Paying for Repairs

 

The Strata Property Act and, especially, the regulations determine who is ultimately responsible to pay for repairs. For the reasons given at the start of Chapter 25, Carrying Out Repairs, every reference in this chapter to “repair” or “repairs” includes maintenance, unless the context requires otherwise.

For the purpose of paying for repairs, the Strata Property Act and the Standard Bylaws treat both common property and common assets the same. Accordingly, when speaking of repairs, in this chapter every reference to common property includes common assets, unless the context requires otherwise.

Use This Analysis for Expenses Other Than Repairs

Repairs are just one of many different kinds of expenses that a strata corporation may incur. The requirements for allocating expenses for repairs apply equally to every other kind of strata corporation expenditure.

We use the subject of repairs to illustrate how the Strata Property Act and the regulations allocate expenses. The reader, however, may use the analysis below to allocate any expenditure by a strata corporation among the owners, including expenses for repairs.

Although a strata corporation may amend its bylaws concerning repair work, the Strata Property Act and the regulations govern the allocation of costs for that work. Note that many of the provisions that specifically require a strata corporation to allocate repair costs among only some of the owners, rather than all of them, are found in the regulations.

A strata corporation that wishes to amend its bylaws governing repairs should keep in mind the ways in which the Strata Property Act and regulations allocate the cost of repair work. Where a strata corporation passes a bylaw to allocate repair work or the cost of repairs, if that bylaw conflicts with the Act or regulations, then the bylaw is of no force or effect to the extent it conflicts with the legislation. 1

Assuming that a strata corporation is responsible to perform certain repair work, the corporation must decide who ultimately pays for that work. In other words, the strata corporation must decide whether all, some, or even just one owner must pay the corporation for the cost of that work.

The General Rule for a Strata Corporation

Under the Strata Property Act, the general rule for a strata corporation is that every strata lot must contribute to the operating fund, the contingency reserve fund (“CRF”), or to a special levy, as the case may be, according to the schedule of unit entitlement. 2 In other words, all of the owners must contribute to common expenses according to unit entitlement. As one judge observed: 3

The Act describes the general rule with this formula for calculating a strata lot’s contribution: 4

formula_spa_99(2).png

There are exceptions to the general rule. An exception requires a strata corporation to depart from the general rule. Where an exception exists, the strata corporation must allocate an expense among only some, or perhaps to just one owner, instead of all of the owners. It follows that the general rule applies unless an exception exists.

In most cases where an exception to the general rule occurs, the Strata Property Act or regulations create the exception. In certain circumstances, the Act also allows the courts to make an order that effectively amounts to a court-ordered exception to the general rule. 5

In summary, if the strata corporation must carry out the actual repair work, the general rule requires every strata lot to contribute to the cost of that work, according to unit entitlement. This chapter explains how the general rule governs unless one of the following exceptions applies:

  • a section 100 exception,
  • a fund based exception,
  • a special levy exception,
  • a court ordered exception, or
  • a section exists.

Exceptions to the General Rule

The Section 100 Exception

This exception may apply whether the expenditure for a repair comes from the operating fund, the CRF or a special levy.

Recall that the Strata Property Act, as a general rule, requires in respect of each strata lot that every owner contribute to the operating fund, the CRF or a special levy, according to the schedule of unit entitlement. 6

Section 100 of the Strata Property Act, however, permits the eligible voters to override the general rule by passing a unanimous resolution to change the formula for calculating each strata lot’s share of a contribution to the operating fund, the CRF or a special levy, as the case may be. A unanimous resolution requires the affirmative vote of every strata lot. For information about a unanimous vote, see Chapter 14, Voting.

A section 100 resolution is not enforceable until the resolution is filed with a Certificate of Strata Corporation (Form E) in the Land Title Office. 7 The prescribed form of Certificate of Strata Corporation (Form E) is found in the regulations.

Though it is a rare case where the owners unanimously agree to alter the general rule for contributing to the operating fund, the CRF or a special levy, as the case may be, the Strata Property Act permits the eligible voters, in effect, to agree unanimously to require some strata lots, or even just one strata lot, to contribute the whole cost of particular repair work carried out by the strata corporation. This exception is equally available for contributions to the operating fund, the CRF or a special levy.

The Supreme Court of British Columbia may use a section 100 resolution to remedy significant unfairness. In certain circumstances, if significant unfairness exists, section 164 of the Strata Property Act permits the court to make any order it considers necessary to prevent or cure the problem. For example, in Fraser v. Strata Plan VR 1411, the court ordered that all the owners were deemed to have passed a section 100 resolution under the Strata Property Act. 8 The court, in effect, ordered a section 100 resolution to remedy significant unfairness in the allocation of some repair expenses. In another case, the court made a similar order to remedy a significantly unfair allocation of water and sewage expenses in a strata corporation’s budget between its commercial and residential sections. 9

Exception In A Phased Strata Development

In a phased development, the Strata Property Regulation limits a strata corporation’s ability to pass a section 100 resolution in some cases. If certain conditions exist, the strata corporation may not pass a section 100 resolution. Specifically, so long as the developer in a phased development complies with the dates in the Phased Strata Plan Declaration, or in an amended Declaration, for the beginning of construction of each phase, the strata corporation may not pass a section 100 resolution until one of the following occurs: 10

  • the annual general meeting is held following the deposit of the final phase, or
  • in accordance with the Act, the developer elects not to proceed with the next phase, or
  • the Supreme Court of British Columbia declares that the developer is deemed to have elected not to proceed, or
  • the strata corporation obtains the developer’s written consent to passage of a section 100 resolution.

The Fund-Based Exceptions

There are also exceptions to the general rule whose availability depends on which fund is used to pay for an expenditure.

The Strata Property Act creates different exceptions, depending whether the strata corporation pays an expenditure out of the operating fund or the out of the CRF. These fund-based exceptions are described below.

To determine if a fund-based exception to the general rule applies, a strata corporation first must decide whether the expense in question falls within the definition of the operating fund or the CRF. The two funds are described earlier in Chapter 15, Finances.

Exceptions Where the Operating Fund is Used

The operating fund is for common expenses that occur at least once a year. 11 If a proposed expenditure typically occurs at least once or more per year, the operating fund must be used to pay the expense. The general rule requires in respect of each strata lot that every owner contribute to an expense, unless in this case, one of the operating fund exceptions applies. If an exception applies, the strata corporation must allocate the expense to only some, or even just one, of the owners, as the case may be.

Where the operating fund applies to an expense, the Strata Property Act and regulations create the following exceptions to the general rule.

Repairing Common Property

Normally, a strata corporation performs repairs to common property. If the repairs constitute an ongoing expense, the strata corporation pays for the repairs out of the operating fund. In the usual case, the general rule applies and in respect of every strata lot all the owners contribute to the operating fund according to unit entitlement to pay for that repair.

For the reasons explained earlier in Chapter 25, Carrying Out Repairs, as at the time of this writing a strata corporation may not use a bylaw to make an owner responsible to repair common property. 12 It appears, however, there are at least two instances where, by agreement, an owner may be solely responsible to pay for a common-property repair performed by the strata corporation.

First, where an owner asks permission under the Standard Bylaws to alter common property, the corporation may require, as a condition of its approval, that the owner take responsibility for any expenses relating to the alteration. 13Second, where in a short term exclusive use agreement a strata corporation gives an owner or tenant permission to exclusively use certain common property, the corporation may, as part of the agreement, require the owner or tenant to pay for repairs to the relevant common property.

Repairing Limited Common Property

According to section 6.4(1) of the regulations, if a contribution to the operating fund relates to and benefits only limited common property (“LCP”), the contribution is shared only by owners of strata lots entitled to use such LCP. Section 6.4(1) of the regulations says: 14

formula_spreg_6.4_1.png

For instance, under the Standard Bylaws a strata corporation must carry out all repair work on LCP balconies and railings attached to the exterior of the building. 15 This regulation requires the strata corporation to allocate its yearly expenses for LCP balcony repairs to strata lots with LCP balconies, all according to unit entitlement.

Repairing a Strata Lot

When the operating fund is used to pay for repairs to one or more strata lots, there are, generally speaking, two exceptions which require a strata corporation to allocate the expense to only some, or perhaps just one, strata lot, as the case may be. Before either exception applies, specific criteria must be met. The first exception involves identifying a type of strata lot, the second occurs where a strata corporation takes responsibility to repair specified portions of some, but not all, strata lots. 16

Exception: Repair Costs Allocated To A Type of Strata Lot

According to section 6.4(2) of the regulations, if a contribution to the operating fund relates to and benefits only one type of strata lot, and that type is identified as a type of strata lot in the bylaws, the contribution is shared only among strata lots of that type, all according to unit entitlement. Section 6.4(2) of the regulations says: 17

formula_spreg_6.4_2.png

The Standard Bylaws do not identify different types of strata lots. A strata corporation, however, may amend its bylaws to identify a type of strata lot for the purposes of allocating expenses. 18

What Is A “Type” of Strata Lot?

The Strata Property Act does not define the meaning of the term type.

