BC Supreme Court grants leave to appeal CRT decision in dispute over upkeep of duplex strata property

BC Supreme Court grants leave to appeal CRT decision in dispute over upkeep of duplex strata property

December 13, 2017

BY Kevin Zakreski

In McKnight v Bourque, 2017 BCSC 2280, the Supreme Court of British Columbia considered an application for leave to appeal a decision of the Civil Resolution Tribunal. The application proceeded under section 56.5 of the Civil Resolution Tribunal Act. Leave was granted on five of the eleven grounds sought.

The underlying dispute “relates to a duplex strata property; a one-storey oceanfront building in Sooke, B.C.” As the CRT noted in its decision “the strata has operated informally without complying with the [Strata Property Act] and the applicable bylaws. In particular, there have been no regular strata council meetings, no regular annual general meetings, no strata fees collected, no contingency reserve fund, and no strata bank account.”

This method of governing the strata came to a head when the owners fell out over repairs and maintenance. This led to an application to the CRT, which ordered, among other things, that:

• McKnight pay for the repair of the seawall abutting her strata lot;
• McKnight remove Scotch Broom from her strata lot and not plant weeds without the consent of Bourque/Lloyd;
• the strata arrange for annual inspections of each strata residence and yard by a professional inspector who will set standards and make recommendations regarding the upkeep of the strata lots. Contractors must be retained to implement those recommendations within 30 days. Ms. McKnight must be consulted but her agreement is not required for the inspections or work to be performed;
• the strata become a member of the Condominium Home Owner’s Association (CHOA), with the owners to share the membership cost equally; and
• the parties may refer disputes to the CHOA and its decisions will be binding on the parties.

The last point in this list was amended two days after the final order was made. The amendment “included removal of reference to the CHOA’s binding decision making and instead stating the parties should follow the CHOA’s opinion if one is provided.”

Ms. McKnight subsequently applied to the supreme court, arguing that “the CRT member erred in law on the following grounds”:

• Contrary to the Civil Resolution Tribunal Act and the doctrine of functus officio, the CRT member made substantive amendments to a previously delivered and validated order;
• The CRT member exceeded her statutory authority and acted contrary to the doctrine of delegatus non potest delegare by delegating the CRT’s dispute resolution authority to the CHOA and ordering that the parties be bound by the CHOA’s decision making;
• The CRT member exceeded her statutory authority by ordering binding third party decision making by a professional inspector in the nature of, or exceeding, the powers of an administrator under the Strata Property Act, S.B.C 1998, c. 43, where the appointment of such an administrator is a power reserved exclusively for this Court;
• The CRT member misinterpreted the definition of “natural boundary” as it appears in the Land Act, R.S.B.C. 1996, c. 245, thereby incorrectly concluding that the seawall is within the bounds of the strata property and therefore the duty of the strata corporation to repair;
• The CRT member, while correctly stating the burden of proof, incorrectly applied it by shifting the burden to Ms. McKnight to prove the sufficiency of repairs and maintenance rather than requiring Bourque/Lloyd to prove the insufficiency;
• The CRT member erred in her finding of the evidentiary basis required for intervention in decisions of a strata corporation regarding repairs and maintenance;
• The CRT member incorrectly decided without legal foundation that Ms. McKnight must not allow various plant species on her strata lot, basing this decision on a finding that they blocked Bourque/Lloyd’s view from their own strata lot and that one such species is considered invasive by the Invasive Species Council of BC;
• The CRT member erred in applying an incorrect definition of “nuisance” as it appears in the Schedule of Standard Bylaws to the Strata Property Act in finding that the aesthetic appearance of a property may constitute a nuisance;
• The CRT member misapplied the legal standard for unreasonable interference in the use or enjoyment of property in regard to nuisance by applying the incorrect standard of “significant unfairness” as it applies to s. 164 of the Strata Property Act,
• The CRT member ordered the annual inspection of Ms. McKnight’s residence without finding a factual foundation that could support such an order; and
• The CRT member failed to exercise its gatekeeper function in accepting and relying upon Bourque/Lloyds’ realtor’s evidence as expert opinion evidence, contrary to the Civil Resolution Tribunal Rules.

The court began by setting out its framework for granting leave to appeal. It noted that, under section 56.5 of the Civil Resolution Tribunal Act, appeal may only “be brought on a question of law” and that “there must be a demonstration that leave is in the interests of justice and fairness.” On the latter point, the court may consider the following factors:

• whether an issue raised by the claim or dispute that is the subject of the appeal is of such importance that it would benefit from being resolved by the Supreme Court to establish a precedent;
• whether an issue raised by the claim or dispute relates to the constitution or the Human Rights Code;
• the importance of the issue to the parties, or to a class of persons of which one of the parties is a member;
• the principle of proportionality.

These factors “are not exhaustive and the relevant factors may depend on the individual circumstances of a case.” Finally, the court made the following determination of the standard of review applicable to the CRT’s decision:

In terms of the standard of review, there is disagreement about whether the standard of review ought to be considered in this analysis and, if so, what it is. While the standard of review is clearly relevant to an assessment of the merits (Sattva at para. 75), in my view, given the absence of case law on the issue and its importance to the substance of the appeal, it would be better that the standard of review be determined by the judge in the appeal.

As a result, I will conduct the preliminary assessment of the merits of the appeal as though correctness were the standard of review, an approach favourable to the applicant. I recognize that this may tip the balance in favour of granting leave. However, given that the standard of review has not yet been decided, this is fairer.

The court found that five grounds met the tests it had formulated:

• whether the CRT was functus: “The variation [of the final decision two days after it was made] is clearly related to a key aspect of the appeal. This question appears to be one of specific importance to Ms. McKnight and of general importance given the CRT is still in its early stages and the scope of its authority is yet to be fully determined.”
• sub-delegation: “Given that the CRT member’s first order required the parties to submit to binding dispute resolution by CHOA respecting matters that might otherwise be decided by the CRT, it is at arguable that the rule against sub-delegation is engaged. I note also that no party has pointed me to a provision in the Act that might authorize sub-delegation. The question here is both of specific and general importance. In my view it would be in the interests of justice and fairness to grant leave to appeal on this issue.”
• appointing an administrator: “There are significant, long-term obligations potentially occasioned by the orders around inspections and following through on recommendations. Proportionality also favours granting leave to appeal.”
• test for nuisance: “In my view there is arguable merit to this ground. While administrative tribunals certainly may be entitled to adapt or even ignore common law rules when interpreting similar statutory terms, and the CRT member provided reasons for her departure, it is at least arguable that it is an error to include aesthetic appearance in the definition of nuisance. Further, a precedent from this court on this issue is potentially of considerable significance for strata property owners in general.”
• improper opinion evidence: “There is arguable merit to this ground. The realtor’s evidence appears to be mainly opinion evidence rather than evidence about experiences and observations. It is also arguable that it ought not to have been accepted as such except in accordance with the CRT Rules. While the admission of evidence is discretionary, particularly where, as here, the tribunal may accept evidence not admissible in a court (Act, s. 42(1), s. 38 expressly makes the tribunal’s discretion regarding procedure subject to the Rules.”

The court concluded by expressing “concern over the duplex deadlock between the parties in managing the affairs of the property.” But this concern was overridden by the “arguable merit to certain grounds raised.”