Mar 14, 2018

Unfairness Analyses in Alberta and British Columbia: A Tale of Two Age-Restriction Bylaw Cases

Condominium Corporation No 072 9313 (Trails of Mill Creek) v Schultz, 2016 ABQB 338 (CanLII)

A comparison between the Alberta judgment in Condominium Corporation No 072 9313 (Trails of Mill Creek) v Schultz (“Schultz”)[1] and its factually similar and older sibling from British Columbia, Drummond v Strata Plan NW254 (“Drummond”),[2] illustrates the two provinces’ differing approaches to unfairness. The Alberta Court of Queen’s Bench applied a modern administrative law analysis to the issue, while the British Columbia Supreme Court engaged in a shallower analysis based on the plain reading of section 164 of the Strata Property Act (“SPA”).

The dispute in Schultz centred around whether the owner’s 15-year old son could live in a unit in a strata scheme with a minimum age of 18. The owner, Ms. Schultz,had required that her son be permitted to live with her intermittently in the apartment as a condition of purchasing the unit in 2012. The developer indicated that this would not be a problem, as the council could approve an under-age occupant“for compassionate reasons.”[3] However, in March 2014, the strata council determined that Ms. Schultz’s son would not be permitted to live in the building. Although Ms. Schultz responded by promptly attempting to sell her unit, the strata council continued to levy the maximum biweekly $250 fine. The strata corporation then applied to the Court for an order to evict Ms. Schultz’s son, enforce the fines, and recover costs. Ms.Schultz filed a cross-application claiming unfair conduct and, in the result, the Court dismissed the strata corporation’s application.[4]

The British Columbia case of Drummond v Strata Plan NW254 (“Drummond”) presents a superficially similar fact pattern as that in Schultz, although there are important differences in the reasonably held beliefs and behaviours of the two petitioners. In Drummond,the petitioner, Ms. Drummond, had moved into the strata unit with her 13-year-old son two months prior to purchase in November 2002. The strata bylaws restricted the use, occupation and enjoyment of the strata lots to persons over the age of 19, unless otherwise approved by the council.[5] Ms. Drummond’s request for approval in October 2002 went unanswered and, in January 2003, the council imposed a fine of $200 against her for contravention of the age restriction. In rejecting Ms. Drummond’s appeal, the strata council indicated that their duty to uphold the bylaws required imposing the maximum fine of $200 per week so long as the contravention continued. At the time of the court proceedings, Ms. Drummond owed $16,400 in fines. The British Columbia Supreme Court reduced those fines to $1,000.[6]

The differing facts presented provide a logical explanation for the courts’ decisions either to partially enforce or dismiss the fines. In Drummond, the Court appeared to have little sympathy for the petitioner because of her uncooperative conduct and presumptive attitude. Ms. Drummond claimed that she had had no knowledge of the bylaw prohibiting occupants under 19 years before moving into the unit. However, because review of the bylaws had been required at the time of conveyance[7], the Court found that “at the time of… purchase, the petitioner was aware of the 19 bylaw but chose to either ignore it, or hoped to rely upon the discretion of Council to grant an exemption”. Altogether, Ms. Drummond appeared to consider the application “a mere formality that would receive automatic approval”.[8] Even so, the Court was troubled by the strata council’s erroneous assumption that it was “obliged to impose the maximum fine”[9] and its failure to discuss any lesser amount. Therefore, the Court substantially reduced the fine imposed.

Ms. Schultz, by contrast, immediately attempted to end her contravention of the strata bylaws by selling her unit. The Alberta Court found that there was “little more that she could do”[10], and dismissed the fines levied against her.

The wording of section 164 of the British Columbia SPA and section 67 of the Alberta Condominium Property Act (“CPA”), although both addressing the issue of unfair actions, differ enough to also create a noticeable discrepancy in the analyses of the Courts. Section 164(1) of the SPA requires that an action be significantly unfair to qualify for a court-ordered remedy.[11] The Court in Blue-Red Holdings Ltd v Strata Plan VR 857 interpreted unfairly prejudicial conduct as “conduct that is unjust and inequitable”.[12] In Gentis v. the Owners, Strata Plan VR368, the Court noted whether a strata corporation’s action is “significantly”unfair must be determined in light of its duty to “act in the best interests of all owners”.[13] Relying on this case law, and with little additional analysis, the Court in Drummond determined that the age bylaw was “not demonstrably significant or oppressive”.[14] Instead, the council’s actions were reasonably justified because a failure to enforce the bylaw “might lead to an inability to enforce it in the future”.

