Absent specific statutory authorization, the B.C. Court of Appeal held that a court may not order that an administrator can exercise powers without approval by a resolution passed by a majority vote pursuant to section 174(7) Strata Property Act (the “Act”), as this would abrogate the democratic rights of owners under the Act.
Administrative law – Administrators – Compliance with legislation – Condominiums – Decisions of administrative tribunals – Judicial Review – Jurisdiction – Powers – Strata Corporations
Norenger Development (Canada) Inc. v. Strata Plan NW 3271,  B.C.J. No. 508, 2016 BCCA 118, British Columbia Court of Appeal, March 15, 2016, P.A. Kirkpatrick, D.F. Tysoe and S. Stromberg‑Stein JJ.A.
A strata corporation was created in 1990 with respect to a building with a residential and commercial section. Under the bylaws, each strata lot was entitled to one vote. The appellant was the developer of the condominium and was the owner of the commercial lots as well as one residential lot. The original strata bylaws were ambiguous regarding the allocation of common expenses between the strata corporation and the commercial and residential sections. A dispute arose regarding the allocation of cost for the replacement of lights in parking and exterior common areas as well as the allocation of other costs. As a result, the developer applied for the appointment of an administrator of the strata corporation, with the residential section consenting subject to certain qualifications. The court appointed an administrator and ordered that the administrator draft bylaws, and if the bylaws were not passed with the majority vote required, the administrator or the parties could apply for further direction.
When the draft bylaws and unanimous resolutions were defeated at the next special general meeting, the administrator applied for directions and sought an order repealing the strata corporation’s bylaws and replacing them with the draft bylaws. The administrator also requested that the court order that the administrator approve, without the requirement of a unanimous vote, a resolution requiring the strata corporation to use formulas for calculating its share of expenses and removing certain property from common property. The residential section brought a very similar application for essentially the same relief. The chambers judge allowed the applications, finding that the draft bylaws would resolve ambiguity and inconsistencies.
The developer appealed this decision on the basis of section 174(7) of the Act, which reads as follows:
Unless the court otherwise orders, if, under this Act, a strata corporation must, before exercising a power or performing a duty, obtain approval by a resolution passed by a majority vote, a 3/4 vote or a unanimous vote, an administrator appointed under this section must not exercise that power or perform that duty unless that approval has been obtained.
Section 174(7) is a relatively recent amendment to the Act, dating back to December 11, 2009. The court reviewed the leading cases on the scope of an administrator’s powers that predated the amendment to assist with interpreting the provision. The Court of Appeal determined that democratic governance lies at the core of the Act and is fundamental to the function of a strata corporation established under the Act.
The Court of Appeal also noted that, under section 174 of the Act, a court may appoint an administrator to exercise the powers and perform the duties of a strata corporation, but that the powers and duties of a strata corporation are independent from the powers and duties of the owners who are members of that strata corporation. The right to vote on and pass a resolution at an annual special general meeting is an individual right possessed by the owner of a strata lot (or an assignee or mortgagee under section 54 of the Act). The Act provides that a strata corporation must obtain the approval of voters before taking certain actions. Absent specific statutory authorization, a court cannot empower an administrator to act without the approval of voters as required under the Act.
In the result, the Court of Appeal held that section 174(7) of the Act did not permit the court to authorize action that would otherwise require a majority, three quarters or unanimous vote under the Act. Passing bylaws, removing common property designations and changing the formula for allocating expenses were not powers or duties of the strata corporation. The Court of Appeal held that, absent specific statutory authorization, a court may not abrogate the democratic rights of owners under the Act.
This case was digested by JoAnne Barnum of Harper Grey LLP. If you would like to discuss this case further, please feel free to contact her directly at firstname.lastname@example.org or review her biography at http://www.harpergrey.com.
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