Citation:

Coupal et al v. The Owners, Strata Plan LMS2503

Date:

20021011

 

2002 BCSC 1444

Docket:

L020537

Registry:  Vancouver

IN THE SUPREME COURT OF BRITISH COLUMBIA

BETWEEN:

JOCELYN COUPAL, SUSAN EMBACHER, STEPHEN AND NADENE BEEMISH, GLORIA HUI, BARRY MCGINN AND DEBORAH RINK,

DONNA AND MICHAEL NOMURA, CLIFFE AND SHAROLE MORRISON,

KUI KWAN LIU, DANIEL CHUANG, STEPHEN AND LIANE DECOURCY

AND DAWN FLOTTEN

PETITIONERS

AND:

THE OWNERS, STRATA PLAN LMS2503

RESPONDENT

 

 

REASONS FOR JUDGMENT

 

OF THE

 

HONOURABLE MR. JUSTICE SIGURDSON

 

 

Counsel for the Petitioners:

George Gregory

Counsel for the Respondent:

Timothy A.M. Peters

Date and Place of Hearing:

July 12, 2002

 

Vancouver, BC

 

INTRODUCTION

[1]            In this case, there is a strata corporation made up of apartment units and townhouses.  The petitioners, the owners of apartment units, say that they are not responsible for certain common expenses, i.e. the repair to the building envelope around the townhouse units, because they say the expenses are common expenses that are attributable to that type of strata unit.

[2]            The respondent strata corporation, essentially made up of the townhouse or non-apartment owners, says that there are not separate types of units in the strata corporation, but if there are, the expenses in question are common expenses that are not attributable to different types of unit.  Moreover, the strata corporation says that, at least, the petitioners have not shown that these repair expenses are attributable to a certain type of unit, and as such are to be shared by all owners according to their unit entitlement. 

[3]            The parties agree that the Condominium Act, R.S.BC. 1996, c. 64 is applicable to this dispute, not the new Strata Property Act, S.B.C. 1998, c. 43.  The Condominium Act establishes certain basic bylaws for the strata corporation.  The parties also agree that the expenses in question, approximately $1,700,000, are common expenses. 

[4]            There are three main issues.  First, whether under the bylaws there are different types of strata units in this strata corporation.  Second, if there are different types of units, whether the petitioners have established that the common expenses are attributable to the townhouse units.  Third, whether the petitioners are estopped from claiming townhouses and apartment units are different types of strata unit for the purposes of allocating common expenses.

Specific application

[5]            The petitioners seek a declaration that they are not liable to contribute to a special assessment relating to building envelope repairs, or legal fees in connection with anticipated litigation.  They also seek a declaration that certain resolutions passed on February 28, 2002 which denied the petitioners the right to vote because they had had not paid a special assessment, or because they had been fined for not paying a special assessment, are void.  They also seek an order setting aside the fines and a declaration that the strata corporation is behaving unfairly towards them. 

[6]            These issues come down to a central question: whether or not the petitioners are liable to contribute to any special assessment levied for the building envelope repairs. 

FACTS

[7]            The strata development is called Terra Vita Place.  It is an 88 unit strata complex that was developed in three phases.  76 of the 88 strata lots (phases 1 and 3) are contained within 7 three-storey townhouse style buildings.  The remaining 12 strata lots (phase 2) are apartment units contained in a building described by the petitioners as the “Heritage Building”.  The Heritage Building is an old Provincial Industrial School for Girls building, constructed in 1912, that has been converted for this development. 

[8]            The strata plan for phase 1 was deposited in the Land Title Office on August 28, 1996, and for phase 3 on July 21, 1997.  The strata plan for phase 2, the Heritage Building, was also deposited in 1997. 

[9]            The Terra Vita strata corporation adopted the so-called default bylaws in the Condominium Act including s. 128(2) of the Act.  It provides:

If a strata plan consists of more than one type of strata lot, the common expenses must be apportioned in the following manner:

 

(a)   common expenses attributable to one or more type of strata lot must be allocated to that type of strata lot and must be borne by the owners of that type of strata lot in the proportion that the unit entitlement of that strata lot bears to the aggregate unit entitlement of all types of strata lots concerned;

 

(b)   common expenses not attributable to a particular type or types of strata lot must be allocated to all strata lots and must be borne by the owners in proportion to the unit entitlement of their strata lots.

