered the strata corporation to repair its buildings in accordance with the recommendations in the first engineering report. The court also ordered the administrator to impose a special levy for $960,000 without the requirement of a 3/4 vote. Based apparently on the schedule of unit entitlement, this special levy required each of the six strata lots to contribute $160,000 apiece to repair the building envelope.

As a result of the December 2009 amendment, the Supreme Court of British Columbia may now, for example, empower an administrator to impose a special levy to carry out repairs. Alternatively, with or without a request to appoint an administrator, where a strata corporation is deadlocked over repairs or other significant problems, an owner or tenant may also consider applying to the court for the appropriate solution under section 164 [Preventing or remedying unfair acts] 9 or 165 [Other court remedies] 10 of the Strata Property Act.

Appeal Against Appointment of An Administrator

An appeal lies to the British Columbia Court of Appeal from an order by the Supreme Court of British Columbia concerning the appointment of an administrator. Depending whether the order under appeal is characterized as interlocutory or final, the party wishing to appeal must first obtain leave to appeal in the Court of Appeal. 11

If the order was made in proceedings initiated in the Supreme Court by a writ of summons, and in the course of ongoing litigation where the facts which support the order remain in dispute for determination later at trial, then the order is likely interlocutory in nature and leave to appeal in the Court of Appeal is necessary. Alternatively, where proceedings in the Supreme Court are brought by petition to appoint an administrator, an order granting or dismissing the request is likely final in nature. In that case, there is no requirement to first apply for leave to appeal in the Court of Appeal.

Paying for the Administrator

The court may set the administrator’s remuneration. 12 When considering the appointment of an administrator, strata owners should keep in mind that the remuneration and expenses of the administrator are paid by the strata corporation. 13 As a common expense of the strata corporation, all owners are responsible to contribute, in respect of each strata lot, to the administrator’s costs according to unit entitlement.


 

Notes:

  1. Strata Property Act, s. 174(1).
  2. See, for example, Richardson et al. v. The Owners, Strata Plan LMS 2435, 2005 BCSC 636.
  3. Strata Property Act, s. 174(2). See e.g., Ranftl v. The Owners, Strata Plan VR 672, 2005 BCSC 1760.
  4. The Owners, Strata Plan LMS 2643 v. Kwan et al., 2003 BCSC 293; and Strata Plan BCS 3699 v. Burrard Development Inc., 2013 BCCA 356 at para. 25.
  5. Lum et al. v. The Owners, Strata Plan VR 519, 2001 BCSC 493.
  6. Lum et al. v. The Owners, Strata Plan VR 519, 2001 BCSC 493 at para 12. See also Andrews v. Leno, 2001 BCSC 963; McGowan v. The Owners, Strata Plan NW 1018, 2002 BCSC 673 at para 70; The Owners, Strata Plan LMS 2643 v. Kwan et al., 2003 BCSC 293.
  7. Aviawest Resort Club v. Strata Plan LMS 1863, 2005 BCCA 267, supp. reasons on costs 2006 BCCA 359, leave to appeal dismissed without reasons (2006), 350 N.R. 200 (note), 2006 CanLII 1104 (S.C.C.). See also Cook v. Strata Plan N-50 (1995), 16 B.C.L.R. (3d) 131, 1995 CanLII 2422 (S.C.) where the court held that the power to appoint an administrator under the former Condominium Act did not permit the court to authorize an administrator to act without a special resolution (now called a 3/4 vote) where one was required by the statute.
  8. Ranftl v. The Owners, Strata Plan VR 672, 2007 BCSC 482.
  9. See, for example, Aviawest Resort Club v. Strata Plan LMS 1863, 2005 BCCA 267 at paras 35-36.
  10. See, for example, Tadeson v. The Owners, Strata Plan NW 2644 (1999), 30 R.P.R. (3d) 253, 1999 CanLII 6999 (B.C.S.C.); Enefer v. The Owners, Strata Plan LMS 1564, 2005 BCSC 1866, supp. reasons on costs 2005 BCSC 1331; Browne et al. v. The Owners, Strata Plan 582, 2007 BCSC 206.
  11. Court of Appeal Act, R.S.B.C. 1996, c. 77, s. 7. See also Aviawest Resort Club v. Strata Plan LMS 1863, Owners, 2004 BCCA 420 (application for directions on appeal).
  12. Strata Property Act, s. 174(3).
  13. Strata Property Act, ss. 1(1) (definition of “common expenses”), 92, 99 and 174(4).