This petition raises issues concerning the validity and enforcement of the Rental Bylaw of a Strata Development.

[2] The petitioners, owners of a strata lot, seek the following declarations and orders:

[3] The respondents apply for:

[5] By special resolution dated February 21, 1994, the owners of the strata development passed a Rental Bylaw which limited the number of rental units to 15 and adopted as presented the proposed Rental Bylaw which had been circulated with the Notice of Meeting. The Form 9 - Notification of Change of Bylaw - was filed in the Land Titles Office purporting to register "Rental Bylaw 136(a) through (l)". Attached to this Notification is a Rental Bylaw 136 (a) to (h). This Bylaw prohibited the rental or leasing of a strata lot except in accordance with Bylaw 136, restricted the number of rental strata lots to 15, and provided for a fine of $500 a month for any contravention. There is no record of any separate special resolution being passed authorizing a fine in excess of $25.00 pursuant to s. 50 of the Act. There is a lack of evidence to establish whether the Bylaw that was passed on February 21, 1994 is the one that was registered, but the petitioners do not take issue with the validity of the Rental Bylaw. The Bylaw was amended on February 19, 1996 to provide for the eventual elimination of any rental units.

[6] A special resolution was passed on February 22, 1999 adopting Bylaw 145 - Rental Terms & Conditions. This Bylaw provided for leasing due to hardship with reviews after 12 months and then every 6 months, with the requirement that a unit be listed for sale if hardship does not continue and the owner does not re-occupy the premises.

[7] The petitioners' children, who were joint tenants, resided in the strata lot until approximately October 1995 when the Strata Council became aware that the strata lot had been rented in contravention of Bylaw 136. Initially, the petitioners were not given permission to rent the strata lot because the number of rental units was already over the limit. On October 18, 1995, the petitioners' children wrote a letter in appeal and, despite the fact that they had already rented the strata lot in contravention of the Bylaw, the Strata Council permitted a six month rental until May 15, 1996, on the basis of economic hardship under the terms of s. 32(1)(c) of the Act. On March 19, 1996, the Strata Council refused a request to extend the tenancy beyond six months on the basis that no more than 15 units could be rented at one time.

[8] The petitioners' children moved back to the strata lot and remained there until approximately July or August, 1997. At that time, the strata lot was again rented in contravention of Bylaw 136. A further request to rent was refused by the Strata Council on July 31, 1997 because more than 15 strata lots were rented at the time. The petitioners wrote the Strata Council on August 8, 1997 seeking permission to rent their strata lot due to severe economic hardship. Then, in September 1997 foreclosure proceedings were commenced against the strata lot. The petitioners were able to redeem the strata lot in October 1997.

[9] In October 1997, in response to the letter of August 8^th, a visit by Mr. Willson, and subsequent phone calls, the Strata Council permitted the petitioners to rent the strata lot until December 1, 1997 on the assurance that the tenants were renting with an option to purchase the strata lot. The petitioners were required to produce a valid purchase/sale contract that would complete before the year end.

[10] It is unclear on the evidence what has happened between December 1, 1997 and May 18, 1999 when the petition was filed. It is difficult to discern whether the strata lot was rented in contravention of the Bylaw for this entire time; but such an inference can be drawn since fines for contravention of Bylaw 136 have been levied against the petitioners since December 1997, and are presently in excess of $10,000.

[11] The petitioners have attempted to sell their strata lot on two occasions. They placed a "For Sale" sign in the window of their unit in the winter of 1996, but removed it at the request of a member of the Strata Council who complained that it was an eyesore and in contravention of the Bylaws. The unit was listed for sale for six months with a real estate agent in the spring of 1997. However, the petitioners have provided no details of this listing and now cannot even recall the name of the real estate agent. The real estate market was poor at the time. To make matters worse, the strata development, and particularly the petitioners' strata lot, showed signs of water damage.