In the early years of the Strata Property Act, previous editions of this book suggested that, in the absence of a definition of type in the Act, it seemed that each strata corporation could use its own criteria, by means of a bylaw, to define a type of strata lot. It is now clear, however, that the courts rely on case law decided under the former Condominium Act to determine if a different type of strata lot exists. 19

Consequently, the term, type is taken to denote the different character or form of a structure, 20 or a class of things having common characteristics. 21

The cases that have decided whether a different type of strata lot exists tend to be fact-driven. For instance, in one case, the court found that different types exist in a phased, heritage development with 88 strata lots. In that case, 12 apartment strata lots in a 1912 heritage building differed in character or form from the remaining 76 strata lots, contained in seven modern, three-storey townhouse style buildings. 22

Conversely, in a different case involving another heritage development, the court ruled that separate types of strata lot did not exist. 23 In that case, the development blended a 1904 heritage home, containing two strata lots, with a 1994 apartment building, which held six strata lots.

In another decision, the court found that different types of strata lot did not exist in a development consisting of two buildings which shared a common foundation. 24 The first building contained one strata lot and a garage which was part of another strata lot in the adjacent second building. The second building contained two strata lots.

The identification of the type in question does not have to actually occur in a specific bylaw. In The Owners, Strata Plan VR 2654 v. Mason, the bylaw in question referred to allocating expenses according to type, but it did not expressly say what the types were. 25 Upon reading all of the strata corporation’s bylaws, the court found other bylaws that apparently named the two types. In these circumstances, the court held that the bylaw in question met the requirement in section 6.4(2) of the regulations to identify in the bylaws the relevant types of strata lot. 26 This result is consistent with the wording of section 6.4(2), which requires, in part, that the, “. . . type is identified as a type of strata lot in the bylaws of the strata corporation.” (Emphasis added)

Townhouse and apartment building strata lots respectively do not constitute different types of strata lots by virtue only of being different kinds of buildings. The courts have apparently resisted reasoning that if different kinds of buildings exist in the same development, for example, townhouses and apartment buildings, their respective strata lots must automatically be different types. Despite opportunities to do so, 27 it seems the courts have refrained from this approach. Given the case law so far, where a development contains both townhouses and apartment buildings, it is not correct to say they are each a different type by virtue only of being townhouses and apartment buildings respectively.

Allocating a Common Expense for Repairs According to Type

Where a type of strata lot is identified as a type in the bylaws, the type-exception only applies if the contribution to the operating fund relates to and benefits only that type of strata lot exclusively.

In Ernest & Twins Ventures (PP) Ltd. v. Strata Plan LMS 3529, the complainant argued that where an item of expense benefits all types of strata lots equally, the expense must be allocated among them. 28 Where, however, an expenditure benefits one type of strata lot disproportionately, the complainant argued that the strata corporation must allocate the expense in a manner that reflects the extent of the benefit derived by each type of strata lot. This approach would mean, for example, that if roofing repairs benefit the Type A strata lots 80 per cent (80%), and the Type B strata lots 20 per cent (20%), then the expense should be prorated between Types A and B. On that basis, 80 per cent (80%) of the repair expense would be allocated to the Type A strata lots, which would then share the expense, also according to unit entitlement. The Type B strata lots would carry 20 per cent (20%) of the expense, also according to unit entitlement.

The British Columbia Court of Appeal specifically rejected this interpretation of the exception in section 6.4(2) of the regulations. 29 Instead, the Court of Appeal emphasized that this exception applies where the contribution to the operating fund relates to and benefits only that type of strata lot exclusively. Where this exception applies, the contribution to pay for that repair expense is to be shared by the owners of that one type of strata lot alone, according to unit entitlement.

Amending The Bylaws To Identify A Type of Strata Lot

A strata corporation may enact a bylaw that identifies different types of strata lots for the purpose of allocating expenses under section 6.4(2) of the regulations. Subject to a transition exception noted below, a strata corporation must follow the usual procedure to create a types bylaw. 30

Given the case law concerning what constitutes a different type of strata lot, as described above, a strata corporation that wishes to create a types bylaw should first obtain legal advice in the matter.

Residential Sections Involving Types

A section is a form of mini-government within a strata corporation. Where a strata corporation passes a bylaw to create a section to represent the different interests of “owners of different types of residential strata lots,” the strata corporation has a types bylaw. 31

Section 191(1)(c) of the Strata Property Act permits a strata corporation to pass a bylaw to create separate sections to represent the different interests of, “owners of different types of residential strata lots.” The regulations say that for this purpose, “the following are the different types of residential strata lots” (emphasis added) permitted: 32

  • apartment-style strata lots,
  • townhouse-style strata lots, or
  • detached houses.

If a strata corporation passes a bylaw to create a section for residential strata lots of one of these types, then by virtue of the wording in the regulation, the bylaw will necessarily identify different a type of strata lot. In that case, section 6.4(2) of the regulations will apply to permit the corporation to allocate expenses to that type of residential strata lot. 33 For information about sections, see Chapter 10, Sections. 34

In Oakley v. Strata Plan VIS 1098, the strata development consisted of 62 townhouse units and four buildings that together contained a total of 71 apartment strata lots. 35 The strata corporation passed a bylaw establishing two sections: Section 1 for the apartment-style strata lots, Section 2 for the townhouse-style strata lots.

The issue was whether the strata corporation could allocate repair expenses among apartment-style strata lots according to their respective buildings. If permitted, the result would be that each apartment building would bear its own repair expenses, and within each building, presumably the owners of the apartment-style strata lots would contribute to their building’s repair costs according to unit entitlement.

While the Strata Property Act recognizes the different types of residential strata lot which can comprise sections, the court held that the apartment-style residential strata lots in different buildings did not constitute different types of strata lots. The strata corporation could not treat the apartment-style residential strata lots in one building as a separate section distinct from the apartment-style residential strata lots in the other buildings. Put another way, a section for apartment-style strata lots cannot be broken into sub-sections such that each apartment building is a separate sub-section.

Advantages

For the purpose of allocating repair expenses, creating an apartment, townhouse or detached house-style section has certain advantages over the passage of a bylaw identifying a type of strata lot.

With a types bylaw, described above, the strata corporation is restricted to allocating expenditures from the operating fund. Since the operating fund is restricted to expenditures which occur at least once per year, if not more often, the operating fund is likely only used for regular repairs. Certainly, in most cases, the operating fund cannot be used for a major, once-in-a-lifetime repair, such as the replacement of a building envelope in a leaky condo building.

On the other hand, if the strata corporation creates a residential section, the corporation may, in effect, allocate to that section all expenses that relate solely to the strata lots in that section. This means that when a particular expenditure by the strata corporation relates solely to the strata lots in a section, only the owners of the strata lots in that section must contribute to it. This is so whether the strata corporation pays the expense from its operating fund, the CRF, or a special levy. 36

Transition From The Former Condominium Act

When it came into force on July 1, 2000, the Strata Property Act recognized that some strata corporations already allocated expenses according to different types of strata lots. Often, a strata corporation had for many years identified different types of strata lot in the corporation’s annual budget, for the purpose of allocating expenses. In other instances, under the former Condominium Act a strata corporation had already amended its bylaws to identify different types of strata lot for the purpose of allocating expenses.

The following explains how the Strata Property Act’s transition provisions addressed both of these situations.

Transition From A Types Distinction In A Budget Under the Condominium Act

The scheme for allocating expenses in the Strata Property Act and its regulations differs from that under the former Condominium Act.

Under the Condominium Act, the statutory bylaws required that where a strata plan consisted of more than one type of strata lot, the common expenses attributable to one or more type of strata lot must be allocated to and borne by the owners of that type of strata lot, in proportion to their unit entitlements. In addition, there was no requirement in the Condominium Act to first identify each type of strata lot in the strata corporation’s bylaws. Section 128(2) of the Condominium Act said:

The Condominium Act did not define the term type in section 128(2). Recall, however, that the courts held that the word type in section 128(2) referred to “character or form of structure” or to “a class of things having common characteristics.” 37

In the past, many strata corporations relied on section 128(2) of the Condominium Act to allocate different expenses in their budgets to different types of strata lots. In other words, in their annual budgets those strata corporations distinguished different types of strata lot and separately allocated expenses to each type of strata lot.

On July 1, 2000, the Strata Property Act came into force. While the Strata Property Act maintains the concept of allocating expenses according to a type of strata lot, the scheme in that Act is different. With one time-limited exception, the Strata Property Act requires that a bylaw identify each type of strata lot for this purpose. The exception occurred in the Strata Property Act’s transition provisions. The exception allowed a strata corporation to continue allocating expenses according to type of strata lot, even if there was no bylaw identifying a type of strata lot for this purpose. The transition provisions also made it easier to pass a types bylaw. The exception was available if a strata corporation met the following requirements . 38

If on July 1, 2000, when the Strata Property Act came into force, a strata corporation relied on section 128(2) of the former Condominium Act, quoted above, or a similar bylaw, to allocate expenses according to different types of strata lots in the budget prevailing on that date, then the regulations permitted the corporation to continue allocating expenses on that basis until December 31, 2001, subject to the corporation’s bylaws. 39

The reference in the transition provisions to a “similar bylaw” means a statutory bylaw in a predecessor statute that is similar to the statutory bylaw in section 128(2) of the Condominium Act, quoted above. 40

Since these transition provisions permitted the strata corporation to continue allocating expenses for the purpose of section 6.4(2) of the regulations (being a formula for sharing operating expenses for types of strata lots), these provisions applied only to operating expenses, and not to CRF expenses. 41

In addition, until December 31, 2001, a strata corporation could more easily amend its bylaws to identify types of strata lot for the purpose of complying with section 6.4(2) of the regulations to allocate operating expenses according to type. The transition provisions allowed the strata corporation to enact a bylaw to identify the same types of strata lot previously set out in the budget prevailing on July 1, 2000. During this grace period, the strata corporation could enact such a bylaw by a majority vote at a general meeting. 42 Normally, a 3/4 vote would be necessary. 43

Transition from an Amended Types-Bylaw Previously Filed Under the Condominium Act

Depending on the circumstances, an amended types bylaw filed before July 1, 2000 (that is, under the Condominium Act) may still apply under the Strata Property Act. If so, the bylaw may require the strata corporation to allocate contributions by type from the operating fund, if certain criteria are met.

