The adoption of the Strata Property Act and the Strata Property Regulation has resulted in more detailed provisions dealing with the preparation and maintenance of strata corporation records. However, although the provisions of the Act are more detailed, there has been little guidance to date as to the nature of a strata corporation’s obligations to maintain records. In a recent decision, Kayne v. Strata Plan LMS 2374, the BC Supreme Court has provided some assistance in interpreting those obligations.
The Strata Property Act and the Strata Property Regulation
Developers are now required to maintain and provide certain documents to a strata corporation. Section 20(1) of the Act requires an owner developer to provide copies of certain documents to the strata corporation (such as building plans, contracts entered into on behalf of the strata corporation and a list of contractors), while section 23 provides that a strata corporation is entitled to request access to the financial records maintained by the developer on behalf of the strata corporation before the owners assume control.
Section 35 of the Act provides that a strata corporation is required to prepare and maintain the following records:
- a. minutes of annual and special general meetings and council meetings, including the results of any votes;
b. a list of council members;
c. a list of
- owners, with their strata lot addresses, mailing addresses if different, strata lot numbers as shown on the strata plan, parking stall numbers, if any, and unit entitlements,
- names and addresses of mortgagees who have filed a Mortgagee’s Request for Notification under section,
- names of tenants, and
- assignments of voting or other rights by landlords to tenants under sections 147 and 148;
d. books of account showing money received and spent and the reason for the receipt or expenditure;
e. any other records required by the regulations.
- The strata corporation must retain copies of all of the following:
a. the records referred to in subsection (1)
b. the registered strata plan and any strata plan amendments as obtained from the land title office;
c. this Act and the regulations;
d. the bylaws and rules;
e. resolutions that deal with changes to common property, including the designation of limited common property;
f. waivers and consents under section 41, 44 or 45;
g. written contracts to which the strata corporation is a party;h. any decision of an arbitrator or judge in a proceeding in which the strata corporation was a party, and any legal opinions obtained by the strata corporation;
i. the budget and financial statement for the current year and for previous years;
j. income tax returns, if any;
k. correspondence sent or received by the strata corporation and council;
l. bank statements, cancelled cheques and certificates of deposit;
m. Information Certificates issued under section 59;
n. the records and documents given to the strata corporation by the owner developer under section 20, or obtained by the strata corporation under section 23;
o. any other records required by the regulations.
Strata Property Regulation 4.1 requires a strata corporation to maintain these records for specified periods, the length of which depends on the type of record.
Section 35 of the Act provides that any of an owner, a tenant who has been assigned a landlord’s right to inspect and obtain copies of records, or a person authorized in writing by an owner or tenant is entitled to review any of the records that a strata corporation is required to maintain under section 34. Those who are entitled to review records are also entitled to ask for copies of those records but can be required to pay a fee for those copies (which is capped at 25 cents a page under Regulation 4.2(1)). However, no fee can be charged for merely inspecting of any records.
Section 36 requires a strata manager to deliver the strata corporation’s records to the strata corporation within four weeks of termination of the property management contract. Failure to comply with this requirement imposes an obligation on the strata manager to pay the sum of $1,000 to the strata corporation for the late delivery of the records (section 37(2) and Regulation 4.3).
Kayne v. Strata Plan LMS 2374
In this case, the Court considered an owner’s application to inspect all of the records that a strata corporation is required to keep and make available under the Act. The owner also sought an order requiring the strata corporation to make efforts to recover documents generated in electronic form that had been lost or deleted. Underlying the owner’s request for documents was a pending matter before the BC Human Rights Tribunal, which had been preceded by other disputes between the owner and the strata corporation. However, the Court noted that the reason why the owner wanted to see the records was not relevant to the application (and by implication to the owner’s initial request to see the strata corporation’s records).