[13] An issue arises on the evidence about whether the petitioners ever made a "formal request" to the Strata Council pursuant to s. 32 of the Act for permission to rent their strata lot on the basis of hardship. I am satisfied that the letters of October 18, 1995 and August 8, 1997, and the letter from the Strata Council dated November 15, 1995 acknowledging that the October request was made pursuant to s. 32(c), are sufficient to constitute a formal request pursuant to s. 32. Section 32 does not set out the form of application for appeal; or the form that the appeal proceedings should take. Even the Bylaw 145 passed in February 1999 prescribes no set form and merely provides that requests for hardship must be made in writing.

[14] It is argued that the Strata Council has acted in an arbitrary and capricious manner. The Strata Council, on other occasions, have both allowed and disallowed hardship appeals from other owners. According to the minutes of the Strata Council meeting from December 1998, the Strata Council chose on that occasion to approve hardship requests with respect to other owners providing for a review within a year's time, and instructed the Property Manager to write the owner who had made a rental request in order to outline the process to the owner. Neither of these things were done for the petitioners. There appeared to be absolutely no opportunity for a review at a later date; nor was any letter sent by the Strata Council to explain this so-called "formal request" process to the petitioners.

[15] For the purposes of s. 42, "oppressive" conduct is generally synonymous with bad faith, while "unfairly prejudicial" conduct is conduct which is "unjust and inequitable": Alvarez v. Strata Plan NW927, [1988] B.C.J. No. 1638 (Q.L.)(B.C.S.C.). Usually "oppression" must involve an element of lack of probity or fair dealing: Vold v. Strata Corp. No. 202 (1993), 31 R.P.R. (2d) 129 at 134 (B.C.S.C.). However, on the authority of Alvarez, the court need not find oppressive or unfairly prejudicial conduct by the Strata Council as a prerequisite to making an order under s. 43 of the Act. Section 43 is the provision which empowers the court to "direct an act of council".

[16] I cannot conclude on the evidence before this Court that the Strata Council has acted in an oppressive manner in carrying out their functions. On the available evidence, the Strata Council appears to have acted in good faith in resolving the hardship requests of the petitioners and others. It is relevant that the petitioners consistently rented without permission in breach of the Bylaw, and only advanced the hardship issue when caught.

[17] It is the position of the petitioners that the Strata Council has no authority to levy fines of more than $25.00 pursuant to s. 50 of the Act. The petitioners seek an order declaring Bylaw 136(h) to be in contravention of s. 50 of the Act and thereby unenforceable on the basis that there must be a separate resolution respecting the imposition of the $500 fine.

[18] Bylaw 136(h) was apparently passed by special resolution. I do not understand the petitioners to be arguing that Bylaw 136(h) itself was not passed by special resolution. Nor do I understand the petitioners to be alleging that the terms of the proposed Rental Bylaw, circulated and incorporated by reference in the special resolution of February, 1994, are at variance with the terms of the Bylaws filed under the Land Titles Office. In any event, there is no evidence to that effect. The Part 5 Bylaws do not specifically provide for fines, other than in s. 117(i) where the Strata Corporation is given the power to set and collect fines. There is no specific Part 5 "fine bylaw" that requires a prerequisite amendment. The enactment of Bylaw 136(h) amends the Part 5 Bylaws and sets the amount of the fine that clearly applies to a breach of Bylaw 136. In Kok v. Strata Plan LMS 463, [1999] B.C.J. No. 921 (Q.L.) (B.C.S.C.) at para. 46, the court held that in amending the Part 5 Bylaws, the resolution must state the amount of the fine in excess of $25.00, and recite the relevant bylaw, rule or regulation to which the higher fine applies. This is accomplished in Bylaw 136(h). Bylaw 136(h) is not in contravention of s. 50 of the Act.

[20] The disclosure statement provided that there were "no amendments or proposed amendments to the bylaws in Part 5 of the Condominium Act". However, at the end of the disclosure statement, there is a statement that all declarations contained therein "constitute full, true and plain disclosure of all relevant facts ... as of the 7^th day of June, 1991". The disclosure statement does not operate to affect the disclosure of relevant facts that arise after that date. There is legal authority affirming the power of a Strata Council, pursuant to s. 30 of the Act, to amend its bylaws to affect subsequent leasing restrictions: Von Scottenstein v. Strata Plan 730 (1985), 64 B.C.L.R. 376 at 382-4 (B.C.S.C.); Hill v. Strata Plan NW2477 (1995), 47 R.P.R. (2d) 264 at para. 18 (B.C.S.C.).

