284 Application For Court Order To Wind Up Strata Corporation

CASE LAW

A Remedy for Drastic Circumstances

The plaintiff owned a commercial strata lot in a three-unit strata corporation, from which he operated a recreational equipment rental business. RM and his corporation owned the remaining two strata lots, from which he operated a bed and breakfast business. RM was the strata council president and effectively ran the strata corporation on his own because the plaintiff refused to participate. Prior to formation of the strata corporation, the plaintiff had entered into a joint venture agreement (“JVA”) with a third party concerning the use of the bare land development property. Neither the strata corporation nor RM was party to the JVA, and RM was unaware of its details. The JVA proved unsuccessful. The plaintiff was convinced RM was involved in the demise of the arrangement and thereafter, refused to be involved in the strata corporation’s affairs, refused to attend strata council meetings, and refused to pay strata fees. The strata corporation filed a lien against the plaintiff’s unit for unpaid strata fees and commenced proceedings to enforce the lien. The plaintiff sought an order under s. 284 to wind up the strata corporation. The court refused the s. 284 order, appointed an administrator, and declared the lien for unpaid strata fees enforceable. Section 284 is a rarely used remedy, and for good reason. The fact that the section refers to the use of a “liquidator” implies that it is intended to be used in drastic circumstances such as where the strata building is to be sold or demolished, where the strata corporation is insolvent, or where the building is physically unsalvageable. In such a case, it would make sense to appoint a liquidator to do all things necessary to wind up the strata. The section can be invoked only in cases where the court is satisfied that it is in the strata owners’ best interests; it was not designed for the situation where one disgruntled minority owner disagrees with the management of the strata corporation by the other owners. Here, the plaintiff had mostly himself to blame for the discordant situation in which he found himself. RM’s reasonable attempts to accommodate the plaintiff were inevitably futile. On the evidence, the court was satisfied that the winding-up order sought by the plaintiff was not intended to serve the best interests of the owners, but as a means to reverse the effects of the soured JVA, an agreement the plaintiff regretted from the moment he signed it. For better or worse, the plaintiff had to understand that he was the owner of one of three strata lots in the strata corporation. He had to accept that notwithstanding the non-success of the JVA, an agreement into which he had entered voluntarily, he could not ignore the realities of strata property ownership, including the obligation to pay strata fees. In the result, the court dismissed the plaintiff’s application for a winding-up order and issued a declaration that the lien for unpaid fees was enforceable. The court also appointed an administrator, finding that would serve the corporation’s best interests in that the administrator would act as a “buffer” between the plaintiff and RM and allow the strata to function with some degree of normalcy (Stewart v. Strata Plan KAS 2601, 2020 BCSC 809).