Strata buildings, particularly older ones, often need extensive repairs to ensure their continued viability and safety. The strata corporation may be able to raise the money for these repairs from the owners. However, if the strata corporation does not have the support of the owners, is there a way for it to raise the funds and proceed with the repairs? Can the court be called on to decide in the event of a dispute?
This article considers these questions, along with a recent decision of the Court of Appeal for British Columbia in which a strata corporation applied to the Court for an order authorizing repairs.
A strata corporation can raise money for repairs through a special levy
Under section 108 of the Strata Property Act of British Columbia, a strata corporation can raise money from the owners, for example, to fund repairs to the building by means of a special levy.
If each strata lot’s share of the special levy is calculated in accordance with the Strata Property Act, such as by dividing the unit entitlement of the particular strata lot by the total unit entitlement of all lots, the special levy has to be approved by a resolution passed by a three-quarters vote at an annual or special general meeting.
If each strata lot’s share of the special levy is calculated in another way that represents a fair division of expenses for the particular levy, it must be approved by a unanimous vote.
The strata corporation may apply to the court for approval of a special levy
If the owners do not pass the resolution, the strata corporation may be able to rely on section 173 of the Strata Property Act. It allows the strata corporation to apply to the Supreme Court if:
“(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…”
If these requirements are satisfied, the court may make an order approving the resolution.
Strata Corporation applied to court after resolution for special levy was voted down
In Thurlow & Alberni Project Ltd. v The Owners, Strata Plan VR 2213, a strata corporation sought an order under section 173 of the Strata Property Act approving a resolution for a special levy.
The relevant building is located on Alberni Street in Vancouver. It is a 21-storey building consisting of an 18-storey residential tower on top of one commercial unit. It was enveloped in an exterior insulation and finish system (“EIFS”) with a life expectancy of about 30 years in the 1980s.
At the 2019 annual general meeting, the strata corporation sought a special levy of approximately $5.3 million to replace the EIFS. The resolution failed to pass, receiving between 50 and 75% of the votes. The main opponent was the owner of the commercial unit.
Chambers judge rejected the resolution for a special levy
Regarding the application of section 173, the chambers judge decided that replacement of the EIFS was not necessary to ensure safety because mould from water entry was not a systemic problem that posed a risk throughout the building. Evidence that showed there was a risk that some portions of the EIFS would fall off did not justify full remediation.
The chambers judge looked at competing expert opinions to decide whether the repair work was needed to prevent significant loss or damage. The judge decided that proper investigations had not been carried out and that the current evidence did not support the type of remediation sought by the strata corporation.
Section 173 allows the Court to break a deadlock and effect repairs through a simple majority
The Court of Appeal explained that section 173 of the Strata Property Act should be interpreted as allowing strata corporations to discharge their statutory obligations to maintain and repair strata property. It said that:
“It permits the court to authorize special levies to effect repairs that are necessary but does not require that the repairs be immediately necessary or that the proposed repair be the minimum necessary to address the problem. It should be read in a manner that permits the Strata Corporation to determine the timing and method of repair.”
The Court said that section 173 did not require the Court to analyze the scope of the repair work intensively but simply allowed it to break a deadlock and authorize a simple majority to resolve to effect necessary repairs.
Trial court to determine whether to approve resolution for special levy
The Court of Appeal decided that the chambers judge erred by examining whether the work was necessary to remedy an immediate safety risk. For example, the judge found that there was a risk of some panels falling off but that this did not require the extensive work proposed by the strata corporation. The Court said that once the evidence established a safety risk and that a reasonable way to respond was to do the work proposed by the strata corporation, an order could be made under section 173.
The Court of Appeal also decided that the chambers judge made an error in assessing whether the repairs were necessary to prevent significant damage. For example, the conclusion that further investigation was needed was erroneously based on the view that the court needed to determine whether the proposed work was needed to address an imminent threat of damage and was the least expensive way of doing so.
As a result, the Court remitted the strata corporation’s application to a trial court for reconsideration.
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