Condominiums – Special Assessment, Owners Refusal to Pay #304
A strata owner who refused to pay the second half of a special assessment for the cost of substantial repairs to a condominium complex applied to the court for an order for the cancellation of a certificate of default filed against the strata owner’s property by the strata corporation. The owner claimed that a cost overrun was not provided for in the strata corporation’s annual budget and that the circumstances did not constitute an emergency which would have allowed the strata corporation under Section 49 to make this payment without the authority of a special resolution.
The repairs included the replacement of roofs, siding, eavestroughs and the painting of the common property. This was authorized by special resolution in 1997, which stated that "in general" the work and costs were to be done in accordance with the consultant’s report attached to the special resolution. Part of the work was to be done in that year at a cost of $743,000 and part in 1998 for $326,000.
The 1997 resolution provided that any potential increase in cost should be brought to the members for review and approval at a special meeting. Six months after the special resolution a meeting was held to explain the cost overrun.
No formal vote was taken but the chairman of the strata council stated that the tenor of the meeting indicated that the owners, by majority, wanted to go ahead. The work was done over the objections of the strata owner who, however, took no steps to have a special meeting called by the strata council. At the next annual general meeting the owners approved the changes which resulted in the cost overrun, by a majority vote.
The building was 25 years old and the consultant’s report identified 18 serious leaks, 15 very serious leaks and recommended 69 immediate roof replacements and 36 additional roof replacements. The judge held that the defects were serious and had to be dealt with quickly and were therefore authorized by Section 49.
The argument that the cost overruns were not properly approved by the members was met by the judge’s decision that the wording of the resolution gave the strata corporation the discretion to vary the work to be done. In addition the strata owner failed to act promptly to protect his own interests, and allowed the additional work to be done when he could have requisitioned a special meeting at which the issue could have been put to a vote.1
The purchaser of property owned by Canada Safeway Limited intended to develop it for a mixed commercial and residential condominium project, which both parties agreed was the best use of the property. It was anticipated that the floor space ratio (FSR) would be 2.3 to 2.5 and the purchaser agreed to pay a greater price if the ratio exceeded 2.3. To the surprise of both parties and over their objections the director of planning for Vancouver down zoned the property and reduced the FSR. The developer refused to proceed and sued for the return of the first installment of $150,000.
The circumstances leading to the changes were unusual. The property was located in the area of a pilot project to seek input from the community as to its vision of the future for that community. The purchaser’s vision apparently was not shared by the community. The judge was satisfied that not only did the parties not actually contemplate these events, no reasonable persons in their position would likely have foreseen them. The judge was satisfied further that if they had considered this possibility, they would have agreed that the contract would be frustrated and therefore void. The purchaser was entitled to the return of the $150,000 installment.2
|1.||Rosenbalm v. The Owners, Strata Plan N9, Reasons for Judgment, December 23, 1998, SCBC, Vancouver.|
|2.||KBK No. 138 Ventures Ltd. v. Canada Safeway Limited, April 30, 1999, SCBC, Vancouver.|
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