Can Legal Costs Be Claimed For Enforcing Strata Bylaws
Alex J. Chang, Associate
Phone: 604-685-1255
Email: ajc@lmlaw.ca
A dreaded scenario for strata corporations is a resident that continues to breach the bylaws in spite of warnings and fines. A strata corporation may be hesitant to take the next step of pursuing a legal action out of fear that the legal costs may be high and not recoverable from the owner.
Prior to the Strata Property Act (SPA) coming into effect in 2000, s. 127 of the Condominium Act was interpreted as requiring a strata to bring a separate action to recover legal fees after a court established bylaws had been contravened, rather than seeking recovery by way of a costs award in the first claim. The requirement of starting a second lawsuit for costs arguably created unnecessary costs and complexity.
In NWS3075 v Stevens, 2018 BCSC 1784, the Supreme Court clarified that it would be incongruous to require a strata to sue separately for costs, in light of the purpose of s. 133 of the current SPA as stated by the Court of Appeal in KAS 2428 v. Baettig, 2017 BCCA 377. The Baettig decision says the legislative intent of s. 133 is “that strata owners who comply with the bylaws and rules of the strata corporation should not have to shoulder the financial burden of remedying infractions committed by non-compliant owners.”
NWS3075 v Stevens also confirms that a Strata Corporation must comply with s. 135 of the SPA to claim its legal costs. Section 135 requires that after receiving a complaint of a breach of a bylaw that the strata corporation give the owner or tenant the particulars of the complaint in writing, an opportunity to answer them, an opportunity for a hearing before the council and give notice of the council’s decision in writing as soon as feasible. The notices issued by the strata under s. 135 should specify that in addition to imposing fines, the strata corporation will also apply any legal costs that it may incur to remedy breaches of the bylaws.
Unfortunately, the certainty the Courts have given regarding a strata corporation’s ability to claim legal costs does not exist in the Civil Resolution Tribunal (CRT), which generally sees costs awards as being inconsistent with its mandate. As a result, CRT Rule 9.4(3) says that except in extraordinary circumstances, the CRT will not award legal costs in a strata dispute. Stratas have tried three strategies in the CRT to overcome this Rule.
First, stratas have successfully argued that they are entitled to legal costs based on a non-standard bylaw that says an owner must indemnify the strata from its legal costs. For more information on this argument see our previous article. So far, this approach appears to be the surest way of claiming legal costs in the CRT. Strata corporations considering passing an indemnity bylaw should seek legal advice and ensure that the bylaw is passed and registered before a claim is filed with the CRT.
The second argument that the CRT has endorsed is dependant on the extreme conduct of the parties during the litigation. The CRT has adopted the test for awarding special costs, which says that special costs should be ordered against a party when their conduct in the litigation was reprehensible, in the sense of deserving of rebuke or blame. This test sets a high threshold. In Parfitt et al v. VR 416 et al, 2019 BCCRT 330, the CRT said that a direct threat made by a party during the proceedings met the test for special costs. However, the CRT has otherwise been reluctant to award costs on this basis (see Bond v. NW 2671, 2019 BCCRT 344; Fisher v. VR 1420, 2019 BCCRT 1379; Wang v. LMS 2970, 2018 BCCRT 473; Napoleone v. BCS 2460 et al, 2018 BCCRT 246.
The third argument is that a strata is entitled to legal costs under s. 133 of the SPA per Baettig. However, the CRT has yet to accept this argument because in NWS3075 v Stevens, the Court expressed doubt that a strata could recover legal costs in the CRT. The CRT in Hallman et al v. KAS 1821, 2019 BCCRT 1179 and VIS 2287 v. Mullins, 2020 BCCRT 122 noted that the court in Stevens was not conclusive of this issue but that the reasoning suggested legal costs for CRT disputes are not recoverable under s. 133.
The uncertainty created by NWS3075 v Stevens regarding a strata’s right to recover legal costs under s. 133 in the CRT is unfortunate, particularly for stratas without indemnity bylaws. Respectfully, it is also not clear if the Court’s concern was justified. The Court’s comments were based on s. 20 of the CRT Act, which requires parties to represent themselves, and on the fact that the CRT is intended to offer simple and inexpensive access to justice. However, other Court decisions have acknowledged that while there is a general rule that parties must represent themselves, a party is entitled to use lawyer throughout the CRT process (see NW 2575 v Booth, 2018 BCSC 1605). There is also nothing in the CRT Act that expressly purports to override what the Court of Appeal in Baettig said was the legislative purpose of s. 133. The issue was also not argued before the Court so the precedential value of NWS3075 v Stevens on this issue is uncertain. This author hopes that the Court will revisit this issue and provide clarity.
Strata corporations seeking to recover legal costs for enforcing their bylaws in the CRT should either amend their bylaws prior to proceeding or claim legal costs under s. 133. If the strata does not have an indemnity bylaw, then the strata may be able to recover legal costs under s. 133 if the Court clarifies this issue in the future.
WHAT WE DO: Lesperance Mendes has been advising strata corporation and strata owners on strata governance and dispute issues since 1997. For more information on how we can assist you in your strata matter, contact Paul G Mendes, Partner at 604-685-4894 or by email at pgm@lmlaw.ca or Alex J. Chang at 604-685-1255 at ajc@lmlaw.ca.
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.