[21] Section 31(4)(b) of the Act allows for "grandfathering", in that a bylaw passed under s. 30 does not restrict the right of an owner who has leased his or her strata lot under a tenancy agreement entered into before the bylaw is passed to continue the lease under the agreement or renew or extend it. This is not applicable here since the petitioners granted any relevant leases after the new bylaw came into effect, and, therefore, cannot benefit from this protection.

[25] Section 24 of the Law and Equity Act gives the court the power to relieve against penalties such as fines imposed by a strata corporation upon a party: Lau v.Strata Corp. No. LMS 463, [1996] B.C.J. No. 1728 (Q.L.)(B.C.S.C.), at para.64. However, any equitable form of relief must be considered in light of the delays in this case. This issue first arose in October 1995 with the final communications appearing to date no later than December 1, 1997; yet this petition was not brought until May 1999. The issue of delay weighs against the relief sought by the petitioners.

[26] It is relevant that the Strata Council rescinded the fines levied prior to December 1, 1997, in its letter dated October 10, 1997. This was done despite the fact that the petitioners initially rented without permission of the Strata Council, in contravention of the bylaw, and lacked "clean hands".

[27] A significant factor concerns the fairness of the petitioners being made to carry the full burden of the accumulated fines when it appears that there may have been no real opportunity afforded them to appeal hardship by means of a fair hearing--possibly due to miscommunications on the part of both the Strata Council and the petitioners.

[28] The key factor in this case is that the Strata Council has an obligation to enforce its Bylaws when they have been breached. Accumulating fines in the amount of $10,000 is a form of punishment, not an enforcement of its Bylaws, and is unreasonable. The Strata Council should have taken steps to enforce the Bylaw. Until this petition was filed, the Strata Council did not seek to enforce Bylaw 136 by obtaining an injunction. That failure has directly affected the number of months in which the strata lot was rented in contravention of the Bylaw. As a result, the fines which could justifiably be levied against the petitioners has also been affected: Strata Plan No. VR-333 v. Nunns [1981] B.C.J. No.58 (Q.L.)(B.C.S.C.).

[29] I am satisfied that an order should be granted cancelling the accumulated fines in the amount of $10,000 levied against the petitioners having regard to the history of this matter.

[30] Since I intend to refer this matter to the Strata Council to conduct a full, fair and proper hearing of the petitioners' appeal of hardship, it would be inappropriate at this time for this court to make the orders sought by the respondents.

[31] I refer this matter to the Strata Council to conduct a full, fair and proper hearing of the petitioners' appeal for hardship. While there is legal authority to the effect that economic hardship alone is insufficient to establish the type of hardship necessary for the purposes of s. 32 of the Act, (see Von Schottenstein, at 381-2), it is conceded by counsel for the respondents that economic hardship, in conjunction with a "leaky condo" issue, is probably the type of "hardship" contemplated by the Act. If such "hardship" is found to exist, the Strata Council must not "unreasonably refuse the appeal" in accordance with s. 32. Further, the Strata Council would be bound to adhere to the requirements of Bylaw 145 in the event that the petitioners' "hardship" is found to exist. Thus, the Strata Council would be required to provide for a review of hardship after 12 months, and every 6 months thereafter.

[32] Where there has been divided success in an application such as this, courts have made no order for costs: Lau v. Strata Corp. No. LMS 463, [1996] B.C.J. No. 1728 (Q.L.)(B.C.S.C.); Marshall v. Strata Plan No. NW 2584, [1996] B.C.J. No. 1716 (Q.L.)(B.C.S.C.). This approach is properly taken in this case since the success in the action has been divided. The parties will bear their own costs.

"S. Stromberg-Stein J."