Owner Consent and Notice Requirements #223
By Gerry Neely
Failure to comply with the Condominium Act may result in an unsuccessful action brought by a strata corporation or the failure of arbitration.
In one case, the units in a strata titled industrial park were subject to a building scheme, which allowed units to be used for "manufacturing, processing, storage...of goods and materials." An owner of one unit wanted to build a mortuary/crematorium. The owner's argument was that the human remains were brought onto the premises for storage prior to being processed through the crematorium. While the judge rejected this macabre interpretation of the building scheme, he had to dismiss the strata corporation's petition because it failed to comply with Section 15 of the Condominium Act.
Under Section 15 a strata corporation may sue on its own behalf, and on behalf of an owner, about matters affecting the common property, common facilities and other assets of the strata corporation. If the action, however, involves a matter affecting individual strata lots as was the case here, the strata corporation may only proceed with the authority of a special resolution of the members, and the written consent of the owners who wish the strata corporation to act on their behalf. In this case the written consent had not been obtained.1
Section 44 of the Condominium Act provides that some disputes between a strata corporation and an owner, or between two or more owners, may be arbitrated. Arbitration is limited to disputes which include contributions to common expenses, repair work done by strata corporations on an owner's strata unit, as ordered by a local authority, fines, or damages to common property. A request for arbitration may be initiated by the strata corporation or an owner. Notice of the arbitration must be given to any owner who would be affected by the arbitrator's decision.
An arbitration was held to determine how maintenance costs were to be divided between different types of units, condominium apartments and garden apartments, in one strata corporation. The arbitrator's decision might shift maintenance costs from one type to the other. All owners might be affected by the decision. Therefore, all members of the strata corporation were entitled to notice of the arbitration, and the failure to do so meant that the ruling made by the arbitrator was set aside and the parties had to start all over again.2
An intending purchaser of a strata lot is entitled to receive from the strata corporation a Section 36 certificate, which lists nine facts the strata corporation is required to provide to the owner. The results of one case suggest that the strata councils, or their property managers, would be well advised to give no more information than is required by Section 36. The reason is that as between the owner and the strata corporation, the certificate is conclusive evidence of the accuracy of the facts contained within it.
That proved to be advantageous to two buyers of units in a strata development constructed in 1984. A problem with water leaking into the strata units developed in 1989. This resulted in the members of the strata corporation authorizing repairs to be done. At the time of the purchase in 1991, the certificate received by the 1991 buyers contained a statement which Section 36 did not require the strata corporation to provide.
That statement was "there is no money expended on behalf of the owner of the above strata lot, not recovered by the strata corporation." Within a few months after their purchase the strata council announced that the actual cost of repairs had exceeded the anticipated costs. The previous assessments made upon all owners were insufficient to repay the additional cost incurred by the strata corporation.
The 1991 purchasers rcfused to pay their share of the new assessment levied upon all owners, stating that the cost had been incurred on behalf of the owners from whom they had purchased their strata lots. The court agreed with their argument that the effect of the statement, added to the Section 36 certificate, meant that they were not required to contribute to this CoSt.3
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