Governing and managing a strata property can be messy and difficult. Strata owners are generally a disparate group with little in common beyond ownership in the strata. From among this group, a strata council must be elected, usually all volunteers who, to one degree or another, are reluctant participants and untrained in strata governance. Yet, it is the members of the strata council who are often required to address the misconduct of individual owners and make decisions about what may, or may not, take place on strata property. What are they to do?
In many cases, listening to the competing sides in any strata dispute and making common sense suggestions on route to a consensual resolution of an issue will suffice. It is certainly the most reasonable way to solve problems, provided everyone behaves reasonably. But what if that is not possible?
The short answer is that the strata council has recourse to its bylaws and the Strata Property Act to impose solutions and compel appropriate behavior in the right circumstances. In other words, they can pull out the rules and use them to force a resolution of the particular issue. This can be messy and can take some time, but these are legal tools designed specifically to assist in bringing resolution to the often rough edges of communal living arrangements such as stratas. Earlier blogs illustrate the use of such powers. This blog is not about the scope of those powers or how and when to use them. Rather, the point here is that if a strata council is going to “pull out the rules” on an intransigent owner or tenant, then you better make sure to get it right or the process may backfire.
A recent case in Chilliwack provides a good example. The strata in question (like many) had a prohibition on the rental of units. One of the owners wanted to rent out his unit in order to ameliorate a financial crisis he was experiencing. He found some tenants and moved them into his unit. He knew of the rental prohibition but did not raise the issue with the strata council until after his tenants moved in and complaints about them of excessive noise and other problems had been made to the council. In a rather ham-fisted and technically improper way, the strata owner made a request to the strata council for an exemption to the rental prohibition on the grounds of financial hardship.
Section 144 of the Strata Property Act (the SPA) allows strata owners to appeal to their council for an exemption from any rental ban on the grounds of hardship. This section sets out both a procedure for such a request and its timing. In this case, the strata council members had already decided to levy “significant fines” against the owner for breaching the rental ban and the conduct of his tenants in the hope the resulting financial impact would compel the owner to get rid of the tenants. Rather than requiring the owner to follow the legislated procedure properly, the council treated the owner’s appearance at one of their meetings as the required hearing on the issue of “hardship”. At the end of that meeting, they told the owner that, despite his presentation, they were not going to lift the rental ban. The fines would remain and continued to increase. In the end, the fines were over $16,000.
When the strata council finally sued the owner to collect these fines, the Court rejected their claim because of a day. Put shortly, having resorted to the “rules” to deal with this transgressing owner, the strata council failed to follow those rules properly. Though they had verbally told the owner his hardship appeal was dismissed, they failed to deliver to the owner the “decision in writing” “within one week after the hearing”. Instead, they gave him this letter 8 days after the council meeting, one day late. Under the SPA, where there has been a hardship hearing, a council is required to give the owner its decision in writing “within one week”. If they do not, the requested rental exemption is deemed to be allowed.
In this case, the Court held that the strata council failed to give its decision in writing to the owner within a week (even though they verbally advised him of the result immediately). As a result, the owner was “deemed” by the SPA to be allowed to rent his unit. As a result, all the fines imposed on the owner for illegally renting his unit were invalid and set aside.
Though the court did not rely on it as part of its decision, there was also the suggestion that the strata council had made up its mind on the “hardship” issue before they ever heard from the owner. While understandable, that is also improper. As a matter of fairness, decision makers like strata councils are required to keep an open mind about an issue they must decide until they have heard from all the parties entitled to address them on the matter. Unfairly prejudging a matter is also a ground on which courts will set aside or invalidate a strata decision.
If you are a strata council member, the take away is that if you are going to invoke “the rules” to combat a recalcitrant tenant or owner, you better make sure you do it properly and according to the bylaws and SPA. If you do not, the courts are not going to uphold the sanctions or outcomes you intend to impose. It’s better to get a bit of legal advice at the outset than to end up spending far more in legal fees later to lose in court because you misread or misapplied “the rules”.
This blog is authored by members of the Litigation and Dispute Resolution Department. We follow new and interesting issues emerging in the legal and business communities. The wide range of experience among the members of our litigation group will provide a diverse and insightful examination of current legal trends and topics. Our goal is to provide a source of valuable information and insight on a wide variety of matters for our readers.