The decision of the Supreme Court of British Columbia in The Owners, Strata Plan VR 2654 v. Mason illustrates how to determine if a previously filed types bylaw survives the Strata Property Act.

In the Mason case, a phased development consisted of apartment strata lots and townhouse strata lots. 44 In 1992, the strata corporation amended its bylaws by filing bylaw 2.2 at the Land Title Office. The bylaw itself did not explicitly identify the different types in question. Instead, the strata corporation’s bylaw 2.2 said:

Elsewhere, the strata corporation’s bylaws referred to the apartment and townhouse units as the two different types of strata lot. Except for one brief, irrelevant period, , the strata corporation from 1992 to the date of the hearing in 2004 allocated expenditures from both its operating fund and CRF according to type, based on bylaw 2.2.

In Mason, an issue was whether the amended types bylaw survived the Strata Property Act, which came into force on July 1, 2000, and if so, whether the bylaw applied to contributions from the operating fund.

The transition provisions in the Strata Property Act provide that bylaws which were already filed in the Land Title Office when that Act came into force would continue to apply for an initial grace period. During the grace period, all of a strata corporation’s bylaws continued to apply, whether they were statutory bylaws or bylaws amended under the former Condominium Act. 45 The grace period ended on December 31, 2001. In Mason, the court found that bylaw 2.2 applied during the grace period. 46 During the grace period, the bylaw required the strata corporation to apportion contributions to the operating fund according to type of strata lot.

The transition provisions also provide that on or after January 1, 2002, after the grace period, any amended bylaw that was already filed at the Land Title Office when the Strata Property Act came into force continues to apply, except to the extent the bylaw conflicts with the Strata Property Act or the regulations. If the amended bylaw conflicts with the Strata Property Act or the regulations, the bylaw ceases to have effect to the extent of the conflict, with one exception. 47 The exception occurs where a bylaw that was filed in the Land Title Office before July 1, 2000 allocates CRF contributions by type and meets certain criteria. 48 This exception is explained later in this chapter under “Exceptions Where the Contingency Reserve Fund is Used.”

In Mason, the court held that bylaw 2.2 continued to apply after the grace period, from January 1, 2002 onward. 49 Since bylaw 2.2 complied with the types exception in section 6.4(2) of the regulations (being a formula for sharing operating expenses for types of strata lots identified in the bylaws), bylaw 2.2 required the strata corporation to allocate a contribution to its operating fund according to type of strata lot.

Exception: A Specified Portions Bylaw

The Strata Property Act permits a strata corporation to pass a bylaw to take responsibility to repair specified portions of a strata lot. Section 72(3) of the Act says:

According to section 6.5(1) of the regulations, if a strata corporation has passed a bylaw under section 72(3) of the Strata Property Act that makes the corporation responsible to repair specified portions of some, but not all, of the strata lots, a contribution to the operating fund for the repair of those portions is shared only among owners of the strata lots to which the contribution relates. Section 6.5(1) of the regulations says,

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For example, suppose a residential strata complex contains 20 strata lots, and there are gas fireplaces in 12 of the strata lots; (the “gas-fireplace strata lots”). In each case, the gas fireplace is part of the respective strata lot. Suppose also that as the result of an owner’s attempt to repair his own gas fireplace, a dangerous gas leak occurred, prompting the strata corporation to take over maintenance of the gas fireplaces. To do so, the strata corporation passes a bylaw requiring the strata corporation to maintain the gas fireplaces.

We now have a bylaw requiring the strata corporation to repair specified portions of some (the 12 gas-fireplace strata lots), but not all strata lots (all 20 strata lots). Imagine that, for the next fiscal year, the strata corporation budgets $2,000 from the operating fund for gas-fireplace maintenance. Ordinarily, the general rule requires every strata lot to contribute to the cost, according to unit entitlement (in this example, all 20 strata lots). Since we have a specified-portions bylaw, however, only the 12 gas-fireplace strata lots must contribute to this operating expenditure, according to unit entitlement.

Exceptions Where the Contingency Reserve Fund is Used

The CRF is for expenses that usually occur less than once per year, or not at all. 50

According to the general rule, every strata lot must contribute to CRF expenditures, according to the schedule of unit entitlement. 51

Where the CRF applies to an expense, the Strata Property Act and regulations create these exceptions.

Section 100 Exception

The section 100 exception is described earlier in this chapter.

Types Bylaw Previously Filed Under the Condominium Act

There is an exception for a previously amended bylaw that apportions contributions to the CRF according to type of strata lot, if the bylaw meets certain criteria in the transition provisions of the Strata Property Act. 52

First, the strata corporation must have filed the amended bylaw at the Land Title Office before July 1, 2000, when the Strata Property Act came into force. Next, the bylaw must apportion CRF contributions as a common expense according to type of strata lot. Finally, the specific type of strata lot must be “. . . a type identified in the bylaws of the corporation or a section.” 53 Given this wording, it appears that the identification of the type of strata lot in question does not have to actually occur in the specific bylaw, so long as the type is reasonably identified somewhere in the bylaws of the strata corporation or the section. 54

If these requirements are met, a strata corporation must apportion a contribution to the CRF to a particular type of strata lot in accordance with the amended bylaw.

In The Owners, Strata Plan VR 2654 v. Mason, the court used this exception to authorize a strata corporation to allocate CRF expenditures according to type of strata lot. 55

In the Mason case, a phased development contained apartment strata lots and townhouse strata lots. In 1992, the strata corporation amended its bylaws by filing its bylaw 2.2 at the Land Title Office. Bylaw 2.2 said:

While bylaw 2.2 itself did not explicitly identify the different types of strata lot in question, elsewhere the strata corporation’s bylaws referred to apartment and townhouse units as the two different types. From 1992 through 2004 (except for one brief, irrelevant period), the strata corporation allocated expenditures from both its operating fund and CRF according to type, based on bylaw 2.2.

In Mason, an important issue was whether after July 1, 2000, when the Strata Property Act came into force, the amended bylaw authorized the strata corporation to allocate CRF expenses according to type. The court found that after the Strata Property Act came into force, bylaw 2.2 continued to require the strata corporation to allocate CRF expenditures according to type.

First, the court held that bylaw 2.2 remained in force during the initial grace period for all bylaws from July 1, 2000 until December 31, 2001. 56

Next, the court held that by virtue of the transition provisions for a bylaw of this kind, bylaw 2.2 continued to operate after the grace period ended, from January 1, 2002 onwards. 57 Earlier, Chapter 19, Statutory Bylaws And The Effect Of The Strata Property Act, explained how the Strata Property Act affects an amended bylaw that was already filed at the Land Title Office when the Act came into force, on July 1, 2000. Recall that, subject to one exception described below, in any case where such an amended bylaw conflicts with the Strata Property Act, or the regulations, the amended bylaw ceases to have any effect to the extent of the conflict. For example, a strata corporation may have filed a bylaw that requires the corporation to approve an owner’s tenant before the owner rents a residential strata lot to the tenant. The Strata Property Act does not permit such a bylaw. Since January 1, 2002, a strata corporation cannot enforce that bylaw. 58

There is a narrow exception, however, for an amended bylaw that apportions contributions to the contingency reserve fund (CRF) by type of strata lot, if the bylaw meets certain criteria. First, the strata corporation must have filed the amended bylaw in the Land Title Office before July 1, 2000, when the Strata Property Act came into force. Second, the bylaw must apportion CRF contributions according to type of strata lot. Last, the specific type of strata lot must be identified as a type of strata lot in the bylaws of the strata corporation or a section. If an amended bylaw meets these requirements, the bylaw will continue to operate beyond January 1, 2002, even if it conflicts with the Act and regulations. 59

In Mason, the court found that the strata corporation’s bylaw 2.2 met the requirements for this narrow CRF exception. After the grace period for bylaws expired on January 1, 2002, bylaw 2.2 continued to require the strata corporation to allocate expenditures from the CRF according to type. 60

Finally, where this narrow CRF exception occurs, it appears to also serve as an exception in the case of a special levy. Where a special levy is approved, the general rule requires every strata lot to contribute according to unit entitlement. In Mason, the court held that where a strata corporation meets the criteria for this narrow CRF exception, then the exception also applies to permit the corporation to impose a special levy according to type of strata lot If so, a strata corporation must allocate contributions to the special levy according to type, as explained below.

