The British Columbia Court Of Appeal Finds Strata Council's Allocation Of Strata Fees Based On Unit Entitlement Significantly Unfair

• Published date: 22 December 2020
• Subject Matter: Employment and HR, Litigation, Mediation & Arbitration, Retirement, Superannuation & Pensions, Trials & Appeals & Compensation
• Law Firm: Lawson Lundell LLP
• Author: Ms Amy Nathanson and Flora Wu

In King Day Holdings Ltd. v. The Owners, Strata Plan LMS3851¹, the general rule that strata owners are "all in it together" gave way to fairness considerations and King Day Holdings Ltd. ("King Day") reigned supreme in its claim that the strata council's allocation of strata fees based on unit entitlement was significantly unfair.

Strata Plan LMS3851 consists of 228 strata lots in the building known as the Westin Grand (the "Building"). The Building contains a hotel, commercial properties and an underground parkade. Twelve of the strata lots are parkade lots, nine are commercial lots and 207 are hotel lots.

In 1998, King Day purchased all of the parkade lots in the Building. From the outset, King Day objected to paying strata fees based on unit entitlement (its share would be 29.82%) because most of the Building's common property was designated for the exclusive use of the hotel and commercial lots. Negotiations between King Day and the strata council regarding the appropriate allocation continued over the years and in 2011, they reached an agreement that 18% of operating expenses and special levies would be allocated to the parkade lots.

Unfortunately for King Day, in 2014, the majority of hotel lots owners sold their lots to Retirement Concepts Ltd. ("Retirement Concepts"). Retirement Concepts also tried to purchase the parkade lots from King Day but its negotiations were not successful. Immediately after it purchased the hotel lots, Retirement Concepts replaced the property manager and elected their own representatives to the strata council. At the next annual general meeting, the new strata council proposed an operating budget based on unit entitlement, with 29.82 % of the common expenses and two special levies allocated to the parkade lots. The special levies related to elevator modernization and hotel renovations, both of which were for the exclusive use of the hotel lots. King Day objected to the increased allocation, but since representatives of Retirement Concepts held the majority of votes, the operating budget and special levies were approved.

King Day commenced a petition under s. 164 of the Strata Property Act, S.B.C. 1998, c. 43 (the "SPA"), which permits a strata owner to apply to the Supreme Court to remedy an action or decision of a strata corporation that is significantly unfair. In its Petition King Day sought an order that the strata fees and special levies levied against it by the strata corporation based on unit entitlement was...