 

[10]        The strata corporation has received reports from various consultants respecting problems in the building envelope and related building components of the buildings comprising Terra Vita Place, save for the Heritage Building.  The consultants recommended recladding all exposed walls, and at the same time, modifying the architecture of the current gable facades and corner parapets to provide protecting overhangs. 

[11]        On November 6, 2001 the owners of the strata corporation convened a special meeting to consider, among other things, a resolution for a special assessment in the amount of $40,000 to fund the engineering design phase.  The resolution was carried.

[12]        On February 28, 2002, the owners of the strata corporation convened an annual general meeting to consider, among other things, a resolution for a special assessment in the amount of $100,000 for litigation expenses and a resolution for a special assessment of $1,722,360 for restoration costs including warranty and administration costs.  Both resolutions were carried.

[13]        According to the amended petition, at the annual general meeting on February 28, 2002, the petitioners, the owners of the apartment units in the Heritage building, were excluded from voting because they had failed to pay the special assessment of $40,000.

DISCUSSION

Type of Strata Lot

[14]        The initial question is whether there are different types of strata lots or, put another way, whether “the strata plan consists of more than one type of strata lot”. (s. 128(2))

[15]        The language of s. 128(2) suggests that this question might be determined by reviewing the strata plan to see if it prescribes more than one type.  The strata plan is in evidence as part of the initial disclosure documents but it does not, itself, indicate that more than one type of strata lot exists.

[16]        The respondent says that the petitioners’ evidence described differences between buildings, the Heritage Building and the townhouses, but does not describe differences between strata lots, if in fact there are differences, and notes that the term “building” is not interchangeable with “strata lot” in the Act, both being defined terms. 

[17]        The statute does not provide direct assistance on “type” as the term is not defined.  The issue has been addressed by this Court, but not to any great extent. 

[18]        In Smith v. G.C. (Goldie) Read, [1993] B.C.J. No. 1348 (S.C.), Davies J. heard an application to set aside an arbitrator’s ruling on procedural grounds.  He did that, but went on in obiter dicta to discuss s. 128 because the parties had asked for directions on the interpretation of that section.  He said:

The Act does not define the word “type”.  In the sense that it is used in this section, “type” should be taken to denote the character or form of structure.  Therefore, where as in the case of Edwards’ Estates, units of a different character or form exist, the common expenses of the Strata Corporation should be levied as follows:

 

      (a)   common expenses attributable or related to a particular type of strata lot should be allocated to that type of strata lot and should be borne by the Owners of that type of strata lot;

 

      (b)   common expenses not attributable to a particular type of strata lot, that is to say, expenses which relate to all types of strata lots should be borne by the Owners of all strata lots in proportion to the unit entitlement of their strata lots. 

 

[Emphasis added]

 

[19]        Davies J., as is apparent from that quote, did not suggest that the question of determining if there was a difference in type was to be determined solely by reference to the strata plans or the bylaws of the corporation.

[20]        In Lim v. Strata Plan VR2654 (2001), 44 R.P.R. (3d) 243 (B.C.S.C.), 2001 BCSC 1386, Boyd J. considered the dicta of Davies J. in Smith v. Read and said at paras 36 and 40:

The original Bylaw 15 is indeed ambiguous. The word "type" is not defined anywhere in the Condominium Act, nor does it have any "accepted meaning". The only case authority to deal with the issue was Davies J.'s decision in Smith v. G.C. (Goldie) Read (1993) B.C.J. No. 1348 (B.C.S.C.). In a response to a specific request to interpret s. 128(2) of the Condominium Act, Davies J. noted that the Condominium Act did not define the word "type". He held that the word "should be taken to denote the character or form of structure". Accordingly, where units of a different character or form exist within a project, the common expenses of the strata corporation would be levied pursuant to s. 128(2) according to the particular "type" of strata lot. While not decided directly, the petitioners submit Read may stand for the proposition that strata lots comprising apartments and townhouses constitute different "types" within the meaning of s. 128(2).