Special Levy Exceptions

Where a strata corporation approves a special levy for repairs, the general rule requires every strata lot to contribute, according to unit entitlement. 61 The general rule applies unless one of the following exceptions exists.

Section 100 Exception

The section 100 exception is described earlier in this chapter.

Section 108(2)(b) Exception

An exception occurs where a strata corporation, by unanimous resolution, adopts some other fair way to contribute to the special levy. Section 108(2)(b) of the Strata Property Act says:

Where there is a unanimous resolution, this provision allows a strata corporation to depart from the ordinary rule that requires every strata lot to contribute to a special levy according to unit entitlement. Instead, the strata corporation might, for instance, require only some strata lots to contribute to the special levy, so long as it is fair and supported by a unanimous vote. For example, suppose a strata development consists of 20 townhouses situated near a busy street with a lot of traffic noise. Suppose, too, that the five townhouses nearest the street are separated from the road-way by a wide strip of grass that is common property. Assume that the strata corporation requires a special levy to raise $25,000 to install a landscaped sound barrier along the grassy strip. Since the five townhouses nearest the street will most directly benefit from this repair, the owners might agree by unanimous resolution under section 108(2)(b) of the Act to allocate the whole expense solely to the five townhouse strata lots , shared equally among them.

Types Bylaw Previously Filed Under the Condominium Act

Earlier, this chapter explained how the transition provisions in the Strata Property Act create an exception where, under the former Condominium Act, a strata corporation filed a types bylaw to apportion CRF contributions. 62 The explanation appears in “Exceptions Where The Contingency Reserve Fund Is Used.” It appears that the same exception applies equally to a special levy. 63

In The Owners, Strata Plan VR 2654 v. Mason, described above, the court held that where the transition provisions 64 in the Strata Property Act preserve an amended bylaw that apportions contributions to the CRF by type of strata lot, that bylaw also applies to a special levy. This means that the authority in the bylaw to apportion a contribution to the CRF according to type of strata lot necessarily includes the power, to the same extent, to allocate contributions to a special levy by type. 65

Court-Ordered Exceptions

Using some of its broad powers under the Strata Property Act, the British Columbia Supreme Court has occasionally remedied a repair dispute by ordering what amounts, in effect, to an exception to the general rule. Such an order typically authorizes a strata corporation to require only some strata lots, rather than all of them, to contribute to a particular expenditure.

Significant Unfairness

In certain circumstances where significant unfairness exists, an owner or tenant may apply to the Supreme Court of British Columbia to prevent or remedy the situation. If the court finds there is significant unfairness, section 164 of the Strata Property Act permits the court to make any order it considers necessary to prevent or cure the problem. 66

In Chow v. The Owners, Strata Plan LMS 1277,the Supreme Court of British Columbia found significant unfairness in the way a strata corporation proposed to allocate certain repair expenses between townhouse and apartment strata lots. The court used its broad powers to order the creation of sections to represent the different interests of apartment and townhouse owners respectively. The existence of sections allowed the strata corporation to allocate to each section those repair expenses unique to its respective type of strata lot. 67

In Fraser v. Strata Plan VR 1411, the Supreme Court of British Columbia again found significant unfairness in the allocation of some repair expenses. To remedy the situation, the court ordered that all the owners were deemed to have passed a section 100 resolution under the Strata Property Act. 68 The section 100 exception is explained earlier in this chapter.

Briefly, section 100 of the Strata Property Act allows the owners to override the general rule by passing a unanimous resolution to change the formula for calculating each strata lot’s share of a contribution to the operating fund, the CRF or a special levy, as the case may be. 69 The court ordered the resolution filed in the Land Title Office to make the resolution enforceable in accordance with the Act. In Fraser, the court used the section 100 exception to override the general rule by substituting a different formula for calculating each strata lot’s contribution to the cost of repairs.

Cases where the court finds significant unfairness tend to be fact-driven and difficult to achieve. While the Chow and Fraser cases each depended on their respective facts, both cases shared certain features. Both cases emphasized a well-established past practice of allocating certain expenses to only some strata lots, rather than to all. Each case involved a rather abrupt departure from past practice so as to suddenly apply the general rule requiring every strata lot to contribute to a costly, major repair.

Section

The Strata Property Act permits a strata corporation to create a separate section to represent the interests of different strata owners, if certain criteria are met. In addition, the Supreme Court of British Columbia may order the creation of a section to prevent or remedy significant unfairness. For example, to remedy significant unfairness in the way a strata corporation allocated certain repair expenses, the court used its broad powers to order the creation of sections to represent the different interests of apartment and townhouse owners respectively. Sections allowed the strata corporation to allocate to each section those repair expenses unique to their respective type of strata lot. 70

A section is a form of mini-government with autonomy over matters that relate solely to the section, including finances. Among other things, a section may establish its own operating fund and CRF for common expenses of the section. A section may also budget and require owners of strata lots within the section to pay strata fees and special levies for expenditures authorized by the section. 71

A strata corporation, or alternatively, a section, may spend money for the benefit of all, or some, of the strata lots in the section.

Strata Corporation Expenditure

The requirements that govern how a strata corporation allocates expenses among the owners, as described earlier in this chapter, apply in a similar fashion when a strata corporation spends money for the benefit of strata lots in a section. 72 There is a general rule with some exceptions.

The General Rule for a Section

Where an expense of the strata corporation relates solely to strata lots in a section, the general rule is that every strata lot in the section must contribute to the expense according to unit entitlement. 73 In this work, this is called the general rule for a section.

The general rule for a section applies whether the strata corporation spends the money from its operating fund, the CRF, or from the proceeds of a special levy. 74 Section 195 of the Strata Property Act describes the general rule for a section, as follows:

formula_spa_195.png

As the Supreme Court of British Columbia said in one case, 75

For example, if a strata corporation carries out repairs that relate solely to strata lots in a section, then all of the owners in the section must contribute to the cost of that work according to unit entitlement, unless an exception applies. Adapting one judge’s observation about a strata corporation to the case of a section, the general rule for a section is that the owners of strata lots in the section are “all in it together.” 76

In a manner similar to the way that the Strata Property Act and its regulations establish exceptions to the general rule in a strata corporation, the legislation creates some exceptions to the general rule for a section. If an exception applies, then the strata corporation must allocate the expense among only some, or perhaps to only one, of the strata lots in the section. The exceptions to the general rule for a section are set out below.

Section 100 Exception

In the same fashion as described earlier in “The General Rule for a Strata Corporation,” a strata corporation may override the general rule for a section with a section 100 exception. Section 100 permits the strata corporation to depart from the general rule for a section by passing a unanimous resolution to change the formula for calculating each strata lot’s share of a contribution to the operating fund, the CRF, or a special levy. 77

The Fund-Based Exceptions

In addition, there are exceptions to the general rule for a section that depend which fund is used to pay for an expenditure.

The Strata Property Act creates different exceptions, depending whether the strata corporation, for the benefit of strata lots in a section, spends money out of the operating fund or the out of the CRF. These fund-based exceptions are described below.

Recall how the Strata Property Act restricts the use of each fund. To determine if a fund-based exception to the general rule for a section applies, a strata corporation first must decide whether the expense in question falls within the definition of the operating fund or the CRF. The two funds are described earlier in Chapter 15, Finances.

Exceptions Where the Operating Fund is Used

Recall that the operating fund is for common expenses that occur at least once a year. 78 If a proposed expenditure typically occurs at least once or more per year, the operating fund must be used to pay the expense.

Under the general rule for a section, if a contribution to the strata corporation’s operating fund relates solely to strata lots in a section, the contribution must be borne by every strata lot in the section according to unit entitlement. 79 The general rule for a section applies unless an exception exists. Where the strata corporation’s operating fund is used to pay for a repair that relates solely to strata lots in a section, then in addition to the section 100 exception noted above, the following exceptions to the general rule for a section may also occur.

Limited Common Property

According to section 11.2(1) of the regulations, if a contribution to a strata corporation’s operating fund relates to and benefits only LCP for the exclusive use of strata lots in a section, the contribution is shared only by owners of the strata lots entitled to use the LCP. Section 11.2(1) of the regulations says:

formula_spreg_11.2_1.png

Note that while limited common property may be designated for the exclusive use of all the strata lots in a section, 80 a section may not have its own common property. 81

Strata Lot

Where a strata corporation uses its operating fund for repairs that relate solely to strata lots in a section, and the repairs involve work on one or more of the strata lots in that section, there appear to be two exceptions which require the corporation to depart from the general rule for a section. The first exception involves identifying a type of strata lot in the bylaws of the section. The second exception applies where a section, in its bylaws, takes responsibility to repair specified portions of some, but not all, strata lots in the section. Before either exception applies, certain criteria must be met.

Exception: Repair Costs Allocated To A Type of Strata Lot In A Section

The law governing types of strata lot is explained earlier in this chapter.

According to section 11.2(2) of the regulations, if a contribution to the strata corporation’s operating fund relates to and benefits only one type of strata lot in a section, and that type is identified as a type of strata lot in the bylaws of the section, the contribution is shared only by owners of strata lots of that type based on unit entitlement.

