Executive Summary: Key Legal and Evidentiary Issues

• Differing interpretations of Bylaw 2000 created a long-running deadlock over expense-sharing for repairs and maintenance of a mixed-use strata building in Coquitlam, BC.

• Defendants L-259 Holdings Ltd. and Woods Sports Pub Inc., owning stand-alone commercial lots outside the Mixed-Use Building, held sufficient voting power (26%) to block any resolution requiring 75% approval for repair funding.

• A 2017 engineering report identified significant building envelope deterioration with repair costs estimated at approximately $535,000 to $2.9 million, yet no significant repairs were undertaken owing to the cost and the funding impasse.

• Under the Strata Property Act, s. 72 mandates that the Strata Corporation — not individual sections — is responsible for repair and maintenance of common property, and s. 195 limits section-allocated expenses to those relating "solely" to that section.

• Bylaw 2000's attempt to apportion common expenses between sections was found ambiguous and, if interpreted as L-259 and Woods urged, would contravene the Act by effectively creating impermissible "subsections" within a section.

• The Court declined to individually classify the plaintiff's enumerated list of building components as common property, holding that the parties should be guided by Bylaw 2000 and the filed strata plan.

The dispute over a deteriorating mixed-use strata building

The Residential Section of the Owners, Strata Plan NW 3365 brought a summary trial action in the Supreme Court of British Columbia against the Commercial Section, the Strata Corporation itself, and two commercial lot owners — L-259 Holdings Ltd. and Woods Sports Pub Inc. The case centered on a mixed-use building located at 918 Roderick Avenue, Coquitlam, BC (the "Mixed-Use Building"). The Strata Corporation, established in 1990, comprises 41 strata lots divided into a Commercial Section (lots 1–6) and a Residential Section (lots 7–41). Commercial strata lot 5 is located on level 1 and commercial strata lot 6 is located on level 2 of the Mixed-Use Building, while residential strata lots 7 to 41 are located on levels 3 to 5. Commercial strata lots 1 through 4 are not located in the Mixed-Use Building and are instead stand-alone strata lots with different civic addresses. There is no common property on strata lots 1–4. However, on level 2 of the Mixed-Use Building, 18 parking spots are designated as limited common property for the benefit of all Commercial Section strata lots. This physical layout became the root of the disagreement, as L-259 and Woods argued that requiring strata lots 1–4 to contribute to repairs to the Mixed-Use Building is unfair since they have no rights, title, or interest to the Mixed-Use Building.

Years of dysfunction and a governance vacuum

Between approximately 2009 and 2018, there was no strata council and no functioning Strata Corporation. Governance of the Strata Corporation assets was undertaken individually by the Residential Section and Commercial Section. From time to time, the Residential Section sought reimbursement of common expenses from the Commercial Section; however, the Commercial Section did not always pay its share of common expenses because of the way the Commercial Section interpreted Bylaw 2000. The Residential Section requested that a functioning strata council be put in place, but the members of the Commercial Section denied these requests. The Commercial Section owners held 44 of 79 votes within the Strata Corporation, equating to 56% of the vote, enabling them to defeat any resolution and pass any majority vote resolution. L-259 and Woods alone held a 26% vote, sufficient to defeat any resolution requiring 75% approval. A strata council was finally elected at an annual general meeting on July 19, 2018, but the fundamental disagreement about cost-sharing persisted.

The building envelope crisis

In late 2017, the Residential Section obtained a building envelope condition assessment report from BC Building Science (the "Engineering Report"). This report outlined significant problems that affected the Mixed-Use Building's envelope. The report estimated that repairs would cost approximately $535,000 to $2.9 million, depending on whether urgent repairs were made, targeted repairs were made, or whether a full renovation was undertaken. The Engineering Report noted that the flat roof membrane was past its normal serviceable lifespan and sporadic leaks were to be expected. The perimeter flashings and related interfacing were also in poor condition. According to the president of the Residential Section, no significant repairs have been made owing to the cost, and the building has continued to deteriorate. In order to fund the repairs, a resolution requiring 75% approval of the members of the Strata Corporation is required, and there is no evidence before the Court that such a resolution has been attempted — the plaintiff's position being that it would be futile to do so.

The bylaws at issue: Bylaw 2000 and the allocation of expenses

Bylaw 2000, adopted in 1995, created the Residential and Commercial Sections and purports to separate expenses attributable to each section and the Strata Corporation. Several provisions were central to the dispute. Section 1(3) addressed the designation of entrance ways and common areas as limited common property for the exclusive use of each section but made no reference to obvious common property such as the roofs or building envelope. Section 2(b) imposed duties on each section to maintain fixtures, fittings, and equipment used in connection with limited common property and common property "to be controlled, managed and administered by either separate section," while Section 2(c) required each section to maintain all areas common to the separate section. The plaintiff argued that under Section 2(b), it is not clear which section would be responsible to maintain common property and limited common property in the Mixed-Use Building, since the common and limited common property does not pertain solely to either section. Section 5(1) defined "common expenses" broadly — encompassing all expenses incurred by the Strata Corporation in controlling, managing, operating, repairing, maintaining, and replacing common property, common facilities, and other assets. Section 5(4) set out an apportionment formula: expenses "attributable to either separate section" would be allocated to that section (subsection (a)), expenses "not attributable to either separate section" would be allocated to all strata lots based on unit entitlement (subsection (b)), and expenses attributable to any one strata lot would be allocated to that lot (subsection (c)).