 

In the end result, I find that the meaning of the word “type” contained in s. 128(2) of the Condominium Act denotes “character or form of structure” as suggested by Davies J. in Read (supra) or “a class of things having common characteristics” as defined by the Oxford dictionary.

 

[Emphasis added]

 

[21]        The strata corporation has not formally designated different types of strata lots.  That might have been done, for clarity, in the plan or in the bylaws, but was not. 

[22]        Are the strata lots in the townhouses different types of strata lots from the strata lots in the Heritage Building? 

[23]        Mr. Peters, for the strata corporation, says that without a clear demarcation between strata lot and common property, the court could not conclude whether the Heritage Building strata lots are of a significantly different character or form of structure to be considered different “types”. 

[24]        Mr. Gregory, counsel for the apartment owners, disagrees.  He points to the following evidence to draw a distinction between the strata lots by character and form of structure.  Mr. Gregory says that apartments and townhouses are always different types of strata lots within the meaning of s. 128, the difference being that apartments have one entrance and townhouses have individual entrances.  Further, Mr. Gregory says that, in these particular circumstances, there are other differences that show that the apartment units and the townhouse units are different types.  The most important distinction he draws is that the Heritage/apartment units are built solidly; so solidly that they do not leak.  While that may be circular reasoning in the circumstances, he goes on to say that the apartment units are built of concrete brick masonry construction, with 13 foot ceilings, exterior cladding over brick masonry of one inch stucco, wood framed and different paned windows, a galvanized sheet metal baked enamel steel tiled roof.  They are built in a “mission style” architecture of a notable early British Columbia architect, there is a common arcade entry to six of the apartments, and there are no fenced landscaped yards. 

[25]        He distinguishes the townhouse, or modern, units which have different common characteristics.  They are of wood frame construction row housing, all with grade level landscaped yards, 8 foot ceilings, wood frame face-sealed stucco construction with exposed standing gables and other low parapet walls, aluminium sliding patio windows, upper fixed/awning windows, and an asphalt shingle roof or a membrane flat roof.

[26]        Mr. Peters for the strata corporation argues that these differences are distinctions between buildings, not distinctions between types of strata lots, a distinction he says that the petitioners’ argument fails to make.  He also says that, significantly, it is a distinction that the strata corporation has not made.

[27]        Even though parts of the exterior wall or the exterior wall may be common property, I think that the units in the Heritage Building are sufficiently different in structure and character from the townhouse units that they are different types of strata units under s. 128(2) of the Act.  The great number of differences that I have pointed out make it clear that the units in the converted 1912 building are of a different type than those in the newly constructed buildings, as s. 128(2) has been interpreted in the authorities that I have referred to.  The strata corporation might have formally provided that these units were of different types.  Notwithstanding that they did not do so, I am satisfied on the evidence that they are substantially different in structure and character, and that they are different types.

Allocation of common expenses

[28]        The question that then arises is whether the common expenses, which the amounts in question are, are “attributable to one or more type of strata lots” and therefore must be allocated to that type of strata lot, or, whether under s. 128(2)(b) they are common expenses not attributable to a particular type of strata lot and must be allocated to all strata lots. 

[29]        Are these common expenses attributable to one type of strata lot?

[30]        The strata corporation says that a large part of the common expense is associated with work related to the building envelope.  They say that expense is not attributable to a particular type of strata lot.  That expense, it says, must be borne by all strata lot owners in proportion to their unit entitlement. 

[31]        Mr. Peters says that for a common expense to be attributable to a particular type of strata lot, the strata corporation must have done something to indicate an intention that such common expenses were attributable to certain types of strata lots.  Otherwise he says that all owners should bear the expenses in accordance with their unit entitlement. 

[32]        Mr. Peters suggests that the bylaw incorporated by s. 128(2) is vague and uncertain.  He says that there are questions unanswered, such as: what is meant by “type” of strata lot; what are the boundaries of those types; which expenses are to be allocated and to which types; how are mixed expenses relating to both common property and strata lot to be dealt with?  Mr. Peters says that the petitioners are asking this court to read into section 128(2) far more than is reasonable.  In those circumstances, the bylaw, he says, does not have sufficient clarity or certainty to allow for the allocation of expenses as the petitioners desire.  Even if there are two types of strata lots, he says, it has not been shown that the expenses are attributable to one type.

