Strata Alert: What if you held a strata council meeting and nobody came? Dealing with an Improperly Constituted Strata Council

Strata Alert:  What if you held a strata council meeting and nobody came?
Dealing with an Improperly Constituted Strata Council

 Omnicare Pharmacy Ltd. v. Strata Plan LMS 2854, 2017 BCSC 256


Paul G. Mendes, Partner
Phone:  604-685-4894
Email:  PGM@LMLAW.CA

 

Better yet, what if you held a strata council meeting and everyone came except for the people who had to be there under the bylaws?

Many stratas made up of residential and commercial strata lots have a bylaw requiring at least one or more members of council to be elected “by the commercial owners” or to be a “commercial representative”. Many of these stratas also have something in common: no one from commercial is on council.

For a variety of reasons, many commercial owners avoid strata meetings like the plague.  Conventional wisdom suggests that commercial owners only show up to an AGM if there is a special levy on the agenda or a bylaw amendment to that somehow uniquely affects the commercial owners. As a result, commercial seats on strata council can remain vacant for years.

Are those strata councils properly constituted?  Are their decisions lawful?

That was the question before the BC Supreme Court in the very interesting Omnicare Pharmacy case.  This case concerned the operation of a methadone dispensary in a mostly residential condo development in Vancouver’s troubled Down Town East Side.  According to the strata’s evidence, Omnicare’s operations constituted a significant nuisance to the strata, some of which is described in some graphic detail in the reasons for judgment. The strata attempted to deal with the nuisance by enforcing a variety of bylaws against the owner.

Now as it turns out, the owner developer registered a Form Y Owner Developer’s Notice of Different Bylaws when it deposited the strata plan.  These bylaws contained two amendments to the standard bylaws:

  1.  At least two members of the council had to be owners of or representatives of the commercial strata lots.
  2.  No bylaw could be amended or repealed unless there were at least 50% of the commercial owners present in person or by proxy at the meeting.

The legality of this second bylaw was not addressed by the court.  This may have been because the real focus of the case was s. 128(1)(c) of the Strata Property Act (“SPA”), which states that in a strata composed of both residential and non-residential strata lots, all bylaw amendments must be approved by a 3/4 vote of the residential strata lots and a 3/4 vote of the non-residential strata lots.

Over the years, the strata passed many amendments to the strata’s bylaws but unfortunately, the minutes of those general meetings failed to record the two separate vote counts as required by SPA s. 128.

I say that is “unfortunate” for two reasons:

  1. One of those amendments was to the bylaw reducing the commercial composition of the council from two members to one.
  2. The other amendments were the very bylaws the strata council had been enforcing against Omnicare over the years.

The strata eventually caught on to the requirements of SPA s. 128 in 2016, and convened a meeting to amend its bylaws in compliance with the SPA.  Unfortunately, the commercial owner caught on too, and the proposed amendments failed to receive the required ¾ vote of the commercial strata lot owners.

The questions the court had to address in Omnicare were twofold:

  1. The validity of the bylaws passed in contravention to SPA s. 128.
  2. The validity of the actions of an improperly constituted council.

Remember, the original bylaws required the council to be comprised of owners representing two commercial strata lots. For years this strata council had only one commercial representative.

The Court ruled that because the bylaw amendments were not passed in compliance with s.128 of the SPA, they were not valid and could not be enforced by the council. The Court held that rights afforded to commercial owners under s. 128 were substantive in nature, and that non-compliance with s. 128 was not a mere technicality that could be overlooked by the court.  You will find some good stuff about the importance of s. 128 starting at paragraph 96 of the reasons for judgment.

So, the strata took a different tack: some of the bylaws the council enforced were the standard bylaws.  Surely the council could enforce those bylaws?

Not. So. Fast.

The council had only one commercial member and the only valid bylaw on the books required the council to have at least two commercial members.  As it turns out, however, the sole “commercial owner” may not have been a commercial owner at all.  According to the evidence, he used his strata lot for residential and not commercial purposes.  Omnicare’s evidence was that he was really a residential representative on council who routinely voted against commercial interests at council meetings.

The court concluded that every owner expects that only valid bylaws were enforced, and that those valid bylaws will be enforced only by a duly constituted council.  As a result, even the council’s enforcement of the standard nuisance bylaws against Omnicare was set aside and some decisions were remitted back to the strata so they could be considered afresh by a “validly constituted council”.

I bet the first words spoken at the next meeting were, “well, this is awkward.”

There are a couple of takeaways from this case if you own in or manage a strata plan comprised of both residential and non-residential strata lots:

  1. Are all the bylaw amendments valid? Do the minutes record separate ¾ votes of both the residential and the non-residential strata lots? If they do not, those bylaw amendments may not be enforceable unless there is some other evidence to support the conclusion that at least ¾ of both residential and residential lots voted in favour of the amendments.
  2. Is the council valid? Based on this decision, councils with bylaws requiring a minimum number of commercial owners on council will need to make sure those positions are filled at every general meeting. Most of these bylaws require commercial representatives to be on council, but they don’t actually require them to be present at every meeting.
  3. Consider amending the bylaws (in compliance with SPA s. 128 of course), to remove the requirement for commercial representatives on council or to make it possible to elect other owners if no commercial owner is willing to stand for election.

 

WHAT WE DO:  Leperance Mendes advises strata owners, strata corporations and strata property managers on all aspects of bylaw amendment and enforcement.  To clean up your bylaws or for advice on a particularly unsettling bylaw dispute, contact the Strata Lawyer,  Paul G. Mendes by phone at 604-685-4894 or by email at pgm@lmlaw.ca.

 

THIS ARTICLE IS NOT LEGAL ADVICE:  This article provides general information and should not be relied on without independent legal advice.