On April 22, 2009, Judge Burnyeat of the BC Supreme Court rendered a lengthy decision (Azura Management (Kelowna) Corp. v. Strata Plan KAS 2428) that addressed a number of issues that have plagued strata corporations for many years. In most instances, this was the first time that a court had ruled on the issues and these rulings should greatly assist strata governance. The decision touches on a wide range of matters – from when a strata corporation may prohibit voting to disclosing legal opinions to providing financial statements to the proper way to tally votes at general meetings. This article will review a number of the rulings that address strata governance.
- The wording of section 61(1)(b)(i) of the Strata Property Act (the “Act”), namely “by leaving a notice or other record or document with a person”, is broad enough to include the forwarding of an email transmission. The court ruled that, even if an email address had not been provided by an owner, forwarding communication to a known email address was satisfactory to meet the requirements of the section.
- Any notices of general meetings should contain a full description of all agenda items, plus the specific wording of all resolutions requiring a 3/4 vote or a unanimous vote, to ensure that owners who cannot make a meeting are able to review all the information before providing their proxies.
- Notices required under the Act (for example, of an AGM) should not be used for the purposes of soliciting support for any particular group of potential members of a council, should be restricted to factual matters and should remain neutral as to whether some owners are or are not suitable members of the council of a strata corporation. One obvious concern noted was the funding of the production of materials for distribution in support of an incumbent council.
- If biographies or names of potential candidates for council are to be circulated before an AGM, then prior to the notice of the general meeting being sent out, all owners should be provided with sufficient opportunity to provide names and biographies so that all names and biographies will be included in the notice.
- Draft financial statements of the strata corporation should be sent to the council only and not the owners and only financial statements and budgets in final form should be forwarded to owners with the notice of an annual general meeting.
- Strata corporations often receive requests from owners who wish to the strata corporation’s legal opinion that addresses the owner making the request. Section 169(1)(b) states that, despite the s. 36 obligation to disclose legal opinions received by a strata corporation, a legal opinion need not be provided to an owner who has sued the strata corporation. Judge Burnyeat expanded section 169(1)(b) to include potential litigation. The Judge stated that it could not have been the intent of the Legislature to require a strata corporation to waive solicitor/client privilege or to require a solicitor to breach solicitor/client privilege by producing documents which relate to a dispute or a potential dispute where litigation had not been commenced and is only contemplated.
- The Judge added that it was appropriate for the strata corporation to seek the opinion of the Court as to whether the documents produced in contemplation of litigation must be provided to the owner with whom the dispute has arisen. This essentially creates a process that might result in a significant number of court applications.
- The quorum for all general meetings of the strata corporation will be eligible voters holding at least one-third of the total number of strata corporation votes, unless the bylaws of the strata corporation state differently. This is a number that will not change from meeting to meeting, even though the number of eligible voters may change.
- In order to enforce a bylaw that prohibits an owner in arrears from voting at a general meeting, the strata corporation must have delivered a demand letter contemplated under s. 112 of the Act and 14 days must have expired. In other words, “entitlement” to file a lien only occurs if the s. 112 demand letter has been sent and the 14 day period has expired.
- Even if the appropriate bylaw exists prohibiting an owner in arrears from being a member of council, an owner in arrears may remain on council unless a demand letter has been forwarded to that owner pursuant to s. 112 of the Act.
- Standard bylaw 19 states that the council must inform owners of minutes of all council meetings within two weeks of the meeting, regardless whether the minutes have been approved. The Act is silent with respect to circulation of minutes of general meetings. The Court held that the council should produce minutes “forthwith” after all annual general meetings, special general meetings and council meetings are held.
- Furthermore, minutes from a council meeting which set agenda for a general meeting must be made available to the owners prior to the two weeks’ written notice of an annual or special general meeting so that owners are informed of the intention to call the meeting and what will be discussed at the meeting.
- The proper procedure for tallying votes at annual and special general meetings on all resolutions after it has been determined that there is a quorum present is: (a) the total number of votes represented in person or by proxy should be calculated; (b) all votes in favour should be counted first; (c) all votes against should be calculated second; (d) all abstentions should be counted third.
- Any proxy form should list at least four owners – two from the present list of council members and two from those presently not on council, in order that those in favour of various resolutions and those opposed to various resolutions will have an opportunity to have their vote cast by owners who represent their positions. This could prove quite unwieldy for many strata corporations, and was ordered due to the specific dispute at KAS 2428.
This article is a review of what was ordered in the Azura case and should not be considered a legal opinion of Clark Wilson LLP. Each dispute will still depend upon the peculiar circumstances of that dispute. There were many more issues addressed in the Azura case than have been noted above. However, I feel confident in stating that future courts will look to these Reasons for helpful guidance in interpreting some of the governance provisions of the Act, and that owners and managing agents would be well-served to be familiar with the findings and follow the declarations and recommendations with respect to providing material, and the calling and running meetings.