BC Supreme Court upholds order that Vancouver condominium refund special levy to former unit owner

A British Columbia court has upheld a tribunal order that a Vancouver condominium refund a special levy of almost $19,000 taken from a former owner.

“I find that the Civil Resolution Tribunal was not patently unreasonable in determining that the special levy was due and payable . . . after [the former owner] had sold his lot,” said Supreme Court of British Columbia Justice Andrew Majawa in his March 13 decision. As such, the levy did not apply to Daniel Day, who owned the strata until the end of May 2021.

It is “rational and tenable” that the former owner “cannot be bound by a resolution that he had no opportunity to participate in.” Therefore, “the CRT was not patently unreasonable in ordering the [condo] to reimburse the payment.”

"I feel vindicated by the Supreme Court of BC decision,” says Daniel Day, who disputed the levy, adding that all argument put forward by the strata against his case “were dismissed entirely.”

Describing what he has gone through in the past two years as having made him “very anxious,” Day says he wants to thank his lawyers, Mitch Bringeland and Joshua Hutchinson of Blake, Cassels and Graydon, for securing the win. “Without them, this case would in all likelihood not succeed.”

Validity of strata’s first annual general meeting in 2021

In February 2021, the condominium – or strata in BC – held an annual general meeting. There would be a vote on a special levy, using a restricted proxy ballot,” allowing funding a $2.25-million project for a garden membrane on the property.

Owners had to submit proxy votes to the strata president or building manager. They were encouraged not to physically attend the AGM due to the pandemic, as public health orders were restricting gatherings to up to 50 people. The strata did not offer a virtual attendance option.

The special levy resolution passed at this AGM compelled Day and other strata owners to pay $18,700.20 in three installments.

However, the president of the strata later sent a letter explaining that it had a legal opinion regarding the legitimacy of the first AGM and that there would be a second AGM. The letter said it would not pursue any enforcement penalties on owners who had yet to pay.

On May 1, 2021, the strata withdrew $6,233.40 from Day’s bank account as payment for the first instalment of the special levy. Day emailed the strata, requesting a meeting with the president of the governing board. He asked for the return of the first installment and advised that he would commence legal proceedings if there was no refund.

A phone call between the strata president and Day took place that day, but Day did not request a hearing with the strata council during that phone call. After Day again threatened a CRT complaint, the first installment was refunded.

Ten days later, Day completed the sale of his unit. However, on July 15, 2021, the strata held the second annual general meeting. Another resolution regarding the special levy passed at that meeting.

The strata took the position that the second resolution ratified the first resolution, making the special levy payment due on February 25, 2021. The strata then deducted the entire $18,000-plus levy from the proceeds of the sale of Day’s unit.

Day then filed a tribunal claim, asking to invalidate the first AGM because no strata owners were permitted to attend or participate in discussions. Day also argued that he was not required to pay the special levy because he sold his lot before the second AGM that approved the resolution.

The strata’s response to the tribunal action said Day failed to formally request a hearing with the strata council as required under the Strata Property Act (SPA).

It further argued that at no time before the sale of Day’s unit was the first resolution invalidated, as the second resolution retroactively ratified it. As such, the strata claimed Day owed the strata the entire payment.

Civil Resolution Tribunal decision

The tribunal did not agree, ruling the first AGM was not lawful and that the levy wasn’t approved until after Day sold his property. But the strata applied for a judicial review of the tribunal decision, saying the interpretation of the second resolution had resulted in an “irrational and absurd result.”

However, in his decision, Justice Majawa found the tribunal was reasonable in concluding that the levy was due and payable on the date of the second AGM. He ordered reimbursement of the levy to Day, including pre- and post-judgement interest.

“It would be contrary to the SPA for Mr. Day to be liable for a special levy approved at the second AGM which he was no longer entitled to attend or vote at.”

The court also upheld the tribunal’s finding that condominiums/stratas are not authorized to restrict an owner’s choice of proxy during the pandemic.

“The strata’s proxy voting procedure, which only allowed the owners to select either the strata president or the building manager as their proxies, was a restricted proxy contrary to the SPA,” Justice Majawa said.

Additionally, he wrote that strata owners “were encouraged not to physically attend the AGM due to the pandemic.” Despite the province providing for the legal use of virtual meetings in April of that year, the strata offered no such option. Not creating a virtual option restricted the ability of owners to discuss issues and violated the order, the judge ruled.

Also, the fact that the strata held a town hall in January of that year to discuss the special levy before the first AGM was “insufficient to remedy” the lack of discussion, as the ministerial order “specifically stipulated” that discussion must be allowed during the meeting.”

“The first resolution was no longer binding the moment it contravened the SPA or ministerial order,” Majawa said. “It is rational and tenable to conclude that [Day] cannot be bound by a resolution that he had no opportunity to participate in.”

Judge says tribunal was not “patently unreasonable” in making its ruling

On whether Day needed to request a meeting officially, Justice Majawa ruled the CRT was “not patently unreasonable” to infer from Day’s conduct that the meeting requirement was waived.

I find the CRT’s reliance on Mr. Day’s conduct to be a rational line of reasoning which supports its decision to infer a waiver request,” he wrote. While Day did not request a hearing using those precise words, his “email and subsequent phone call voiced his concerns to a Strata representative and explicitly put the strata on notice that if the parties were unable to come to an acceptable resolution, he would initiate a CRT claim.

He noted the tribunal’s mandate is to take an informal approach rather than strictly adhere to technical requirements. This includes “flexibly interpreting procedural rules, which a layperson is understandably unfamiliar with, particularly where the result of the waiver does not unduly prejudice the opposing party.”