Key Themes, Trends, And Principles From The Post-Bill 40 Case Law On Strata Wind-Ups In B.C.

It has been about two years since Bill 40 ushered in a new strata wind-up regime in British Columbia. The bill, which was prompted by a 2015 B.C. Law Institute report, marked a new era in strata wind-ups under the Strata Property Act1 (the "Act"). Whereas, previously, unanimous approval on the part of the owners was generally required to wind up a strata corporation, the new threshold is a more attainable 80 per cent, provided court confirmation is subsequently obtained.

Thus far, we have seen four contested confirmation applications reach the B.C. Supreme Court, with one refusal and three approvals:

In The Owners, Strata Plan VR 19662 ("Bel-Ayre"), the Court refused to confirm the wind-up resolution because the interest schedule - the liquidator's "roadmap" - that was attached to the resolution suffered from a deficiency of substance: it omitted statutorily required value estimates. In The Owners, Strata Plan VR2122 v. Wake3 ("The Hampstead"), the Court confirmed the resolution over the objections of four dissenting owners, finding that the essential statutory requirements had been met, even though the resolution contained certain flaws. In Re The Owners, Strata Plan VR27024 ("Barclay Terrace"), the Court confirmed the resolution despite resistance from two holdout owners who argued that the sale price was too low and that they were not kept informed throughout the sale process. In Strata Plan NWS837 (Re)5 ("Ascott Wynde"), the Court confirmed the resolution in the face of allegations 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". Though the post-Bill 40 jurisprudence is still in its infancy, it is worth taking a moment to step back and take stock of five key themes, trends, and legal principles that have emerged thus far.

1. The Analytical Framework

   In considering whether to confirm a wind-up resolution, the Act requires the Court to consider the following factors:

   the best interests of the owners, and the probability and extent, if the winding-up resolution is confirmed or not confirmed, of i) significant unfairness to one or more owners, holders of registered charges, or other creditors, and ii) significant confusion and uncertainty in the affairs of the strata corporation or of the owners.6 In Ascott Wynde, the Court provided a helpful summary of several bedrock principles governing applications for court confirmation of wind-up resolutions, including the following:

   The dissenting owners bear the onus of establishing the factors that would justify refusing an application for an order confirming a wind-up resolution. In determining what is in the best interests of the owners, the interests of all owners must be weighed. Any alleged unfairness or uncertainty must be significant enough to override the interests of the majority who voted in favour of the wind-up. "Significant unfairness" includes conduct that is "burdensome, harsh, wrongful, lacking in probity or fair dealing, done in bad faith, unjust, or inequitable, and might extend to less severe conduct as well". In determining whether confirming or refusing to confirm the resolution would cause significant unfairness, the Court must consider whether the evidence supports the reasonable expectations asserted by the minority and, if so, whether those expectations were violated in a way that was significantly unfair.7 2. The Fairness of the Wind-Up and Sale Process Is a Familiar Target in Litigation

   One of the most striking themes emerging from the case law is the frequency with which the fairness of the wind-up and sale process is targeted in litigation. While the...