Section 11.2(2) of the regulations says:

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It appears that the identification of the type of strata lot in question does not have to actually occur in the specific bylaw, so long as the type is reasonably identified somewhere in the bylaws of the section. 82 In any event, the wording of section 11.2(2) of the regulations requires, in part, that the “. . . type is identified as a type of strata lot in the bylaws of the section.” (Emphasis added)

Allocating a Common Expense for Repairs According to Type

Recall how, in Ernest & Twins Ventures (PP) Ltd. v. Strata Plan LMS 3529, the British Columbia Court of Appeal held that where a type of strata lot is identified as a type in the bylaws, the types exception only applies when a contribution to the strata corporation’s operating fund relates to and benefits only that type of strata lot exclusively. 83

In the case of a types exception to the general rule for a section, presumably the same requirement for exclusiveness applies. That is, where a type of strata lot is identified as a type in the bylaws of a section, this exception only applies if the expenditure from the strata corporation’s operating fund, “relates to and benefits only one type of strata lot.” In other words, the expenditure must relate to that type of strata lot exclusively.

Enacting a Section Bylaw to Identify a Type of Strata Lot

The Strata Property Act acknowledges that a section may enact its own bylaw to identify a type of strata lot within the section for the purpose of allocating expenses, including repair expenses. 84 For information about the procedure for a section to enact a bylaw, see Chapter 10, Sections.

If a section wishes to create its own types bylaw, the section should first obtain legal advice, especially given the law concerning types of strata lot, as explained earlier in this chapter.

Transition From The Former Condominium Act

In the regulations, the transition provisions that apply to a type of strata lot in a strata corporation, as explained earlier in this chapter, also apply to a type of strata lot in a section. When it came into force on July 1, 2000, the Strata Property Act recognized that some strata corporations already allocated expenses according to different types of strata lots in a section. 85

In some cases, a strata corporation had, for many years in its annual budget identified different types of strata lot in a section, for the purpose of allocating expenses. In other situations, under the former Condominium Act the strata corporation had long ago filed an amended bylaw to identify different types of strata lot in a section, again for the purpose of allocating expenses.

The following explains how the Strata Property Act’s transition provisions addressed both of these situations.

Transition From A Types Distinction In A Budget Under The Condominium Act

If on July 1, 2000, when the Strata Property Act came into force, a strata corporation, in its budget prevailing on that date, relied on section 128(2) of the former Condominium Act, quoted earlier, or a similar bylaw, to allocate expenses according to different types of strata lot within a section, then the transition provisions permitted the corporation to continue allocating expenses on that basis until December 31, 2001, subject to the strata corporation’s bylaws.

The reference in the transition provisions to a “similar bylaw” means a statutory bylaw in a predecessor statute that is similar to the statutory bylaw in section 128(2) of the Condominium Act, quoted above.

Since these transition provisions permit the strata corporation to continue allocating expenses, for the purpose of section 11.2(2) of the regulations (being a formula for sharing operating expenses for types of strata lots in sections), according to different types of strata lot in a section, these provisions apply only to operating expenses, and not to CRF expenses. 86

During the grace period for bylaws until December 31, 2001, a strata corporation could pass a bylaw to identify one or more types of strata lot within a section. 87 Such a bylaw permits the strata corporation to allocate operating expenses according to type of strata lot within the section. The transition provisions allowed the strata corporation to enact the bylaw so long as it corresponded to the way the corporation’s budget (as at the time the Strata Property Act came into force) identified types of strata lot within the section. For the purpose of section 11.2(2) [the exception for a type of strata lot within a section, quoted earlier], the wording of the regulations suggests that the strata corporation’s bylaw apparently has the same force as if it was enacted by the section as part of the section’s bylaws. 88 During this grace period, it appears that the strata corporation could enact its types bylaw by majority vote at a general meeting.

Transition From An Amended Types-Bylaw Filed Under The Condominium Act

If a strata corporation relied on an amended bylaw previously filed under the Condominium Act to apportion contributions according to types of strata lot within a section, the bylaw may still apply under the Strata Property Act, depending on the circumstances. If so, under the Strata Property Act, the bylaw may continue to require the strata corporation to allocate contributions to the operating fund according to different types of strata lot within a section, if certain criteria are met.

For instance, in The Owners, Strata Plan VR 2654 v. Mason, described earlier in this chapter, the court found that a previously amended types bylaw survived under the Strata Property Act. 89

Exception: A Section’s Specified Portions Bylaw

According to section 11.3(1) of the regulations, if a section has, by a bylaw passed under section 72(3) of the Strata Property Act, taken responsibility for the repair of specified portions of some, but not all, of the strata lots in a section, a contribution to the strata corporation’s operating fund to repair those portions is shared only by the strata lots within the section to which the contribution relates, according to unit entitlement. Section 72(3) of the Act is quoted earlier in this chapter. Section 11.3(1) of the regulations says:

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Exceptions Where the Contingency Reserve Fund is Used

According to the general rule for a section, if a contribution to a strata corporation’s CRF relates solely to strata lots in a section, then every strata lot in the section must share the contribution on the basis of unit entitlement. The general rule for a section applies unless an exception exists. 90 To qualify for an exception, certain conditions must exist.

Where the strata corporation’s CRF is used to pay for a repair that relates solely to strata lots in a section, the following exceptions to the general rule for a section may occur.

Section 100 Exception

The section 100 exception is described earlier in this chapter.

Amended Types Bylaw Filed Under the Condominium Act

The transition provisions in the Strata Property Act preserve an amended bylaw that apportions contributions to the strata corporation’s CRF according to type of strata lot in a section, if certain criteria are met. In an analogous example, in the Mason case, described earlier in this chapter, the court invoked these transition provisions to uphold a previously amended bylaw that apportioned CRF contributions by type of strata lot. The bylaw in Mason dealt with types of strata lot in a strata corporation, as opposed to types within a section. 91

To preserve such a bylaw in the case of a section, the transition provisions establish these criteria. First, the amended bylaw must have been filed at the Land Title Office before July 1, 2000, when the Strata Property Act came into force. Next, the bylaw must apportion contributions to the strata corporation’s CRF, “as a common expense according to type of strata lot.”  92 Presumably, in the case of a section, this wording requires that the bylaw apportion such contributions according to type of strata lot in a section. Last, the specific type of strata lot must be “. . . a type identified in the bylaws of the corporation or a section.” 93 It appears that the identification of the type of strata lot in question does not have to actually occur in the specific bylaw, so long as the type is reasonably identified somewhere in the bylaws of the strata corporation or the section.

If these requirements are met, where a contribution to the strata corporation’s CRF pertains only to one type of strata lot in a section, the strata corporation must allocate the contribution to that type of strata lot within the section, in accordance with the amended bylaw. In other words, the contribution will be shared only by strata lots of that type within the section, on the basis of unit entitlement.

Special Levy Exceptions

According to the general rule for a section, where a strata corporation raises money by a special levy for an expenditure that relates solely to a section, every strata lot in the section must contribute to the special levy on the basis of unit entitlement. 94

This means that if the strata corporation raises money by special levy for the benefit of only certain strata lots in the section, the general rule for the section applies, unless an exception exists.

Where a special levy is used to pay for a repair that relates solely to strata lots in a section, the following exceptions to the general rule may also occur.

Section 100 Exception

The section 100 exception is described earlier in this chapter.

Section 108(2)(b) Exception

Section 108(2)(b) of the Strata Property Act permits a strata corporation to override the general rule by passing a unanimous resolution to allocate a special levy on some other fair basis that does not directly involve unit entitlement. Section 108(2)(b) of the Act is quoted earlier in this chapter.

The regulations clearly contemplate that where a strata corporation raises money by special levy for an expenditure that benefits strata lots in a section, the eligible voters may use section 108(2)(b) to allocate the levy among the owners on a basis other than unit entitlement. 95

A Section’s Specified Portions Bylaw

According to section 11.3(1) of the regulations, if a section has passed a bylaw under section 72(3) of the Strata Property Act, quoted earlier in this chapter, which makes the section responsible to repair specified portions of some, but not all, of the strata lots in the section, contributions to a strata corporation’s special levy to repair those portions are shared only among owners of the strata lots to which the contribution relates. Section 11.3(1) is quoted above in “Exceptions Where The Operating Fund Is Used” under “Exception: A Section’s Specified Portions Bylaw.”

If these criteria are met, the regulations require a strata corporation to calculate each strata lot’s share of the special levy according to this formula:

formula_spreg_11.3_1.png

Amended Types Bylaw Filed Under the Condominium Act

The exception for a previously amended bylaw that apportions contributions to a strata corporation’s CRF by type, explained earlier, may apply equally to a special levy, in the case of a section.

