Executive Summary: Key Legal and Evidentiary Issues

• Section 118 of the Strata Property Act provides permissive, not automatic, entitlement to recover legal costs upon lien registration

• Entitlement under s. 118 requires that costs be incurred specifically in "registering or enforcing" a lien, confining recovery to defined statutory purposes

• The court retains a gatekeeping role to determine entitlement and scope, while the registrar assesses quantum on assessment

• Once strata arrears are paid, the lien ceases to serve any enforcement function, limiting further cost recovery

• Legal costs incurred solely to pursue payment of legal fees after underlying obligations are satisfied fall outside s. 118's scope

• Remedial provisions under ss. 116–118 protect compliant owners from subsidizing delinquent owners but do not support continued accrual of lienable legal costs once fees have been paid

Background and parties involved

This dispute arose in the Supreme Court of British Columbia between The Owners, Strata Plan EPS 7076, a strata corporation, and 1186856 B.C. Ltd., the original builder and developer of the strata development. The matter centered on the recovery of legal costs arising from the registration of a strata lien, after the underlying strata fees and charges had been paid.

The phased development context

Unlike the typical case involving a delinquent strata owner who refuses to pay strata fees, this matter arose in the context of a phased strata development. During the construction and marketing phase, strata lots were completed, sold, and closed at different times. Strata fees attributable to each unit were paid at or before the unit's sale closing as part of the conveyancing process—a protocol that reflected the practical realities of a phased development and operated without dispute as units were completed and sold.

Escalation and enforcement steps

In the spring of 2024, after the majority of strata lots had been sold and the strata corporation had assumed governance of the development, it pursued the developer directly for payment of strata fees for the final unsold unit. The developer does not dispute that, at that stage, the strata was entitled to seek payment of strata fees directly from it. However, the developer's position was that it requested confirmation of the amounts claimed, including budgets, meeting minutes, and account statements, asserting it was not refusing to pay but rather seeking documentation.

On July 4, 2024, the strata corporation issued a written notice pursuant to s. 112(2) of the Strata Property Act, demanding payment of the alleged arrears and advising that a lien could be registered if payment was not made. The developer did not pay the claimed arrears within the period set out in the s. 112 notice. On August 14, 2024, following expiry of the notice period, the strata corporation registered a certificate of lien against the developer's strata lot pursuant to s. 116(1) of the Strata Property Act. No order enforcing the lien by way of sale under s. 117 was sought or obtained prior to payment of the arrears. Correspondence continued, with the developer maintaining it was prepared to pay strata fees upon receiving further clarification and the strata corporation maintaining its position that arrears were owing.

Payment of arrears and narrowing of the dispute

In January 2025, after the lien had been registered but before any enforcement proceedings were initiated, the developer paid the outstanding strata arrears claimed by the strata corporation. The payment resolved the underlying dispute concerning strata fees and common expenses. However, the payment did not include the strata corporation's claimed legal costs. The developer did not agree to pay legal fees without adjudication and maintained that the fees claimed were unnecessary, unreasonable, and disproportionate in the circumstances. As a result, the proceeding continued on the issue of whether the strata corporation is entitled to recover legal fees under s. 118 of the Strata Property Act.

The statutory framework for cost recovery

The court analyzed the statutory scheme governing recovery of legal costs under sections 112–118 of the Strata Property Act. Section 118 provides that a strata corporation may add the costs of registering or enforcing the lien to the amount owing, including reasonable legal costs, land title and court registry fees, and other reasonable disbursements. However, the provision uses permissive language ("may"), indicating that entitlement is conditional, not automatic. It does not confer an automatic right to recover all legal fees once a lien is registered, nor does it create a general cost-shifting regime. The Court of Appeal's decision in The Owners, Strata Plan KAS 2428 v. Baettig established that sections 116–118 are remedial provisions intended to protect compliant owners from bearing the cost of enforcing strata obligations against delinquent owners. The Court of Appeal's decision in 625536 B.C. Ltd. v. Owners of Strata Plan LMS 4385 confirmed that s. 118 is not engaged unless and until a certificate of lien is registered.

The court's analysis on entitlement

The developer advanced three propositions: that entitlement under s. 118 is discretionary and not automatic; that reasonableness informs not only quantum but also whether it was reasonable to incur legal costs in the first place; and that, on the facts of this case, the strata corporation's conduct warrants denial of entitlement. The court found that the authorities do not support either an automatic entitlement upon registration or a broad entitlement-denying discretion based on generalized allegations of unreasonableness. The strata corporation had issued a notice under s. 112, the developer did not pay the claimed arrears within the notice period, and the strata corporation registered a certificate of lien under s. 116. The developer did not pay the arrears until January 2025, well after the lien was registered. There was no undertaking, agreement, or unconditional tender of payment before registration that would have rendered the lien unnecessary or premature. In these circumstances, the strata corporation's invocation of the lien's registration falls within the core enforcement scenario contemplated by the Strata Property Act.

Scope limitation after payment

While confirming entitlement in principle, the court limited its scope. Once the arrears were paid and accepted, the lien ceased to serve any enforcement function. From that point forward, legal steps were no longer aimed at securing payment of strata arrears, but rather at resolving the dispute over legal costs. Section 118 does not authorize the recovery of legal costs incurred solely to pursue payment of legal fees after the underlying strata obligation has been satisfied. To permit such recovery would risk reversing the statutory relationship between arrears and costs, making legal fees the primary object of enforcement rather than an incident of it. The court emphasized that this conclusion flows from the structure of the Strata Property Act, not from any finding of improper conduct by the strata corporation.

Ruling and outcome

The court directed the registrar of the Supreme Court of British Columbia to conduct an assessment under Rule 18-1 of the Supreme Court Civil Rules of the legal costs claimed by the strata corporation, limited to those incurred up to the date the arrears were paid, together with any steps reasonably required to give effect to that payment and to discharge the lien. Once the arrears were paid, legal costs incurred thereafter fall outside the scope of s. 118 and are not recoverable as lien-related costs. The quantum of recoverable legal costs is not before the court and will be determined on assessment before the registrar. If the parties are unable to agree on costs of the proceeding, they may make written submissions not exceeding five pages within 14 days of the date of the reasons.