In a much anticipated decision, the BC Court of Appeal just released a decision that has changed strata collections for strata corporations in British Columbia.
Section 116 of the Strata Property Act permits a strata corporation to place a lien on a strata lot for failure to pay strata fees and special levies (among a few other things). Section 118 provided that the reasonable legal fees incurred by the strata corporation also form part of the lien and must be paid before the lien is removed. The sections also give the strata corporation priority in payment of its strata fees, special levies and reasonable legal fees against other creditors claiming against the strata lot.
Most strata councils concisdered the ‘reasonable legal fees’ in section 118 to be their actual elgal fees incurred as biled by their lawyer. However, a decision of Master Young in 2015 interpreted ‘reasonable legal fees’ to mean Court Costs, which can be only a portion of the actual legal fees incurred by the strata corporation.
Luckily for strata corporations (perhaps unlucky for individual owners) the BC Court of Appeal disagreed with Master Young and determined that ‘reasonable legal fees’ are the actual legal fees that the strata corporation incurs, in the decision of The Owners, Strata Plan KAS 2428 v. Baettig, 2017 BCCA 377:
“Section 118 of the Strata Property Act entitles a strata corporation to add to the amount owing under the lien its actual legal costs subject to one qualification: those costs must have been reasonably necessary. This interpretation of s. 118 accords with the words of the provision, its legislative history, its evident purpose and its statutory context. Pursuant to Rule 18-1 of the Supreme Court Civil Rules, costs reasonably necessary to register and enforce the lien were directed to be assessed and certified by the Registrar of the Supreme Court of British Columbia.”
This decision will come as a relief to many strata corporations who were concerned for being out of pocket to collect arrears of strata fees and special levies from their delinquent owners.