Recall how the transition provisions in the Strata Property Act preserve an amended bylaw that apportions contributions to a strata corporation’s CRF according to type of strata lot in a section, if certain criteria are met. 96These transition provisions are explained earlier in this chapter in, “Exceptions Where The Contingency Reserve Fund Is Used.” These provisions create an exception to the general rule for a section. In The Owners, Strata Plan VR 2654 v. Mason, described earlier in this chapter, the court considered a similar transition provision. Mason involved a transition provision that preserved an amended bylaw which allocated CRF contributions by type of strata lot in the strata corporation (as opposed to a type of strata lot within a section). 97 In Mason, the court held that where the transition provisions preserve an amended bylaw that apportions contributions to the CRF by type of strata lot, that bylaw also applies to a strata corporation’s special levy. 98

The Mason reasoning may also apply where the transition provisions preserve an amended bylaw that apportions contributions to the strata corporation’s CRF according to a type of strata lot in a section. If so, the same bylaw permits a strata corporation to allocate contributions to a special levy according to type of strata lot within a section. In other words, the authority in the bylaw to apportion a contribution to the CRF according to type of strata lot in a section likely includes the power, to the same extent, to allocate contributions to a special levy by type of strata lot in a section.107 If a strata corporation wishes to apply this reasoning to apportion, to a type of strata lot within a section, the contributions to a strata corporation’s special levy, the corporation should first obtain legal advice in the matter.

Section Expenditure

The Strata Property Act and the regulations do not explicitly deal with the case where a section itself, rather than the strata corporation, spends money for the benefit of some, or all, of the strata lots in the section.

Instead, section 194(2) of the Strata Property Act says, in part:

Presumably, the same provisions that govern how a strata corporation may allocate expenses that benefit some or all of the strata lots in a section, as described above, apply equally to the section itself, subject to any necessary modifications. If a section, in a matter relating solely to the section, spends money to repair strata lots in the section, the expense is a common expense of the section. That is, every strata lot in the section must contribute to the section’s expenditure according to unit entitlement. If a section wishes to depart from the general rule that all the section owners are in it together by apportioning contributions to the section among some, or to only one, of the owners within the section, the executive of the section should first obtain legal advice.

Which Statute Governs a Dispute Over Repair Costs?

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Effective July 1, 2000, the Strata Property Act repealed the former Condominium Act. 99 In the early years of the Strata Property Act, the courts appeared divided over the question which statute governed a repair dispute: the Condominium Act or its replacement, the Strata Property Act. In its 2004 decision in Coupal v. Strata Plan LMS 2503, the British Columbia Court of Appeal finally settled this question. 100

Early Cases

In the early cases, the answer mainly depended whether the provincial Interpretation Act applied. The Interpretation Act applies to every enactment, “unless a contrary intention appears.” 101 If the Interpretation Act applies to a repair dispute, then section 35 of that Act protects rights that accrued, or which continue to accrue, under the former Condominium Act, as follows:

In 2001, for instance, in The Owners, Strata Plan LMS 608 v. The Apartment Owners of Strata Plan LMS 608 et al., the Supreme Court of British Columbia found that section 35 of the Interpretation Act preserved certain rights of the applicants that accrued to them under the former Condominium Act. 102 Even though the Strata Property Act repealed the Condominium Act, the Interpretation Act allowed the court to apply the relevant provisions of the Condominium Act to allocate repair costs to only some, rather than all, of the owners.

Some of the earlier repair cases are confusing because they overlook restrictions on the use of the operating fund and the CRF respectively, depending on the situation. When reading repair cases, it is important to keep these restrictions in mind.

The later cases better take into account these fund restrictions. Two of the leading, later cases are Strata Plan LMS 1537 v. Alvarez  103 and Coupal v. Strata Plan LMS 2503, 104 both of which are described below.

Later Cases

Today, it appears that the 2001 decision in The Owners, Strata Plan LMS 608 v. The Apartment Owners of Strata Plan LMS 608 et al. is no longer good law. The British Columbia Court of Appeal has since rejected the reasoning in LMS 608, as explained below. 105

In 2003, the Supreme Court of British Columbia took a different approach. In Strata Plan LMS 1537 v. Alvarez, 106the court reviewed its previous decisions to date, including the LMS 608 case, and carefully analyzed the Strata Property Act scheme for allocating repair costs. The court concluded that the detailed provisions in the Strata Property Act reveal the legislature’s intention to resolve repair disputes with the new statute. To the extent that the earlier LMS 608 case depends on the Interpretation Act to preserve certain rights under the former Condominium Act, the court in Alvarez rejected the reasoning in LMS 608. In part, the court in Alvarez justified its departure from the court’s previous approach in LMS 608 because, in the earlier case, the court did not consider the detailed transition provisions in the Strata Property Act.

In Alvarez, the court held that the scheme in the Strata Property Act governs repair disputes. This means that on or after July 1, 2000, the Strata Property Act applies, except only for those specific cases where a transition provision in the Strata Property Regulation preserves the right for a limited time to continue using the former Condominium Act approach to allocating expenses. The following Case Study summarizes what happened in the Alvarez case.

Case Study

The strata development blended a heritage home built in 1904 with an apartment building built in 1994. The heritage home held two strata lots. The apartment portion consisted of six apartments.

The building envelope in the apartment portion, built with all the benefits of modern technology, leaked. The strata corporation estimated that it would cost approximately $160,000 to repair the building envelope for the apartment units.

Initially, the strata corporation’s bylaws included the statutory bylaw in section 128(2) of the Condominium Act, quoted earlier in this chapter.

On July 1, 2000, the Strata Property Act repealed and replaced the former Condominium Act.

On October 15, 2001, the owners unanimously passed a resolution allocating among all the owners the cost to repair the building envelope in the apartment portion of the complex.

The applicants owned a strata lot in the heritage portion of the development.

Despite previously consenting to the resolution, the applicants claimed that it was invalid. The applicants argued that the Condominium Act governed the repairs, and that section 128(2) of the bylaws required the strata corporation to allocate the cost to repair the apartments’ building envelope solely to the owners of the apartment units.

The court found that the Strata Property Act applied to the dispute, not the former Condominium Act. Consequently, the general rule applied; every strata lot must contribute according to unit entitlement unless an exception exists. Since the expenditure to repair the building envelope was an unusual expense, the funds must come from the CRF or a special levy. In the circumstances of this case, there was no evidence to justify any of the exceptions that the Strata Property Act permits where a CRF or a special levy is used to fund repairs. Since the Strata Property Act required everyone to pay, the resolution was consistent with what the law required. The 2001 resolution in Alvarez was valid and the owners of the heritage building strata lots must contribute their share of the cost to repair the modern apartment building. The general rule governed; every strata lot must contribute to the repairs.

In November 2004, in Coupal v. Strata Plan LMS 2503 107 the British Columbia Court of Appeal settled which statute governs. In Coupal, the Court of Appeal approved the approach previously taken in the Alvarez case. The Court of Appeal in Coupal held that on or after July 1, 2000 the scheme in the Strata Property Act applies, except only for those specific cases where a transition provision in the Strata Property Regulation preserves the right for a limited time to continue using the former Condominium Act approach to allocating expenses.

In doing so, the Court of Appeal in Coupal apparently also rejected the earlier reasoning in The Owners, Strata Plan LMS 608 v. The Apartment Owners of Strata Plan LMS 608 et al., to the extent that previous decision held that the Interpretation Act preserved certain rights under the former Condominium Act. 108

In Coupal, the residential development consisted of a 1912 heritage building plus seven new buildings. The heritage building had 12 strata lots, while the new buildings together contained 76 strata lots. When the strata corporation was formed in the 1990s, the corporation’s bylaws were the Standard Bylaws under the former Condominium Act. Those bylaws included section 128(2) of the Condominium Act, quoted earlier in this chapter. In effect, that bylaw required that where a strata corporation consisted of more than one type of strata lot, then expenses attributable only to one particular type of strata lot must be allocated solely to that type based on unit entitlement.

On July 1, 2000 the Strata Property Act repealed and replaced the former Condominium Act. In 2001 and 2002, the strata corporation approved several large special levies for repairs to building envelopes in the new buildings, and for related litigation. The owners in the 12 heritage units objected to contributing to the special levies on the basis that their strata lots were of a different type.

At the suggestion of, and with the consent of all parties, in Coupal, the Supreme Court of British Columbia assumed that the standard bylaw in section 128(2) of the former Condominium Act governed the special levies in 2001 and 2002. Applying section 128(2) of the Condominium Act, the Supreme Court found that the 12 strata lots in the heritage building were of a different type than those in the new buildings. Since the repairs and litigation involved only the new buildings, only the owners of strata lots of that type must contribute to the costs. The owners of the other type of strata lot, the 12 strata lots in the heritage building, did not have to contribute to the cost of the repairs.

On appeal in Coupal, the British Columbia Court of Appeal overturned the decision of the Supreme Court. The Court of Appeal held that the Strata Property Act governed the dispute, not section 128(2) of the former Condominium Act. Even though all parties to the dispute originally agreed in the court below that the Condominium Act applied, that agreement was wrong in law. It was not in the interest of justice to affirm the decision of the court below made on the basis of the lawyers’ mistaken view of the law.

For the reasons explained above in the Alvarez case, the Court of Appeal in Coupal confirmed that on or after July 1, 2000, the scheme in the Strata Property Act applies, except only for those specific cases where a transition provision in the Strata Property Regulation preserves the right for a limited time to continue using the former Condominium Act approach to allocating expenses.

Consequently, in the Coupal case, the Court of Appeal found that since the Strata Property Act governed the dispute, the general rule applied. Every strata lot must contribute according to unit entitlement. The owners of the 12 strata lots in the heritage building must contribute to the cost of repairing the new buildings. In other words, every owner must contribute to repairing the buildings in question.

