B.C. Supreme Court Approves Wind-Up Of Richmond Strata, Issues Guidance On Ensuring A Fair Sale Process

Introduction

Since changes to the strata wind-up regime under the B.C. Strata Property Act 1 (the "Act") took effect in July 2016, we have seen a number of contested applications for confirmation of strata wind-up resolutions reach the B.C. Supreme Court (the "Court").2 For applicants, results have been mixed. In the first contested application, The Owners, Strata Plan VR 19663 ("Bel-Ayre"), the B.C. Supreme Court (the "Court") refused to confirm the resolution. However, in The Owners, Strata Plan VR2122 v. Wake4 ("The Hampstead") and more recently in Re The Owners, Strata Plan VR27025 ("Barclay Terrace"), the applicants got the green light.

On April 10, 2018, the Court issued its most recent decision in this fast-growing line of case law: Strata Plan NWS837 (Re)6 ("Ascott Wynde"). In the context of a proposed sale of a 102-unit strata complex in Richmond, the largest complex we have seen in the recent strata wind-up case law, the Court approved a wind-up resolution over the objections of a small handful of dissenting owners who alleged that the process leading up to the vote on the resolution was unfair and that permitting the wind-up and sale to proceed would result in "significant unfairness" and "significant confusion and uncertainty".

The Court's decision offers guidance on ensuring a fair sale process, a critical factor in the Court's assessment of whether to confirm a wind-up resolution.

Background

"Ascott Wynde", a strata complex located in Richmond, consists of two wood-framed buildings over cement foundations, together containing 102 strata lots and associated common property. The two buildings had been built in the late '70s and, by December 2013, had seen better days. It was then that the strata corporation commissioned a depreciation report recommending significant maintenance and repair work over the next five to seven years. Based on the strata council's calculations, the total cost of repairs would be approximately $4.97 million, requiring levies of between $36,600 and $67,600 per unit.

At the strata's 2016 AGM, with the prospect of costly repairs looming, the owners discussed their options. A majority embraced the idea of exploring a wind-up and sale. The strata council met with a realtor and scheduled a special general meeting to consult with the owners more formally. There, the owners passed a resolution authorizing council to retain legal counsel and engage a realtor to market the property. Six offers emerged.

Council reviewed the offers and, in October 2017, entered into a purchase and sale agreement (the "PSA") with the successful bidder. Under the PSA, council provisionally agreed to sell the complex for $49.8 million. Two information sessions were held in December 2017 and January 2018 to give owners the opportunity to learn about the details of the PSA.

In late January 2018, the strata held a special general meeting to vote on a resolution approving a wind-up and sale as contemplated by the PSA (the "Resolution"). The Resolution passed with over 84% approval (86 of 102 units), thereby exceeding the requisite 80% threshold. The strata corporation, the proposed liquidator, and several owners (together, the "Petitioners") then brought an application for court confirmation. A small handful of owners (the "Opposing Owners") opposed the application.

Court Decision

The Court set out the criteria...