Strata Property Act Change re: Special Levies
We were advised this week by the Office of Housing & Construction Standards (Ministry of Natural Gas Development and Minister Responsible for Housing) that on December 12, 2013 the Province brought into force legislative amendments to allow strata corporations with majority support to apply to the BC Supreme Court to require strata owners to pay for certain repairs.
With our thanks to Patrick Williams of Clark Wilson LLP, we are pleased to provide the following information bulletin to explain this amendment and the implications for strata corporations.
A New Amendment re: Special Levies
The Strata Property Amendment Act, 2009 Bill received third reading October, 2009. Provisions were enacted December, 2009. Some of the provisions made walking around sense, but were not enacted immediately. Those included the Depreciation Report and parking stall lists on Form B’s, enacted in December 2011. Section 25 was just enacted December 12, 2013. It also makes walking around sense.
This section amends s. 173 of the Strata Property Act. The first part of the section remains the same (now 173(1)), but subsections 2, 3 and 4 have been added. It its entirety section 173 reads as follows:
Other court remedies
173(1) On application by the strata corporation, the Supreme Court may do one or more of the following:
(a) order an owner, tenant or other person to perform a duty he or she is required to perform under this Act, the bylaws or the rules;
(b) order an owner, tenant or other person to stop contravening this Act, the regulations, the bylaws or the rules;
(c) make any other orders it considers necessary to give effect to an order under paragraph (a) or (b).
(2) If, under section 108 (2) (a),
(a) a resolution is proposed to approve a special levy to raise money for the maintenance or repair of common property or common assets that is necessary to ensure safety or to prevent significant loss or damage, whether physical or otherwise, and
(b) the number of votes cast in favour of the resolution is more than 1/2 of the votes cast on the resolution but less than the 3/4 vote required under section 108 (2) (a),
the strata corporation may apply to the Supreme Court, on such notice as the court may require, for an order under subsection (4) of this section.
(3) An application under subsection (2) must be made within 90 days after the vote referred to in that subsection.
(4) On an application under subsection (2), the court may approve the resolution and, in that event, the strata corporation may proceed as if the resolution had been passed under section 108 (2) (a).
This amendment should prove very helpful to strata corporations. The ¾ vote threshold to obtain a special levy to discharge a statutory obligation of a strata corporation in the past has proved very difficult to reach. Often a majority of owners will vote in favour of a remedial action to repair and maintain the building envelope, but a sufficient number of owners will stymie the action by voting against the special levy. Frequently the reason for voting against such a resolution is due to lack of funds. However, that lack of funds binds the other owners and results in a building continuing to deteriorate. This resulted at times in court actions that were difficult, confrontational and expensive. indeed, applications were made to appoint administrators.
This amendment permits a strata corporation to make an application to the Supreme Court for an order that the special levy resolution is deemed to have been passed as a ¾ vote, even if the actual vote was more than 50% but less than 75%. In order to be successful, the strata corporation must make the application within 90 days of the ¾ vote resolution being defeated. Note that it provides the Court “may” approve and the strata corporation “may” proceed. The use of this permissive word, rather than the mandatory “must” means a strata corporation still must persuade a court that the resolution is in the best interests of the owners collectively.
Although it is not specifically provided in the amended section, it is very likely that a ¾ vote authorization to make such an application is not necessary, since that requirement would defeat the purpose and intent of the amendment. There is also the cost of bringing the application. Typically, a strata corporation would need to raise funds for such an application by way of ¾ vote special levy. It is the view of the author that also would not be required, since it would defeat the purpose and intent of the amendment. The court recently deemed a less than ¾ vote to raise money by special levy in order to obtain a depreciation report (NWS 3401 v. HSBC Bank Canada, 2013 BCSC 2117) was passed as a ¾ vote. The failure to obtain the report would have been a breach of a statutory obligation, since the vote to waive the preparation of the report had also not received the requisite ¾ vote.
One interesting note. The initial 2009 Bill provided that such an application could be brought in either the Supreme Court or the Provincial Court, the latter being the Small Claims division. The 2013 amendment does NOT include the ability to apply to the lower level Provincial Court.
Clark Wilson LLP
December 16, 2013