The competing interpretations

L-259 and Woods contended that Bylaw 2000 contemplates that costs of repairs to common property, including the building envelope, be allocated between the sections. They argued that the declarations sought by the plaintiff were premature and submitted that the Strata Corporation should raise the money required for the repairs and then allocate the costs. However, they also indicated that they oppose cost allocation by unit entitlement and will defeat any resolution that requires them to pay on that basis. They further filed a counterclaim alleging that requiring them to contribute to repairs to the Mixed-Use Building is significantly unfair and sought relief under s. 164 of the Strata Property Act, though that counterclaim was not before the Court on this summary trial application. The Residential Section countered that Bylaw 2000 does not support L-259 and Woods' position and that an interpretation that does would run contrary to the Strata Property Act. Without the Court making the sought declarations, the parties would remain deadlocked and required repairs to the building envelope would not be made.

The Court's interpretation and legal analysis

Justice Walker applied ordinary principles of statutory interpretation to the bylaws, giving words their plain and ordinary meaning while considering their purpose. The Court noted that although Bylaw 2000 was passed under the Condominium Act, the parties agreed that pursuant to s. 293(1) of the Strata Property Act, Bylaw 2000 remains in force. However, s. 121 of the Strata Property Act provides that a bylaw is not enforceable if it contravenes the Act or the regulations. The Court found that Subsection 5(4)(a) appears to assume that the commercial and residential sections are completely separate, but they are not, particularly in the Mixed-Use Building. The Court agreed with the plaintiff that "attributable to either separate section" is unclear and that the only reasonable interpretation, when read in conjunction with the Strata Property Act, is that it must refer to an expense related solely to one of the two sections — consistent with s. 195 of the Act and the judicial interpretation of s. 128 of the former Condominium Act in Owners Strata Plan LMS 1537 v. Alvarez, 2003 BCSC 1085. The Court agreed with the plaintiff that the defendants' position is at odds with the Strata Property Act and in effect suggests that there can be subsections within a section, which the Act does not permit. The Court also drew on Strata Plan VR1767 (Owners) v. Seven Estate Ltd., 2002 BCSC 381, where a parking lot owner beneath a building was required to contribute to building envelope repairs based on unit entitlement because a failure to maintain and repair the building envelope would result in a complete failure of the building and directly affect the parking lot. Similarly, the building envelope of the Mixed-Use Building provides protection from water ingress which benefits all strata lots of the Strata Corporation, and in relation to L-259 and Woods specifically, the building envelope protects and shelters the electrical room, the parkade, and the access to the parkade.

Determining the scope of common expenses

While the Court accepted the plaintiff's core position on cost-sharing, it declined to declare each of the specific building components enumerated by the plaintiff — including elevators, janitorial costs, rodent control, fire alarm and safety systems, BC Hydro, parking lot maintenance, railings, balconies, stairs, hallways, courtyard, HVAC system, and plumbing and mechanical systems — as common expenses to be borne by the Strata Corporation. L-259 and Woods argued that some of the listed items are expressly related to a particular section, and the Court is not in a position to conclude that the listed items are common property. By way of illustration, L-259 and Woods pointed to the inclusion of "balconies" on the plaintiff's list — there are only residential balconies, none of the commercial owners have access to them, and the balconies are designated as limited common property. Section 5(6) of Bylaw 2000 states that expenses attributable to limited common property shall be borne by the owners of the strata lots entitled to use the limited common property, and s. 194(2) of the Act supports this position. The Court accepted L-259 and Woods' position that it would be imprudent for the Court to review the enumerated list and determine which portions of the buildings are common property, directing instead that the parties should be guided by the listed items in Bylaw 2000 and the filed strata plan.

The ruling and outcome

The Court issued two declarations. First, the Strata Corporation (The Owners, Strata Plan NW 3365) is responsible to repair and maintain the building envelope and other related common property components of the building at 918 Roderick Avenue, Coquitlam, British Columbia — a declaration to which all defendants consented. Second, the owners of the Strata Corporation must contribute to the cost relating to the repair and maintenance of common property and common assets of the Strata Corporation based on unit entitlement — a declaration opposed by L-259 and Woods but granted by the Court. A third declaration sought by the plaintiff — that it is not responsible for the repair, maintenance, and related costs of the building envelope and other related common property — was found unnecessary as it is already encompassed in the declarations made. No specific monetary amount was awarded or ordered, as the case concerned declaratory relief clarifying the parties' obligations. No party sought costs of the application, and as a result, none were ordered.