A recent decision of the BC Supreme Court reminds strata
developers and strata lot owners alike that an important feature of
the Strata Property Act1 (the
"Act") is consumer protection.
In Strata Plan LMS 1495 v 0753874 BC Ltd.,2
the owners of strata lots in a phased strata development sought to
recover proportionate expenses for common facilities from an owner
developer. Normally in a phased strata development the owner
developer acts as a proxy for those strata lots not yet built and
contributes proportionally to the common facility expenses that
arise pending final build-out of the development. In this case,
however, the original owner developer transferred its interest (or
a portion thereof) in the strata's undeveloped phase to another
corporation ("Corp A"). A few years
later Corp A in turn transferred that interest onto another
corporation ("Corp B").
The main question for the court was whether Corp B should be
considered an "owner developer" under the Act and whether
it was thus liable for a proportionate share of the common facility
fees of the development.
Decision and Discussion
The Court ultimately decided that Corp B was an "owner
developer" under the Act and was therefore responsible for a
proportionate share of the common facility fees. The Court embarked
on a detailed interpretative analysis of the Act, deciding to
follow a "large and liberal" interpretation favouring the
strata lot owners rather than a "restrictive"
interpretation of the Act advanced by Corp B. Specifically, the
Court accepted that the appropriate definition of "owner
developer" is derived from the provisions under Part 13 of the
Act which deal exclusively with phased developments, rather than
the general definition of "owner developer" found in the
introductory provisions of the Act.
The Court noted that every piece of legislation must be looked
at as being remedial in nature and as such, must be given a
"fair, large and liberal" interpretation in order for it
to fulfill its objectives. One main objective of the Act, the Court
said, is consumer protection, and held that this feature is
especially important in phased developments where potential strata
owners are investing in homes and agreeing to pay fees toward
properties that will be built at some point in the future. Since
such buyers cannot know exactly what they are agreeing to purchase,
the Act attempts to level the playing field. The Court held that
the Act's provisions regarding phased developments protects
buyers from the potential "mischief" that owner
developers could commit by transferring their interests to avoid
paying common facility expenses. According to the Court, even where
there is a series of transactions transferring the interest of the
owner developer, all of the rights and responsibilities of the
original owner developer transfer as well.
The Court's decision in this case highlights that consumer
protection is one important feature of Act and has important
consequences for developers and strata lot owners alike. Without
ignoring the plain language and meaning of the Act, the courts may
favour a large and liberal interpretation of the Act in order to
balance the potential information imbalance that sometimes exists
in these types of consumer transactions.
1. Strata Property Act, SBC 1998, ch
2. Strata Plan LMS 1495 v 0753874 BC
Ltd., 2015 BCSC 2124
The foregoing provides only an overview and does not
constitute legal advice. Readers are cautioned against making any
decisions based on this material alone. Rather, specific legal
advice should be obtained.
Russell v. Township of Georgian Bay provides a useful reminder of the fact that while municipal officials sometimes appear to hold all of the cards in disputes with home owners, that is not always the case.
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