Executive Summary: Key Legal and Evidentiary Issues

• The central dispute concerns the interpretation of "reasonable legal costs" under s. 118 of the Strata Property Act, S.B.C. 1998, c. 43, specifically whether that phrase permits courts to assess the necessity and reasonableness of the enforcement steps taken, or only the quantum of costs incurred.
   
• Both parties sought leave to appeal a BC Supreme Court Costs Order arising from the Strata's registration of a certificate of lien against an unsold strata lot owned by 1186856 B.C. Ltd.
   
• The Owner argued that the chambers judge erred by limiting the "reasonableness" inquiry to quantum alone and deferring entirely to the registrar, thereby foreclosing the Owner's argument that the enforcement steps were not reasonably necessary in the first place.
   
• Conversely, the Strata argued the chambers judge erred by concluding that legal costs incurred after the arrears were paid fell outside the recoverable scope of s. 118.
• Justice MacNaughton found that both proposed appeals raised arguable issues of sufficient merit, significance to the practice, and significance to the action to warrant scrutiny by a division of the Court of Appeal.
   
• Both applications for leave to appeal were granted, with the court noting the matter raises broader questions of significance to the relationship between strata owners and strata corporations generally.

Facts of the case

The petitioner, the Owners, Strata Plan EPS 7076 (the "Strata"), is the strata corporation for a phased strata development in British Columbia. The respondent, 1186856 B.C. Ltd. (the "Owner"), was the original builder and developer. During the development, the parties followed a protocol whereby strata fees attributable to each unit were paid as part of the conveyancing process at or before the closing of each unit sale.

In the spring of 2024, the Strata pursued the Owner directly for payment of strata fees for an unsold unit. On July 4, 2024, the Strata issued a written notice pursuant to s. 112(2) of the Strata Property Act (SPA), demanding payment of the alleged arrears and advising that a lien could be registered if payment was not made. The Owner did not pay within the notice period, though it did not dispute its obligation to pay. Instead, it requested supporting documents — including budgets, meeting minutes, and account statements — to confirm the amounts claimed, expressing confusion about how the strata fees and arrears had been calculated.

On August 14, 2024, following expiry of the notice period, the Strata registered a certificate of lien against the Owner's strata lot pursuant to s. 116(1) of the SPA. Correspondence continued after registration, with the Owner indicating it was prepared to pay upon receiving further clarification and documentation. On November 25, 2024, the Strata filed a petition in the Supreme Court seeking relief under s. 117 of the SPA. The Owner was served before the end of November, and on January 21, 2025, after both the lien registration and the petition had been filed, the Owner paid the outstanding strata arrears. That payment resolved the underlying dispute about strata fees and common expenses, but the Owner's payment did not include the Strata's claimed legal costs, as the Owner took the position that the enforcement steps had been unreasonable.

Policy and legislative provisions at issue

The operative provision is s. 118 of the SPA, captioned "Costs added to amount owing," which provides that the following costs of registering a lien against an owner's strata lot under s. 116 or enforcing a lien under s. 117 may be added to the amount owing to the strata corporation under a Certificate of Lien: (a) reasonable legal costs; (b) land title and court registry fees; and (c) other reasonable disbursements. The parties' dispute centred on the meaning of "reasonable legal costs" — specifically, whether that phrase invites the court at the entitlement stage to assess whether the enforcement steps themselves were reasonably necessary, or whether "reasonableness" is a matter for the registrar at the quantum assessment stage only.

Reasoning and analysis

The chambers judge released her reasons on January 29, 2026 (The Owners, Strata Plan EPS 7076 v. 1186856 B.C. Ltd., 2026 BCSC 148), with a corrigendum issued on March 30, 2026. She agreed with the Strata that s. 118 permits recovery of reasonable legal costs incurred in registering and enforcing the lien, granting the Strata its reasonable legal costs up to the date the arrears were paid, but denying costs incurred thereafter (the "Costs Order"). She held that entitlement under s. 118 is not automatic, that the provision is permissive rather than mandatory, and that the court retains a gatekeeping role to determine whether a claim for costs falls within the statutory categories of "registering or enforcing" a lien. She further held that the scope of entitlement where arrears are paid after lien registration but before any s. 117 order is necessarily confined to costs reasonably incurred to register the lien and take the steps leading up to payment, together with any steps reasonably required to give effect to that payment and discharge the lien. She concluded that legal costs incurred after the arrears were paid fell outside the scope of s. 118 because the lien ceased to serve any enforcement function from that point onward.

On the leave applications before Justice MacNaughton, both parties challenged different aspects of the Costs Order. The Owner argued that the chambers judge erred by treating "reasonableness" only as a quantum question for the registrar, thereby foreclosing the court's ability at the entitlement stage to assess whether specific enforcement steps — such as proceeding to lien registration despite the Owner's expressed willingness to pay upon receiving confirming documents — were reasonably necessary. Justice MacNaughton found there was no authority directing a court not to assess the reasonableness of legal costs at the entitlement stage, noting that Baettig itself requires that costs be "reasonably necessary" to fall within s. 118. The Strata, for its part, argued that Baettig supports the position that its reasonable legal costs form part of the amount claimed in the lien, including costs accrued after the arrears were paid and associated with enforcement. Justice MacNaughton agreed that Baettig does not definitively resolve the question of whether s. 118 entitlement extends to costs accrued after payment and discharge of a lien, finding that ground of appeal also meritorious. Applying the four-part test from Goldman, Sachs & Co. v. Sessions, 2000 BCCA 326, Justice MacNaughton was satisfied that both proposed appeals raised issues of significance to the practice and to the action, presented arguable cases of sufficient merit, and would not unduly hinder the progress of the matter.

Ruling and overall outcome

Justice MacNaughton granted both applications for leave to appeal, finding it in the interests of justice to do so. Both the Owner (CA51385) and the Strata (CA51383) were granted leave to appeal the Costs Order to the Court of Appeal for British Columbia. The decision is interlocutory in nature — no final monetary award or costs order was made by the Court of Appeal — and the substantive questions regarding the scope and quantum of the Strata's entitlement to reasonable legal costs under s. 118 of the SPA remain to be determined on the merits of the appeal. No specific monetary amount was ordered or awarded at this stage.