In considering the owner’s application, the Court noted that the purpose of Act “is to ensure that members of the strata corporation are informed of the decisions taken and the money spent on their behalf.” However, the Court also noted that, although the Act specifies the documents to be maintained, it says nothing about the form in which the documents are to be kept or the level of detail required in the documents. As an example, although a strata corporation is required to maintain minutes, the Act says nothing about the degree of detail that must be contained in the minutes beyond a requirement that the minutes include the results of any votes of the council.
The owner’s demand for production of the strata corporation’s records included the general ledger. The Court found that the owner had been provided with the monthly financial statements for the strata corporation, which included a balance sheet, budget comparisons and a general ledger, as well as access to the bank reconciliations. The owner was not satisfied with the production, insisting that the monthly ledgers must be part of a larger document and further that all of the backup documents be provided. In holding that the strata corporation had complied with its obligation to produce financial documents under sections 35(1)(d) and (i), the Court noted that:
“Again, the purpose of the Act is to provide information as to how money has been spent. It requires the corporation to keep books of account showing money spent and received. It does not require those documents be prepared and kept in any particular form and does not require the production of every bill or receipt that may be reflected in those summary documents.“
The Court concluded that the financial statements provided by the strata corporation met the requirements of the Act.
In addition to financial documents, the owner also sought access to all emails exchanged between council members on the grounds that these emails constituted “correspondence sent or received by the strata corporation and council” under section 35(2)(k). Although the strata corporation had provided access to many emails, excerpts from some emails had been removed on the basis of privacy or legal privilege. Other emails had been deleted or had been otherwise lost when computer hard drives crashed or were disposed of.
In interpreting section 35(2)(k), the Court noted that a strata corporation is a separate legal entity from its owners, including the council members. As a result, the Court held that section 35(2)(k) was only intended to refer to correspondence sent to the council or sent by the council, the latter being “correspondence by an officer of the council that is authorized by the council to be sent on the council’s behalf.” The Court further stated that it would be unrealistic to expect a strata corporation to maintain a record of every email exchanged between council members on their home or business computers. As the production of emails to the owner went far beyond what the strata corporation was required to do under the records provisions of the Act, the Court held that there was no reason to consider the owner’s request for recovery of electronic data from council members’ personal computers.
Also included in the owner’s demand for records was an insistence that the minutes of a meeting of council members held on a particular date be produced. The evidence before the Court was that the meeting was not a formal council meeting but was instead an informal gathering of council members. In holding that the strata corporation was not required to keep records of informal council meetings, the Court wrote:
“The Act requires minutes of meetings of the strata council at which decisions are taken. In any organization, there will be occasions when people who are members of a council or an executive will meet informally to discuss matters of relevance to the organization. Those are not meetings of the council and it would be unrealistic to expect minutes to be kept of such meetings. Of course no decision that may have been taken at any such meeting has any validity unless and until it is taken or ratified by a properly constituted and minuted meeting of the council.“
In making its ruling on the issue of records, the Court was careful to note that its comments related to the obligations to prepare and maintain records under the Act. However, in the event of litigation between a strata corporation and an owner, the obligation to produce documents under the Rules of Court may be significantly broader than the list of documents listed in the Act as records to be maintained by the strata corporation – in litigation, the parties are required to produce any documents that are or may be relevant to the matters in dispute.
The evidence before the Court disclosed that the strata corporation’s records had been, after some delay from the owner’s initial request to the strata corporation but before the matter was heard by the Court, produced to the owner. As a result, the owner’s application was dismissed by the Court.
What can be taken from the Court’s decision?
- In appropriate circumstances, a Court will make an order for production of records in favour of an owner if the strata corporation has failed to comply with its obligations to make the documents set out in section 35 available for inspection.
- The right of an owner to inspect and obtain copies of records does not extend to every document generated or received by persons associated with the strata corporation.
- Emails exchanged between council members are not considered records of the strata corporation. However, in appropriate circumstances, they may be considered relevant documents in litigation between a strata corporation and an owner. As a result, council members should carefully consider what council business is discussed in emails as those emails may have to be produced in litigation.
- A decision of council is not valid unless made at a minuted meeting of the strata council.