[33]        Mr. Peters says that before any allocation of expenses is made between types, there must be something more than the bylaws incorporated under s. 128(2); there must be an amendment to the bylaws delineating differences in types or a budgetary line item. In other words, there must be a past practice that makes the intention of the corporation clear, and the vague wording of the statute is insufficient to allocate expenses between types of units. 

[34]        The cases referred to by counsel on this point were Quayle v. Strata Plan VR2654, [1985] B.C.J. No. 787 (S.C.); Strata Plan LMS608 v. Strata Plan LMS608, [2001] B.C.J. No. 2116 (S.C.); Lim, supra; and Blue-Red Holdings Ltd. v. Strata Plan VR857 (1994), 42 R.P.R. (2d) 421 (B.C.S.C.).  Mr. Gregory relies most heavily on Strata Plan LMS608, supra.

[35]        Mr. Peters says that the issue of allocation in the absence of a specific direction of the strata corporation was not directly raised by the court in Strata Plan LMS608, supra, as there was a particular bylaw in place that provided for the allocation of expenses between apartment units and owners of townhouse units.  In that case, different types was a conceded issue.  However, I find what Josephson J. said at para. 20, 29-31 of guidance:

Assuming the Condominium Act applies, and it being conceded that there are two types of strata lots in this case, s. 128(2) provides that common expenses attributable to one or more types of strata lots must be allocated to that type and be borne by the owners of that type.  The repairs in issues are common expenses, as was held in Chelsea Green.

 

Finally, I do not accept the submission of the apartment owners that there exists an over-arching principle flowing from the nature of strata living requiring all types within the strata plan to bear common expenses of this nature. While it is a fundamental duty of the strata corporation to undertake repairs of this nature, it is not a fundamental duty of the strata corporation to fund those repairs by assessing all types of strata lots, regardless of statutory provisions and regardless of by-laws to the contrary.

 

The apartment owners concede that certain expenses, such as those related to elevators and entrance intercoms, may escape this over-arching principle. They submit that repairs to the building envelope cannot. There is no support for that proposition in the case law. The statutes, in my respectful view, are against them. The will of all the owners, as expressed in By-law 5(a), is also against them.

 

[emphasis added]

 

[36]        Mr. Peters says that what has not been demonstrated on the petitioners’ evidence is whether these are common expenses attributable to one or more types of strata lots.  He says that the work relates primarily to the building envelope regardless of where the line is drawn between common property and strata lot.  He says, therefore, a large portion of the common expense associated with the work is likely to be an expense attributable to common property.  If that is the case, he says the expense must be borne by all strata lot owners in proportion to their unit entitlement. 

[37]        I disagree.  I think that in the particular unique circumstances of this case, where there is a distinct and differently constructed historical building and newly constructed and differently constructed buildings containing other strata lots, not only are they clearly different types, but it makes an allocation of costs attributable to a particular type of strata lot relatively straightforward.  The common expenses are in connection with the repair to the buildings housing the townhouses and are attributable to that type of strata lot.  In other cases the question of whether common expenses can be allocated to a particular type of strata lot may be so complex or difficult to determine such that no attribution is possible, but here the issue is rather straightforward.  Under the language of the section, I think that the costs of the repair to the building envelope are common expenses (and admittedly are common expenses) that are attributable to the townhouse strata lots.  They are not attributable to, related to, or connected with the building in which the heritage strata lots exist and are not attributable to the apartment strata lots.

[38]        In these particular circumstances I think that it has been demonstrated that the repair costs (the common expenses) are attributable to one type of strata lot, the townhouses.

Estoppel

[39]        The final issue is whether there is a past practice of the strata corporation that has the effect of amending the bylaw incorporated under s. 128 or prevents the petitioners from relying on its terms.  I understood the respondent was essentially raising an estoppel argument.

[40]        The strata corporation points to two examples of what it says is a past practice that leads to an estoppel.  First, the owners of strata units in the Heritage Building use more natural gas for their fireplaces but are charged equally with all owners.  Second, all owners shared the legal costs of about $18,000 resulting from dispute between owners in the Heritage Building. 

