Apr 01, 2004

Streamside Protection Regulation and Standard Logging Practices; Strata Property Act and the Cost of Arbitration #370

Apr 01, 2004

Streamside Protection Regulation and Standard Logging Practices; Strata Property Act and the Cost of Arbitration #370

By Gerry Neely
B.A. LL.B.

A BC Supreme Court judge recently decided that a breach of the Streamside Protection Regulation was a breach of a seller's agreement to "carry on all logging operations in a good and workmanlike manner and in accordance with industry standards." The seller was a limited company that carried on a pig farm business on 176 acres near Port Alberni; the principal shareholder was a logger.

When the business and the land were sold in March 1992, the seller reserved a ten-year right to log all standing and fallen marketable timber on the land. The seller hired a professional logger to carry out the logging operations, which ended in 2002. The most valuable timber was in a swampy area through which a creek ran. Neither the principal shareholder nor the professional logger considered the possibility that the creek was fish-bearing when it was logged.

The seller had also agreed to clean up and remove or burn all logging debris. It was only during this clean up that the Department of Fisheries and Oceans was brought in and found the creek contained coho fry. As an immediate result, the seller was required to replace the trees taken from the creek banks with a large number of seedlings. The long-term result was that the debris within the stream protection setback had to stay because the damage caused by its removal would have been a breach of the Streamside Protection Regulation. Damages of $10,000 were awarded to the buyers as compensation for this breach.

A side issue was whether the seller's obligation to clean up the debris included the removal of the tree stumps. The evidence of several experienced loggers was that this was not standard practice in the industry. Despite the buyer's expectation that the stumps would be removed, lack of clear wording in the contract relieved the seller of this obligation.1

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An application to the BC Supreme Court to appeal the decision of an arbitrator appointed to resolve a dispute between a strata lot owner and the strata corporation is a remarkable example of how a small issue can balloon into a huge, vexatious and costly problem. The owner had been fined $600 for feeding seagulls from his nineteenth-floor balcony, with the resulting inevitable defecations on other units. The strata corporation also wanted him to pay $1,800 to repair water damage in other units, caused by the owner's negligent plumbing alteration.

The parties agreed to arbitrate the disputes, undoubtedly in the belief that arbitration, under Part 10, Division 4 of the Strata Property Act, would be less costly than litigation. However, the arbitrator's fees were $41,890 and the legal fees incurred by the strata corporation totaled $110,000.

The arbitrator directed the owner to pay to the strata corporation one-half of the arbitrator's fee and 75 per cent of the legal fees, plus an additional $10,100. The owner was liable for payment of about $143,000, plus interest until paid.

There are only limited circumstances that justify appealing an arbitrator's decision. One is when there is a question of law important to a class or body of persons of whom the applicant is a member. This is the first case to examine the extent of an arbitrator's discretion under the Strata Property Act. The judge decided that the basis upon which the arbitrator allocated fees was a matter of importance to strata lot owners and strata corporations that might be involved in arbitration proceedings. He gave the owner leave to appeal only the fees issue.2

  1. Hertel Farms Ltd. v. Aylard et al., SBCSC, Victoria Registry, Reasons for Judgment, December 19, 2003.
  2. Blackmore et al. v. The Owners, Strata Plan VR-274, BCSC, Reasons for Judgment, January 15, 2004.

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