164 Preventing Or Remedying Unfair Acts

CASE LAW

Significantly Unfair Action Declared and Registration Ordered of Court Order, Amended Schedules of Unit Entitlement, and Schedule of Interest on Destruction

A claim before the Civil Resolution Tribunal had been brought to address an alleged overpayment of strata fees not in conformity with the strata plan’s unit entitlement system for calculating contributions. In the 1970s, several of the large strata lots had been re-subdivided into numerous smaller strata lots; pursuant to that statute, the re-subdivisions were not additional bodies corporate but members of the original strata plan. The court, providing remedies beyond the jurisdiction of the Tribunal, granted a declaration that the proposed adoption by the strata council of a schedule delivered to owners with the notice of annual general meeting constituted a significantly unfair action by or decision of the respondent strata corporation contrary to s. 164(1) of the Strata Property Act, and ordered amendment of the schedules of unit entitlement so that the unit entitlement of each strata lot would be the total area of both floors of that lot as set out in each of the strata plans, excluding the area of each lot’s patio. The court ordered registration of its order and any necessary appendixes at the land title office and that the registrar of land titles accept and register the order, any necessary appendixes, and the amended schedules of unit entitlement for three respective strata plans. The court also ordered registration of a schedule of interest on destruction setting out the interests of strata lot owners and their entitlement to proceeds upon a destructive event (Brown v. Strata Plan VR 42, VR 64, VR 153, 2022 BCSC 812).

Cannabis Business Bylaws Not Significantly Unfair

In Kunzler v. Strata Plan EPS 1433, 2021 BCCA 173, the plaintiff had purchased a lot in 2017 in a strata corporation on Salt Spring Island, intending to develop a licensed cannabis production and sale business. Having reviewed the website advertising the lots for sale, the strata bylaws, and the applicable land use bylaw, the plaintiff failed to consult with the strata corporation regarding his plans. The property’s zoning allowed for agricultural use, and there were no explicit prohibitions in the strata corporation’s bylaws against the cannabis business.

At a special general meeting, the strata corporation amended its bylaws to prohibit commercial cannabis production. The plaintiff challenged the bylaw amendments under ss. 164 and 121 of the Strata Property Act, arguing that they were “significantly unfair” and unenforceable as a restraint of trade. At the Court of Appeal, he appealed the dismissal of his petition, claiming the judge had applied an incorrect test for “significantly unfair”, failed to adequately consider his reasonable expectations, relied on irrelevant principles, and disregarded relevant case law.

Dismissing the appeal, the court found that, on the specific facts, the bylaws were not significantly unfair. Although the judge had initially erred in his assessment of the relevance of reasonable expectations to the legal test, he had addressed the plaintiff’s expectations in case he was mistaken about the test, and his analysis of their reasonable expectations was appropriate within the context. The court distinguished the plaintiff’s authorities and found they did not support his argument for a more restrictive approach to regulating individual land uses. The judge had not erred in determining that the bylaws did not constitute an impermissible restraint of trade.

No Equitable Easement or Proprietary Estoppel Granting Strata Lot Owner Rights to Use Deck

Stratton v. Richter, 2022 BCCA 337 was a dispute between owners of strata lots 1 and 3 in a three-lot strata corporation occupying a single building, a house built in 1912. On the second floor, doors from strata lots 1 and 3 open onto an exterior deck. A stairway descends from the deck to the backyard. On the strata plan, the deck is designated as limited common property for the exclusive use of strata lot 1.

In the backyard, each of strata lots 1 and 3 have an area designated on the strata plan as “Yard LCP” abutting their strata lots, that being the limited common property for the respective uses of strata lots 1 and 3. The stairway was constructed entirely on, and supported entirely by, strata lot 3 Yard LCP. The stairway and strata lot 3’s exterior door leading onto the rear deck were built either before the strata plan was registered, or shortly thereafter. The stairway had, ever since then, been used by the owners of both strata lots 1 and 3 to access the backyard from the rear deck.