[41]        The strata corporation says that all strata lots contain gas fireplaces, but the Heritage building units consume more natural gas than the townhouse units. The gas fireplaces represent a primary heat source for the Heritage building units, whereas the gas fireplaces in the remaining buildings are largely decorative.  The fireplaces in the Heritage building have blowers to circulate warm air.  Mr. Chris Baker deposes that although the Heritage building comprises only 13.6% of the total number of units, or 16.4% of the total unit entitlement, those units consume 28.33% of the total gas.  He says that notwithstanding the fact that the cost of natural gas can easily be allocated among owners, it has been the longstanding practice to distribute common expenses solely on a unit entitlement basis. 

[42]        Ms. Nomura, one of the petitioners, says that the issue of natural gas consumption was raised in 1999 when she was on the council of the strata corporation.  She says that at that time, the Heritage apartment owners were prepared to agree to separate metering, but individual metering cost about $2,000 per unit and made the proposal too expensive to implement.  Ms. Coupal, who was on council in 2000, said that the Heritage apartment owners raised the issue of separate metering because they were concerned that many townhouse owners were using their fireplaces for heating, rather than decorative purposes.  She said the property manager rejected the possibility of having individual unit metering on the grounds of cost and resistance from owners who purchased their units with the understanding that natural gas was included in their strata fees.  The property manager said that discussions regarding metering related solely to the necessity and feasibility of metering each owner, with a view that each owner would then be responsible to pay for their personal gas consumption.  He says that the concept of capturing costs by building was never raised.  He says there was a general concern among all council members respecting escalating gas prices.  He says that rather than rejecting an invitation to investigate the possibility of moving to individual metering, he accepted the previous property manager’s investigation and conclusion that the capital cost of installing individual meters far outweighed the potential cost savings to the strata corporation. 

[43]        It appears to me that the allocation of the cost of natural gas to all owners on the basis of unit entitlement was continued largely because it was too costly to monitor the costs incurred by the individual owners, and not as a result of an application of a policy that all common expenses should be paid by all owners according to unit entitlement regardless of type of strata lot.

[44]        The second matter raised by the respondent relates to the legal costs of about $18,000 incurred by the strata corporation in dealing with a petition in court with respect to a dispute between owners in the Heritage building.  That involved a petition by Mr. Reid, the owner of strata lot 39, for a declaration that, “the decision of the strata council to grant the registered owners of strata lots 46 and 47 temporary permission to place items on the common property entryway appurtenant to the petitioner’s strata lot was a significant unfair decision”.  Mr. Reid is the only owner in the Heritage building who is not a petitioner in this matter.  Mr. Reid commenced a petition which was dismissed.  The strata corporation has paid $17,639.87 for legal fees and disbursements.  Mr. Baker deposes that although the expenses associated with the Reid application relate to Heritage building owners, and in particular strata lots 39, 46 and 47, the strata corporation’s policy of allocating all common expenses on a unit entitlement basis provided that all owners have funded the strata corporation’s response to the petition.

[45]        As the respondents put it: "the petitioners want to have their cake and eat it too.  They have quietly accepted the benefits of the strata corporation's practice of allocating expenses on a straight unit entitlement without a peep… [then], cry foul when they are called upon to contribute to the costs of fixing the non-heritage buildings".  The petitioners, the respondents say, are estopped.

[46]        No specific authority was cited by the respondent on this point, but I believe that the respondent is probably relying on estoppel by convention or estoppel by acquiescence.

[47]        Mr. Gregory says that an estoppel does not arise in connection with the gas usage because gas consumption is not an issue of expense that has to do with “type of unit”, but rather has to do with personal choice of the owners.  Rather than participating in some practice and far from accepting the status quo, the parties tried repeatedly, he says, to divide heating costs among various owners.  He says that the question of the heat source for some of the heritage units is not an expense connected with a difference in character or form of structure and therefore is not an expense that should be allocated pursuant to s. 128(2) of the Condominium Act.

[48]        In terms of the Reid lawsuit, Mr. Gregory says that this is not an expense that is allocated according to type of strata lot and says that the allocation of the expense is governed by s. 15(8) of the Condominium Act that provides:

The legal or court costs in a proceeding brought in whole or in part on behalf of owners on a matter affecting their strata lots must be borne by the individual owners in the proportion in which their interests are affected.

