Strata Alert: The Court of Appeal Says “Imminent Risk” Not Required to Fund Repairs

The Court of Appeal Says “Imminent Risk” Not Required to Fund Repairs

Alex J. Chang, Associate
Phone:  604-685-1255
Email:  ajc@lmlaw.ca

The Court of Appeal of BC has overruled a 2021 decision of the BC Supreme Court that dismissed a strata corporation’s petition under s. 173 of the Strata Property Act that sought court approval of a levy to fund repairs.

Section 173 was amended in 2009 to make it easier for a strata corporation to fund repairs.  The provision empowers the Supreme Court to approve a special levy when a majority of owners support the repairs, but the strata corporation can’t get the three-quarter vote needed.

Under s. 173, the strata corporation can apply to the Supreme Court within 90 days of a ¾ vote for a special levy to fund repairs for an order approving the resolution if:

• the special levy is to raise money for maintenance or repairs of common property or common assets that are “necessary to ensure safety or to prevent significant loss or damage”, and
• the number of votes cast in favour of the resolution is more than 50% but less than the 3/4 vote required to pass the special levy.

In Strata Plan VR 2213 (Re), 2021 BCSC 905, the Court dismissed the strata corporation’s section 173 petition to approve a special levy resolution to replace its existing EIFS face-sealed cladding system. The judge found that, while there was a risk that portions of the building’s exterior cladding would fall off as a result of its deterioration, that risk did not justify the extensive work proposed by the strata corporation:

… None of the experts emphasize any imminent risk of panels falling. The suggestion is that it is a potential risk at some point in the future. I am not prepared to find that a full remediation of the east elevation of the Building is necessary to ensure safety. I accept there is some risk of failure in the southern end of the east elevation of the Building. This is the one area the engineers agree needs to have work completed, and the Strata Corporation should address it, but it does not justify approving the entire s. 173 Petition.

The requirement for an “imminent risk” of a life-safety hazard appeared to many strata law observers, including this author, to be a departure from the established legal test that would make it significantly harder for strata corporations to fund repairs using s. 173.

On appeal, the higher Court in Thurlow & Alberni Project Ltd. v. Strata Plan VR 2213, 2022 BCCA 257 held that the lower Court erred in suggesting that, to obtain an order under s. 173, the proposed repairs must be immediately necessary or the minimum work required to address the problem. The real question for the Court is whether the repair is necessary to ensure safety or prevent a loss. If that threshold is met, the Court should avoid second-guessing the urgency or scope of the project, particularly if the strata council is acting in good faith and reasonably based on professional advice.

The Court of Appeal held that when it comes to repairs, the Court should give deference to the decision made by the strata council and approved by the majority of owners. The Court held: “It would be contrary to the remedial intention of [s. 173] to require the court to intensively analyse the scope of the work the strata corporation proposes to do. Doing so will only increase costs to owners and fail to address the deadlock the legislature clearly intended to resolve.”

This case reconfirms that s. 173 is meant to be remedial, and if the work is reasonably necessary to prevent damage or loss, the court should approve the levy. This welcome decision will ultimately make it easier for strata corporations to fulfill their statutory duty to repair and maintain their condominiums.

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.