I have read that 60% of the real estate presently being purchased in British Columbia is condominiums. While many are first time buyers, many more are moving from owning a single family home to owning a condominium. Condominiums come in all sorts of shapes and sizes. There are high rises, low rises, commercial retail and industrial, leasehold stratas, duplexes, townhouses, mixed use stratas, bare land stratas. All condominiums have one thing in common – there is an element of community living because there is common property owned by all based upon a proportion of unit entitlement. In my twenty years practising law and dispute resolution involving condos, I have seen community living and its best and indeed, at its worst.
The B.C. Legislature enacted the Strata Titles Act in 1969. The name was changed to the Condominium Act in 1979. There has now been passed (but not in force yet) a new Act called the Strata Property Act. In its wisdom, the Government has always included a dispute resolution mechanism to assist owners resolve their disputes in a forum other than Court. Until approximately ten years ago the few disputes that occurred were resolved in Court. However, as development of condos blossomed, so did the disputes. The owners found that court resolution of disputes proved very costly and extremely adversarial. Because an owner had to sue the strata corporation, the owner was effectively suing himself or herself. Further, nothing will destroy a neighbour relationship more than a law suit.
Sections 44 and 45 of the present Condominium Act govern the application of arbitration to condo disputes. Section 44 of the Condominium Act provides that an owner or a strata corporation may refer any dispute between the strata corporation and an owner, or between two or more owners about any matter. Although a list then follows, the list is inclusive, not exhaustive. The balance of section 44 provides a mechanism for the appointment of an arbitrator or arbitrators. If the parties cannot agree on a single arbitrator, then each disputant appoints an arbitrator and the two arbitrators so appointed appoint a third arbitrator who is the Chair. Problems have resulted as the result of this requirement.
Firstly, an advantage of arbitration over Court is the lesser expense. However, that expense increases dramatically if there are three arbitrators that must be paid. Secondly, there have been occasions when there has been a dispute between two owners and the strata corporation should be a party. A classic example is a dispute between two owners (one above the other) regarding noise and the requirement that the strata corporation enforce a noise bylaw. In this situation would the situation require three arbitrators appointing a fourth? The answer is unknown; however, this situation occurred, the strata corporation rejected the Arbitration Award. The Court overturned the Award, stating that the strata corporation was at fault for lack of enforcement, but no costs could be awarded against the strata corporation because they had not had the opportunity to be involved in the arbitrator selection process.
The present Condominium Act also contains a requirement that unless the disputants otherwise agree, an arbitrator must be an owner and occupier of a strata lot for at least one year. This has created problems because many trained arbitrators do not live in or own a condo, and those owners who do live in and own a condo, and are conducting arbitrations, are not necessarily trained arbitrators. The new Strata Property Act eliminates this requirement, which should result in arbitrations regarding condos being generally better conducted.
The disputes that are commonly being arbitrated vary. They include noise bylaw violations, pet issues, parking issues, fencing issues, rental restriction issues, insurance deductible payments by an individual owner, application of fines and generally disputes that bylaws are not being enforced on an even handed basis. My experience is both as an arbitrator and legal counsel on behalf of an owner or on behalf of a strata corporation. I would speculate that approximately half the arbitrations include legal counsel representation. There are a few condo consultants, who are not lawyers, representing parties at arbitrations. This practice is not frowned upon, and indeed, is encouraged.
Section 45 of the Condominium Act must be understood by all property managers. The Commercial Arbitration Act governs the procedure of arbitrations in B.C. unless a statute specifically excludes the Commercial Arbitration Act. That Act is excluded by section 45(8) of the Condominium Act. This exclusion is very significant. For example, the Commercial Arbitration Act requires the arbitrator to apply the law as the arbitrator is best able. No such requirement exists in condos. Section 45(5) of the Condominium Act provides that the arbitrators may make whatever award they consider just and equitable, including an order in the nature of a mandatory or prohibitive injunction, or for payment of pecuniary damages. Hence, arbitrators must look to the provisions of the Condominium Act to determine what is just and equitable.
Another provision of section 45 includes the requirement the arbitration be held as soon as possible and at a convenient location in the strata plan or nearby. This allows all owners to attend. There is case law that notice must be provided to all owners of the location, date and time of the arbitration. Most arbitrations take place in a common activity or amenity room of the strata corporation. They are typically very well attended by owners and invariably include a view of the area in dispute (for example, noise complaints result in an attendance in both units, a fence complaint involves viewing all the fences within the complex, etc.). The need for expediency is clear. A dispute is typically between neighbours, and the sooner it can be resolved, the better for everyone concerned.
Sections 45(2) and (3) of the Condominium Act provide that the arbitrators must conduct the hearing as they believe proper, allowing each party adequate opportunity to present or rebut evidence. They may accept evidence on oath, affidavit or otherwise, as they believe proper, whether or not admissible in court. It is easy to understand the problems that can, and are encountered, when an arbitrator does not have the proper training. Regardless of these loose evidence production requirements, an Award can be entered as a Court Judgment and with leave of the Supreme Court, be enforced. Under the new Strata Property Act, even leave will no longer be required.
Section 45(6) provides that the arbitrators must make an order about the contribution of the parties to the cost of the arbitration and remuneration of the arbitrators. Most arbitrators do a very good job of this requirement. The actual cost charged by an arbitrator varies greatly. Non-lawyer arbitrators are typically owners and condo consultants who happen to live in condos. The non-lawyer, non-consultant untrained arbitrators usually charge less than $100 and with some exceptions, are worth much less. Non-lawyer consultant trained arbitrators usually charge between $100 and $150 and lawyer trained arbitrators up to $250. The arbitration hearings can take a couple of hours; others up to three days.
It is my belief that all things considered, arbitrations of condominium disputes have proved worthwhile. There are obviously exceptions. The advantages over Court adjudicated proceedings are the ability to conduct a view, expediency, less adversarial between neighbours, the option of not hiring a lawyer, and the ability to sit long hours. The disadvantages are that the law is not necessarily applied (how can you tell I am a lawyer?!), the problems with a variety of methods of obtaining evidence, and the loss of mysticism that some owners feel is provided by a Judge. Overall it is my belief that arbitration is working to resolve condo disputes.
It is also my belief that much more could be done. The requirement that an arbitrator be an owner of and an occupant in a condo can be waived if all parties agree. The arbitrations that I have conducted require that waiver because I am not a condo owner. Many parties have agreed to the waiver due to my knowledge of condo law and my formal arbitration training. I am also a trained mediator. This is where so much more could be done. For example, a noise bylaw dispute cries out for mediation, not arbitration. I am hopeful that the new Strata Property Act will include specific mediation regulations in addition to the proposed provision that the potential of mediation be discussed.