 

That section appears to be directed to situations other than where the strata corporation is defending a petition brought by one of the owners.

[49]        Mr. Gregory argues that estoppel argument fails because there was no detriment suffered by the strata corporation.  He also says that the examples raised by the strata corporation to support a practice, policy or convention are in fact trivial and that for the petitioners to be estopped they must have understood their legal rights and intended their words or actions to be relied on.

[50]        If the respondents are in fact asserting an estoppel by convention, they must establish that the parties have a convention based on a shared assumption or a common apprehension of fact or law relating to the bylaws, that the subsequent dealings between the parties were based on that convention, and that one party would suffer detriment if the other was permitted to resile from that convention.  See 3226 BC Ltd. v. Companions Restaurants Inc. (1995), 17 B.L.R. (2d) 227 (B.C.S.C.), Canacemal Investment Inc. v. P.C.I. Realty Corp., [1999] B.C.J. No. 2029 (Q.L.)(S.C.), Vancouver City Savings Credit Union v. Norenger Development (Canada) Inc., 2002 BCSC 934 and the decision of the Court of Appeal in Litwin Construction Ltd. v. Kiss (1988), 52 D.L.R. (4th) 459 (B.C.C.A.).

[51]        I find that this estoppel argument fails.  The evidence is inadequate to support a common understanding or convention that common expenses would be allocated to all units regardless of type.  I do not think that it has been shown on the evidence that the parties have regulated their dealings on the basis of such a convention.  As Chief Justice Esson noted in Companions Restaurants, supra, "the authorities require a considerable degree of formality, or at least conscious dealing between the parties in order to create a convention…".

[52]        Moreover, it has not been shown that the other members of the strata corporation have relied to their detriment on the bylaws being interpreted as the strata corporation says they ought to be.  In other words, the respondents have not shown that they would suffer detriment if the bylaws were applied according to their proper interpretation.

[53]        If the respondent is in substance asserting estoppel by acquiescence it has not established the required elements.  It  must establish the elements set out in Willmott v. Barber (1880), 15 Ch. D. 96, as accepted in Quesnel & District Credit Union v. Smith (1987), D.L.R. (4th) 386 (B.C.C.A.) and Zelmer v. Victor Projects (1997) 147 D.L.R. (4th) 216 (B.C.C.A.).  First, the party raising the estoppel (say the plaintiff) must have made a mistake as to his or her legal rights.  Second, the plaintiff must have spent money or done some act in reliance on the mistaken belief.  Third, the defendant must know his or her legal rights and those rights are inconsistent with the belief of the party asserting the estoppel.  Fourth, the defendant must have encouraged the plaintiff to spend money or otherwise do some act directly or by failing to assert his or her legal rights.

[54]        I am not persuaded that an estoppel by acquiescence arises in these circumstances.  One reason is that it has not been shown that that the petitioners were aware of their legal rights and slept on them.  Nor has it been shown that the respondent has relied on a mistaken belief as to its rights.

[55]        In Litwin Construction (1973) Ltd., supra, the court spoke of the concept of unfairness or injustice underlying estoppel, at 468:

Under this broad principle, the distinctions between estoppel, promissory estoppel, waiver, election, laches and acquiescence do not always affect the outcome, though they may in some cases. The underlying concept is of unfairness or injustice and it is not essential to its application that there be knowledge, detriment, acquiescence or encouragement although their presence may serve to raise the unfairness or injustice to the level requiring the exercise of judgment.

 

[56]        I have concluded that the two instances described by the respondent relating to natural gas and the legal fees in relation to the Reid petition do not make it unfair or unjust for the petitioners to rely on the proper interpretation of the bylaws.  For these reasons, the estoppel argument fails.

[57]        Accordingly, the petitioners are entitled to the declaration that they are not liable to contribute to a special assessment relating to building envelope repairs, or legal fees in connection with anticipated litigation.  The fines against the petitioners are set aside.

[58]        The petitioners are entitled to costs.

“J.S. Sigurdson, J.”
The Honourable Mr. Justice J.S. Sigurdson