Phases

Does phasing alone create an exception to the general rule such that a strata corporation may separately allocate common expenses to each phase? The answer is, “No.”

Phasing allows a developer to add strata lots and common property to a strata plan over time. This is done by filing the strata plan in phases. For more information about phases, see Chapter 31, Phases.

Phasing alone does not create an exception to the general rule. This means that even in a phased development, the general rule applies unless an exception exists, as described later in this chapter. For instance, the general rule requires every owner to contribute to the cost of repairs according to unit entitlement no matter whether the owner’s strata lot is in one phase or another. The general rule applies unless an exception exists.

For example, in Terry v. The Owners, Strata Plan LMS 2153, there were three phases containing a total of 302 residential dwelling units. 109 The owners in Phases Two and Three objected to contributing to the cost of major repairs in Phase One. When the buildings in Phase One needed building envelope repairs estimated to cost more than $1 million, the owners in Phases Two and Three resisted contributing to the repairs. The court confirmed that as a phased strata development, the owners were “all in it together.” The general rule required all the owners in each phase to contribute according to unit entitlement to the building envelope repairs in Phase One. In this case, it was irrelevant that both a REALTOR® and the developer had apparently told a buyer in Phase Two that the Phase One owners would be responsible for the Phase One repairs: 110

Duty to Pay For A Repair v. Insurance

Some individuals mistakenly try to determine who must pay for a repair on the basis of whose insurance covers the problem. This is wrong. Whether the strata corporation, or an owner or tenant, or some or all of them have insurance has nothing to do with determining who must pay for a repair. The liability to pay for a repair is determined according to the Strata Property Act and the regulations, as described in this chapter. For an illustration of the irrelevance of insurance to the duty to pay for a repair, see “Insurance v. Duty to Repair” in Chapter 16, Insurance.


 

Notes:

