Improperly Charging Insurance Deductibles to Owners

[Since I wrote this post, the appeal of Te Owners, Strata Plan BCS 1589 v Nacht, 2019 BCSC 1785, has been concluded. See my more recent post for a discussion of the appeal outcome.]

By default, lawyers are not permitted to represent parties in a Civil Resolution Tribunal claim. Parties are permitted to apply to have legal representation, but that request can be denied - and has been previously.

In the case of Booth v The Owners, Strata Plan NW 2575, 2017 BCCRT 61, the strata corporation's requested permission to have a lawyer represent it in a claim from an owner. The owner opposed the request saying it wasn't fair when the owner couldn't afford his own lawyer and it wouldn't be fair for only one side to be represented.

The CRT agreed with the owner and the strata corporation wasn't permitted to use a lawyer to represent it in the dispute.

However, there is no rule against a party consulting with a lawyer about a dispute. Further, there is no rule preventing a party from getting legal advice, using a lawyer to help complete CRT documents, prepare submissions, organize evidence, or otherwise. A fine legal distinction.

As a result, I recently, I  had the pleasure of assisting a client who owned a strata lot in defending a claim against her by the strata corporation in the CRT. In the case of The Owners, Strata Plan KAS 1357 v. Amos, 2018 BCCRT 105 , the strata corporation was attempting to charge a $5,000 insurance deductible to the owner.

The facts are quite simple:

1. Water leaked in the strata complex in June of 2015. The leak was discovered on June 14 in the parkade and in the laundry room of the ground floor unit. 
2. Two days later, the leak was traced back to the third floor in the owner's unit. 
3. Originally, the strata thought that the leak came from the owner's new washing machine. 
4. The leak was eventually traced back to the cold water tap on the wall, to which the washing machine was attached. 

The strata had hired a restoration company to repair the water damage and incurred a $5,000 insurance deductible for the repairs and charged the deductible back to the owner. 

The owner refused to pay the deductible on advice that the bylaws required her to be negligent before she would have to pay an insurance deductible and nothing she did was negligent. 

The strata sued in the CRT. After filing the claim, in April 2017 the strata changed their bylaw and removed the negligence standard. The CRT noted that a bylaw change cannot be retroactive and the new bylaws do not apply to the water leak from June 2015. 

The CRT found that the owner was not negligent. The tap that caused the leak was not visible to the owner and it was not reasonable for the owner to know of the leak. 

Because the owner wasn't negligent, the CRT found that the strata could not charge the insurance deductible to the owner because of the wording of the bylaws. The strata was ordered to remove the $5,000 charge from the owner's account. 

My previous blog post: WHEN CAN A STRATA CHARGE AN INSURANCE DEDUCTIBLE BACK TO AN OWNER? outlined when a strata corporation can charge insurance deductibles back to owners. This decision is consistent with many other decisions regarding this issue:

1. Strata Plan LMS 2446 v. Morrison, 2011 BCPC 519 (CanLII)
2. The Owners, Strata Plan VR 194 v MacKinnon, 2017 BCCRT 46
3. Clark v. The Owners, Strata Plan LMS 3938, 2017 BCCRT 62 (CanLII)

While this has been the law since at least 2011, this may change in the future. Recently, a strata corporation has filed to appeal a decision of the CRT with respect to charging insurance deductibles to owners and a bylaw that limits the standard to negligence. 

In the case of The Owners, Strata Plan BCS 1589 v Nacht, 2018 BCSC 455, the strata corporation was granted leave to appeal a CRT decision that dismissed the strata's claim for an insurance deductible to be paid by an owner. 

The appeal was granted to answer the following questions: 

1. Can the bylaws of a strata corporation serve to narrow the application of s 158(2) of the strata property act?
2. What is the correct interpretation of the bylaw at issue?
3. Should the decision of the Provincial Court in Strata Plan LMS 2446 v. Morrison, 2011 BCPC 519 (CanLII) apply?

It will be some time before the appeal is complete and we have the answers to the above questions. However, if the appeal is successful, it can change the way insurance deductibles are charged back and can have significant impact on strata corporations.

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TAEYA FITZPATRICK Taeya Fitzpatrick has specialized in strata law for most of her practice, has won cases for her clients in the BC Supreme Court, the BC Court of Appeal, and assisted with a client succeeding in defending a Civil Resolution Tribunal claim. Taeya offers full services to a strata corporation or a strata owner from redrafting the strata’s bylaws, collection of outstanding strata fees or other charges, issues with bylaw enforcement, to amending the strata plan. For more information on the services provided, you can reach Taeya by email, phone: 250-763-4323, or at her Web Page.