Bylaw Changes Can Affect How You Want to Use Your Strata Lot After You Buy

Most (and hopefully all) people review the strata's bylaws before they purchase the strata lot to make sure there aren't any bylaws that will interfere with how they want to use the strata lot they are buying. But what happens when you buy a strata lot and the strata changes the bylaws (and they weren't planning on making that change until after you buy) and now there is a bylaw that specifically prevents you from what you want to do? Are you exempt? 

In some cases, the new bylaw wouldn't apply to you or the effect would be delayed: pet bylaws, age restriction bylaws, and rental restriction bylaws. Each of those has different grandfathering provisions (the delaying effect until the bylaw applies to you). 

What happens when it is a new bylaw that prevents the specific business that you wanted to operate in your strata lot? In some cases the new bylaw was significantly unfair to the owner and the owner was exempt: Semmler v The Owners, Strata Plan NES3039, 2018 BCSC 2064.

In another case, Kunzler v The Owners, Strata Plan EPS 1433, 2020 BCSC 576, the owners were upset with a new bylaw that the Strata passed that directly affected how the Kunzlers could use their strata lot and those owners were not successful in their application to court in being exempted from the bylaw. 

When the Kunzlers purchased their strata lot, is was an undeveloped bare land strata lot that was 16.4 acres in size. At that time, there were no bylaws that prohibited the construction or operation of a marijuana facility and the bylaws specifically permitted agriculture use. After the Kunzlers purchased their lot they took steps to plan and build a licensed medical-use cannabis production business on the lot. 

The strata found out about the proposed cannabis facility and some owners were opposed to the planning use. Those owners petitioned a Special General Meeting to propose new bylaws that would prohibit the commercial production of cannabis plants or cannabis based products.

At the SGM the bylaw was approved and "effectively ended Mr. Kunzler's plan to establish a licensed cannabis production business at [the strata]". 

The owners sued the strata on the basis that the actions of the strata were significantly unfair and/or that the bylaw contravened section 121 of the Strata Property Act ("SPA") (because the bylaw was an unreasonable restriction on their freedom to conduct business). 

The judge disagreed with the owners, upheld the bylaws and dismissed their claim. The judge's findings were aptly summarized by the Court of Appeal in the appeal decision: 

[62] In the judge's view (at para 72), applying a reasonable expectations test in the context of the passage of a bylaw would, in effect, give each owner:

a defacto veto over bylaw changes simply by claiming that there [sic] reasonable expectations have been violated and then seek an exemption from the effect(s) of the new bylaw. This would rob s. 128 of the SPA. . . of its efficacy. It would also undermine strata owners' right to make democratic decisions such as the passage of bylaws. 

[63] The judge went on to note at para 73 that the test could result in situations where a bylaw is not struck down, but rather is ruled inapplicable to a particular owner: 

This would effectively create a grandfathering regime. The legislation permits grandfathering only with respect to three situations, namely, restrictions on pets, age and the rental of strata lots: ss. 123 and 143. There is no general grandfathering provision in the SPA. Had such been intended, the legislature would presumably have included it and not the limited situations permitted.

[64] Turning then to the question of the reasonableness of Mr. Kunzler's expectations, the judge noted that such expectations must be objectively reasonable. Once again, the judge observed that the effect of Mr. Kunzler's position would be to limit the right o strata owners to pass bylaws inconsistent with his expectations, thereby effectively grandfather them. In the circumstances, including the nature of the [strata] development, the judge considered that it was not reasonable for Mr. Kunzler to think that his expectations at the time of purchase would bind the other owners and exempt them from any amendment to the bylaws. Indeed, the judge's view (at para 86), the Kunzlers should have expected opposition to their plan to grow cannabis on a commercial scale. He therefore concluded that the Kunzer's asserted expectations were not reasonable. 

The owners appealed to the BC Court of Appeal and that decision can be found here:  Kunzler v The Owners, Strata Plan EPS 1433, 2021 BCCA 173:

[140] I have no doubt that the Kunzlers were taken aback by the [strata's] actions. The new bylaws were late-stage amendments, hastily enacted, that had the effect of frustrating the Kunzler's lawful commercial plans for which he and his mother had purchased the property in the first place.

[141] On the other hand, the [strata] never represented that it would accept commercial cannabis production on the strata lands, and Mr. Kunzler recognized from the outset that his plans might be contentious. The other members of the community acted as soon as they learned that such activities might move forward. The [strata] enacted the bylaws democratically after the amendments received the supermajority of owners in compliance with the SPA's requirements, and they did so before the appellants had committed the land to a contrary use. The bylaws were consistent with the manner in which the strata had developed to that point, and left most uses of the property undisturbed. There was no evidence to suggest that they had any negative impact on the value of the [strata lot]. I see no error in the judge's analysis or in his conclusion that neither the actions of the respondent in enacting the bylaws, nor the bylaws themselves, were "significantly unfair" within the meaning of section 164(1)(a) of the SPA."

The Court of Appeal also found that the bylaw was not an unlawful restraint on trade under section 121 of the SPA. 

The owners' appeal was dismissed and the owners remained unable to establish a licensed cannabis production business at [the strata]. 




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: 250-762-6111, or at her Web Page

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