  1. Strata Property Act, s. 121(1) See, for example, Fraser v. Strata Plan VR 1411 et al., 2006 BCSC 1316; B.P.Y.A. 1163 Holdings Ltd. v. The Owners, Strata Plan VR 2192, 2008 BCSC 695.
  2. Strata Property Act, ss. 99 and 108(2). Coupal v. Strata Plan LMS 2503, 2004 BCCA 552, at para 34, rev’g 2002 BCSC 1444 (S.C.). For information about the operating fund, the CRF, a special levy, or using a schedule of unit entitlement, see Chapter 15, Finances.
  3. The Owners, Strata Plan LMS 1537 v. Alvarez, 2003 BCSC 1085 at para 35 per Bauman, J. See also Oakley et al. v. Strata Plan VIS 1098, 2003 BCSC 1700 at para 16.
  4. Strata Property Act, ss. 99 and 108(2).
  5. See, for example, Chow v. The Owners, Strata Plan LMS 1277, 2006 BCSC 335. In Chow, to remedy significant unfairness, the court ordered the creation of separate sections within a residential strata corporation to represent the different interests of apartment and townhouse owners. This allowed the strata corporation to depart from the general rule requiring all the owners to contribute to repairs, and to allocate instead to each section those repair expenses unique to their respective type of strata lot. For more information about sections, see Chapter 10, Sections. For more information about significant unfairness, see Chapter 27, Lawsuits.
  6. Strata Property Act, ss. 99 and 108(2).
  7. Strata Property Act, ss. 1(1) (definition of “unanimous vote”), 100 and 108(2).
  8. Fraser v. Strata Plan VR 1411 et al., 2006 BCSC 1316. For information about significant unfairness under the Strata Property Act, see Chapter 27, Lawsuits.
  9. Shaw v. The Owners, Strata LMS 3972 et al., 2008 BCSC 453.
  10. Strata Property Regulation, s. 13.3(1). For information about phases, see Chapter 31, Phases.
  11. Strata Property Act, ss.1(1) (definition of “operating fund”) and 92(a).
  12. Section 72(2)(b) of the Strata Property Act permits a strata corporation, by bylaw, to make an owner responsible for repairs to common property, “only if identified in the regulations and subject to prescribed restrictions.” Until the government creates a regulation to identify the applicable common property and any prescribed restrictions, it appears that this section cannot be used to pass a bylaw making an owner responsible to repair common property. For more information, see Chapter 25, Carrying Out Repairs.
  13. Strata Property Act, Schedule of Standard Bylaws, s. 6.
  14. Strata Property Regulation, s. 6.4(1).
  15. For information about who must carry out repair work on limited common property, see Chapter 25, Carrying Out Repairs.
  16. Strata Property Regulation, ss. 6.4(2) and 6.5(1).
  17. Strata Property Regulation, s. 6.4(2). See also s. 6.4(3) from which we infer that the “type” exception only applies where operating funds are spent. This exception is not typically available where CRF or special levy funds are expended.
  18. For information about amending bylaws, see Chapter 20, Amending Bylaws.
  19. Condominium Act, R.S.B.C. 1996, c. 64.
  20. Smith v. G.C. (Goldie) Read, 1993 CanLII 2149, [1993] B.C.J. No. 1348 (QL)(S.C.) at para 10; The Owners, Strata Plan LMS 608 v. The Apartment Owners of Strata Plan LMS 608 et al., [2001] B.C.J. No. 2116 (QL)(S.C.); Coupal v. Strata Plan LMS 2503, 2004 BCCA 552, rev’g 2002 BCSC 1444 (S.C.); Primero Cigar Imports Ltd. v. The Owners, Strata Plan VR 2327, 2003 BCSC 175.
  21. See, for example, Lim v. The Owners, Strata Plan VR 2654, 2001 BCSC 1386 at para 40.
  22. Coupal v. Strata Plan LMS 2503, 2004 BCCA 552, rev’g 2002 BCSC 1444 (S.C.).
  23. The Owners, Strata Plan LMS 1537 v. Alvarez, 2003 BCSC 1085.
  24. Fraser v. Strata Plan VR 1411 et al., 2006 BCSC 1316.
  25. The Owners, Strata Plan VR 2654 v. Mason, 2004 BCSC 685.
  26. The Owners, Strata Plan VR 2654 v. Mason, 2004 BCSC 685, at paras 32-33.
  27. See, for example, Coupal v. Strata Plan LMS 2503, 2004 BCCA 552, at paras 22-27, rev’g 2002 BCSC 1444 (S.C.).
  28. Ernest & Twins Ventures (PP) Ltd. v. Strata Plan LMS 3259, 2004 BCCA 597.
  29. Ernest & Twins Ventures (PP) Ltd. v. Strata Plan LMS 3259, 2004 BCCA 597 at paras. 15-18.
  30. For information about amending bylaws, see Chapter 20, Amending Bylaws.
  31. Strata Property Act, s. 191(1)(c).
  32. Strata Property Regulation, s. 11.1.
  33. See also Strata Property Regulation, s. 11.3 and Strata Corporation LMS 509 v. Andresen et al., 2001 BCSC 201; Oakley et al. v. Strata Plan VIS 1098, 2003 BCSC 1700.
  34. Strata Property Act, s. 191(1)(c). See also Strata Property Regulation, s. 11.3 and Strata Corporation LMS 509 v. Andresen et al., 2001 BCSC 201; Oakley et al. v. Strata Plan VIS 1098, 2003 BCSC 1700.
  35. Oakley et al. v. Strata Plan VIS 1098, 2003 BCSC 1700. See also The Owners, Strata Plan VR 2654 v. Mason, 2004 BCSC 685 at paras 52-55.
  36. Strata Property Act, s. 195; Wilfert et al. v. Ward et al., 2004 BCSC 289.
  37. See, for example, Smith v. G.C. (Goldie) Read, 1993 CanLII 2149, [1993] B.C.J. No. 1348 (QL)(S.C.); Lim v. The Owners, Strata Plan VR 2654, 2001 BCSC 1386.
  38. Strata Property Regulation, s. 17.13. Coupal v. Strata Plan LMS 2503, 2004 BCCA 552, at paras 53-55, rev’g 2002 BCSC 1444 (S.C.).
  39. Strata Property Regulation, s. 17.13. See also Strata Corporation LMS 509 v. Andresen et al., 2001 BCSC 201 and The Owners, Strata Plan LMS 608 v. The Apartment Owners of Strata Plan LMS 608 et al., [2001] B.C.J. No. 2116 (QL)(S.C.).
  40. The Owners, Strata Plan VR 2654 v. Mason, 2004 BCSC 685 at paras 30-31.
  41. The Owners, Strata Plan VR 2654 v. Mason, 2004 BCSC 685 at paras 24-25.
  42. Strata Property Regulations, s. 17.13.
  43. Strata Property Act, s. 128(1).
  44. The Owners, Strata Plan VR 2654 v. Mason, 2004 BCSC 685.
  45. Strata Property Regulation, s. 17.11(1).
  46. The Owners, Strata Plan VR 2654 v. Mason, 2004 BCSC 685 at para 27.
  47. Strata Property Regulation, s. 17.11(4), (5).
  48. Strata Property Regulation, s. 17.11(6).
  49. The Owners, Strata Plan VR 2654 v. Mason, 2004 BCSC 685 at paras 28-29.
  50. Strata Property Act, ss. 1(1) (definition of “contingency reserve fund”) and 92(b).
  51. Strata Property Act, ss. 99 and 108(2)(a).
  52. Strata Property Regulation, s. 17.11(6). For information about the impact of the Strata Property Act on bylaws existing when the Act came into force on July 1, 2000, see Chapter 19, Statutory Bylaws and the Effect of the Strata Property Act.
  53. Strata Property Regulation, s. 17.11(6).
  54. See also The Owners, Strata Plan VR 2654 v. Mason, 2004 BCSC 685 at paras. 32-33.
  55. The Owners, Strata Plan VR 2654 v. Mason, 2004 BCSC 685.
  56. Strata Property Regulation, s. 17.11(1) and The Owners, Strata Plan VR 2654 v. Mason, 2004 BCSC 685 at para 27.
  57. The Owners, Strata Plan VR 2654 v. Mason, 2004 BCSC 685 at paras 28-29.
  58. Strata Property Act, s. 141(1) and Strata Property Regulation, s. 17.11.
  59. Strata Property Regulation, s. 17.11(6). For information about a type of strata lot, see Chapter 26, Paying for Repairs.
  60. Strata Property Regulation, s. 17.11(3)-(6).
  61. Strata Property Act, ss. 99 and 108. For more information about a special levy, see Chapter 15, Finances.
  62. Strata Property Regulation, s. 17.11(6).
  63. The Owners, Strata Plan VR 2654 v. Mason, 2004 BCSC 685.
  64. Strata Property Regulation, s. 17.11(3)-(6).
  65. The Owners, Strata Plan VR 2654 v. Mason, 2004 BCSC 685 at paras 39-42.
  66. For information about significant unfairness under the Strata Property Act, see Chapter 27, Lawsuits.
  67. Chow v. The Owners, Strata Plan LMS 1277, 2006 BCSC 335. Cf. Large et al. v The Owners, Strata Plan 601, 2005 BCSC 1128. In Chow, the court declined to follow the earlier decision in Large on the question of the court’s authority to make a sectioning order. For information about sections, see Chapter 10, Sections.
  68. Fraser v. Strata Plan VR 1411 et al., 2006 BCSC 1316. See also Shaw v. The Owners, Strata LMS 3972 et al., 2008 BCSC 453.
  69. Strata Property Act, ss. 100 and 108(2).
  70. Strata Property Act, s. 191. Chow v. The Owners, Strata Plan LMS 1277, 2006 BCSC 335. For information about sections, see Chapter 10, Sections. For information about the significant unfairness remedy under the Strata Property Act, see Chapter 27, Lawsuits.
  71. Strata Property Act, s. 194.
  72. Strata Property Act, s. 194(1) and Strata Property Regulation, ss. 11.2, 11.3 and 17.13.
  73. Strata Property Act, s. 195.
  74. Strata Property Act, ss. 99, 100, 108(2) and 195 and Strata Property Regulation, ss. 11.2(3) and 11.3(2).
  75. Yang v. Strata Plan LMS 4084, 2010 BCSC 453 at paras. 22-24.
  76. The Owners, Strata Plan LMS 1537 v. Alvarez, 2003 BCSC 1085 at para 35 where Bauman J. noted that under the Strata Property Act, the general rule in a strata corporation is that “You are all in it together.” See also Oakley et al. v. Strata Plan VIS 1098, 2003 BCSC 1700 at para 16.
  77. Strata Property Act., ss. 100 and 108(2) and Strata Property Regulation, ss. 11.2(3) and 11.3(2).
  78. Strata Property Act, ss.1(1) (definition of “operating fund”) and 92(a).
  79. Strata Property Act, s. 195 and Strata Property Regulation, ss. 11.2(3) and 11.3(2).
  80. Strata Property Act, s. 194(2)(a).
  81. Yang v. Strata Plan LMS 4084, 2010 BCSC 453 at para. 32.
  82. The Owners, Strata Plan VR 2654 v. Mason, 2004 BCSC 685 at paras 32-33.
  83. Ernest & Twins Ventures (PP) Ltd. v. Strata Plan LMS 3259, 2004 BCCA 597.
  84. Strata Property Act, s. 197 and Strata Property Regulation, ss. 11.2(2), 17.11(6) and 17.13.
  85. Strata Property Regulation, ss. 11.2(2) and 17.13.
  86. Strata Property Regulation, ss. 11.2(2) and 17.13, and The Owners, Strata Plan VR 2654 v. Mason, 2004 BCSC 685 at paras 24-25 and 30-31.
  87. Strata Property Regulation, ss. 11.2(2) and 17.13.
  88. In the transitions provisions in s. 17.13(3) of the Strata Property Regulation, a strata corporation may enact a bylaw to identify a type of strata lot within a section, “for the purposes of sections … 11.2(2).” The cross-referenced s. 11.2(2) establishes an exception to the general rule for a section if there is a types bylaw where, “the type is identified as a type of strata lot in the bylaws of the section ….” (Emphasis added).
  89. The Owners, Strata Plan VR 2654 v. Mason, 2004 BCSC 685 at para 27.
  90. Strata Property Act, s. 195 and Strata Property Regulation, ss. 11.2(3) and 11.3(2).
  91. Strata Property Regulation, s. 17.11(6). For information about the impact of the Strata Property Act on bylaws existing when the Act came into force on July 1, 2000, see Chapter 19, Statutory Bylaws and the Effect of the Strata Property Act. The Owners, Strata Plan VR 2654 v. Mason, 2004 BCSC 685 at paras 28-29.
  92. Strata Property Regulation, s. 17.11(6).
  93. Strata Property Regulation, s. 17.11(6). See also The Owners, Strata Plan VR 2654 v. Mason, 2004 BCSC 685 at paras 32-33.
  94. Strata Property Act, ss. 108(2) and 195; Strata Property Regulation, ss. 11.2(3) and 11.3(2).
  95. Strata Property Act, ss. 108(2), 195 and Strata Property Regulation, ss. 11.2(3) and 11.3(1).
  96. Strata Property Regulation, s. 17.11(6). For information about the impact of the Strata Property Act on bylaws existing when the Act came into force on July 1, 2000, see Chapter 19, Statutory Bylaws and the Effect of the Strata Property Act.
  97. In The Owners, Strata Plan VR 2654 v. Mason, 2004 BCSC 685, section 17.11(6) of the Strata Property Regulation was the relevant transition provision. That provision preserves a strata corporation’s bylaw that apportions contributions to a CRF according to type of strata lot, if the strata corporation filed the bylaw under the former Condominium Act.
  98. Strata Property Regulation, s. 17.11(3)-(6). The Owners, Strata Plan VR 2654 v. Mason, 2004 BCSC 685.
  99. Strata Property Act, s. 294.
  100. Coupal v. Strata Plan LMS 2503, 2004 BCCA 552, rev’g 2002 BCSC 1444 (S.C.).
  101. Interpretation Act, R.S.B.C. 1996, c. 238, s. 2.
  102. The Owners, Strata Plan LMS 608 v. The Apartment Owners of Strata Plan LMS 608 et al., [2001] B.C.J. No. 2116 (QL)(S.C.). See also Lim v. The Owners, Strata Plan VR 2654, 2001 BCSC 1386; The Owners, Strata Plan VR 1767 v. Seven Estate Ltd. et al., 2002 BCSC 381, supp. reasons on costs 2002 BCSC 827; cf. Coupal v. Strata Plan LMS 2503, 2004 BCCA 552, rev’g 2002 BCSC 1444 (S.C.) (where the parties agreed by consent that the Condominium Act applied).
  103. The Owners, Strata Plan LMS 1537 v. Alvarez, 2003 BCSC 1085 paras 88-89 (S.C.) where Bauman, J. refers to error on this point in The Owners, Strata Plan VR 1767 v. Seven Estate Ltd. et al., 2002 BCSC 381.
  104. Coupal v. Strata Plan LMS 2503, 2004 BCCA 552 at para 34. See also Wilfert et al. v. Ward et al., 2004 BCSC 289.
  105. Coupal v. Strata Plan LMS 2503, 2004 BCCA 552 at para 34. See also Wilfert et al. v. Ward et al., 2004 BCSC 289.
  106. The Owners, Strata Plan LMS 1537 v. Alvarez, 2003 BCSC 1085.
  107. Coupal v. Strata Plan LMS 2503, 2004 BCCA 552, rev’g 2002 BCSC 1444 (S.C.).
  108. The Owners, Strata Plan LMS 608 v. The Apartment Owners of Strata Plan LMS 608 et al., [2001] B.C.J. No. 2116 (QL)(S.C.). See also Lim v. The Owners, Strata Plan VR 2654, 2001 BCSC 1386; The Owners, Strata Plan VR 1767 v. Seven Estate Ltd. et al., 2002 BCSC 381; cf. Coupal v. Strata Plan LMS 2503, 2002 BCSC 1444 (where the parties agreed by consent that the Condominium Act applied).
  109. Terry v. The Owners, Strata Plan LMS 2153, 2006 BCSC 950.
  110. Terry v. The Owners, Strata Plan LMS 2153, 2006 BCSC 950, at para 103.