By contrast, section 67(1)(a)(ii) and (iii) of the Alberta CPA stipulates that the conduct of the business affairs of a corporation or the exercise of the powers of the board must not be “oppressive or unfairly prejudicial or unfairly[disregard] the interests of an interested party”.[15] In Leeson v Condo Plan No. 9925923, the Alberta Court of Queen’s Bench noted that the Court had broad remedial power to protect the “reasonable expectation that caused the relationship to begin or continue”.[16] The missing modifier “significantly” and a focus on reasonable expectations allowed the Alberta Court to take a more minority-friendly approach in Schultz. The Court determined that “a unit owner could reasonably, or legitimately expect that she would not be fined when there would be no useful purpose served by it” and that “the by-laws [were] not to be treated as a version of legislated inhumanity”.[17]

Finally, the reasoning of the Courts varied as a result of their willingness to apply administrative law principles in this area of private law. The Alberta Court treated the decision of the strata council as being analogous to the decision of an administrative tribunal. As such, the standard to be applied when reviewing the decision was the Dunsmuir standard of “reasonableness”.[18] When applying this standard, the Court determined that the principles of natural justice required the provision of reasons for a decision as significant as eviction of an owner[19], and that lack of reasons could indicate that a decision was arbitrary. The strata council’s failure to provide reasons, the lack of evidence to refute Ms.Schultz’s claim that her son was “not causing problems”[20], and Ms. Schultz’s effort to comply with the council’s order, led the Court to conclude that the decision to impose fines was punitive with no other useful purpose.[21]

By contrast, the Court in Drummond engaged in very little analysis of the reasons behind the decision to enforce the age bylaw, the standard of review that should be applied, or the reasonable expectations of the party claiming unfairness. The Court appears not to have considered the relevance of administrative law principles to its understanding of unfairness under section 164. If the Court had determined that these principles applied, then the guidance in Baker v Canada could have been used to determine the requirements of procedural fairness. These might include consideration of whether a decision had “important significance for the individual”,[22] leading to an increased requirement for reasons, and whether a claimant had a “legitimate expectation that a certain result [would] be reached”,[23] leading to more extensive procedural rights. The Alberta Court considered these principles (without reference to Baker) when assessing the lack of reasons provided by the strata council, the serious impact of eviction on an owner, and the petitioner’s reasonable expectations.

The British Columbia Supreme Court appears to be moving toward increased acceptance of administrative law principles in recent section 164 analyses. For instance, it adopted a reasonable expectation test in Dollan v The Owners, Strata Plan BCS 1589.[24] However, the extent to which the British Columbia Court has engaged with these principles lags that of the Alberta Court in Schultz. As strata schemes become increasingly common in British Columbia, making decisions for ever larger parts of cities and segments of the population, the line between private strata law and public administrative law may become increasingly blurred. The need to protect owners such as Ms. Schultz from unfair strata corporation actions is likely to become increasingly pressing, shining a spotlight on how the Court determines unfairness under section 164 in comparison to other provinces.

[1] Condominium Corporation No 072 9313 (Trailsof Mill Creek) v Schultz, 2016 ABQB 338 [Schultz]

[2] Drummond v Strata Plan NW2654, 2004 BCSC 1405 [Drummond].

[3] Schultz,supra note 1 at para 8.

[4] Ibid at para 37.

[5] Drummond supra note 2 at para 5.

[6] Ibid at 41.

[7] Ibid at para 12.

[8] Ibid at para 32.

[9] Ibid at para 39.

[10] Schultz, supra note 1 at para 6.

[11] Strata Property Act, SBC 1998, c 43, s 164.

[12] Blue-Red Holdings Ltd v Strata Plan VR 857,1994 CanLII 1503 (BCSC) at 18.

[13] Gentis v. the Owners, Strata Plan VR 368,2003 BCSC 120 at para 24.

[14] Drummond, supra note 2 at para 35.

[15] Condominium Property Act, RSA c C-22, ss67(1)(a)(ii), (iii).

[16] Leeson v Condo Plan No 9925923, 2014 ABQB 20 at para 16.

[17] Schultz, supra note 1 at para 25.

[18] Schultz, supra note 1 at para 28.

[19] Ibid at para 30.

[20] Ibid at para 18.

[21] Ibid at para 33.

[22] Baker v Canada, [1999] 2 SCR 817 at para 43.

[23] Ibid at para 26.

[24] Dollan v The Owners, Strata Plan BCS 1589, 2012BCCA 44 at para 30.