Bylaw Veto for Non-owners

Case Comment: Bylaw Veto for Non-Residential Strata Lots Restored, by Paul G. Mendes

(BC Court of Appeal)

The Supreme Court decision of Azura Management (Kelowna) Corp. v. The Owners, Strata Plan KAS 2428 made a number of sweeping changes to strata law in British Columbia. Every property manager and council member should study that decision carefully because it has much to say about condominium governance, especially when there are sharp divisions between competing factions of owners.

The Court of Appeal has now weighed in on two of the more controversial aspects of the case and overturned the Supreme Court’s rulings with respect to bylaw amendments and applications for relief under s. 164 of the Strata Property Act (the SPA).

The Supreme Court decision resolved a dispute between two factions within a development Okanagan Lake known as Las Casa by declaring that the vast majority of strata lots were lot residential and that only a small number of strata lots were non-residential

Under SPA 128, amendments to the bylaws of a strata corporation comprised of both residential and non-residential strata lots requires a ¾ vote of each type of lot owners in order to pass. The Supreme Court judge then relied on SPA 164 to order that, at all future general meetings, all strata lot owners would vote together. In other words, the owners of the non-residential strata lots would no longer have a veto over bylaw amendments. The Supreme Court judge relied on SPA 164 to make this ruling because he felt that the veto power conferred by the non-residential strata lot owners created the potential for an abuse of power by the non-residential strata lot owners.

SPA 164, which has been described as the “oppression remedy” of the SPA, provides that an owner or tenant may apply to the Supreme Court to …”make any interim or final order [the court] considers necessary to prevent or to remedy a significantly unfair action, threatened action or decision of the strata corporation, including the council, in relation to the owner or tenant or exercise of voting rights by a person who holds 50 percent or more of the votes, including proxies, at an annual or special general meeting.

The Court of Appeal, however, ruled that the Supreme Court has no jurisdiction to make an order under SPA 164 in the absence of an application by an owner or a tenant or evidence of actual oppressive conduct on the part of an owner or the strata corporation. Evidence of something more than the “potential” for oppressive conduct is required.

SPA 164 is an important tool for owners who are on the receiving end of decisions or votes with significantly unfair consequences. Although the section has been used in the past to craft creative solutions to unique problems, the court’s discretion to make an order under SPA 164 must be exercised judicially. Owners or tenants bringing an application for relief under SPA 164 must ensure that their evidence supports the relief they are seeking.

Reasons for Judgment: Azura Management (Kelowna) Corp. v. The Owners, Strata Plan KAS 2428, 2010 BCCA 474. For the reasons for judgment in the Supreme Court click here: Azura Management (Kelowna) Corp. v. Owners of the Strata Plan KAS2428, 2009 BCSC 506

What We Do: We have experience bringing and defending applications for relief under SPA 164. If you would further advice on this topic or any other strata law topic, please contact Paul G. Mendes to make an appointment for an in-person meeting or teleconference.

THIS ARTICLE IS NOT LEGAL ADVICE:  This article provides general information and should not be relied upon without independent legal advice with respect to the specific facts of your case.