BC Supreme Court orders bylaw amendments and unanimous resolutions under s. 165
Paul G. Mendes, Partner
Phone: 604-685-4894
Email: pgm@lmlaw.ca
Norenger Development (Canada) Inc. v. Strata Plan NW 3271, 2018 BCSC 1690
This news may surprise you, but one of the main purposes of the Strata Property Act (the “SPA”) is promoting the democratic governance of strata corporations. As observed by the judge in this case, through a series of checks and balances, the goal of the SPA is to facilitate community living among people with different interests, financial resources, and life circumstances.
But what happens when the system breaks down, and what happens when those checks and balances might be working to thwart the democratic functioning of a strata? Can the court “fix it” and order the strata to adopt a solution to the impasse? Can the court pick one side over the other when democracy fails to produce a solution?
The latest ruling in Norenger v. NW3271 says the answer is a resounding yes.
This case concerns a long-standing dispute between commercial and residential owners in a strata complex in Richmond known as The Richmond Landmark. The Court had previously found that the strata was incapable of managing its affairs and the strata had been under the authority of an administrator for almost eight years. At issue were contradictions in the bylaws and the fact that the commercial owner refused to vote in favor of any change in the operation of the strata which had the effect of reducing the commercial owner’s control of the strata, or increasing the commercial owner’s contribution to the operating expenses.
The administrator proposed new bylaws and a formula for cost allocation, which failed to pass at a general meeting. The administrator then applied to the Court to have the bylaws and cost-sharing formula approved by the Court. Although the trial court granted the order, the BC Court of Appeal overturned that decision, holding that absent specific statutory authorization, the court could not override a democratic vote of the owners. The Court of Appeal did leave open, however, the possibility that s. 165 of the SPA might provide the administrator with an avenue for relief.
Section 165 is that section of the SPA which allows a court to make the orders it considers necessary when the strata is contravening the SPA or failing to perform a duty under the SPA.
So the administrator took that cue and brought a new application to the Supreme Court, this time seeking relief under s. 165 of the SPA. An interesting wrinkle, in this case, was that the commercial owner was also the developer of the strata. As the developer, the commercial owner had registered the very bylaws that were in dispute between the parties. To make matters worse, the commercial owner was using its “s. 128 veto” to block any efforts to resolve those contradictions with bylaw amendments. Section 128 is the section of the SPA that requires all bylaw amendments to be passed by a separate ¾ vote resolution of the residential and commercial owners. The s. 128 veto effectively meant that a vote of the owners could never address the developer’s failure to create proper bylaws.
The Court found that s. 165 of the SPA provided an avenue for overriding the voting rights of the owners in very limited circumstances, where doing so would be neither anti-democratic nor contrary to the purposes of the SPA. The Court found that the adoption of the bylaws and cost allocation formula recommended by the administrator was necessary because the strata was in serious disrepair. In the absence of judicial intervention, the owners would remain incapable of managing the affairs of the strata on their own.
This very important case further expands the court’s power under s. 165 of the SPA. This precedent will be particularly useful when a strata is failing to meet its obligations under the SPA, and a block of owners is using the “s. 128 veto” to block all efforts to solve the problem.
WHAT WE DO: Lesperance Mendes has been representing strata owners, strata sections and strata corporations since 1997. If you live in strata where resolutions to repair the building or amend the bylaws are continuing to be defeated, contact Paul G Mendes, Partner at 604-685-4894 or email Paul 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.