Sabey Rule Blog

Legal Fees Must Be Reasonable

A strata corporation typically incurs legal fees when collecting strata fee or special levy arrears from owners through the strata lien process. As discussed in my previous post Can a strata collect full legal fees when collecting on a strata lien?, those legal fees can be collected 100% from the owner who was in arrears.

However, the legal fees claimed must be reasonable. If they are not reasonable, the strata will have to pay for those legal fees 100% and will not receive reimbursement from the owner in arrears.

In the case of The Owners, Strata Plan NW 2089 v Ruby, 2019 BCSC 143, the strata had registered a lien against the owner’s strata lot in the amount of $4,532.33. The strata’s claimed legal fees were in excess of $17,000.

The owner frequently traveled for work and had been away for 8 consecutive months when the strata approved the special levy and didn’t receive his mailed notice. Due to the nature of his work, the owner had requested the strata send all notices electronically, and the strata did so for the 10 years that he owned the strata lot. Further, when the strata had previous special levies, the strata sent the owner an email notice to pay.

However, for the $4,500 special levy, the strata only sent notice by mail. The owner didn’t receive it because he was out of town. When the owner failed to pay, the strata hired a lawyer, who sent an email notice to the owner about the arrears. The owner agreed to pay the special levy, but disagreed that he had to pay the legal fees ($1,950 at that point).

The court noted:

[45] In all the circumstances, the decision by the [strata corporation] to hand the matter over to their lawyers before attempting to make email contact was not reasonable. Those circumstances include the [owner’s] unique situation of being absent from his strata unit for extended periods of time by reason of his employment; the [strata’s] knowledge in this regard; the [owner’s] past dealings with the [strata] regarding special levies and access to his unit, via email; and, the [strata’s] failure to contact the [owner] via email prior to putting the matter into the hands of their lawyers. In my view, the legal costs which flow from that decision were likewise unreasonable in their entirety. 

The court concluded: 

[50] In my view, this entire proceeding could have been avoided had the [strata]sent a single email to the [owner], demanding payment of the special levy, as it had in the past, before handing the matter to their lawyer and incurring legal costs. The [owner] was not a “delinquent owner” in the context of [The Owners, Strata Plan KAS 2428 v Baettig, 2017 BCCA 377]. Upon receipt of the first email demanding payment of the special levy the [owner] promptly acknowledged his liability and agreed to pay. He did not agree to pay legal fees which he felt were needlessly incurred. Regretfully, he was not permitted to pay the special levy unless it was accompanied by full payment of the legal fees claimed. The escalating claim for legal fees became a club to cow the [owner] into submission. 

 [51] . . . The legal costs incurred by the [strata] in this matter were not reasonable, or proportional, in the circumstances. Section 118(a) is not a carte blanche entitlement to full legal indemnity regardless of the circumstances and conduct giving rise to the proceeding. 

 The strata then had to pay 100% of the $17,000 in legal fees incurred and had to pay the owner another $750 in costs for the proceeding.

It is clear from the case, that legal fees must have been reasonably incurred in the first place, and reasonable in their amount. It would also be prudent to make sure that legal fees claimed from the owner are directly related to the owner and are not legal fees incurred to assist the strata in a non-owner issue. Therefore, strata’s should be careful that they are not also responsible for the fact that the owner failed, such as a computer error where the strata fees were not auto deducted, the strata failed to input the PAD on time, the strata lost the cheque, etc. All those could lead to the strata being unreasonable in going to a lawyer before trying to send notice to the owner.

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Taeya Fitzpatrick

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