One of the challenges for strata corporations and strata property managers in BC’s Small Claims Court is that the Court can be a forum for many groundless complaints.[1] It is an unfortunate “side effect” of a fundamental principle of our justice system; namely, that everyone is entitled to their day in court. Only in the rarest of cases, where it can be shown that the claimant’s case has no possible chance of success will the Small Claims Court judge exercise his or her discretion to dismiss a claim before a trial.
This is what happened in Jones and Letkeman v. Baywest Management Corp., 2012 BCPC 309. In that case, an owner alleged that the property manager had wrongfully towed his car from the common property. The claimant’s argument was that the bylaws that the property manager relied on upon to tow the car were invalid under the Strata Property Act (the “Act”). The property manager defended the claim by pleading that the towing was lawful and that the claimant should be suing the strata corporation and not the property manager.
When the settlement conference rolled around, the property manager applied to dismiss the claim pursuant to Rule 7(14) of the Small Claims Rules. Rule 7(14) allows the judge at the settlement conference to dismiss a claim if, after discussion with the parties and reviewing the filed documents, the judge determines that the claim is without reasonable grounds, discloses no triable issue, or is frivolous or an abuse of the court’s process.
The application was successful and the claim was dismissed. The judge focused on the claimant’s allegation that the bylaws were invalid under the Act and found the bylaws to be lawful. Essentially, the judge concluded that the claim disclosed no triable issue. Although this was the right decision, it may have been the right decision for the wrong reason.
The validity of bylaws and bylaw enforcement is a question that arises under s. 164 of the Act (preventing or remedying unfair acts) and s. 165 (orders related to contraventions of the Act and the bylaws by the strata corporation). The Small Claims Court has repeatedly ruled that it has no jurisdiction to grant relief under those sections of the Act. The correct decision would have been to dismiss the owner’s claim because the claim was beyond the authority of the Small Claims Court; essentially, that the claim was an abuse of the court’s process because the Small Claims Court had no jurisdiction to hear the owner’s complaint.
When a property manager is faced with an actual or potential claim from a client or owner, the claim should be reported promptly to the errors and omissions insurer. This should be done even if the claim appears to be groundless. Reporting claims to the insurer promptly reduce the risk that the insurance claim will be denied for late reporting.
WHAT WE DO: We advise property managers and strata corporations on a wide range of strata governance issues. We have also advised property managers on disciplinary matters and complaints with the Real Estate Council of British Columbia. For more information about our strata law practice, please visit our website or contact Paul Mendes at 604-685-4894 or pgm@lmlaw.ca.
Lesperance Mendes Lawyers
900 Howe St #550, Vancouver, BC V6Z 2M4
(604) 685-3567