From very early in the strata corporation’s history until the summer of 2017, owners of strata lot 3 (who had purchased in 2004) used the deck to access the stairway without any objections. A former owner of strata lot 1 told the owner of strata lot 3 that she would never deny her passage over the deck to reach the stairway, but she ceased to be an owner in 2010. In late 2014, the current owners purchased strata lot 1. In 2017, they prohibited the owner of strata lot 3 from using the deck to reach the stairway.

The owner of strata lot 3 applied for an order granting her an easement over the deck. The owners of strata lot 1 applied for an injunction prohibiting her from entering onto the deck. The proceedings were heard together in the Supreme Court, and the judge declared that the owner of strata lot 3 was entitled to an easement over the deck, based on the doctrine of proprietary estoppel.

Held, appeal allowed. No equitable easement was created by the former owner’s representation, and even if an easement had been created, it would have been unenforceable against new owners. The chambers judge had suggested that the fact that the three strata lot owners all contributed to the rebuilding of the stairway in 2010 was evidence of an agreement that they would all be entitled to use it. That assessment was not consistent with the facts or with the scheme of the Strata Property Act. First, it was evident that “all three owners” did not have the ability to use the stairway in an “equal fashion”. No one suggested that the owner of strata lot 2 had any right of passage over the deck; strata lot 2 did not have a door to the deck, nor did it even abut it. The owner of strata lot 2 had no reason to use the stairway. Moreover, the strata lot owners could have granted an easement. The strata development consisted of only three strata lots, each of which had equal voting rights. A single strata lot owner opposing the granting of an easement would mean the vote would fall short of the 3/4 requirement. The vote would have to be unanimous. Clearly, no easement was created in 2010 or, indeed, at any time prior to the litigation.

In any event, if an equitable easement had been created, s. 29(2) of the Land Title Act would apply. Under it, in the absence of fraud, the respondents would not be affected by a notice—express, implied, or constructive—of an unregistered interest affecting the land. The chambers judge was correct in asking whether the respondents were involved in fraudulent behaviour, not whether they had notice of any claim that the petitioner had to an easement. As the judge recognized, “mere knowledge” of the claim would not constitute fraud. Despite the clear language of s. 29(2) and his own statement of the question to be answered, the judge then formulated the question as one of what notice the defendants had of the easement. He found that they had adequate notice. Apart from the fact that the analysis pursued the wrong issue (i.e., that of whether the respondents ought to have suspected that there was an easement), there were several errors in the analysis. First, it was not possible to infer knowledge of an easement from the fact that occupants of strata lot 3 crossed the deck to reach the stairway, or from the fact that a previous owner had placed planters on the deck to keep them from straying beyond a narrow corridor. Those facts, while consistent with the existence of an easement, were equally consistent with simple neighbourly goodwill and tolerance. The judge’s conclusion (at para. 102) that the respondents were using the Land Title Act “to defeat the petitioner’s interests in circumstances contrary to common morality” presupposed that the petitioner had interests that were being disregarded. It was evident that she did not have an easement, and that, even if such an easement had existed, it would be negatived by s. 29(2) of the Land Title Act. Although the actions of the respondents could be characterized as uncivil and mean-spirited, in the context of s. 29(2) of the Land Title Act, that was not the point. The question was whether they behaved fraudulently, which was something quite different.

Proprietary estoppel typically applies against only the maker of a representation, though there are exceptions where subsequent owners are closely tied to the representation. Here, there was nothing to tie the new owners to the representation. Accordingly, the judge erred in granting an order for an easement.

The evidence indicated that the occupants of strata lot 3 had not flouted the law, and there was no reason to believe that an injunction against them was necessary. A declaration that ownership of strata lot 3 does not include a right to cross the deck was sufficient.

Unwieldy, Unworkable, and Targeting Bylaws Significantly Unfair

See the annotation under “47 Failure to give proper notice of meeting” in this chapter regarding Hall v. Strata Plan EPS 2116, 2022 BCSC 2167, where conduct of a strata corporation that passed bylaws determined to be unwieldy, unworkable, and targeting the petitioners, who had no reasonable notice of the AGM, was found to be oppressive and prejudicial and the bylaws significantly unfair pursuant to s. 164.