Should your strata stop chasing owners for insurance deductibles?
Paul G. Mendes, Partner
Phone: 604-685-4894
Email: pgm@lmlaw.ca
Strata Plan BCS 1589 v. Nacht 2019 BCSC 1785
BCS 1589 v. Nacht was an appeal from an earlier CRT decision: BCS 1589 v. Nacht 2017 BCCRT 88. The facts are straightforward and very common: a failed toilet supply line in the owners’ strata lot caused approximately $87,000 in damage to some strata lots and the common property.
The strata’s insurance covered the damage, subject to a $25,000 deductible. The strata corporation paid the deductible and then sought reimbursement from the respondents under the strata’s deductible bylaw, which required the owners to indemnify the strata corporation for damage arising from the owners’ “…act, omission, negligence or carelessness” to the extent that strata’s insurance did not cover the expense. I will go out on a limb here and say that chances are, your strata corporation has the same bylaw.
As you might have guessed, the owners refused to pay.
The strata brought its claim to the Civil Resolution Tribunal (the “CRT”), and the CRT ruled in favour of the owners, finding that the strata needed to prove that the owners were negligent to collect the deductible, and there was simply no evidence of negligence.
The strata sought and obtained leave to appeal the decision to the BC Supreme Court. See BCS 1589 v Nacht, 2018 BCSC 455.
The strata corporation appealed on three questions:
- Whether a strata corporation’s by-laws can narrow the application of s. 158(2) of the Strata Property Act?
- The correct interpretation of the deductible bylaws? and
- Whether the decision in Strata Plan LMS 2446 v. Morrison, 2011 BCPC 519, referred to by the CRT, was good law.
As you probably guessed, the Court dismissed the appeal on the basis that there was no error in law, and that the decision was reasonable in the circumstances.
The strata corporation argued that its bylaw, which required proof of negligence by the owner to collect the deductible, was unenforceable because it narrowed the application of section 158(2) of the Strata Property Act. Section 158 (2), which does not refer to “negligence” by the owner, allows the strata corporation to sue an owner for a deductible “if the owner is responsible for the loss of damage.”
The strata also argued that the decision Strata Plan LMS 2446 v. Morrison, a Small Claims Court decision holding that a similarly worded bylaw required proof negligence, was wrong and not binding on the Court. Morrison, some readers will recall, is the case that proved your mom was right: always take time to wash your hands after using the toilet.
In upholding the CRT’s decision, the court agreed with the CRT that the strata corporation’s deductible bylaw did not contravene the SPA. The bylaw simply clarified or specified the circumstances in which an owner could be held responsible for the loss, and that required the strata to prove negligence. The Supreme Court found the CRT’s interpretation of the SPA and the bylaw to be reasonable and justified on the facts of the case.
The take away here is that if your strata’s deductible bylaw refers to losses caused by “the owner’s act, omission, negligence or carelessness,” your strata corporation must have some evidence of the owner’s negligence before demanding payment of the deductible. Proving negligence in the CRT will be very difficult, due to the lax rules of evidence in CRT proceedings. The strata cannot, for example, cross-examine an owner on their in-suite maintenance regimen.
By the way, when was the last time you looked at the water supply lines to your clothes washer, dishwasher, fridge and toilet. I thought so.
WHAT WE DO: Lesperance Mendes fixes your strata’s bylaws so that they are easier to enforce. To have your bylaws reviewed by one of our strata lawyers, 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 upon without independent legal advice.